nep-sea New Economics Papers
on South East Asia
Issue of 2006‒06‒10
nine papers chosen by
Kavita Iyengar
Asian Development Bank

  1. A Comparison of Reform-Era Labor Force Participation Rates of China’s Ethnic Minorities and Han Majority By Margaret Maurer-Fazio,; James W. Hughes; Dandan Zhang
  2. A Quantitative Analysis of China’s Structural Transformation By Robert Dekle; Guillaume Vandenbroucke
  3. Interest Income and Household Savings: Evidence Based on the Maturation of Postal Savings Certificates By Noriko Inakura; Satoshi Shimizutani
  4. The Impact of Trade Reform in the 1990s on Welfare and Poverty in the Philippines By Caesar B. Cororaton
  5. Evaluating Foreign Exchange Market Intervention: Self-Selection, Counterfactuals and Average Treatment Effects By Rasmus Fatum; Michael M. Hutchison
  6. Population Aging, Fiscal Policies, and National Saving: Predictions for Korean Economy By Young Jun Chun
  7. Agriculture-sector Policies and Poverty in the Philippines: a Computable General-Equilibrium (CGE) Analysis By Caesar B. Cororaton; Erwin L. Corong
  8. Foreign Direct Investment and the Nature of the Imitation Process By Helene, LATZER
  9. A cross-country evaluation of cheating in academia: is it related to ‘real world’ business ethics? By Maria Fátima Rocha; Aurora A.C. Teixeira

  1. By: Margaret Maurer-Fazio,; James W. Hughes; Dandan Zhang
    Abstract: Previous research suggests that minorities are not faring well in China’s transition—both income and occupational attainment gaps are widening. We are particularly interested in whether the differences in majority and minority economic outcomes are the result of ethnicity per se, or whether they are artifacts of local economic conditions. In this paper, we employ data from the three most recent population censuses of China to explore differences in the labor force participation rates of a number of China’s important ethnic groups. We estimate urban labor force participation rates using probit regressions controlling for sex, marital status, educational attainment, age, ethnicity, and location. We also account for the geographic concentration of particular ethnic minorities and compare the participation rates of different ethnic groups within geographic regions that represent the areas of principal residence for each minority. We concentrate on seven important minority groups: Hui, Koreans, Manchu, Mongolians, Uygurs, Yi and Zhuang. We find that location has limited explanatory power in explaining differences in the probability of labor force participation between these important Chinese ethnic minorities and the majority Han.
    Keywords: China, ethnic minorities, labor force participation, economic reform, population censuses
    JEL: J1 J2 J7 O1 O5 P2
    Date: 2005–11–01
  2. By: Robert Dekle; Guillaume Vandenbroucke
    Abstract: Between 1978 and 2003 the Chinese economy experienced a remarkable 5.7 percent annual growth of GDP per labor. At the same time, there has been a noticeable transformation of the economy: the share of workers in agriculture decreased from over 70 percent to less than 50 percent. We distinguish three sectors: private agriculture and nonagriculture and public nonagriculture. A growth accounting exercise reveals that the main source of growth was TFP in the private nonagricultural sector. The reallocation of labor from agriculture to nonagriculture accounted for 1.9 percent out of the 5.7 percent growth in output per labor. The reallocation of labor from the public to the private sector also accounted for a significant part of growth in the 1996- 2003 period. We calibrate a general equilibrium model where the driving forces are public investment and employment, as well as sectorial TFP derived from our growth accounting exercise. The model tracks the historical employment share of agriculture and the labor productivities of all three sectors quite well.
    Keywords: China, structural transformation, growth
    JEL: O41 O53
    Date: 2006–05
  3. By: Noriko Inakura; Satoshi Shimizutani
    Abstract: Japan's traditionally high household saving rate has declined substantially since the early 1990s. While this decline is often explained as a result of the rapid increase in the population share of the elderly who are dissaving, we argue that the cause is a decline in interest income triggered by falling interest rates. To examine our hypothesis, we focus on the effect of the maturation of relatively high-yielding postal savings certificates. Estimating a savings function, we find that the reduction in interest income caused by the maturation of the postal saving certificates reduced household saving rates by 3 percentage points.
    Keywords: interest rate income, household saving rate, postal saving certificate
    JEL: D12 E21 G29
    Date: 2006–05
  4. By: Caesar B. Cororaton
    Abstract: This paper analyzes the impact of trade reform on welfare and poverty in the Philippines in the 1990s using a CGE model. The results indicate that while welfare rises and poverty falls for all household groups except the poorest (those with rural unskilled private employees as household head), urban households gain more than rural households. Policy experiments involving full tariff reduction and uniform five percent tariff rate indicate generally the same pattern of effects, except that the magnitude of change is relatively larger in the former while all household groups, including the poorest, experience a reduction in poverty in the latter. Since poverty remains high and the disparity between rural and urban poverty is still wide, other poverty-reducing measures have to be designed and implemented to target those households that do not benefit much from this type of market reform.
    Keywords: Computable general equilibrium, International trade, Poverty, Philippines
    JEL: D33 D58 E27 F13 F14 I32 O15 O53
    Date: 2006
  5. By: Rasmus Fatum (School of Business, University of Alberta); Michael M. Hutchison (Department of Economics, University of California Santa Cruz)
    Abstract: Studies of central bank intervention are complicated by the fact that we typically observe intervention only during periods of turbulent exchange markets. Furthermore, entering the market during these particular periods is a conscious “self-selection” choice made by the intervening central bank. We estimate the “counterfactual” exchange rate movements that allow us to determine what would have occurred in the absence of intervention and we introduce the method of propensity score matching to the intervention literature in order to estimate the “average treatment effect” (ATE) of intervention. Specifically, we estimate the ATE for daily Bank of Japan intervention over the January 1999 to March 2004 period. This sample encompasses a remarkable variation in intervention frequencies as well as unprecedented frequent intervention towards the latter part of the period. We find that the effects of intervention vary dramatically and inversely with the frequency of intervention: Intervention is effective over the 1999 to 2002 period, ineffective during 2003 and counterproductive during the first quarter of 2004.
    Keywords: foreign exchange intervention; Bank of Japan; self-selection, matching methods
    JEL: E58 F31 G15
    Date: 2006–05
  6. By: Young Jun Chun
    Abstract: This paper evaluates the effects of population aging and fiscal policies on national saving in Korean situation. For the prediction of the national savings rate of Korea for the next several decades, we employ a life-cycle model, which incorporates the generational accounting approach needed to assess the distribution of fiscal burden across generations. We found that the rapid population aging and long-term budgetary imbalance will substantially lower the national savings rate in Korea. A sensitivity analysis based on an alternative model, an altruistic family model, shows that these predictions are robust to the specification of altruism among generations. In addition, the estimation results of consumption functions with respect to various kinds of wealth suggest that the annuitization of wealth due to maturing of public pensions and introduction of reverse annuity mortgage is likely to further decrease the savings rate in the future.
    JEL: H3 H60 E21
    Date: 2006–05
  7. By: Caesar B. Cororaton; Erwin L. Corong
    Abstract: The Philippines has undertaken substantial trade-policy reforms since the 1980s. However, the poverty impact is not very clear and has been the subject of intense debate, most crucial of which is the likely poverty effects of liberalizing the highly protected agricultural sector. A CGE micro-simulation model is employed to estimate and explain these impacts. Tariff reduction induces consumers to substitute cheaper imported agricultural products for domestic goods, thereby resulting in a contraction in agricultural output. In contrast, the prevalence of cheap, imported inputs reduces the domestic cost of production, benefiting the outward-oriented and import-dependent industrial sector as their output and export increases. The national poverty headcount decreases marginally as lower consumer prices outweigh the income reduction experienced by the majority of households. However, both the poverty gap and severity of poverty worsens, implying that the poorest of the poor become even poorer.
    Keywords: Agriculture, International trade, Poverty, Computable general equilibrium, Micro-simulation, Philippines
    JEL: D58 E27 F13 I32 O13 O15 O24 O53 Q10
    Date: 2006
  8. By: Helene, LATZER (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)
    Abstract: We study the optimal imitation strategy of a developing country having access to both imitation through trade and imitation through Foreign Direct Investments (FDIs). We base ourselves on an extension of the Romer ‘variety model’ (1990) of technology-driven growth, and find that the two types of imitation are substitutes and not complements. We characterize a condition on the technology level transferred by multinational foreign firms for imitation through FDI to be optimal, and study the effect of a technological acceleration.
    JEL: F23 O33 O40
    Date: 2006–05–05
  9. By: Maria Fátima Rocha (Faculdade de Economia, Universidade do Porto and Universidade Fernando Pessoa); Aurora A.C. Teixeira (CEMPRE, Faculdade de Economia, Universidade do Porto)
    Abstract: Today’s economics and business students are expected to be our future’s business people and potentially our tomorrow’s economic leaders and politicians. Thus, their beliefs and practices are likely to affect the definition of acceptable economics and business ethics. The empirical evaluation of the cheating phenomenon in academia has been almost exclusively focused on the US context, and the non-US studies involve, in general, a narrow scope of countries. In the present paper we perform a wide cross-country study on the determinants of economics and business undergraduate cheating which involves 21 countries from the American (4), European (14), Africa (2) and Oceania (1) Continents and 7213 students. We found that the average magnitude of copying among the economics and business undergraduates is quite high (62%) but with a significant cross-country heterogeneity. The probability of cheating is significantly lower in students enrolled in schools located in the Nordic or the US plus British Isles blocks when compared with their South Europe counterparts; quite surprisingly that probability is also lower for the African block. Distinctly, students enrolled in schools from the Western and especially from the Eastern Europe observe statistically significant higher propensities for perpetrating academic fraud. Our findings further suggest that average cheating propensity in academia is significantly correlated with ‘real world’ business corruption.
    Keywords: cheating; corruption; university; economics; business; countries
    JEL: A22 I23
    Date: 2006–06

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