with overseas financial institutions. availability of diverse financial services to meet the potential needs of firms and households provides the basis for revitalizing the financial sector as a growth industry. countries around the world have recognized the financial sector as a high growth industry, and for this reason they have been vying with each other in the reform of their domestic financial markets. the big bang implemented in the united kingdom in the mid - 1980s was in fact aimed at strengthening the financial sector as the leading industry of the country ’ s economy by attracting back to london financial transactions that had shifted to the united states. the development and introduction of diverse financial services is becoming increasingly important in japan as well, given the changes in the flow of capital in japan and abroad. with the accumulation of personal assets and the need to prepare for the aging of society, there is a growing demand in the household sector for diversification of assets and risks, while the corporate sector is waiting for the emergence of venture businesses to lead growth industries and the establishment of new channels to facilitate the supply of capital to such businesses. there is concern, however, as to whether the japanese financial markets have the capacity to create financial services and instruments which can satisfy the various needs of the corporate and household sectors. the conventional framework of the japanese financial system has divided the industry by type of business, entrusted each type of business to specialized financial institutions, and prohibited institutions from entering into other types of business. the majority opinion is that this institutional segmentation of financial businesses was effective in supplying capital to priority industries during the postwar reconstruction period and the era of high economic growth. with the rapidly expanding scope of financial services and the diversifying needs of users, however, the appropriateness of such segmentation has come into question. it must indeed be thoroughly examined whether it is impeding the provision of efficient financial services and the introduction of new financial technology, and whether it is restricting market competition. - 7it is also important to review the institutional frameworks of the legal, tax, and accounting systems to make them suitable for the financial services of the new era. if the institutional frameworks are not improved, even transactions between residents may shift to overseas markets due to the exercise of choice by market participants. this may be called “ transactions flight ” rather than “ capital flight. ” as the financial markets constitute the infrastructure supporting the economic activity of a country, hollowing out of the markets must be prevented. b. the basic approach to market reform as i have explained, market reform should

as discussions of the outsourcing of business services tend to ignore the large amount of “ insourcing ” of services to the united states from other countries, so do discussions of american firms moving jobs abroad ignore the fact that foreign firms also move jobs to the united states. between 1997 and 2001 ( the most recent data available ), employment of u. s. residents by affiliates of foreign companies operating within the united states increased by about 1. 2 million jobs. in 2001, u. s. affiliates of foreign companies accounted for nearly $ 500 billion in gross output ( about half in manufacturing ) and about $ 164 billion in exports. globalization and outsourcing work both ways. so why is the recovery jobless? we have little evidence to show that trade in general, or outsourcing abroad in particular, is a major source of net job loss. yet, two - and - a - half years into the economic recovery, the pace of job creation comparing data for 1999 and 2003 to eliminate the largest effects of the high - tech boom - and - bust cycle, mann also shows that u. s. employment in several white - collar occupations related to it or deemed vulnerable to it - enabled outsourcing has in fact been stable or expanded modestly. although my focus today is on the united states, we should not ignore the benefits of outsourcing to countries that provide these services. software developers and telephone operators who provide offshore services from a country such as india are afforded a precious opportunity for economic advancement, and their country as a whole becomes richer, more competitive, and more integrated into the world trading system. moreover, outsourced service jobs do not typically bring along collateral issues of potential environmental damage and poor working conditions that have concerned some critics of expanded trade. some components of this category probably contain little outsourcing, for example, construction services, whereas some categories outside business, professional, and technical services, for example, telecommunications, may contain significant amounts of outsourced services. none of the conclusions drawn in the text is changed by considering the subcategories in greater detail. in the broader category of other private services, of which business, technical, and professional services is a subset, in 2003 the united states had a trade surplus of $ 53. 6 billion, up from $ 41. 7 billion in 1997. in the united states has been distressingly slow. job losses in manufacturing have been particularly deep, with employment in that sector apparently only now beginning to stabilize