Something similar is observed in gross fixed capital formation in machinery and equipment. Discounting unusual purchases of transportation equipment, this investment component has tended to perform better in the past few months (figure 5). The labor market has continued to adjust. Salaried employment stands out with a fall of 2.1% annually in the December to February moving quarter, as does the moderation of annual wage growth. Plus the reduction in hours worked, at a time where a growing number of workers claim that they work fewer hours than desired. Anyway, selfemployment, while more precarious, has significantly cushioned the disturbances coming from salaried employment (figure 6). A constant concern in recent years has originated in the evolution of the labor market. In several Reports we have included boxes and research notes addressing various related topics, including the degree of working flexibility and how changes in labor conditions affect unemployment. Our last issue includes a box that explores the effects of the business cycle on workers' wages. Normally, wages are analyzed using aggregate data that, by their very nature, conceal the movements of individual wages. Using data per worker, we show that the dynamics of individual wages are much more correlated with the business cycle than what aggregate wages would suggest. In particular, because the wages of workers changing jobs—either voluntarily or involuntarily—are affected, for better or for worse, depending if the business cycle is favorable or not.

With well-trained, English speaking, and cost-competitive professionals, India has created a niche for itself as the world’s back-office as well as a global software centre. The BJP coalition’s unexpected defeat in the general elections reflects the unhappiness of rural voters who have not benefited from the liberalisation. This may cause the new Congress government to be more circumspect about pressing ahead with reforms, although optimistic commentators argue that the voters are pressing for faster reforms rather than slower. Whether or not that is so, the policy of liberalisation commands bipartisan support, and is likely to continue. After all, the new Prime Minister, Dr Manmohan Singh, was the architect of the initial economic reforms in the early 1990s. He has appointed as Finance Minister Mr Chidambaram, who is also a reformist and a former Commerce Minister and Finance Minister. I am therefore hopeful that the thrust of liberalisation will continue, and India will play increasingly a prominent role like China’s in the regional and global economies. Closer to home, the prospects for Southeast Asian economies are also looking better. The region initially struggled as political and security concerns deterred foreign investments and distracted  BIS Review 33/2004  1  governments from tackling serious economic problems. But Southeast Asia has stabilised considerably in recent years. Governments are responding more vigorously to the threat of terrorism and restoring order and confidence. The political upheavals that swept across the region have also subsided, allowing governments to focus their attention on fostering growth and development.