This study assesses the strengths and weaknesses of reforms in the banking and insurance industries. Banking sector performance is analysed using various indicators as well as Principle Component Analysis techniques. A comparative case study of three banks with different ownership structures is presented. The study concludes with important conclusions and policy implications for future reforms based on the findings.

This study reviews the development of the banking and insurance sectors in Nepal and the effect of reforms and commitments linked to these sectors since the 1980s, when financial sector liberalization in Nepal began with deregulation of the interest rate structure and opening of the banking sector to foreign investors. Now, three fourth of foreign equity participation is permissible in the banking sector. The insurance sector is almost fully liberalized with 100 per cent foreign equity participation on a case by case basis.

This study reviews the development of the banking and insurance sectors in Malaysia since the 1980s, with a particular attention to the effects and sequencing of the various reforms as well as the impact of services trade liberalization and related commitments. Over the 31 years since independence in 1957, the Malaysian economy transformed itself from an agriculture based, to a manufacturing one. This was the result of maintaining an open and liberal trading regime with responsible economic policies to meet the challenges of internal and external imbalances.

This paper draws from three country case studies of the liberalization and development of the banking and insurance service sectors in Bangladesh, Nepal and Malaysia, which were undertaken as part of an ARTNeT regional study on trade in services led by the author. The paper first explores the relationship between financial and economic development, and the causality between service sector liberalization and financial deepening.

Literature on FDI and trade has mainly concentrated on export-substituting or export-complementary nature of foreign direct investment (FDI). However, the relationship between FDI and trade has become far more complex in the current WTO regime wherein several developing countries have initiated import liberalisation and entered into trading arrangements. These have drastically reduced trading costs and encouraged trade.

During the last decade, the services sector has seen modest liberalization on account of removal of trade and investment barriers. Most of the WTO members are committed to multilateral liberalization in services trade. However, within trade in services sector, the liberalization of education services has seen little progress. Education services sector liberalization exerts an economy-wide influence as they constitute strong inputs to all other economic activities, including trade. Some earlier studies identified several challenges related to the implementation of GATS commitments.

Among the 14 Pacific island countries (PICs), Fiji, with its relatively better endowments in land and human resources as well as physical infrastructure, has been one of the ten favourite destinations of foreign direct investment (FDI) in Asia-Pacific. Past studies confirm that FDI contributed to economic growth of Fiji. Firstly, it added to domestic savings and reduced the resource gaps and cushioned them against possible adverse effects of current account deficits.

Agriculture has been the most protected and distorted sector in the AsiaPacific region similar to many regions in the world. Many countries in the region are currently following a combined approach to agricultural trade reform. While many of them have been making some progress towards multilateral trade liberalisation through the WTO trade negotiations and regional trade liberalisation through RTAs, they have been successful in concluding a large number of BTAs. A growing amount of research is now being conducted on the effects of agricultural trade liberalisation.

The improved terms of trade for Indonesia, as a result of the sharp exchange rate depreciation after the 1997/98 economic crisis, was expected to improve the country’s export performance. As documented by some studies, however, the evidence conflicts the prediction. Although some explanations have been offered in the literature, those which focus on firm behaviour are scarce, and almost all of these concentrate on macroeconomic factors.

The term of “information society” was first introduced by Malchup and Porat in the 1970s. Since then information has increasingly been considered as a critical factor in the development process. Various scholars have used information deficiencies to explain development differences among countries and argued that information and communication technologies (ICTs) 1 may facilitate and speed up the development process by providing cheaper and more efficient ways and tools of information gathering, processing and dissemination.