nep-sea New Economics Papers
on South East Asia
Issue of 2005‒01‒09
seven papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Sorting, Selection, and Transformation of the Return to College Education in China By Fleisher, Belton M.; Li, Haizheng; Li, Shi; Wang, Xiaojun
  2. Impact of Income Growth and Economic Reform on Nutrition Intake in Urban China: 1986-2000 By Meng, Xin; Gong, Xiaodong; Wang, Youjuan
  3. Poverty, Inequality, and Growth in Urban China, 1986-2000 By Meng, Xin; Gregory, Robert; Wang, Youjuan
  4. Credit Constraints and Determinants of the Cost of Capital in Vietnamese Manufacturing By John Rand
  5. Water Demand and the Welfare Effects of Connection: Empirical Evidence from Cambodia By Marcello Basani; Barry Reilly; Jonathan Isham
  6. From Plan to Market in the Health Sector? China's Experience. By Karen Eggleston; Jian Wang; Keqin Rao
  7. Agglomeration, Transport, and Regional Development in Indonesia By Uwe Deichmann; Kai Kaiser; Somik V. Lall; Zmarak Shalizi

  1. By: Fleisher, Belton M. (Ohio State University); Li, Haizheng (Georgia Tech); Li, Shi (Chinese Academy of Social Sciences and IZA Bonn); Wang, Xiaojun (University of Hawaii at Manoa)
    Abstract: We estimate selection and sorting effects on the evolution of the private return to schooling for college graduates during China’s between 1988 and 2002. We pay special attention to the changing role of sorting by ability versus budget-constraint effects as China’s education policy has changed from one in which the bulk of direct costs are paid by government for students who pass a rigid set of test to one in which freedom of choice is increasingly the rule for those who can afford to pay for tuition and living expenses while acquiring higher education. We find evidence of substantial sorting gains under the traditional system but that gains have diminished and even become negative as schooling choices widened and participation has become subject to increasing direct private costs. We take this as evidence consistent with the influence of financial constraints on decisions to attend college.
    Keywords: return to schooling, sorting gains, heterogeneity, financial constraints, comparative advantage
    JEL: J31 J24 O15
    Date: 2004–12
  2. By: Meng, Xin (Australian National University); Gong, Xiaodong (Australian National University and IZA Bonn); Wang, Youjuan (Chinese State Statistical Bureau)
    Abstract: Although urban China has experienced a rapid income growth over the last twenty years, nutrition intake for the low income group declined in the 1990s. Does this imply a zero or negative income elasticity for the low income group? This paper examines this issue using large representative sample of repeated cross-sectional data for the period 1986-2000. It is found that income elasticities of calorie consumption for urban households are far from zero, and the lower the income level the higher the income elasticity. The main reason for the reduction in calorie consumption for the low income group in the early 1990s was a sharp increase in food price. In addition, in the mid to late 1990s large scale social welfare reform increased households’ need to pay for education, medical, housing expenses and the need to save for future consumption and income uncertainty. These factors seem to have played an important role in suppressing nutrition consumption of the low income group during this period.
    Keywords: poverty, income growth, inequality, China
    JEL: I31 D31 O40 O15
    Date: 2004–12
  3. By: Meng, Xin (Australian National University); Gregory, Robert (Australian National University and IZA Bonn); Wang, Youjuan (Chinese State Statistical Bureau)
    Abstract: Although urban China has experienced spectacular income growth over the last two decades, increases in inequality, reduction in social welfare provision, deregulation of grain prices, and increases in income uncertainty in the 1990s have increased urban poverty. Using a large repeated cross-section household survey data from 1986 to 2000, this study maps out the change in income, inequality, and poverty over the 15 year period and investigates the determinants of poverty. It is found that the increase in the poverty rate in the 1990s is associated with the increase in the relative food price, and the need to spend on education, housing and medical care which were previously paid by the state. In addition, the increase in the saving rate of the poor due to an increase in income uncertainty contributes significantly to the increase in poverty measured in terms of expenditure. Even though income growth reduces poverty, the radical reform measures implemented in the 1990s have sufficiently offset this gain that urban poverty is higher in 2000 than in 1986.
    Keywords: poverty, income growth, inequality, China
    JEL: I31 D31 O40 O15
    Date: 2005–01
  4. By: John Rand (Institute of Economics, University of Copenhagen)
    Abstract: This paper examines the extent to which borrowing constraints restrict firm access to credit and identifies individual, firm, and loan characteristics, which determine the cost of capital in Vietnamese manufacturing. Using direct information from a Vietnamese enterprise survey I show that 14 percent of the enterprises are credit constrained, and these enterprises would increase their debt holdings by 34 percent if borrowing constraints were relaxed. Moreover, it emerges that informal credit markets play an important role for fast growing firms. Enterprises do not appear to have the necessary time to go through the many administrative difficulties in the formal credit system if they want to "seize the day". Finally, collateralized loans face larger interest rates, explained by the significant influence of "policy lending" in Vietnamese credit markets.
    Keywords: financial markets; credit constraints; Vietnam
    JEL: O16 O53
    Date: 2004–12
  5. By: Marcello Basani; Barry Reilly; Jonathan Isham
    Abstract: Using cross-sectional household-level data from seven provincial Cambodian towns, we estimate a water demand equation for households connected to the network, and provide an empirical measurement of the economic value of tap water connection. The use of a two-step econometric procedure allows us to analyse issues relating to household access to water and to the volume of household water consumption. We estimate that the connection elasticity with respect to the one-off initial cost of connection is -0.39; the price elasticity of water demand for the connected households lies in a range between -0.4 and -0.5; and the welfare effects of water connection are approximately 17 percent of the actual expenditure of the poor unconnected households. Furthermore, providing a network connection to all households in the sample would have the distributional consequences of decreasing the estimated Gini coefficient by three percentage points and the poverty head-count ratio by six percentage points.
    Date: 2004
  6. By: Karen Eggleston; Jian Wang; Keqin Rao
  7. By: Uwe Deichmann (World Bank); Kai Kaiser; Somik V. Lall (World Bank); Zmarak Shalizi (World Bank)
    Abstract: How effective are public interventions in addressing significant regional disparities in formal manufacturing concentration in a developing economy? Deichmann, Kaiser, Lall, and Shalizi examine the aggregate and sectoral geographic concentration of manufacturing industries for Indonesia, and estimate the impact of factors influencing location choice at the firm level. They distinguish between natural advantage, including infrastructure endowments, wage rates, and natural resource endowments, and production externalities, arising from the co-location of firms in the same or complementary industries. The methodology pays special attention to empirically distinguishing the impact of measured production externalities from unobserved local characteristics. Depending on the sector, the authors find that a mix of both forms of regional advantage explains the geographic distribution of firms. Based on the estimated location choice model, they illustrate the potential impacts of policy interventions on manufacturing distribution by simulating the effectiveness of transport improvements on relocation of firms. The findings suggest that improvements in transport infrastructure may only have limited effects in attracting industry to secondary industrial centers outside of Java, especially in sectors already established in leading regions. The findings underscore the challenges for addressing the industrial fortunes of lagging regions, either through local decentralized policy interventions or national policies focused on infrastructure development. This paper—a product of the Infrastructure and Environment Team, Development Research Group—is part of a larger effort in the group to examine the impacts of spatial policy interventions on the location and performance of economic activity.
    Keywords: Infrastructure; Industry; Urban Development
    Date: 2005–01–06

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