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How important is financial development for economic development? A costly state verification model of financial intermediation is presented to address this question. The model is calibrated to match facts about the U. S. economy, such as intermediation spreads and the firm-size distribution for the years 1974 and 2004. It is then used to study the international data, using cross-country interest-rate spreads and per-capita GDP. The analysis suggests a country like Uganda could increase its output by 140 to 180 percent if it could adopt the world's best practice in the financial sector. Still, this amounts to only 34 to 40 percent of the gap between Uganda's potential and actual output. [ABSTRACT FROM AUTHOR]

The article reports on the progress on a free trade agreement (FTA) between the U.S. and Colombia which has been ratified by the U.S. Congress. The administration of U.S. President George Bush is said to be strongly in favour of the ratification of the U.S.-Colombia Trade Promotion agreement. Furthermore, Colombia's long-term economic development risks getting held up by U.S. domestic politics.

Regional growth management is largely addressed at the local and state levels, driven by a myriad of concerns. Many of these concerns are associated with the concept of sprawl, and pit expansion of suburban development against protection of open space, agricultural activities, and amenity values. Local and state policies to respond to these concerns are also diverse. Many federal activities, policies, and programs affect rates and patterns of growth, and the ability of local and state governments to address them. Periodically, the question arises as to whether Congress should examine how current federal activities affect growth, recognizing that a plethora of federal actions affect development decisions, and that there is no way to totally eliminate the effects of these actions. Congress has many policy options that could support local and state efforts to respond to growth management concerns, including: providing information; providing financial and other assistance; using disincentives to discourage undesirable activity; and regulation. Any initiatives Congress might decide to take in this area would likely generate lively debate. This report will be updated as events warrant. [ABSTRACT FROM AUTHOR]