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Dallas Fed examines regional demographics, financial deregulation progress and the Chilean trade accord

For immediate release: January 27, 2003

DALLAS—The latest issue of the Federal Reserve Bank of Dallas' Southwest Economy examines regional demographics, financial deregulation and the Chilean trade accord.

In "Region Lags Nation in Education Gains," senior economist Lori L. Taylor notes that the average American became better educated in the 1990s, but gains in average educational attainment were systematically lower in the West and Southwest. Given their below-average gains, states in the Southwest and West likely benefited less from population growth during the 1990s than did other high-growth areas such as Florida, Georgia and North Carolina. In addition to its implications for productivity and income growth, lagging the nation in education gains has fiscal implications for state governments because educated individuals tend to contribute more income, sales, payroll and property taxes while demanding fewer social services such as welfare, Medicaid and unemployment compensation.

The Financial Services Modernization Act of 1999 is the topic of an article titled "Slow but Steady Progress Toward Financial Deregulation" by Dallas Fed economist Mark G. Guzman. Also known as Gramm-Leach-Bliley, the act was hailed as a major step toward ending government regulation that had separated traditional banking, insurance and securities underwriting into three nonoverlapping industries. The three years since the bill's passage have seen extremely slow progress toward reintegrating these three industries. Guzman discusses three primary reasons for the slow progress and why people who had expected greater progress by now had unrealistic expectations. Despite the slow progress of reform, however, benefits from Gramm–Leach–Bliley have begun to materialize and are likely to increase as the economy improves and financial companies determine how to best take advantage of their newfound freedom.

In "Chilean Accord Extends U.S. Free Trade Universe by One," William C. Gruben and Sherry L. Kiser examine the United States' most recent free trade agreement. While they characterize the accord with Chile as a positive event, they point out the distinction, typical of free trade agreements, between the overall opening of trade and the opening of agricultural trade. The writers give examples of agricultural protectionism on both sides of the U.S.–Chile agreement.

Find the January/February issue of Southwest Economy online at under the What's New heading.


Media contact:
James Hoard
Phone: (214) 922-5307