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Financial management indicators to aid decision making (statistics).

Monitored by Om Sai Ram Centre for Financial Management Research Mumbai, INDIA


Year      Debit/     Debt/    Debt/     Public    Deficit
           GNP        GNP      GNP     Losses/    Primary
         Domestic   Foreign   Sector   GNP Duty     GNP
           (%)        (%)      (%)       (%)        (%)

1990       14.4      32.2      28.7       0.0      -3.6
1991       15.4      32.2      35.1       0.0      -6.2
1992       17.6      34.7      35.8       0.0      -7.0
1993       17.9      37.0      35.1       0.7      -5.6
1994       20.6      50.1      45.1       1.9      -0.2
1995       17.3      42.6      41.3       2.1       2.7
1996       21.0      43.2      46.4       4.2      -1.2
1997       21.4      44 *      42.9       5.2      -2.1
1998       21.9      47 *      43.7      11.4       0.5
1999       29.3      54 *      61.4      16.7      -1.9
2000       28.0 *    57 *      60.8      13.9       2.9
2001-3               71 *      78.1E

Year     Interest/    Growth       Real        Number     No. of
          tax GNP    Interest     Rates      Civil Ser-   Workers
          Revenue               Contracted   vants and
            (%)        (%)         (%)       Employees

1990       30.76       9.4          --        212.157     430.901
1991       30.61       0.3          --        209.216     421.397
1992       28.46       6.4        13.27       203.070     409.138
1993       44.07       8.1        11.21       205.308     393.936
1994       50.75      -6.1        79.17       193,797     361,314
1995       53.13      -0.3        29.71       178.159     361,193
1996       66.73       0.6        37.64       157.439     311,230
1997       48.00       8.5        18.29       174.665     288.736
1998       66.90       3.9        30.57
1999       72.40      -6.1        32.71
2000       77.09       6.1        14.04
2001-3               -11.8 #

Sources: Under Secretarial of Treasury and Central Bank, Domestic
Debt/GNP, Foreign Debt/GNP, Duty Losses/GNP, Public Sector Debt/
GNP, Primary Deficit/GNP, Interest/Tax Revenue, GNP Growth, Real
Interest rates; New Economic porgramme; number of employees in
SEEs, * Egilmez Mahfi, the Radikal, Pril 24, 2001; E; Estimate for
2001; # As of second quarter of 2001.

B. BOOMING TURKISH ECONOMY: 1970-1990 (US$ million)

Year      1970    1973    1976    1987    1980

Exports   588     1,317   1,960   2,288   2,910
Imports   948     2,086   4,872   4,369   7,513
FDI        58 *    --      --      --        18

Year      1981    1983     1985     1988     1990

Exports   4,703   5,905    8,255   11,929   13,026
Imports   8,567   8,895   11,230   13,706   22,581
FDI         141      87      158      387      788

Note: * Total capital flow, both inflow and outflow

Source: State Planning Organisation,


Year          1991     1992     1993     1994     1995

Exports      13,593   14,715   15,345   18,106   21,637
Imports      21,947   22,871   29,428   23,270   35,709
FDI             910      912      797      937      935
FDI ouflow      127      133      175       78      163

Year          1996     1997     1998     1999     2000

Exports      23,224   26,261   26,974   26,587   27,485
Imports      43,627   48,559   45,921   40,687   54,150
FDI             937      873      982      823     1307 *
FDI ouflow      325      319      409      685      718 *

Note: * January-October

Source: Central Bank, State Planning Organization



(US$ million)

Item                       Minimum   Median   Maximum

  Face value of debt
  swapped                    1.1      21.1     197.5
  Market value of equity
  issued                     0.9      15.1     164.4
  Reported swap gain        -2.2      4.8      87.3
  Coupon on bonds
  swapped (%)               3.75      8.1      14.25
  Numbers of years to
  maturity for bonds
  swapped                   0.25      15.1     28.2
  Book value of debt
  defeased                   1.8      21.4     550.0
  Cost of riskless
  securities                 2.2      19.6     550.0
  Reported defeasance
  gain                      -12.4     0.7      132.0
  Coupon on bonds
  defeased (%)               3.0      7.9      14.4
  Number of years to
  maturity for bonds
  defeased                  0.04      6.2      90.0

(US$ million)

Item                               Year before   Year of    Year after
                                   Defeasance   Defeasance  Defeasance

Cash and Marketable Securities
  Defeasing firms                    610.4        593.4        643.3
  Matched firms                      324.0        325.3        347.1
Long-term Debt issued
  Defeasing firms                    141.4        107.8        164.2
  Matched firms                      156.4        280.9        656.4
Common and Preferred Stock Issued
  Defeasing firms                     30.5         47.3         22.2
  Matched firms                       32.0         14.7         31.2
Debt/Equity Ratio
  Defeasing firms                     0.74         0.78         1.14
  Matched firms                       0.64         0.59         0.46

(US$ Million)

Item                       Swaps    Defeasance

Mean abnormal return (%)    -1.3      -0.86
                           (-7.9)     (-2.4)
Mean abnormal return (%)     69         66

Sources :

Hand J. R. M. & Hughes, P., The Motives and Consequences of Debt-Equity
Swaps and Defeasances: More Evidence that it does not pay to
Manipulate Earnings, Journal of Applied Corporate Finance (Fall 1990).


In a debt-equity swap, an investment banker purchases a company's bonds in the open market, exchanges those bonds for a new issue of the company's common stock, and then sells the stock to investors. A swap thus combines a new equity issue with a retirement of debt. Because the difference between the book and market values of retired bonds is included in reported earnings, debt-equity swaps increase earnings during periods of high interest rates.

However, there is no corresponding increase in corporate cash now. And in fact the reduction in interest tax shields that accompanies debt-equity swaps may actually reduce after-tax operating cash flow. In addition to higher corporate taxes, an additional cost of debt-equity swaps are investment banker fees that average close to four percent of the market value of the newly issued stock.

In an insubstance defeasance, a company buys government securities with cash payouts identical in amount and timing to those promised by some of its own outstanding bonds. The government securities are then placed with a trustee who services the company's bonds using the cash flows from the government securities. While the defeased bonds remain outstanding and continue to trade, they are removed from the firm's balance sheet, and the difference between the book value of the defeased bonds and the cost of the government securities is included in earnings.



   Direct Material Costs      Product P    Product Q
                                $45.00       $40.00

Machine A                     15 minutes   10 minutes
Machine B                     15 minutes   30 minutes
Machine C                     15 minutes    5 minutes
Machine D                     15 minutes    5 minutes
Total Machine Time Per Unit   60 minutes   50 minutes


Machine hours used per week:

80 units of P @ 60 minutes per unit = 4,800 minutes
24 units of Q @ 50 minutes per unit = 1.200 minutes
                                      6,000 minutes/

Cost per machine hour: $6,000/6,000 minutes = $ 1.00 per

    Direct Material Costs        Product P   Product Q
                                    ($)         ($)

Raw Materials                      45.00       40.00
Machine A at $1.00 per minute      15.00       10.00
Machine B at $ 1.00 per minute     15.00       30.00
Machine C at $1.00 per minute      15.00        5.00
Machine D at $ 1.00 per minute     15.00        5.00
Product cost per unit             105.00       90.00


Factory overhead costs per week: $6,000
Machine hours used per week:

100 units of P @ 60 minutes per unit = 6,000 minutes
30 units of Q @ 50 minutes per unit  = 1.500 minutes
                                       7,500 minutes/

Cost per machine hour: $6,000/7,500 minutes = $80
per minute

Direct Material Costs         Product P   Product Q
                                 ($)         ($)

Raw Materials                   45.00       40.00
Machine A at 80c per minute     12.00        8.00
Machine B at 80c per minute     12.00       24.00
Machine C at 80c per minute     12.00        4.00
Machine D at 80c per minute     12.00        4.00
Product cost per unit           93.00       80.00


i) Baxendale, S. J., Activity-based Costing for the Small Business
A Pruner, Business Horizons (January-February 2001).

ii) Fonscka, L., management Accountants as Designers and Controllers
of Performance Measurement Systems Management Accountant: The I.C.M.A.
of Pakistan (November-December 2005).

iii) Sharman F. The Case for Management Accounting, Management
Accountant: The I.C.M. A. of Pakistan (November-December 2005).


The term "traditional" is used to describe the accountings system designed primarily to meet the need of investors, lenders, and income tax authorities. Such a system is characterized by absorption costing. Absorption costing takes its name from the manner? in which inventory is valued for reporting on the balance sheet and the cost of goods sold is valued for reporting in the income statement--in other words, the manner in which products "absorb" cost as they are manufactured.

Using absorption costing, the product costs include only the costs of manufacture, not those of marketing and distribution costs as having been expensed during the accounting period in which the costs are incurred, rather than including them in the cost of items in the ending inventory. Thus, if the enterpreneur or small business owner were to ask the accountant for the cost per unit of each type of product made, the accountant's answer would most likely be expressed in terms of absorption costing and would include only manufacturing costs.

It is based on the assumption that as a product is manufactured, it absorbs the costs of the direct materials that become a part of it, the labor used in making it, and the overhead costs associated with its production, which include depreciation on the machinery and the facilities, supervisory costs, heat and electricity, and many other costs related to operating the firm. The assumption behind absorption costing is that these expenses are necessary for the product to be manufactured, so each should attach itself to, or be absorbed by, the product being manufactured.

Distortions Caused by Absorption Costing

The manner in which manufacturing overhead attaches itself to the product in product costing. Unlike direct material costs, which tend to vary in direct proportion to the number of units manufactured, factory overhead is most often a fixed cost. Manufacturing overhead is incurred in the form of depreciation expense or supervisory salaries. If production volumes are lower in one accounting period, manufacturing overhead is not likely to be lowered commensurately, or even at all. This inclusion of both direct costs (direct materials) and fixed costs (factory overhead) causes a product costing distortion that has the potential of misleading an entrepreneur or owner/manager trying to run a small business.

On the other hand, if the owner of a small service firm were to ask the accountant for the cost per unit of each type of services produced, the accountant would probably be at a complete loss as to how to respond. This is true because service firms typically have no cost accounting system to attribute costs to each of the various services provided. To demonstrate the distortion caused by absorption costing, it is necessary to use a simple example in which a new venture manufactures two products using four different machines. The cost of raw materials for each product and the amount of time each product requires of each machine are indicated in Table 3A.

We shall assume further that the costs associated with the factory are $6000 per week and include the wages of the machine operators, the depreciation on the machines and building, supervisor salaries, and the electricity to power the machines. The $6,000 weekly cost will be absorbed by the products that are produced during the week. Using the simplest basis of cost allocation, the $6,000 of fixed overhead costs could be allocated to the products based on the number of units produced during the week. If Product P accounted for 75 per cent of the number of units produced, 75 per cent of the $6,000 would be allocated to it. However, an allocation of the factory overhead costs based on units of production could be distorting because Product P uses 60 minutes of machine time compared to 50 minutes for Product Q. Thus, an allocation of factory costs based on machine time is likely to result in a more equitable allocation of costs between the two products using absorption costing.

Table 3B shows the calculation of product costs for Products P and Q using this method of allocation, assuming that 100 units of P and 30 units of Q are made each week. The absorption cost is $93 per unit for Product P and $80 per unit for Product Q. However, if the weekly production were 80 units of Product P and 24 units of Product the cost per unit would be as shown in Table 3C. A comparison of Tables 3B and 3C shows that when the number of units produced decreases while the fixed overhead costs remain unchanged, the cost per unit increases. In this example, when the unit production of Product P decreased by 20 units per week, the cost per unit increased from $93 to $ 105. A six-unit decrease in Product Q resulted in a cost per unit rise of $ 10.

Absorption costing, then, causes the cost per unit to fluctuate as the production level changes. If the number of units produced increases, the cost per unit decreases, and vice versa. This fluctuating cost can frustrate those attempting to coordinate marketing and production. Given a fixed selling price, the fluctuating product cost from one accounting period to the next would make it difficult to develop marketing strategies for pricing and promotion. A product that seemed profitable in one accounting period when production was high could be unprofitable in another period with a decline in production. The absence of a cost accounting system in a service firm is particularly troublesome when one considers that most of the firm's costs are fixed costs that are not directly identified with a particular service provided. Manufacturing companies have raw material costs that are directly associated with a product. But nearly all the costs of a service firm are incurred to support all the services it offers. The lack of direct costs dictates that any accounting system designed to determine the cost of each type of service would have to rely on a method of allocating such costs.

Need for Activity-Based Costing

Here is where Activity-Based Costing of ABC, comes to the rescue. ABC is a method for allocating costs to products and service. 'The example used to describe it is based on manufacturing situation. However the identification of activities, specification of cost drivers for each activity, calculation of charging rates for each activity, and allocation of costs to each product/service is the same for both manufacturers and service firms. The same is true for the described isolation of unused capacity costs. ABC is an alternative that supplements use absorption costing method required for external reporting to investors, lenders, and income tax authorities. It is highly appropriate as a basis for preparing accounting information intended to be used in tactical and strategic planning and decision making for a new business venture

Activity-Based Costing and Activity-Based Management

The development of activity-based costing (ABC and activity-based management (ABM) has led to radical changes, in cost management systems. The focus of ABC is on the activities and processes within an organisations, and is based on the principle that by controlling the activities that consume resources, costs can be controlled at source. After ABC has provided accurate information about the true costs of those activities. ABM makes use of this information through value analysis and performance measures, which support, strategic and operational decision making.

60 per cent U.S. Corporations Have Attempted ABC: Only 20 per cent Have Sustained ABC

Bain and Company report that their own recent survey demonstrates, that activity-based costing (ABC) has been attempted by perhaps as many as 60 per cent of organizations in the U.S. A., but that only 20 per cent have sustained it. Therefore, the large majority of ABC implementations weren't sustained. Another survey by the RCA interest group of CAM-I demonstrated that only 30 of 145 respondents employ ABC. Perhaps the most interesting finding of both surveys is that 80 per cent of organisations continue to use old-style full absorption standard costing, absorption, or full absorption costing methods (i.e., traditional cost-allocation systems). This is interesting because the primary objective of ABC was to correct the distortion created by traditional cost allocation. If 60 per cent of organisations have tried ABC, but most haven't replaced their traditional allocation system, then we must assume that there were insufficient reasons to make the change. Many articles, books, and case studies address ABC. When viewed as a whole, it becomes possible to draw some insight, on why ABC has not been sustained. A frequently cited reason is that ABC systems design was too complex, That may be true, but there are other things to be noted also. In Practice, ABC Implementation has failed because Software was not IT integrated. Accountants and operating managers want cost accounting to be part of their integrated general ledger, monthly reporting, analysis, performance measurement, and the associated network of operational systems. Small start-up companies developed ABC systems, generally in the late 1980s, as PC-based modelling tools. To this day they haven't been integrated enterprise-wide.

ABC/M/B/P applications are generally not integrated into organisation measurement and management systems. Central to managers going about their business is accountability for their actions. Accountability is accomplished by having managers develop a plan, act upon the plan, and then monitor their performance. Because ABC was largely deployed as a retrospective modelling analysis of prior-period results (often too late to be of any relevance), managers weren't required to use ABC logic as part of the planning process. Successful applications of ABC use it to do planning.

Most applications have been implemented poorly. The most daunting problem has to be the lack of agreement of what ABC is and how it should be deployed. No institution took responsibility for developing standards for the development and deployment of ABC early in the process. Every consultant, software company, and author took it upon himself or herself to become the definitive source. Yet the most successful were the ones with the best connections, not necessarily the greatest experience and competence. It has been quite common to see the presidents of ABC software companies making presentations on the subject to define, what they perceived as appropriate practices for ABC, and yet none of them had any management accounting experience. Writings are awash with advice on how to do and how not to do ABC. There's little consistency. Certainly, there hasn't been a serious process for the development, exposure, and creation of consensus of what represents good practice.

The frustrating part of ABC's lack of sustainment is that it remains a good and valid analytic methodology. The methodology needs to be incorporated into future management accounting practices, but in such a way as to overcome the causes of its lack of sustainment. Furthermore, all those managers in 60 per cent of the organisations, who have already tried but failed to sustain. ABC, need a better solution,

60 per cent U.S. corporations have attempted ABC: only 20 per cent have sustained ABC for the following reasons:

* The Balanced Scorecard introduced by Robert Kaplan of the Harvard Business School is one of the most popular techniques and comprises four perspectives of Corporate Performance

* Financial perspective--measures performance in re-lation to shareholder value-creation.

* Customers perspective--in terms of value-addition to existing and new customers.

* Internal business perspective--performance in rela-tion to internal operations and processes.

* Innovation and learning perspective--in terms of value-creation for the future.

Balanced Scorecard (BSC) attempts to integrate traditional financial performance, measures with contemporary non-financial performance measures. It recognises the importance of the financial statement information as a means of performance measurement, but recognises its limitations and supplements it with additional qualitative indicators, that measure long-term performance. The four perspectives of the Balanced Scorecard would help design of performance measures, that strike a balance between short-term financial performance with long-term non-financial measures. Balanced Scorecard can act as both, a control system and a management tool--in other words, it can be used for monitoring performance as well as for strategic planning.


Total No. of                         Total No. of
small and Medium                     enterprises
Enterprises Newly      of which:     which were
Established in East    industrial    involved           Total No. of
Germany (since 1990)   enterprises   In privatization   MBOs
(No.)                  (No.)         (No.)              (NO.)
(1)                    (2)           (3)                (4)

480000                 12000         15102              2983

       MBOs as per cent of
       total number of (%)
                                    Total No. of
Small of medium     Enterprise      industrial
sized Enterprises   involved in     (employment)
in East Germany     privatization   jobs generated
(3 + 1) (%)         (4 / 3) (%)     by MBOs
(5)                 (6)             (7)

0.6                 19.75           69000

                                   No. of
                    MBOs share     enterprises
                    of total       by MBOs
Total               employment     as per cent
employment by       in small and   of all
small-and medium-   medium-sized   enterprises
sized Enterprises   Industrial     in East
in East Germany     Enterprises    Germany
(No.)               (7 - 8) (%)    (%)
(8)                 (9)            (10)

600000              115            75


(1.) MBOs are only a small percentage--approximately 0.6 per
cent--of all Small and Medium-Sized Enterprises in East Germany

(2.) 2700 MBOs accounted for a share of 6750 East German

(3.) About 20 per cent of all cases of privatization were MBOs.

(4.) In 66 per cent of all MBOs the purshasers were East German
managers who bought their own firm(s).

(5.) During its active life (July 1, 1990 through December 31,
1994). Treuhandshalt sold 15102 keysector enterprises to private
investors--Treuhand was responsible for a complete sell out of
East German firms to West Germany,


Name and Date of   Items Purchased     No.      Turnover       No. of
Establishment                          of     (DM Million)    Employees
                                      Firms      & Year

Horst Plaschna     Electrical           9       3470 (1992)    10.033
  KG (September      motors (and
  1992)              other items)
HW Urban KG        Machines,            9       1521 (1993)     4.365
  (May 1992)         machine
EREL Verwaltungs   Steel heavy         18       1763 (1993)     4.803
  KG (February       machinery,
  1993)              electrical
EFBE Verwaltungs   Cars, motors,       12       1970 (1993)     5.195
  KG (February       metal and
  1993)              machines
Schroder and       Textiles,           13     1,8144 (1993)     2.758
  Partners KG        leather goods,
  (February          furniture,
  1993)              electronic


* On the Government side a special public enterprise is incharge
of management KG's, viz., the Participation Management Company
Berlin (BMGB)


(1.) Personal communication: Treuhandanstalt. HOST Data Bank:

(2.) Bos. D & Kayser. G .. Management buy-out as an instrument of
privatization in East Germany in Bennett. A., Does Privatization
Work? (London/New York 1997)

(3.) Bos. D. & Kayser. G., Management Limited Partnerships (KGs)
and the privatization of East German industrial enterprises Annals
of Public and Cooperative Economics (1:1997).


Privatization in East Germany started with the establishment of a Government Agency which was made responsible for privatizing and restructuring of public property---Treuhandanstalt had already been founded in the former German Democratic Republic and was afterwards reorganized by a law of June 1990 which came into effect at the same time as the treaty on the monetary, economic and social union between the Federal Republic of Germany and the German Democratic Republic. During its active life (1 July 1990 until 31 December 1994). Treuhand sold 15,102 key-sector enterprises to private investors.

At the start of the Treuhand's activities it sold only to West German investors or to investors from other western countries. East German investors could not buy firms because they lacked capital and because of the unwillingness of the banks to grant credits to East Germans. This situation caused dissatisfaction in the East German population which, in turn, caused the policy-makers to act. As early as November 1990, the Prime Minister of the State of Saxony, in his inaugural policy statement, said there was fear that the Treuhandstalt would make East Germany into a country of subsidiaries. After the first month's of the Treuhand's activity (July-October 1990), if became clear that it was doing nothing to promote the establishment of small and medium-sized enterprises. Potential East German investors clearly recognized that their chances to get hold of Treuhand-owned firms would increase considerably if smaller and medium-sized enterprises were offered for sale.

Treuhand started the so called 'small privatization' in October 1990. A company for the privatization of trade (GPH) was established. This company was in charge of the sale of about thirty thousand retail and wholesale trade firms, restaurants, hotels, cinemas and pharmacies which formerly belonged to the government trade organization. The company for the privatization of trade used the fifteen regional branch offices of Treuhandanstalt to sell these small firms and succeeded in completing its activities and by June-end 1991. Approximately 70 per cent of these firms were sold to East German investors. In most cases the manger who actually ran the small firm bought it from the GPH. The 'small privatization' accordingly was a first step on the way to increasing East German participation in the ownership of firms. As early as May 1991, some experts praised the management buy-out (MBO) as the ideal instrument to achieve the following objectives:

* to force the development of small and medium-sized enterprises-in East Germany;

* to bring about East German ownership of East German enterprises atleast in part;

* to achieve employee participation, at least in some of the privatized firms.

At the end of 1994, the Federal Ministry of Economics published the figure of 3.2 million as the number of jobs in small and medium-sized enterprises in East Germany. Although the Treuhandanstalt dit not publish any figures but by extrapolating, All MBOS taken together employed something like 216000 employees, accounting for 6.7 per cent of all jobs in small and Medium-sized Enterprises in East Germany. Approximately 15 per cent of all MBOS involved employee participation, resulting in the latest available (1996) figure of approximately 400 new firms in East Germany in which employees share in the firm's property on profit. MBOs played a significant, role in the economic restructuring of East Germany and they were instrumental in enabling East German investors to obtain ownership of industrial firms.

Though the Treuhand--the German agency responsible for the privatization and restructuring of key-sector enterprises of the former East Germany--officially finished its operations at the end of 1994, effective January 1995 the Treuhand was renamed the Federal Agency for Special Problems Arising from Unification (BVS). In September 1994. the Treuhandanstalt established a consolidation fund of DM 500 Million, financed from revenues from the sale of enterprises--The fund is to be used to grant long-term low-interest credits of up to DM 2 million per enterprise to privatized (former Treuhand) firms. These credits are used primarily for MBOs, a concession to their significance in the economic development of East Germany

Inspite of the highly acclaimed completion of privatization of these key-sector firms, the Treuhand in fact had not privatized some firms, but shifted them to the so called management KGs, which are still preparing these firms for restructuring and privatization. On the government side a special public enterprise is in charge of these management KGs, namely the Participation Management Company Berlin (BMGB).--This special-task institution had been part of the Treuhand with the same name, and its, employees still tend to denominate themselves as part of Treuhand. Hence, inspire of official claims, there is still a German institution responsible for the restructuring and privatization of East German key-sector enterprises. The establishment of management KGs (developed by the Treuhand) was approved by the Federal Minister of Finance in July 1992 whose success on economic front is yet to be realized. Whereas the Treuhand consistently liquidates firms for which no buyer comes forward, such firms are consistently restructured in the management KGs in the management KGs at any cost. This restructuring and privatizing of firms is slow and costly. According to press releases, by the end of 1994, the Treuhand spent DM 4 billion on subsidies to the management KGs: another DM 1.25 billion was expected to be spent over the four-year period 1995-98.

* The Plaschna KG consisted of eight medium-sized enterprises from various sectors, and one large firm (YEM), which had about 5.858 employees, that is, more than 58 per cent of the total of 10,033 employees of Plaschna KG.--Plaschna KG concentrated on the production of electrical motors, and was not as diversified as management KGs were supposed to be. By September 1995. Plaschna KG had sold more than 70 firms and units out of its portfolio, with a total of 3,464 employees transferred to the new firm owners. Privatization transactions led to investment commitments of DM 492.4 million.

* Urban KG sold four firms and three units out of its inventory but kept at 1East 943 employees. Investments of DM 60.1 million were committed. By the end of April 1996 Urban KG finished its operations.

* EREL KG until the end of 1995 had sold one firm and had at least signed contracts for the privatization of three firms out of its stock. The private investors agreed to retain 596 employees and to invest a total of DM 49.9 million.

* Schroder KG sold two firms and one unit out of its stock and saved 407 jobs. Investment commitments of DM 12.4 million were the result of these transactions.

* Totally different is the story of the EFBE KG.--Instead of the usual privatization of single firms or parts of firms, the entire management KG was privatized on 1 January 1995. After appropriate tendering, it was sold to a team of five managers according to Treuhand privatization procedures, that is, job and investment commitments to be undertaken by the investors, and equity infusions and financial investment support to be given by the Treuhand until 1997. In any case, this privatization led to the establishment of a private holding company, which started restructuring its enterprises in January 1995 and led to 1,700 job commitments and to investment commitments of DM 80 million.

In sum, restructuring by all management KGs led to 7,110 job commitments (23.6 percent of the 30.154 employees under the control of the management KGs) and to investment commitments of DM 695.6 million.

* We are grateful to the International Center for Public Enterprises in Developing Countries for making available to Om Sai Ram Centre for Financial Management Research, in the spirit of goodwill and, under exchange agreement, selected papers submitted to the International Expert Meeting on Integrated Coastal Area Management in the Mediterranean/Adriatic Region (ICAM/MIA) held in Ljubljana (Slovenia) in November 1995. In particular, we wish to express our profound thanks to Professor Dusan Strahinga of Croatia and Adviser Jan van Ettinger (of the Netherlands) for making their most recent studies which have high topical relevance in the context of development of OPEC (oil-rich) vis-a-vis non-OPEC (oil-deficit) countries, available to us.


Indicator                                      Unit    1981      1991

Total population of the                     Million   333.3     387.3
  Mediterranean countries                         "      81        97
  of which: Population
  settled around
  Meditteranean region
GDP                                   US $ trillion     1.7        97
Major Ports                                      No      --        30
Goods loaded                           Million tons   452.4       580
Goods unloaded                                    "   665.6     754.3
Total exports                          US $ billion   284.5     534.6
of which: exports to                              "    81.4     156.9
  Mediterranean countries
Total imports                                     "   352.0     629.7
of which: Imports from                            "    77.2     159.9
  Mediterranean countries
Tourism                      Millions of overnights   143.3     174.2
Tanker operations                               DWD      --   450,000
Employment in manufacturing                 Million    21.2      23.0


Country             Reserves    R/P        Resource
                      (Mt)     Yearly    Possibilities

Spain                 4.7       2.6           --
France                31.0      10.6          --
Italy                130.0      50.1          --
Former Yugoslavia     36.0      8.6           --
Greece                 32       2.6           --
Turkey                19.0      8.1           --
Syria                201.0      20.8     135-270-1,650
Egypt                616.0      15.1     135-270-1,650
Libya               3,120.0     63.2     500-800-2,000
Tunisia              238.0      43.4     135-270-1,200
Algeria              660.0      13.2      70-200-700
Mediterranean       5,065.0     29.7    900-1,600-5,600


Country                      Capacity
and No. of refineries      (In Barreis)

Algeria (4)                  464,000
Cyprus (1)                    17,100
Egypt (8)                    488,203
France (14)                 1,878,970
Greece (5)                   384,000
Israel(2)                    180,000
Italy (2)                   2,450,000
Jordan (1)                   100,000
Lebanon (2)                   37,000
Libya (3)                    329,000
Morocco (2)                  154,600
Portugal (3)                 254,000
Spain (10)                  1,285,000
Syria (2)                    243,744
Tunisia (1)                   34,000
Turkey (5)                   724,654
Former Yugoslavia (7)        609,135
Total Mediterranean (89)    9,633,406


(a) Tr = Traditional (woodfuel, crop residues and animal dung: Co
= Coal, 01 = Oil, NG = Natural Gas; [summation]F = Total Fossils,
AI = Alternatives (Nuclear hydro and new renewables): % = per
cent of [summation]energ: [summation]Ener = Total
[summation]energy, Popul = Population, GNP = Gross National
Product in 1989; Cap = Capita.

(b) Ratified by the UN FCCC (as of June 5, 1995)

(c) Data on Croatia, Macedonia and Slovenia for 1993 and
commercial energy only


Year                             1990 in Mtoe

Countries                   Cons.   Prod.   Reserve

France                       26       3       34
Greece                        0       0        1
Italy                        39      16       296
Spain                         5       1       20
Turkey                        3       0       29
Sub Total (A)                74      20       380
North / West                 837     737    11,716

Albania                       0       0       18
Algeria                      14      44      2,923
Egypt                         6       6       316
Israel                        0       0        0
Libya                         4       5      1,096
Morocco                       0       0        1
Syria                         I       1       140
Tunisia                       1       0       76
Konner-Yugoslavia & Bonia     5       2       74

Sub Total (B)                33      60      4,645
Total (A + B)                107     80      5,025

World                       1,768   1,790   107,462

Year                             1994 in Mtoe

Countries                   Cons.   Prod.   Reserve

France                       28       3       33
Greece                        0       0        8
Italy                        41      18       336
Spain                         6       1       17
Turkey                        6       0        9
Sub Total (A)                81      22       403
North / West                 935     830    11,639

Albania                       0       0        2
Algeria                      17      45      3,262
Egypt                         9      10       492
Israel                        0       0        0
Libya                         4       6      1,167
Morocco                       0       0        1
Syria                         1       1       178
Tunisia                       2       0       27
Konner-Yugoslavia & Bonia     4       2       72

Sub Total (B)                38      65      5,202
Total (A + B)                119     87      5,605

World                       1,824   1,874   126,922

Year                         1990-1994 in %/a

Countries                   Cons.   Prod.   Reserve

France                       1.2     0.6     -0.1
Greece                      -28.1   -5.0     58.8
Italy                        1.1     3.8      3.2
Spain                        6.6    -11.7    -3.7
Turkey                      17.8    -1.3     -24.6
Sub Total (A)                2.4     2.5      1.5
North / West                 2.8     3.0     -0.2

Albania                     -29.3   -29.3    -43.8
Algeria                      4.9     0.6      2.8
Egypt                       10.9    11.7     11.7
Israel                      -9.6    -9.6      7.2
Libya                       -0.2     2.1      1.6
Morocco                     -18.4   -18.4      0
Syria                        2.4     2.4      6.2
Tunisia                     10.1    -9.6     -22.7
Konner-Yugoslavia & Bonia   -9.7     3.0     -0.6

Sub Total (B)                3.5     2.0      2.9
Total (A + B)                3.5     2.1      2.9

World                        0.8     1.1      4.2


                                   Fossil Fuels %
Factor (a)                  Tr                  [summation]
Region                      %    Co   Oi   NG        F

France (b)                  1    8    38   11       58
Greece (b)                  2    32   63   0        96
Italy (b)                   1    10   58   24       93
Spain (b)                   1    20   52   5        77
Turkey                      5    40   39   5        84
North/West                  1    22   41   19       82
Albania (b)                 10   x    x    x         x
Algeria (b)                 3    x    x    x         x
Cyprus                      1    x    x    x         x
Egypt (b)                   4    x    x    x         x
Israel                      0    x    x    x         x
Lebanon (b)                 4    x    x    x         x
Libya                       1    x    x    x         x
Malta (b)                   0    x    x    x         x
Morocco                     5    x    x    x         x
Syria                       0    x    x    x         x
Tunisia (b)                 15   x    x    x         x
Former-Yugoslavia & Bonia   2    x    x    x         x
--Macedonia (c)             x    x    x    x         x
--Slovenia (c)              x    x    x    x         x
Mediterranean               2    x    x    x         x
World                       6    25   36   20       81

                                 [summation]                   GNP
Factor (a)                  AI      Ener         Popul      [10.sup.9]
Region                      %       Mtoe       [10.sup.6]      US$

France (b)                  41       233          56.1        1,001
Greece (b)                  2        25           10.0          54
Italy (b)                   6        160          57.1         872
Spain (b)                   22       94           39.2         358
Turkey                      11       56           55.9          75
North/West                  16      4,384         849         14,840
Albania (b)                 x         4           3.2           4
Algeria (b)                 x        17           25.0          53
Cyprus                      x         1           0.7           5
Egypt (b)                   x        31           52.4          33
Israel                      x        10           4.6           44
Lebanon (b)                 x         3           2.7           x
Libya                       x        14           4.6           23
Malta (b)                   x         1           0.3           2
Morocco                     x         7           25.1          22
Syria                       x         9           12.5          13
Tunisia (b)                 x         5           8.2           11
Former-Yugoslavia & Bonia   x        50           23.8          59
--Macedonia (c)             x         x           2.1           x
--Slovenia (c)              x         x           1.9           x
Mediterranean               x        720         381.4        2,628
World                       13      8,784        5,292        20,723

Factor (a)                  GNP US$   Toe/   [10.sup.3]
Region                        Cap     Cap       US$

France (b)                  17,828    4.15      0.23
Greece (b)                   5,336    2.48      0.46
Italy (b)                   15,281    2.81      0.18
Spain (b)                    9,144    2.41      0.26
Turkey                       1,338    1,01      0.75
North/West                  17,473    5.16      0.30
Albania (b)                  1,169    1,17      1.00
Algeria (b)                  2,128    0.70      0.33
Cyprus                       6,989    1.86      0.27
Egypt (b)                     620     0.59      0.94
Israel                       9,594    2.17      0.23
Lebanon (b)                    x      1.11       x
Libya                        5,050    3.01      0.60
Malta (b)                    5,831    1.43      0.24
Morocco                       881     0.28      0.32
Syria                        1,023    0.73      0.72
Tunisia (b)                  1,352    0.60      0.44
Former-Yugoslavia & Bonia    2,481    2.10      0.84
--Macedonia (c)               820      x         x
--Slovenia (c)               6,490    1.53      0.25
Mediterranean                6,890    1.89      0.27
World                        3,916    1.66      0.42

Sources: National Statistics; UNDP Mediterranean Action Plan; UN
National Accounts Statistics; cartographic data: UNCTAD Handbook of
International Trade and Development Statistics; World Tourist
Organization (WTO): Compendium of Tourism Statistics; ILO: Annual
Yearbook of Statistics; World Oil 1990 BP Review of World Gas 1995
BP Statistical Review 1992. World Resources 1992-93 and World
Development Report.


The Mediterranean Sea--Mare Internum, the Internal Sea as the ancient Greeks and Romans called it --is our Sea (lat. Mare Nostrum). It has always represented a concept somewhat wider and more important than the aquatorium itself. The Mediterranean Sea is bordered by 21 coastal and Island states. Even the geographical data denoting its position (a branch of the Atlantic Ocean located between Europe, Asia and Africa) and the data on its area (2,965,900 [km.sup.2]) or the data on the indented coast (38,594 km of coastline) are not adequate to show its overall importance for the countries which border it. The above table IS an illustrative reflection of the trade related economic profile of the Mediterranean region. The impact on environmental health and/or degradation of the region, is not easy to discern and/or correlate. The direct trade effects may be limited to specific cases such as trade in harmful products, marine-stock depletion and transportation of goods that causes such as trade in harmful products, marine-stock depletion and transportation of goods that causes pollution, The indirect structural effects may, however, be of greater significance for the coastal environment.

The volume and value of the trade of the Mediterranean region have enormously increased over the years and far more goods are now moving through the Mediterranean Sea than ever before. The increased dependence upon the sea for the transportation of bulky commodities, and the economies associated with the location of the processing and even the further manufacturing of already processed raw materials (also moved by sea), have placed a high premium on coastal locations. Such factors have not only led to the development of industrial zones and urban agglomerations, but they have also been, responsible for a large part of the industrial pollution. The result is a series of coastal management problems, aggravated by the competition arising out of a multiplicity of users and uses of scarce coastal resources, leading to manifest disequilibria in the natural order of relationships between land, sea and the interlace, the coast.

* The 17 largest Mediterranean ports account for 441.4 million tons of cargo per year. If other ports (medium and small ones) are added to this the traffic volume of this huge basin is over 700 million tons a year. Much of this cargo is oil which is brought to the coast by local and regional pipelines from the countries with rich oil fields (Algeria, Libya, Egypt, Syria, etc.) of which some is transported to other Mediterranean port; nearer the consumer countries, while the rest is transported to ports elsewhere. At the same time, tankers with oil from other oil exporting countries enter the Mediterranean to satisfy the needs of the consumers in Mediterranean countries.

* Perhaps the most important activity developing on the shores of the Mediterranean is tourism. This area has become the destination of 33.07 per cent (1992) of the world's international tourism. Just five of the leading tourist countries of the European section of the Mediterranean earned US$ 42.808 billion from foreign tourism in 1987, which is 28.5 per cent of the world income or 47.6 per cent of Europe's income from international tourism.

* Although the transportation of oil on the Mediterranean represents the highest potential ecological danger; there is also other pollution resulting from uncontrolled urbanization and dirty technologies. If the problem is to be solved each of these services will have to be considered separately, so that optimal solutions can be suggested.

The transportation of oil by pipelines has long been recognized as an economical solution. In the areas where pipelines have been installed they have been found to have beneficial economic effects and they have also been instrumental in the achievement of significant ecological goals. Gushes in pipelines are rare, and when they occur on land rapid and effective repairs are possible. In contrast the transportation of oil by tankers involves far greater risks, both from the economic and particularly the ecological point of view.
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Publication:Journal of Financial Management & Analysis
Geographic Code:7TURK
Date:Jul 1, 2015
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