nep-sea New Economics Papers
on South East Asia
Issue of 2005‒11‒19
ten papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Monitoring Corruption: Evidence from a Field Experiment in Indonesia By Benjamin A. Olken
  3. China's capital account convertibility and financial stability By James Laurenceson; Kam Ki Tang
  4. Health Effects of Child Work: Evidence from Rural Vietnam By Owen A O'Donnell; Furio C. Rosati
  5. The Effects of Life Expectancy on Fiji's Output: A Time Series Approach from 1970 to 2002 By B Bhaskara Rao; Fozia Nisha; Biman C Prasad
  7. Testing Permanent Income Hypothesis for Fiji By B Bhaskara Rao
  8. Employment in China: Recent trends and future challenges By Ajit Ghose
  9. WTO General Council Decision of July 31, 2004: Interpreting from Bangladesh Perspective By Mustafizur Rahman; Ananya Raihan
  10. Road to Hong Kong Ministerial of the WTO: Anticipating the “First Approximations” from Bangladesh Perspective By Debapriya Bhattacharya; Mustafizur Rahman; Uttam Kumar Deb; Fahmida Khatun; Ananya Raihan

  1. By: Benjamin A. Olken
    Abstract: This paper uses a randomized field experiment to examine several approaches to reducing corruption. I measure missing expenditures in over 600 village road projects in Indonesia by having engineers independently estimate the prices and quantities of all inputs used in each road, and then comparing these estimates to villages' official expenditure reports. I find that announcing an increased probability of a government audit, from a baseline of 4 percent to 100 percent, reduced missing expenditures by about 8 percentage points, more than enough to make these audits cost-effective. By contrast, I find that increasing grass-roots participation in the monitoring process only reduced missing wages, with no effect on missing materials expenditures. Since materials account for three-quarters of total expenditures, increasing grass-roots participation had little impact overall. The findings suggest that grass-roots monitoring may be subject to free-rider problems. Overall, the results suggest that traditional top-down monitoring can play an important role in reducing corruption, even in a highly corrupt environment.
    JEL: D73
    Date: 2005–11
  2. By: Emma Xiaoqin Fan; Jesus Felipe
    Abstract: This paper documents the diverging patterns of capital accumulation, profit rates, investment rates, capital productivity and technological progress of China and India since 1980. It is concluded that the two Asian economies have followed very different growth patterns, and as a consequence, they face different challenges for the future. India's problem is how to accelerate growth, while China's is how to sustain it. India must address impediments to investment so as to increase its investment rate. China must deal with the question of whether investment can continue being the main source of growth given that profit rates and capital productivity are decreasing and that the economy has created substantial excess capacity.
    JEL: O10 O30 O40 O53 O57
    Date: 2005–11
  3. By: James Laurenceson; Kam Ki Tang (EAERG - School of Economics, The University of Queensland)
    Abstract: Capital account convertibility in China is on the rise. Some see the process as a means of circumventing domestic financial sector inefficiency while others view it as potentially exposing China to financial crises. In considering these different viewpoints, this paper attempts to quantify the impact that opening the capital account will have on the volume of China’s international capital flows. It is found that were China to fully open its capital account, gross non-FDI capital flows are predicted to rise by around 4.6 percent of GDP. While an increase of this magnitude would present a prudential challenge for China’s monetary authorities, it does not appear to be large enough to seriously call into question financial sector stability, either in China or abroad.
  4. By: Owen A O'Donnell (University of Macedonia); Furio C. Rosati (UCW Project; Erasmus University Rotterdam - Department of Health Policy and Management)
    Abstract: We test whether work in childhood impacts on health. We focus on agricultural work, the dominant form of child work worldwide. Data are from the Vietnam Living Standards Survey, 1992-93 and 1997-98. We correct for both unobservable heterogeneity and simultaneity biases. Instruments include small area labour market and education conditions obtained from community level surveys. We use three indicators of health: body mass index; reported illness; and, height growth. There is clear evidence of a healthy worker selection effect. We find little evidence of a contemporaneous impact of child work on health but work undertaken during childhood raises the risk of illness up to five years later and the risk is increasing with the duration of work. There is no evidence that work impedes the growth of the child.
    Keywords: Child labour, health, Vietnam
    JEL: I12 J13 J22 J28 J43
    Date: 2004–04–07
  5. By: B Bhaskara Rao (University of the South Pacific); Fozia Nisha (University of the South Pacific); Biman C Prasad (University of the South Pacific)
    Abstract: Compared to several cross-country studies on the determinants of growth, time series approaches are relatively few and limited in scope. However, time series studies are useful for country-specific policies. But in the recent time series works, with a few exceptions, ad hoc specifications of output and growth equations are used. This paper examines the specification and estimation issues in the time series approach to the determinants of output. Our approach is used to measure the effects of health on the output of Fiji for the period 1970 to 2002.
    Keywords: The Solow Growth Model, Production Function, General to Specific Approach, Effects of Health on Output.
    JEL: C6
    Date: 2005–11–10
  6. By: B Bhaskara Rao (University of the South Pacific); Rup Singh (University of the South Pacific)
    Abstract: Demand for money is an important macroeconomic relationship. Its stability has implications for the choice of monetary policy targets. This paper estimates demand for narrow money in Fiji and evaluates its robustness and stability. It is found that there is a well determined stable demand for money in Fiji, for three decades, from 1971 to 2002 and its dynamics are adequately captured by the cointegration and error- correction models. Income and interest rate elasticities are found to be significant.
    Keywords: Demand for money, Monetary policy, Income and interest rate elasticities, Cointegration, Error correction, Unit roots, Stability.
    JEL: C1 C5
    Date: 2005–11–11
  7. By: B Bhaskara Rao (University of the South Pacific)
    Abstract: Hall $(1978)$ has stimulated considerable controversy and empirical work on testing the validity of the permanent income hypothesis $(PIH)$. Much of this work is on the developed countries. In the developing countries incomes show larger fluctuations and for the majority opportunities for inter-temporal substitution are limited. This paper uses the extended framework of Campbell and Mankiw (1989) and finds that current consumption is determined by current income for more than two thirds of the consumers in Fiji.
    Keywords: Consumption function, Developing countries, Fiji, Permanent income hypothesis, Hall's random walk hypothesis, Campbell-Mankiw tests.
    JEL: C1 C5
    Date: 2005–11–11
  8. By: Ajit Ghose
    Date: 2005–10
  9. By: Mustafizur Rahman; Ananya Raihan
    Abstract: The present paper titled WTO General Council Decision of July 31, 2004: Interpreting from Bangladesh Perspective was prepared under the CPD’s Trade Policy Analysis (TPA) programme. The TPA programme of CPD was initiated in 1999 in response to a felt need to enhance Bangladesh’s capacity to more effectively deal with the emerging trade issues in the face of deregulation, liberalisation and globalisation. The successful completion of the Uruguay Round Agreement in 1994 and the establishment of the WTO in 1995 was expected to have crucial implications for the LDCs such as Bangladesh. In the 1990s Bangladesh economy was becoming increasingly open and trade related policy making and trade negotiations were assuming critical importance for Bangladesh’s future development. In view of the emerging challenges in the context of the ongoing process of globalisation, the objective of CPD’s Trade Policy Analysis programme is to monitor the impact of the evolving trading regime under the WTO on Bangladesh economy with a view to support trade related capacity building process in the country by strengthening CPD’s institutional capacity in the areas of (a) trade related research, (b) preparation of policy briefs, (c) organisation of dialogues, (d) organisation of workshop and training, (e) strengthening trade related documentation, and (f) trade related publication and networking. The present paper on WTO General Council Decision of July 31, 2004: Interpreting from Bangladesh Perspective has been prepared by Professor Mustafizur Rahman, Research Director of CPD and Dr. Ananya Raihan, Research Fellow of CPD. The paper looks at the salient features of July 31 text, identification of departure of it from the Cancun draft text (progression or regression) from an LDC perspective and to put forward some suggestions as regards issues which Bangladesh could pursue in the course of future negotiations in the run up to the Sixth Ministerial Meeting to be held in Hong Kong by the end of 2005.
    Keywords: WTO-General Council, Bangladesh
    JEL: F10
    Date: 2005–01
  10. By: Debapriya Bhattacharya; Mustafizur Rahman; Uttam Kumar Deb; Fahmida Khatun; Ananya Raihan
    Keywords: WTO-General Council, Bangladesh
    JEL: F10
    Date: 2005–05

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