The Maturation of the East Asian Miracle
Michael Walton
The sustainability of the East Asian miracle is being questioned as the region's economies are buffeted by problems. What are the problems, and how can East Asian countries cope with them to maximize their chances of continuing their rapid growth?

Japanese Foreign Direct Investment and Regional Trade
Tamim Bayoumi and Gabrielle Lipworth
Japan's foreign direct investment abroad has boomed over the past decade as many Japanese companies have set up production facilities overseas. What impact has this had on Japan's manufacturing sector and trade patterns, and is it likely to continue?

World Development Report

The State in a Changing World
Ajay Chhibber
The state has an important role to play in economic and social development as a partner, catalyst, and facilitator. An effective—not a minimalist—state is needed to provide the goods and services—and rules and institutions—that allow markets to flourish and people to lead healthier, happier lives.

How Can States Foster Markets?
Brian Levy
Governments can encourage market development by clearly defining property rights, ensuring a sound regulatory framework, and pursuing industrial policies. But what they do in these areas should be determined by their institutional capability.

Improving the State's Institutional Capability
Sanjay Pradhan
An effective government is necessary for economic development. But states may intervene in economic activity in ways that are harmful. What is needed are mechanisms that enable the state to act in the public interest and that check arbitrary and corrupt actions.

Efficient Public Sector Downsizing
Martín Rama
Public sector downsizing is an important part of many developing countries' economic reform efforts. Carrying out downsizing operations successfully is not easy, however, and requires careful analysis, planning, and implementation.

European Monetary Union

What Impact Will EMU Have on European Securities Markets?
Alessandro Prati and Garry J. Schinasi
The introduction of the euro will create opportunities for greater integration of Europe's financial markets. If integration and efficiency gains are achieved, Europe's securities markets could rival US markets in size and efficiency.

Also in this Issue

Reforming Legal Systems in Developing and Transition Countries
Cheryl W. Gray
A weak legal system can undercut efforts to develop a modern, market-oriented economy. What is the relationship between legal reform and economic reform, and what specific steps can countries take to encourage the former?

Financial Sector Reforms in Morocco and Tunisia
Abdelali Jbili, Klaus Enders, and Volker Treichel
Morocco and Tunisia have made determined efforts over the past decade to reform their financial systems. How much progress have they made, and what remains to be done to ensure that their financial sectors efficiently mobilize and allocate savings?

Departments

Letter from the Editor

World Economy in Transition
Experience Under the IMF's Enhanced Structural Adjustment Facility
IMF's Policy Development and Review Department

Development Focus
The Real Plan, Poverty, and Income Distribution in Brazil
Benedict Clements

Books

A Primer on Securitization, edited by Leon T. Kendall and Michael J. Fishman
reviewed by Harald Hirschhofer

Can We Afford to Grow Older? by Richard Disney
reviewed by Olivia S. Mitchell

Give Us Credit: How Mohammad Yunus's Micro-Lending Revolution Is Empowering Women from Bangladesh to Chicago by Alex Counts
Women at the Center: Grameen Bank Borrowers After One Decade by Helen Todd
reviewed by Thomas Dichter

The Pan-American Dream: Do Latin America's Cultural Values Discourage True Partnership with the United States and Canada? by Lawrence E. Harrison
reviewed by William Easterly

Securing Employer-Based Pensions: An International Perspective, edited by Zvi Bodie, Olivia S. Mitchell, and John A. Turner
reviewed by Albert Jaeger