nep-sea New Economics Papers
on South East Asia
Issue of 2005‒07‒11
ten papers chosen by
Kavita Iyengar
Asian Development Bank

  1. China's exchange rate policy: the case against abandoning the dollar PEG By Laurenceson,James; Qin,Fengming
  2. Productivity and the Business Cycle in Japan -Evidence from Japanese Industry Data - By Tsutomu Miyagawa; Yukie Sakuragawa; Miho Takizawa
  3. Currency Boards and Chinese Banking Development in pre-World War II Southeast Asia: Malaya and the Philippines By W. G. Huff
  4. Management Transfer and Job Consciousness in Indo-Japanese Joint Ventures--Has "Japanese Style Management" Been Successfully Accepted in India?-- By Yukihiko Kiyokawa; Hiroyuki Oba; P. C. Verm
  5. Ownership biases and FDI in China: two provinces By Huang, Yasheng
  6. "The Male Workers in the Factory circa 1910 : A Case Study of a Soy Sauce Brewery in Japan"(in Japanese) By Masayuki Tanimoto
  7. China’s Economic Growth 1978-2025: What We Know Today about China’s Economic Growth Tomorrow By Carsten A. Holz
  8. Has Competition in the Japanese Banking Sector Improved? By Hirofumi Uchida; Yoshiro Tsutsui
  9. Availability of Higher Education and Long-Term Economic Growth By Akiomi Kitagawa; Ryo Horii; Koichi Futagami
  10. Is There a Direct Effect of Money?: Money's Role in an Estimated Monetary Business Cycle Model of the Japanese Economy By Ippei Fujiwara

  1. By: Laurenceson,James; Qin,Fengming (Tilburg University, Center for Economic Research)
    Abstract: This paper critically evaluates the policy literature surrounding China's exchange rate regime. It first discusses several popularly raised contentions in relation to the dollar peg employed by China, which in fact are poorly grounded in evidence. These include notions that the RMB is clearly undervalued and that its value is a prominent cause of the U.S trade deficit. The paper then describes a consensus position that has emerged which argues that China should abandon the peg in favour of a flexible exchange rate regime. We see numerous weaknesses in this position but a few stand out. Moving to a flexible regime is far from the most proximate policy response to the problems that the consensus literature itself identifies in China's economy. Institutional realities that make moving to a flexible regime difficult also appear to have been seriously overlooked. The paper concludes by noting that in the longer term moving to a managed float may be in China's best interests - but for now the focus needs to be firmly in the area of domestic financial reform.
    JEL: E58 F31
    Date: 2005
  2. By: Tsutomu Miyagawa; Yukie Sakuragawa; Miho Takizawa
    Abstract: Constructing thirty-seven industries database, we examines whether measured productivity in Japan is procyclical and investigates the sources of that procyclicality using the production function approach employed by Hall (1990) and Basu and Fernald (1995). At the aggregate level, the measured Solow residual shows procyclicality. Large numbers of industries show constant returns to scale. No significant evidence for the presence of thick-market externalities is found. Our results also hold when we consider labor hoarding, part-time employment, and the adjustment cost of investment. The results suggest policies to revitalize the Japanese economy should concentrate on promoting productivity growth.
    Date: 2005–07
  3. By: W. G. Huff
    Abstract: This article examines the relationship between currency boards and the development of local Chinese deposit banking in pre-World War II Malaya and the Philippines. While in both countries Chinese banks filled an important gap in financial intermediation, the currency board system - an especially strict version of the classical gold standard - virtually ensured that these institutions remained small. Moreover, in the 1930s slump the currency board system's preclusion of a central bank and requirement to pay depositors in 100 per cent metropolitan currency, together with the volatility of highly staple-dependent export economies, pushed Chinese banks to the verge of bankruptcy or beyond. Examination of the 1930s crisis in Southeast Asia and role of banks in it reveals more differences from than parallels with 1990s experience.
  4. By: Yukihiko Kiyokawa; Hiroyuki Oba; P. C. Verm
    Abstract: This paper aims to analyze the effect of "Japanese style management" on job-consciousness at Indo-Japanese joint ventures. Our analysis for this purpose is focused on uncovering the differences in job-consciousness between the joint ventures and indigenous firms. The transfer of management, which is essentially a transfer of a portion of culture, necessarily colors the job-consciousness in the recipient firms. To prove this hypothesis, we conducted a structured interview survey in 1998 at three Indo-Japanese joint ventures and two Indian firms. Then we confirmed, through canonical discriminant analysis applied to our survey data, that (1) the introduction of various Japanese management practices promoted 'a sense of unity' and 'job satisfaction,' and (2) such management was welcome particularly by workers in the joint ventures, since those practices partly realized egalitarianism in the firm.
    Date: 2005–07
  5. By: Huang, Yasheng
    Abstract: Jiangsu and Zhejiang are of two of China most prosperous and dynamic provinces. This paper first presents a factual account of two empirical phenomena: 1) FDI has played a more substantial role in the economic development of Jiangsu than in Zhejiang, and 2) ownership biases against domestic private firms in Jiangsu were more substantial than in Zhejiang. The paper hypothesizes that there is a connection between these two empirical phenomena. Specifically, ownership biases against domestic private firms increase preferences for FDI because FDI provides a measure of relative property rights security. Thus a biased domestic private firm has an incentive to move its assets and/or future growth opportunities to the foreign sector. The paper uses two private-sector surveys - one conducted in 1993 and the other in 2002 - to provide an empirical test of this hypothesis. Our analysis shows, controlling for a variety of firm-level attributes and industry and regional characteristics, those private firms which perceive ownership biases to be more severe are more likely to form joint ventures with foreign firms.
    Keywords: Ownership Biases, FDI, China,
    Date: 2005–06–03
  6. By: Masayuki Tanimoto (Faculty of Economics, University of Tokyo)
    Abstract: It is the common knowledge that the modern textile factories, cotton spinning and silk reeling, which led the Japan's industrialization, based their labor foundation on the juvenile female workers. These female workers, however, might have made only a slight impact on the indigenous development based on the household economy as they had withdrawn from factories in their late twenties at the latest and tended to be embedded afterwards in the households of peasants' or urban non-agricultural occupations'. To consider the impact of the industrialization on the indigenous society in Japan, we should pay the special attention to the life courses of the male labor force. The aim of this paper is to give an example of the factory life of the male workers in the middle scale factory, by analyzing the primary source of the firm. The analysis of the archives revealed that the life course as a lifetime factory worker, though the mobility rate between factories was rather high, emerged even in the middle scale factory circa 1910. However, the wage for the worker over the age of twenty was irrelevant to the age, varied just with attendance and the wage level was relatively low in the local labor market. These fact findings indicate that the emergence of the fulltime and lifetime factory workers can not be fully accounted for by the explanation of existing literatures that emphasize the role of the skilled and high wage workers.
    Date: 2005–07
  7. By: Carsten A. Holz (Hong Kong University of Science & Technology)
    Abstract: Views of the future China vary widely. While some believe that the collapse of China is inevitable, others see the emergence of a new superpower that increasingly poses a threat to the U.S. This paper examines the economic growth prospects of China over the next two decades. Extrapolating past real GDP growth rates into the future, the size of the Chinese economy surpasses that of the U.S. in purchasing power terms between 2012 and 2015; by 2025, China is likely to be the world's largest economic power by almost any measure. The extrapolations are supported by two types of considerations. First, China’s growth patterns of the past 25 years since the beginning of economic reforms match well those identified by standard economic development and trade theories (structural change, catching up, and factor price equalization). Second, decomposing China’s GDP growth into growth of labor and other variables, the near-certain information available today about the quantity and quality of Chinese laborers through 2015 and possibly several years after allows inferences about future GDP growth. Short of some cataclysmic event, and given a continuation of the generally sound economic policies of the past, demographics alone suggests China’s continued economic rise. If talent is randomly distributed in the world population and if agglomeration of talent is important, then the odds are strongly in China’s favor.
    Keywords: economic growth, growth accounting, growth forecasts, development theories, human capital formation, education (all: China)
    JEL: O1 O10 O11 O4 O40 O47 O53 J11 O3 I21
    Date: 2005–07–03
  8. By: Hirofumi Uchida (Indiana University and Wakayama University); Yoshiro Tsutsui (Graduate School of Economics, Osaka University)
    Abstract: This paper investigates whether competition in the Japanese banking sector has improved in the last quarter of the 20th century. By estimating the first order condition of profit maximization, together with the cost function and the inverse demand function, we found that competition had improved, especially in the 1970s and in the first half of the 1980s. The results fail to reject a Cournot oligopoly for city banks for most of the period, while they do reject it for regional banks for the overall period. This suggests that competition among city banks was stronger than that among regional banks.
    Keywords: Japanese banks, degree of competition, loan market.
    JEL: G21 L13
    Date: 2002–06
  9. By: Akiomi Kitagawa (Faculty of Economics and Business Administration, Yokohama City University); Ryo Horii (Graduate School of Economics, Osaka University); Koichi Futagami (Graduate School of Economics, Osaka University)
    Abstract: This paper examines the relationship between the availability of higher education and an economyfs long-term growth rate in a simple endogenous growth model with overlapping generations. Under certain conditions, an increased availability of higher education narrows the rate-of-return difference between human and physical capital investments. This reduces the share of income received by the younger generation, negatively affecting aggregate savings in subsequent periods, and thereby causing a substantial slowdown in the long-term growth rate. Such a paradoxical slowdown is endemic to developed economies, where higher education plays a central role in accumulating human capital. Although the recovery from such a slowdown entails a major restructuring of educational institutions, the authority may not take preventative measures against it, being dazzled by a temporary boom during its early stages.
    JEL: O41 I28
    Date: 2003–11
  10. By: Ippei Fujiwara (Research and Statistics Department, Bank of Japan, and Osaka University)
    Abstract: In this paper, I estimate the monetary business cycle model of the Japanese economy by the method advocated by Ireland (2002a), the max- imum likelihood estimation of the dynamic stochastic general equilibrium model in a state-space representation. The model estimated here includes the direct role of money on output and inflation so that we could study the alternative transmission mecha- nism of monetary policy to traditional interest rate channel, which may even work under the zero nominal interest rate as in Japan now. However, estimation results report that the direct effect of money is extremely small even if there could be. This nding is consistent with the ones obtained for US data in Ireland (2002a) and Euro area in Andres, Lopez-Salido and Valles (2001).
    Keywords: Direct Role of Money; Cross-Restriction; Maximum Likelihood Estimation; Dynamic Stochastic General Equilibrium Model
    JEL: C31 E32 E52
    Date: 2003–12

This nep-sea issue is ©2005 by Kavita Iyengar. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.