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on Central and Western Asia |
| By: | Giovanni Capannelli (Asian Development Bank Institute (ADBI)) |
| Abstract: | Asian economic regionalism has emerged from a bottom-up process, driven by market forces in the absence of a grand plan for regional integration. While the financial crisis of 1997–98 triggered new regional cooperation initiatives, more recently several Asian political leaders have formulated proposals for the creation of a regional economic community, suggesting the possible start of a top-down approach. Based on the results of a survey of Asia’s opinion leaders conducted by the Asian Development Bank (ADB) in 2010, this paper discusses how Asia’s institutional architecture for economic and financial integration is taking shape, suggesting the need to strengthen existing institutions that promote Asian regionalism and to create new ones. While the focus of the paper is on monetary and financial integration, the analysis also covers other integration pillars such as trade and investment, connectivity and infrastructure, and regional public goods. It suggests the need to create new institutions in support of Asian regionalism and to adopt a broad perspective in moving towards the formation of a region-wide economic community based on strong political commitment and grassroots participation. |
| Keywords: | Asian Economic Integration, financial integration, Asia, institutions, economic community, Regionalism |
| JEL: | F15 F36 F55 H87 O53 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:23228&r=cwa |
| By: | Hwee Kwan Chow (Asian Development Bank Institute (ADBI)) |
| Abstract: | Notwithstanding incumbency advantages and network effects enjoyed by the United States (US) dollar, considerations about the stability of its value have led Asian countries to fear they are holding their foreign exchange reserves in a depreciating currency. At the same time, it pays for the regional countries to adjust their reserve currency composition to match the point of reference of their exchange rate policy. This paper examines empirically which regional currency or currencies seem to matter for exchange rate determination in Asia beyond the very short term. To this end, we employ country-specific Vector Autoregressive (VAR) models to compare the relative impact which fluctuations in the Asian Currency Unit (ACU), yuan, and yen separately have on movements of Asian currencies. Contrary to recent evidence based on daily data, we found monthly exchange rates variations in the region are more heavily influenced by the cumulative effect of key Asian currencies than by the yuan or the yen individually within the sample period we used. To the extent that exchange rates in the region shift over time from benchmarking the US dollar towards a broad range of Asian currencies, Asian central banks will find it more attractive to cross-hold Asian bonds. This calls for the development of deep private markets in such assets, as well as institutional prerequisites for internationalizing key regional currencies. |
| Keywords: | foreign exchange reserves, exchange rate determination, Asia, Yuan, Yen, monthly exchange rates variation, benchmarking |
| JEL: | F31 F33 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:eab:macroe:23251&r=cwa |
| By: | Biswa Nath Bhattacharyay (Asian Development Bank Institute (ADBI)) |
| Abstract: | One of the reasons behind the financial crisis in 1997 was excessive dependence of Asian economies on commercial banks for domestic financing. Banks were the major source of corporate financing because the other major source, bond markets, was underdeveloped and small. On the other hand, the 2008 global financial crisis led to constraints in acquiring local currency and foreign currency liquidity in the corporate sector, as foreign banks withdrew investments from Asia. Furthermore, Asia needs large quantities of capital (US$750 billion per year for 2010–2020) to develop infrastructure connectivity within and across its economies. Local and regional capital can be channeled for long-term infrastructure projects and other productive investment through bond markets. At this juncture, to enhance bond financing, it is important to examine factors that promote effective development of bond markets. This study attempts to identity the major determinants of bond market development in Asian economies, through examining its relationship with selected key financial and economic factors, and to provide policy recommendations for further developing Asian bond markets. Major determinants for bond market development in Asia include the size of an economy, the stage of economic development, the openness of an economy, the size of the banking sector, and the interest rate spread. |
| Keywords: | domestic financing, Asian economies, bond market development |
| JEL: | F36 O16 G15 O53 |
| Date: | 2011–06 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:23236&r=cwa |
| By: | György Surányi |
| Abstract: | The global crisis, which was the worst economic and financial downturn since the Great Depression, revealed the fundamental deficiencies in the global financial system and drastically changed the way we view the world and the global financial system. The crisis challenged long-standing views and ideas, and in response, after the most acute phase of the crisis, joint global efforts were launched to put the system on firm footing again and prevent the next crisis. These efforts can only be successful if we fully understand the root causes of the crisis and learn the right lessons from it. In his E-brief Dr. György Surányi focuses on four topics: regulation, external position, monetary policy and the European debt crisis. |
| Keywords: | Financial sector, Europe, debt crisis, regulation, monetary policy |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:sec:ebrief:1207&r=cwa |
| By: | Bidani, Benu; Fatou Diagne, Mame; Zaidi, Salman |
| Abstract: | This paper analyzes the subjective impact of the global economic crisis on households in Europe and Central Asia and relates subjective impacts to consumption, actual shocks, and coping strategies, using the 2010 Life in Transition Survey. Two-thirds of respondents in Europe and Central Asia report their household was subjectively affected, primarily through the labor market. The findings underscore the limitations of cross-country comparisons of subjective perceptions, due to reporting biases. Within countries, richer households felt a decline in their relative income position, consistent with evidence from household budget surveys that the crisis reduced the consumption of the middle and upper classes. But the analysis also finds that poorer households report being (subjectively) affected by the crisis more. Differences in the feasibility of coping strategies may help explain variations in subjective perceptions: the poorest were forced to reduce their staple food consumption and health spending, and tended to depend on public safety nets. Richer households had more options to cope, pursuing so-called"active strategies"(such as increasing their labor supply), borrowing, and cutting spending on non-essentials. Transition countries differed significantly from western European comparator countries in that public safety nets had lower coverage, private safety nets and informal insurance mechanisms could not meet the shortfall in income, and a large proportion of their populations reduced the consumption of basic necessities. The paper finds subjective perceptions of the impact of the crisis to be relevant to socio-political outcomes: the harder the impact, the lower the life satisfaction level and the more negative the assessment of government performance. |
| Keywords: | Safety Nets and Transfers,Housing&Human Habitats,Rural Poverty Reduction,Labor Policies,Consumption |
| Date: | 2012–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5995&r=cwa |
| By: | Alessandro Borin (Bank of Italy); Riccardo Cristadoro (Bank of Italy); Roberto Golinelli (University of Bologna); Giuseppe Parigi (Bank of Italy) |
| Abstract: | Assessing the global economic outlook is a fundamentally important task of international financial institutions, governments and central banks. In this paper we focus on the consequences of the rapid growth of emerging markets for monitoring and forecasting the global outlook. Our main results are that (i) the rise of the emerging countries has sharply altered the correlation of growth rates among the main economic areas; (ii) this is clearly detectable in forecasting equations as a structural break occurring in the 1990s; (iii) hence, inferences on global developments based solely on the industrialized countries are highly unreliable; (iv) the otherwise cumbersome task of monitoring many – and less studied – countries can be tackled by resorting to very simple bridge models (BM); (v) BM performance is in line with that of the most widely quoted predictions (WEO, Consensus) both before and during the recent crisis; (vi) for some emerging economies, BMs would have provided even better forecasts during the recent crisis. |
| Keywords: | GDP forecast, emerging and Asian markets, bridge models, forecasting ability |
| JEL: | C22 C53 E37 F47 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_853_12&r=cwa |
| By: | Yunling Zhang (Asian Development Bank Institute (ADBI)); Minghui Shen |
| Abstract: | Free trade agreements (FTAs) have become a prominent feature of the multilateral trading system and an important instrument of trade policy for members of the World Trade Organization (WTO). The proliferation of FTAs is the result of a number of factors, from the economic to the political. East Asia is with no exception involved in the process and witnessing the establishment of multilayered FTAs. Pioneered by the Association of Southeast Asian Nations (ASEAN) in 1992 when it initiated the ASEAN FTA (AFTA), and encouraged by ASEAN+1 (ASEAN plus one country) FTAs, more and more economies in east Asia are involved in FTAs, although the characteristics of these FTAs differ according to their background and circumstances. When the proliferation of FTAs in east Asia benefits the regional trade and economic growth, questions have been raised about “Asian noodle bowl†effect, pointing out multi-layered FTAs in east Asia have created new trade barriers and raised the cost of business in the region. To this end, east Asia needs to progress from the proliferation of multilayered FTAs to a region-wide FTA with wider participation and broader coverage. |
| Keywords: | free trade agreements, FTA, East Asia, Asian noodle bowl, Regional Integration |
| JEL: | F10 F13 F15 |
| Date: | 2011–05 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:23254&r=cwa |
| By: | Carike Claassen; Elsabé Loots; Henri Bezuidenhout |
| Abstract: | The eyes of the world have, in recent years, been steadfastly focused on China’s economic progress. As China has in recent years emerged as a major player on the world economic stage, its growing relations with other developing regions received much attention. Of particular note is the way in which Sino-African relations have increased since 2000. This paper aims to put Chinese FDI in Africa into perspective and provide some answers on the nature and possible impact of these flows to the continent. The research discloses that China’s outward FDI to Africa is concentrated in diversified, medium growth economic performers, with Southern Africa being the most popular regions for Chinese outward FDI. A literature survey on Chinese investment deals concluded in Africa demonstrates a definite Chinese interest in mining, oil and infrastructure in Africa. The empirical analysis of Chinese FDI in Africa reveals that agricultural land, market size and oil are important determinants of Chinese FDI. Though agricultural land and oil conform to the general notion of resource-driven Chinese FDI in Africa, the fact that market size is important indicates that Chinese investment is not solely resource-driven. As regards the possibility that Chinese FDI could positively contribute towards economic growth in Africa, causality tests conclude that the relationship between African GDP and Chinese FDI is bi-directional, while uni-directional relationships were established between Chinese FDI and African infrastructure and corruption, respectively. |
| JEL: | F21 O16 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:261&r=cwa |
| By: | Tanja A. Börzel; Digdem Soyaltin |
| Abstract: | Research on Europeanization and domestic change has moved south-eastwards and was provided with another real-world experiment when it has meet with Turkey. This paper explores to what extent Europeanization approaches travel to Turkey, which does have a membership perspective that looks, however, ever less credible. The first part outlines the main findings of research on ‘External Europeanization’ focusing on factors that have limited or at least qualified the domestic impact of the EU in the Central and Eastern European (CEE) and Western Balkan (WB) accession countries. The paper, then, discusses to what extent Europeanization approaches need further qualification when applied to Turkey, which squares on democracy with the Western Balkans (with the exception of Croatia), but whose statehood is less limited. We argue that existing Europeanization approaches, largely, account for the overall moderate degree of Europeanization in Turkey. Yet, selective and differential domestic changes are mostly related to the extent to which EU conditionality helps domestic actors gain or hold political power and push their own political agenda. The paper concludes by summarizing the major implications Turkey’s accession to the EU has for Europeanization approaches and discussing why Turkey is not a case sui generis. |
| Keywords: | East-Central Europe; East-Central Europe; EU-South-Eastern Europe; EU-South-Eastern Europe; Turkey; neighbourhood policy; governance |
| Date: | 2012–03–02 |
| URL: | http://d.repec.org/n?u=RePEc:erp:kfgxxx:p0036&r=cwa |
| By: | Khalid Abu-Ismail (Macroeconomics and Poverty Advisor in UNDP?s Sub-Regional Resource Facility for the Arab States); Rathin Roy (International Policy Centre for Inclusive Growth); Raquel Almeida Ramos (IPC-IG) |
| Abstract: | The fundamental development challenge in the Arab region is one of economic transformation or, more pertinent, a lack thereof. Heavy sectoral weights of extractive industries lead to dependence on global oil prices, even in oil-producing countries. The structure of production limits employment generation for skilled and semi-skilled labour. Low-skill services and informal activities then absorb the labour force, with corresponding harm to aggregate productivity and living standards. The slow emergence of manufacturing capacities distinguishes the economies of the Arab region from other developing countries. Compared to suitable aggregates or, more poignant, the successful Asian emerging economies, manufacturing exports from the Arab region do not contribute sufficiently to growth. Concurrently, growth is volatile and saving and investment rates are significantly below what is required to undertake this economic transition (see Arnim et al., 2011; Abu-Ismail, Moustafa, and Arabaci, 2011; Abu-Ismail et al., 2011). (?) |
| Keywords: | Is there Fiscal Space for Financing an Arab Development Transformation? |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:ipc:wpaper:88&r=cwa |
| By: | Sarmidi, Tamat; Siong Hook, Law; Jafari , Yaghoob |
| Abstract: | This paper attempts to provide a probable answer to a longstanding resource curse puzzle; i.e., why resource-rich nations grow at a slower rate compared to less fortunate ones. Using an innovative threshold estimation technique, the empirical results reveal that there is a threshold effect in the natural resources – economic growth relationship. We find that the impact of natural resources is meaningful to economic growth only after a certain threshold point of institutional quality has been attained. The results also shed light on the fact that the nations that have low institutional quality depend heavily on natural resources while countries with high quality institutions are relatively less dependent on natural resources to generate growth. |
| Keywords: | Economic development; Natural resource curse; Institutions |
| JEL: | O11 Q32 O13 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:37206&r=cwa |
| By: | Anwar, Mumtaz; Rashid, Muhammad Khalid |
| Abstract: | Most of the developing countries are becoming more aid dependent with the passage of time. This bleak reality provokes debate on aid effectiveness. This paper analyzes the effectiveness of aid on the health sector of Pakistan over the period 1973-2008. The study focuses on the health sector in the light of Millennium Development Goal; reducing child mortality. We estimate an econometric model to test the short and long run relationship between foreign aid and infant mortality rate in the health sector. In this context, different tests i.e. Augumented Dickey Fuller test, Johansen Likelihood Ratio test and Vector Error Correction Method are used. The results indicate that there is short run and long run relationship between foreign aid and infant mortality rate. The results show that one percent increase in foreign aid will decrease the infant mortality rate by 0.4 percent. This study suggests that an increase aid in this sector will result in better health conditions. |
| Keywords: | Infant Mortality rate; Millennium Development Goal; Foreign Aid |
| JEL: | F35 I10 |
| Date: | 2011–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:37142&r=cwa |
| By: | Bhanumurthy, N. R. (National Institute of Public Finance and Policy); Das, Surajit (National Institute of Public Finance and Policy); Bose, Sukanya (National Institute of Public Finance and Policy) |
| Abstract: | This paper analyses the impact of transmission of international oil prices and domestic oil price pass-through policy on major macroeconomic variables in India with the help of a macroeconomic policy simulation model. Three major channels of transmission viz. import channel, price channel and fiscal channel are explored with the help of a comparative static macroeconomic general equilibrium framework. The policy option of deregulation of domestic oil prices in the scenario of occurrence of a one-time shock in international oil prices as well as no oil price shock situation analysed through its impact on growth, inflation, fiscal balances and external balances during the 12th Plan period of 2012-13 to 2016-17. The simulation results indicate that the deregulation policy as such would have adverse impact on the growth as well as on the inflation. But if this policy is complemented with the policy of switching of subsidy bill to capital expenditure might result in positive growth effects only in the medium term. Given, the current pass-through policy, one-time oil shock has more intense adverse impact on growth and inflation in the year of shock while it mitigates slowly over time. The model shows that with the oil shock and with current partial pass-through regime, a 10 per cent rise in oil prices result in a 0.6 per cent fall in growth while in the full pass-through situation, it can reduce the growth by 0.9 per cent. Overall, the paper argues that the pass-through has diferential impact on growth and inflation over the 12th Plan period. Hence, the policy of oil price deregulation must be carefully weighed and prioritized. |
| Keywords: | Policy simulation ; International price shock ; Transmission channels ; Macroeconomic modelling ; Growth ; Inflation ; Current account deficit ; Subsidies ; Fiscal deficit ; India |
| JEL: | C32 E10 E17 E30 E60 H60 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:npf:wpaper:12/99&r=cwa |
| By: | Gathmann, Christina (University of Heidelberg); Jürges, Hendrik (University of Mannheim); Reinhold, Steffen (MEA, University of Mannheim) |
| Abstract: | Education yields substantial non-monetary benefits, but the size of these gains is still debated. Previous studies, for example, report contradictory effects of education and compulsory schooling on mortality – ranging from zero to large mortality reductions. Using data from 19 compulsory schooling reforms implemented in Europe during the twentieth century, we quantify the mean mortality effect and explore its dispersion across gender, time and countries. We find that men benefit from compulsory education both in the shorter and longer run. In contrast, compulsory schooling reforms have little or no effect on mortality for women. |
| Keywords: | compulsory schooling, education, mortality, Europe |
| JEL: | I12 I21 I28 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6403&r=cwa |
| By: | Timothy Hatton (University of Essex and Australian National University) |
| Abstract: | Over the last decade the locus of policy-making towards asylum seekers and refugees has shifted away from national governments and towards the EU as the Common European Asylum Policy has developed. Most of the focus has been on the harmonisation of policies relating to border control, the processing of asylum claims and reception standards for asylum seekers. But this still falls far short of a fully integrated EU-wide policy. This paper examines the basis upon which a joint EU policy can be justified. I then ask whether superior outcomes can be achieved by harmonisation alone or if more centralised policy-making is necessary. I chart the progress of harmonisation and burden-sharing in the development of the Common European Asylum System and explore its effects. I also study the political feasibility of deeper policy integration by analysing public attitudes in the European Social Survey. I conclude that deeper integration is both desirable and politically possible. |
| Keywords: | Refugees, Asylum seekers, Asylum policy, Harmonisation, Burden-sharing |
| JEL: | F22 F53 F H77 H87 J15 |
| Date: | 2012–03 |
| URL: | http://d.repec.org/n?u=RePEc:nor:wpaper:2012016&r=cwa |