This Country Economic Memorandum subscribes to the overall direction of the reform program mapped out by this body of work and it goes deeper in three important areas: (1) public sector management, (2) labor markets and education and (3) science and technology policy. Chapters 2-4 of this report, each one largely self-contained, cover these topics in order. First, however, Chapter 1 gives the context for the transition now underway with an overview of past and present development focusing on the transformation of the economy from factor-intensive to skill- and knowledge-intensive development. Then a forward-looking section offers a medium-term forecast for the economy's emergence from the recent slowdown and discusses prospects for longer-term (potential) growth.