nep-sea New Economics Papers
on South East Asia
Issue of 2005‒10‒29
nine papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Diffusion of Mobile Phones in China By Sangwan, S.; Pau, L-F.
  2. Organization and Strategy of Farmer Specialized Cooperatives in China By Hu, Y.; Huang, Z.; Hendrikse, G.W.J.; Xu, X.
  3. The Tsunami?s CSR Effect: MNEs and Philanthropic Responses to the Disaster By Whiteman, G.
  4. On Asymmetric Business Cycles and the Effectiveness of Counter-Cyclical Fiscal Policies By Nicolas Magud
  5. Model Uncertainty and Endogenous Volatility By Wiliam Branch; George W. Evans
  6. Foreign Direct Investment, Regional Geographical and Market Conditions, and Regional Development: A Panel Study on China By Mei Wen
  7. "China's Energy Dilemma" By Haider A Khan
  8. External Debt and Exchange Rate Overshooting: The Case of Selected East Asian Countries By Victor Pontines; Reza Siregar
  9. Prospects for Regional Free Trade in Asia By Gary Clyde Hufbauer; Yee Wong

  1. By: Sangwan, S.; Pau, L-F. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Diffusion of mobile communication has induced great societal changes in China. Factors at global market, communications industry and end-user market levels are driving the adoption at a high rate. Firstly, China?s economic emergence together with e.g. accession to WTO has led to foreign investment increase in telecom and communications industry. Secondly, a parallel deregulation and reengineering of the telecom industry ensured an introduction of competition in the domestic terminals market and facilitated manufacturing in China. Finally, overall growth in China has increased purchasing power enabling consumers to adopt new technologies. At the market level, challenges and future growth depends on a favorable business environment both for local and multinationals organizations, operators and service providers, and most importantly to the distribution channels (retailers and resellers). Market mechanisms such as improvement in payment methods, regulations for content providers, branded and low-end mobile phones marketing, applications and support in Chinese language are required for a systematic and not just sporadic adoption of mobile devices. Product development and innovation, improvement in distribution infrastructure, mobile services operators skill enhancement are some measures that can growth of mobile communication and increase in average consumer spending.
    Keywords: China;Mobile phones diffusion;Market developments;China?s industrial policy;
    Date: 2005–10–14
  2. By: Hu, Y.; Huang, Z.; Hendrikse, G.W.J.; Xu, X. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: A description and analysis of China?s Farmer Specialized Cooperatives is presented. Data is presented regarding the historical development of farmer cooperatives in China, the membership composition of a sample of 66 farmer cooperatives in the Zhejiang province, and the various attributes (governance, quality control system, and strategy) of a watermelon cooperative in this province. Many cooperatives are being transformed in organizations with a market orientation. These cooperatives exhibit substantial heterogeneity, in terms of farmers being member and skewness in the distribution of control rights. Human asset specificity in terms of establishing and maintaining relations and access to markets seems to be more important than physical asset specificity in accounting for governance structure choice in the current institutional setting.
    Keywords: Farmer Cooperative;China;Governance;
    Date: 2005–10–18
  3. By: Whiteman, G. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: This paper contributes to the literature on CSR and International Business by linking firm internationalization to corporate philanthropy. Considering the 2004 Tsunami disaster as a highly relevant case of an international societal issue, we analyze the characteristics of the corporate response to the disaster among Fortune Global 500 firms. We find that home region, degree of internationalization, firm size and profitability most strongly influenced the propensity of firms to donate as well as the value of their donations.
    Keywords: CSR, Internationalization;Philanthropy;Tsunami;
    Date: 2005–10–18
  4. By: Nicolas Magud (University of Oregon Economics Department)
    Abstract: In the presence of informational frictions and uncertainty, an investment model is developed to capture the asymmetric dynamics of business cycles. When affected by a negative shock, the economy responds differently than when hit by a positive shock, both in terms of size and recovery length. In this set up, the role for fiscal policy in smoothing the effects of business cycles fluctuations depends on the initial conditions of the economy at the time of the shock: based on the degree of fiscal fragility of the government, expansionary fiscal policy might be expansionary or contractionary in terms of output.
    Keywords: Asymmetric Information, Business Cycles, Fiscal Fragility, Fiscal Policy
    JEL: H32 E00 E22
    Date: 2002–12–01
  5. By: Wiliam Branch (University of Californis - Irvine); George W. Evans (University of Oregon Economics Department)
    Abstract: This paper identifies two channels through which the economy can generate endogenous inflation and output volatility, an empirical regularity, by introducing model uncertainty into a Lucas-type monetary model. The equilibrium path of inflation depends on agents' expectations and a vector of exogenous random variables. Following Branch and Evans (2004) agents are assumed to underparameterize their forecasting models. A Misspecification Equilibrium arises when beliefs are optimal given the misspecification and predictor proportions based on relative forecast performance. We show that there may exist multiple Misspecification Equilibria, a subset of which are stable under least squares learning and dynamic predictor selection. The dual channels of least squares parameter updating and dynamic predictor selection combine to generate regime switching and endogenous volatility.
    Keywords: Lucas model, model uncertainty, adaptive learning, rational expectations, volatility
    JEL: C53 C62 D83 D84 E40
    Date: 2005–10–18
  6. By: Mei Wen
    Abstract: This paper uses regional panel data to investigate the mechanism of how FDI has contributed to China’s regional development through quantifying regional marketization level. It is found that FDI inflow generates a demonstration effect in identifying regional market conditions for investment in fixed assets and hence affects industrial location. In addition, its effects on regional export and regional income growth varied across east, central and west China since the second half of the 1990s, depending on FDI-orientation in different regions. In east China, geographical advantage in export attracts FDI inflow and FDI promotes export. In addition, rise of FDI-GDP ratio increases regional share in industrial value added in east China. These effects contribute positively to regional income growth in east China although there is a direct crowding out effect between FDI and domestic investment (as input) in growth. In contrast, the negative impact of FDI inflow in central China on regional export orientation weakens its contribution to regional income growth. Furthermore, contribution of improvement of market mechanism to regional development is evidenced in attracting FDI, in promoting export and directly contributing to regional income growth.
    Keywords: Export-oriented FDI and import substitute FDI, marketization, industrial location, and regional growth
    JEL: F23 O53 P52 R11
    Date: 2005
  7. By: Haider A Khan (Department of Economics, University of Denver)
    Abstract: PRC's energy dependence is growing and has become a major concern for both economic and national security policymakers in that country. The ambitious goal of modernization of the economy along the lines of the other newly industrialized economies(NIEs) of Asia has succeeded only too well, and it is difficult to reorient economic priorities. If examined rigorously, such an economic strategic assumption can be seen to entail the goal of creating further technological capabilities. In particular, China seems to be firmly committed to the creation of a largely self-sustaining innovation system as part of a knowledge-based economy of the future . Such innovation systems, called positive feedback loop innovation systems or POLIS have been created by advanced countries, and NIEs such as South Korea and Taiwan are proceeding to create these as well. But this will add to its energy burden and further dependence on the US as the power which controls the key sea lanes. Only a strategic reorientation to building a self-sustaining POLIS and appropriate regional cooperation institutions can lead to the way out of the current dilemma for China.
    Date: 2005–10
  8. By: Victor Pontines (University of Adelaide); Reza Siregar (University of Adelaide)
    Abstract: The accumulations of foreign debts had indeed been at a rapid phase, particularly during the last few years leading to the outbreak of the 1997 financial crises in the four most severely effected economies, namely Indonesia, the Philippines, Thailand and Korea. Interestingly, during the same period, the rates of overshooting of these East Asian currencies have also been found to increase considerably. The objective of this paper is to evaluate whether the rapid accumulation of external debts, especially since 1994, has contributed to the overshooting of the East Asian countries’ currencies starting late 1997.
    Keywords: External Debt, East Asian Countries, Exchange Rate and Overshooting
    JEL: F3 F4
    Date: 2005–10–21
  9. By: Gary Clyde Hufbauer (Institute for International Economics); Yee Wong (Massachusetts Institute of Technology)
    Abstract: Frustrated with lackluster momentum in the WTO Doha Round and the Asia Pacific Economic Cooperation (APEC) forum, and mindful of free trade agreement (FTA) networks centered on the United States and Europe, Asian countries have joined the FTA game. By 2005, Asian countries (excluding China) had ratified 14 bilateral and regional FTAs and had negotiated but not implemented another seven. Asian nations are also actively negotiating some 23 bilateral and regional FTAs, many with non-Asian partners, including Australia, Canada, Chile, the European Union, India, and Qatar. China has been particularly active since 2000. It has completed three bilateral FTAs—Thailand in 2003 and Hong Kong and Macao in 2004—and is initiating another 17 bilateral and regional FTAs. However, a regional Asian economic bloc led by China seems distant, even though China accounts for about 30 percent of regional GDP. As in Europe and the Western Hemisphere, many Asian countries are pursuing FTAs with countries outside the region. On present evidence, the FTA process embraced with some enthusiasm in Asia, Europe, and the Western Hemisphere more closely resembles fingers reaching idiosyncratically around the globe rather than politico-economic blocs centered respectively on Beijing, Brussels, and Washington.
    Keywords: Regional free trade agreements, China, trade liberalization, Asia, FTA strategy
    JEL: F13 F14 N75
    Date: 2005–10

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