World Economic Outlook
Growth and Institutions
April 2003
April 2003
A Survey
by the Staff of the International Monetary Fund
©2003
International Monetary Fund
Ordering Information
The World Economic Outlook presents the IMF staff's analysis and projections of economic developments at the global level, in major country groups (classified by region, stage of development, etc.), and in many individual countries. It focuses on major economic policy issues as well as on the analysis of economic developments and prospects. It is usually prepared twice a year, as documentation for meetings of the International Monetary and Financial Committee, and forms the main instrument of the IMF's global surveillance activities.
| Contents | |||
| 772k pdf file | Assumptions and Conventions | ||
| Preface | |||
| Foreword | |||
| Chapter
I. 497k pdf file | Economic Prospects and Policy Issues | ||
| North America: How Long Will the "Soft Spot" in the United States Last? | |||
| Western Europe: Weak Growth (Particularly in Germany) and Delayed Recovery | |||
| Japan: Weak Economy Underlines Need to End Deflation | |||
| Latin America: Spreads Declining But Significant Vulnerabilities Remain | |||
| Asia-Pacific Region: Has Growth Become Less Reliant on Global Developments? | |||
| European Union Candidates: Accession Underlines Fiscal Challenges That Lie Ahead | |||
| Commonwealth of Independent States: Oil Strength Masking Non-oil Weaknesses | |||
| Africa: Stability and Reforms Remain the Keys to Growth | |||
| Middle East: Managing the Demographic Transition | |||
| Appendix 1.1. Commodity Markets | |||
| Appendix 1.2. How Will the War in Iraq Affect the Global Economy? | |||
| References | |||
| Boxes | |||
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1.1 | Could Deflation Become a Global Problem? | |
| | 1.2 | Is the New Economy Dead? | |
| | 1.3 | How Important Are Banking Weaknesses in Explaining Germany's Stagnation? | |
| Tables | |||
| 1.1 | Overview of the World Economic Outlook Projections | ||
| 1.2 | Advanced Economies: Real GDP, Consumer Prices, and Unemployment | ||
| 1.3 | Emerging Market Economies: Net Capital Flows | ||
| 1.4 | Selected Economies: Current Account Positions | ||
| 1.5 | Major Advanced Economies: General Government Fiscal Balances and Debt | ||
| 1.6 | Selected Western Hemisphere Countries: Real GDP, Consumer Prices, and Current Account Balance | ||
| 1.7 | Selected Asian Countries: Real GDP, Consumer Prices, and Current Account Balance | ||
| 1.8 | European Union Candidates: Real GDP, Consumer Prices, and Current Account Balance | ||
| 1.9 | Commonwealth of Independent States: Real GDP, Consumer Prices, and Current Account Balance | ||
| 1.10 | Selected African Countries: Real GDP, Consumer Prices, and Current Account Balance | ||
| 1.11 | Selected Middle Eastern Countries: Real GDP, Consumer Prices, and Current Account Balance | ||
| 1.12 | Impact of a Permanent $5 a Barrel Increase in Oil Prices After One Year | ||
| 1.13 | Effects of Business Confidence on Economic Activity in Selected Industrial Countries | ||
| 1.14 | Stock Market Effects on Economic Activity in Selected Industrial Countries | ||
| Figures | |||
| | 1.1 | Global Indicators | |
| | 1.2 | Current and Forward-Looking Indicators | |
| | 1.3 | Developments in Mature Financial Markets | |
| | 1.4 | Emerging Market Financial Conditions | |
| | 1.5 | Fiscal and Monetary Easing in the Major Advanced Countries | |
| | 1.6 | Global Outlook | |
| | 1.7 | United States: Business Cycle | |
| | 1.8 | Euro Area: Divergences in Cyclical Positions, Structural Fiscal Balances, and Real Interest Rates | |
| | 1.9 | Japan: Deflationary Expectations Worsening | |
| | 1.10 | Selected Western Hemisphere Countries: Economic Activity and Financial Indicators | |
| | 1.11 | Asia: External Demand and Growth | |
| | 1.12 | European Union Accession Countries: Accession Underlines Fiscal Challenges | |
| | 1.13 | Russia: Oil Strength Masking Non-oil Weaknesses | |
| | 1.14 | Africa: Growth Is Highly Influenced by Country-Specific Shocks | |
| | 1.15 | Middle East and North Africa: Managing the Demographic Transition | |
| | 1.16 | Oil Prices and Production | |
| | 1.17 | Nonfuel Commodity Markets | |
| Chapter
II. 352k pdf file | When Bubbles Burst | ||
| Real and Financial Effects of Bursting Asset Price Bubbles | |||
| Corporate Fragility and Investment: What's Different About the Recent Bubble? | |||
| Appendix 2.1. Identifying Asset Price Booms and Busts | |||
| References | |||
| Boxes | |||
| 2.1 | A Historical Perspective on Booms, Busts, and Recessions | ||
| 2.2 | Corporate Financial Conditions and the Severity of U.S. Recessions | ||
| 2.3 | How Do Balance Sheet Vulnerabilities Affect Investment? | ||
| Tables | |||
| 2.1 | Equity and Housing Price Bear Markets in Industrial Countries | ||
| 2.2 | Relative Contributions to Output Growth Before and After Asset Price Busts | ||
| Figures | |||
| 2.1 | Equity and Housing Price Declines | ||
| 2.2 | Comparing Cross-Border Synchronization | ||
| 2.3 | Equity and Housing Price Busts: Macroeconomic Associations | ||
| 2.4 | Equity and Housing Price Busts: Financial Associations | ||
| 2.5 | Equity and Housing Price Busts: Implications for Banks | ||
| 2.6 | The Recent Equity Price Bust in Perspective | ||
| 2.7 | Corporate Financial Indicators Over the Bubble | ||
| 2.8 | Cross-Sectoral Dispersion of Market-to-Book-Value Ratio | ||
| 2.9 | Corporate Investment Over a Bubble | ||
| 2.10 | United States: Corporate Financial Indicators | ||
| 2.11 | Euro Area: Corporate Financial Indicators | ||
| 2.12 | Corporate Leverage in Advanced Countries | ||
| 2.13 | Selected Corporate Financial Indicators in Advanced Countries |
|
|
| Chapter III. 348k pdf file | Growth and Institutions | ||
| Some Background Considerations | |||
| Empirical Analysis and Assessment | |||
| Institutional Reform in Practice | |||
| Appendix 3.1. Do Institutions Drive Economic Performance? | |||
| References | |||
| Boxes | |||
| 3.1 | Institutional Development: The Influence of History and Geography | ||
| 3.2 | Have External Anchors Accelerated Institutional Reform in Practice? | ||
| 3.3 | Promoting Stronger Institutions and Growth: The New Partnership for Africa's Development | ||
| 3.4 | Institutional Development: The Role of the IMF | ||
| Tables | |||
| 3.1 | Economic Development | ||
| 3.2 | Correlation Between Institutions and Economic Performance | ||
| 3.3 | Effects of Institutions and Policy on Growth and Volatility | ||
| 3.4 | Selected Summary Statistics | ||
| 3.5 | GDP per Capita and Institutions: Regression Results | ||
| 3.6 | Growth, Institutions, and Policies: Regression Results | ||
| 3.7 | Volatility, Institutions, and Policies: Regression Results | ||
| Figures | |||
| 3.1 | Growth and Policies in Selected Advanced and Developing Economies | ||
| 3.2 | Relationship Between Income and Institutions | ||
| 3.3 | Income per Capita and Selected Institutions | ||
| 3.4 | Economic Outcome Measures and Aggregate Governance | ||
| 3.5 | Income per Capita and Improvements in Institutions | ||
| 3.6 | Growth and Improvements in Institutions and Policies | ||
| 3.7 | Growth Volatility and Improvements in Institutions and Policies | ||
| 3.8 | Income per Capita and Policies | ||
| 3.9 | Growth, Institutions, and Policies | ||
| 3.10 | Changes in the Rule of Law | ||
| |||
| Chapter
IV. 271k pdf file | Unemployment and Labor Market Institutions: Why Reforms Pay Off? | ||
| Why Do We Need Labor Market Institutions? | |||
| Is High Unemployment a Structural Problem? | |||
| What Is the Effect of Labor Market Institutions on Unemployment? | |||
| What Are the Quantitative Benefits of Reforms? | |||
| Appendix 4.1. An Empirical Model of Unemployment | |||
| References | |||
| Boxes | |||
| 4.1 | Regional Disparities in Unemployment | ||
| 4.2 | Labor Market Reforms in the European Union | ||
| 4.3 | The Global Economy Model | ||
| Tables | |||
| 4.1 | Three Popular Measures and Their Estimated Effect on the Unemployment Rate | ||
| 4.2 | Long-Run Effects of More Competition-Friendly Policies in the Euro Area | ||
| 4.3 | Estimated Effects of Labor Market Institutions on Unemployment in a Panel of 20 OECD Countries, 1960–98 | ||
| Figures | |||
| 4.1 | Actual and Structural Unemployment Rates | ||
| 4.2 | Unemployment and Participation Rates | ||
| 4.3 | Unemployment and Vacancy Rates | ||
| 4.4 | Institution-Adjusted Unemployment Rates | ||
| 4.5 | Changes in Labor Market Institutions and Unemployment Rates | ||
| 4.6 | More Employment-Friendly Labor Market Institutions and Unemployment | ||
| 160k pdf file | Annex: Summing Up by the Chairman | ||
| 602k pdf file | Statistical Appendix | ||
| Assumptions | |||
| What's New | |||
| Data and Conventions | |||
| Classification of Countries | |||
| General Features and Compositions of Groups in the World Economic Outlook Classification | |||
| Box | |||
| A.1 | Economic Policy Assumptions Underlying the Projections for Selected Advanced Economies | ||
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| World Economic Outlook and Staff Studies for the World Economic Outlook, Selected Topics | |||
