nep-sea New Economics Papers
on South East Asia
Issue of 2007‒01‒14
seventeen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Proposed Rules of Origin in Emerging Asia-Pacific Preferential Trade Agreements: Will PTAs Promote Trade and Development? By William E. James
  2. NGOs and the search for Chinese civil society environmental non-governmental organisations in the Nujiang campaign By Büsgen, Michael
  3. Impediments to International Air Transportation Services in Japan: Measuring the Border Effect in Main Japanese Airports By Takamune Fujii; Mariko Futamura
  4. Fiscal Centralization and Decentralization in Russia and China By Elliott Parker; Judith Thornton
  5. Regional Vulnerability : The Case of East Asia By Mody, Ashoka; Taylor, Mark P.
  6. Financial Liberalization and Corporate Debt Maturity in Thailand, 1993-97 By Federico Guerrero; Elliott Parker
  7. Regional varieties of capitalism': inter-firm relations and access to finance in Satun (Thailand) and Perlis (Malaysia) By Andriesse, E.
  8. The role of banking portfolios in the transmission from currency crises to banking crises - potential effects of Basel II By Tobias Knedlik; Johannes Stöbel
  9. Foreign investment liberalization and incentives in selected Asia-Pacific Developing Countries:Implications for the health service sector in Nepal By Nephil Matangi Maskay; Rajan Krishna Panta; Bishnu Prasad Sharma
  10. Rethinking the Role of Agriculture and Agro-Industry in the Economic Development of Thailand: Input-Output and CGE Analyses (Ph.D. Dissertation) By Thaiprasert, Nalitra
  11. Can Fluctuations of Money (M2) Help Predict Future Fluctuations of Income (GDP)? An Empirical Investigation on Malaysian Data By Feridun, Mete
  12. Impact of FDI on Economic Development: A Causality Analysis for Singapore, 1976 - 2002 By Feridun, Mete
  13. Children, childhood and migration By HUIJSMANS, R.
  14. Emergence and Transformation of Clusters and Milieus By Antonio Vazquez-Barquero
  15. The Role of Freight Villages to the Development of the Balkan Region. The Case of Promachon Freight Village (Greek Bulgarian Borders) By Evangelos Kyriazopoulos; Maria - Athina Artavani
  16. The Single Global Currency: Common Cents for the World By Bonpasse, Morrison
  17. Knowledge and Innovation in the Indonesian Artisanal Furniture Industry By Marina van Geenhuizen; Nurul Indarti

  1. By: William E. James (Nathan Associate, Inc)
    Abstract: World trade is increasingly being dominated by preferential trade agreements that have taken precedence over multilateral trade negotiations. Within Asia and the Pacific an explosion of bilateral deals is taking place that seems likely to produce a tangle of hub-spoke trade blocs centered on major Asian or Pacific countries.
    Keywords: Rules of Origin, Preferential Trade Agreements
    JEL: F1
    Date: 2006–08
  2. By: Büsgen, Michael
    Keywords: voluntary organizations; nonprofit organizations; grass roots groups; environmentalism; civil society; advocacy; China;
    Date: 2006
  3. By: Takamune Fujii; Mariko Futamura
    Abstract: In this paper, we investigate the effectiveness of international passenger air transportation services in Japan by quantifying the “border effect.†In order to measure the border effect, we employ the basic gravity model for explaining intra- and international passenger flow in Japan as a benchmark model at first. And then, “border effect†dummy variable is introduced to quantify the diminishing effect to passenger flow in case of international travel. If the dummy variable has negative and statistically significant coefficient, international passenger flow in Japan is smaller than intranational flow. Bilateral passenger flow data among main Japanese airports and between Japanese airport and foreign one is used for our empirical estimation, and the dummy variable shows negative coefficient. This result implies that international passenger flow is diminished by some impediments such as political regulation, institutional inefficiency, and so on. For instance, entry barrier for new carrier or market access restriction to airport services in international airline may have decreasing effect to international passenger flow because of high services cost, and poorly established infrastructure like international air terminal or tiresome immigrant / emigrant procedure may decline passengers’ incentives for traveling abroad or visiting Japan. Unfortunately we cannot specify the reason why international passenger flow is so small because we just measure the difference between international and intranational flow. However, if there are really some impediments in international air transportation services, those may be disadvantageous for Japanese airports to compete with other Asian international hub airports.
    Date: 2006–08
  4. By: Elliott Parker (Department of Economics, University of Nevada, Reno); Judith Thornton (Department of Economics, University of Washington)
    Abstract: In this paper we review the fiscal evolution of China and Russia, asking how the process of creating a separate, tax-financed public sector in the two countries differed. We observe that the size of China's budget sector was consistently smaller than in Russia and that budget decentralization was consistently greater. We see both pros and cons in China's decentralization. Local governments that were allowed to keep marginal increases in local tax revenue had incentives to pursue growth-supporting policies, including support for foreign investment and export-oriented production. However, in the absence of financial markets, there were barriers to investment outside the local region, resulting in inefficient use of capital and protectionism. Fiscal deficits and rapid expansion of credit have threatened stability in both countries, but China has proved more successful than Russia in managing macroeconomic policies. Finally, we argue that Russia's status as a petro-state makes management of the public sector particularly difficult. In Russia, recentralization has been associated with expansion of state ownership of enterprises and production by territorial governments, state ministries, state banks, and the natural monopolies.
    Keywords: Fiscal decentralization, Russia, China, regional growth
    JEL: H6 H7 P35
    Date: 2006–12
  5. By: Mody, Ashoka (International Monetary Fund); Taylor, Mark P. (University of Warwick and Centre for Economic Policy Research)
    Abstract: In a case study of six East Asian economies, we use dynamic factor analysis to estimate a regional component of the exchange market pressure index (EMPI) as a measure of regional financial stress. The extent to which this indicator is explained by regional economic and financial factors is interpreted as regional vulnerability to crisis. We find that regional external liabilities and exuberance in domestic stock and credit markets, as well as the US high yield spread, were positively correlated with regional vulnerability. Individual country EMPIs are also explained by regional factors, with country-specific factors and trade linkages playing little role.
    Keywords: currency crisis ; contagion ; vulnerability ; dynamic factor analysis
    JEL: F31 F32 F36
    Date: 2006
  6. By: Federico Guerrero (Department of Economics, University of Nevada, Reno); Elliott Parker (Department of Economics, University of Nevada, Reno)
    Abstract: Excessive short-term debt is thought to be one of the major causes of the Asian financial crisis, and this paper documents the changes in the maturity of corporate debt in Thailand during a period of rapid integration with international capital markets. Using data from publicly-traded Thai corporations for the period 1993-97, we find that the evidence is weak at best that financial liberalization brought about by globalization reduced the maturity of corporate debt contracts, and the evidence may in fact support an increase in maturity. This result casts some doubts on the generality of the idea that financial liberalization created the short-term debt problem.
    Keywords: Globalization, financial liberalization, corporate debt maturity, Thailand
    JEL: G32 G15 D92 E65 F39
    Date: 2006–11
  7. By: Andriesse, E.
    Keywords: finance; venture capital; enterprises; networks; Thailand; Malaysia;
    Date: 2006
  8. By: Tobias Knedlik; Johannes Stöbel
    Abstract: This paper evaluates the potential effects of the Basel II accord on preventing the transmission from currency crises to financial crises. By analyzing the case study of South Korea, it shows how mismatches on banks’ balance sheets were the primary cause for such a transmission, and models how Basel II would have affected those balance sheets. The paper shows that due to South Korea’s positive credit rating in the months leading up to the crisis, the regulatory capital reserves under Basel II would have been even lower than those under Basel I, and that therefore Basel II would have had adverse effects on the development of the crisis. In the second part, the article analyses whether the behavior of rating agencies has changed since their failure to predict the Asian crisis. The paper finds no robust econometric evidence that rating agencies have started to take micromismatches into account when assigning sovereign ratings. Thus, given the current approach of credit rating agencies, we have reservations concerning the effectiveness of Basel II to prevent the transmission from currency crises to banking crises, both for the case of South Korea and for potential future crises.
    Keywords: Asian Financial Crisis, Bank Portfolios, Currency Mismatch, Maturity Mismatch, Basel II, Credit Ratings
    JEL: F3 F40 G15 G28
    Date: 2006–12
  9. By: Nephil Matangi Maskay; Rajan Krishna Panta; Bishnu Prasad Sharma (Tribhuvan University)
    Abstract: The prime objective and main research questions of the study are: 1) What are the practices of service sector investment liberalization and incentives from selected developing countries, and 2) How those experiences can be applied to the investment liberalization and provision of incentives in the Nepalese services sector, with focus on the health service sector? It should be pointed out that a country’s liberalizing strategy refers to a dynamic policy process through a flow in time; however since this study is presently limited to focus on a point in time (e.g. 2003), attention is given to FDI incentives in selected developing countries to tease out lessons of a broad service related investment (health) liberalization strategy.
    Keywords: AFTA,RTA,CEPT
    JEL: F1
    Date: 2006–12
  10. By: Thaiprasert, Nalitra
    Abstract: Thailand’s economic development has been quite successful in terms of achieving high growth rate and reasonable per capita income. The country’s economic performance in terms of the transformation of production and exports are tending toward the normal pattern of increasing share of manufactured products. However, the major problems Thailand is still facing are the late reduction of its agricultural labor force, inequality that has occurred as a result of the development process, and problems in potential of manufacturing industrial sectors. These three issues are made the main discussions of this dissertation. In addition, structural transformation in Thailand has posed many difficulties for the development of Thai agriculture, which is closely related to the welfare of the poor in the rural areas. Therefore, to tackle income distribution problems directly requires that farmers be given new opportunities. Agro-industry and high value-added agricultural sectors were proposed as the key sectors to improve inequality problems, smoothen employment transformation, generate high growth and induce high output production, and act as a bridge connecting Thai primary agriculture with the modern sectors. Agro-industry was proposed to be promoted in the rural areas for closer input locations, to shift agricultural workers from primary agriculture, to improve the real wage of farmers, and to prevent extensive urban migration. Qualitative analysis, input-output analysis, SAM analysis, and CGE analysis were applied to aid the discussions, prove the hypothesis, and achieve the objective.
    Keywords: Structural transformation; Thai agriculture; Thai agro-industry; Income distribution; Thailand's economic development; Thailand's economic growth; Input-output analysis; SAM analysis; CGE analysis
    JEL: O41 Y4 O4 O21 O11 O24 O13 O1 O14 O2 O18
    Date: 2006–04
  11. By: Feridun, Mete
    Abstract: The paper aims at establishing whether the fluctuations of money help predict future fluctuations of income, that are not already predictable on the basis of fluctuations of income itself or other readily observable variables. For this purpose vector autoregression (VAR) modelling is used to test whether changes in money supply (M2) has any deterministic or predictive content for movements in Income (GDP). The analysis is performed using quarterly macroeconomic data from Malaysia spanning the period between 1980 and 2001. The results suggest that money (M2) and interest rates have information content for future movements in real GDP beyond that contained in past values of GDP itself. This relationship only establishes itself with a fairly long lag. The finding suggests the possibility of making use of the money-income relationship for forecasting purposes.
    Keywords: Vector autoregression (VAR); cointegration; causality
    JEL: A20
    Date: 2006
  12. By: Feridun, Mete
    Abstract: This study examines the relationship between economic growth as measured by GDP per capita and foreign direct investment for Singapore, using the methodology of Granger causality and vector auto regression (VAR). Evidence shows that there is a unidirectional Granger causation from foreign direct investment to economic growth.
    Keywords: Granger causality; vector auto regression; economic growth.
    JEL: C01
    Date: 2006
  13. By: HUIJSMANS, R.
    Keywords: children; childhood; labour migration; Lao PDR; Thailand;
    Date: 2006
  14. By: Antonio Vazquez-Barquero
    Abstract: A renewed interest in the location of the productive activity has appeared during the last two decades. The literature analyzes a great number of cases of local productive systems in which all types of activities are produced and which locate in regions and countries with different levels of development (Altenburg and Meyer-Stamer, 1999; Rosenfeld, 1997; Staber, 1997; Porter, 1998). Electronics in Silicon Valley, U.S.A. and Silicon Glen in Scotland, but also in Guadalajara, Mexico and in Penang, Malaysia; the car industry in Detroit, U.S. and in Vigo, Spain, but also in the Gran ABC in the Sao Paulo metropolitan area, Brazil; ceramic tiles in Sassuolo, Italy and in Castellón, Spain, as well as in Criciuma, Brazil; the shoe industry in Brenta, Italy and in Elche, Spain, as well as in León, Guanajuato, Mexico; textiles and the garment industry in Reutlingen, Germany and in La Coruña, España, but also in Itaji Valley, Brazil. Financial services in New York City, in London and in Frankfurt, Germany, but also in Hong Kong and Shanghai, in China. This diversity has been dealt with from different points of view; no doubt due to the fact that sociologists, geographers and economists believe that at the present time the organization of production is going through a profound transformation process. Mass production, integrated in the fordist model of large firm reduces its hegemony and gives way to more flexible forms of organization, as are industrial districts and milieus. This has produced multiple interpretations such as the industrial districts (Becattini, 1979), flexible specialization (Piore and Sabel, 1984), the new industrial spaces (Scott, 1988), industrial clusters (Porter, 1990), the knowledge economy (Cook, 2002), the new economic geography (Krugman, 1991; Fujita et al., 2000), the theory of the innovative milieu (Aydalot, 1986; Maillat, 1995), or economic sociology (Granovetter, 1985). Thus, a single unique interpretation or theory as to how production is organized within the territory does not exist for explaining the factors that make the agglomerations and industrial production centres appear, the mechanisms through which they develop, as well as the reasons for its change and transformation. Gordon and McCann (2000) conclude that the diversity of the analytical approaches led to some degree of confusion in the analyses and interpretations. The paper discusses the question of spatial organization of production from the perspective of economic development. It maintains that the spatial organization of production takes shape, as the markets and relations between cities and regions developed, the transportation and communication system consolidated itself, firms developed their form of organization, innovation and knowledge was introduced in firms and the transportation and communications system, and the economic system integrated itself as a result of globalization. In fact, given that development takes on different forms in each historical period, spatial organization of production also changes and these changes are affected by the territorial strategies of firms and the economic strategies of cities and regions, and they are responsible for the emergence and reconstruction of clusters and milieus.
    Date: 2006–08
  15. By: Evangelos Kyriazopoulos; Maria - Athina Artavani
    Abstract: Freight Villages are very widely used in the processes of trade and transport in Western Europe, Southeast Asia and the U.S.. Freight Villages are places that provide integrated services including the rationalization of trade flows, the combination of transport modes, added value logistics services, uninterrupted city distribution, decongestion of urban traffic etc. This paper attempts to examine the application of an agglomeration economies policy to the wide Balkan market, which is currently undergoing a phase of political and investing stability and of administrative reorganization. These elements will be further reinforced in the future with the accession of two Balkan states in the E.U., namely Bulgaria and Romania, and with the anticipated regularization of trade processes. This new environment undoubtedly favors the development of complex and well-designed trade infrastructures, such as Freight Villages, that are expected to have a strong influence on regional development and on the reduction of product distribution costs. The case of the Freight Village on the Greek – Bulgarian border at Promachonas in Serres is an interesting and original case study for the greater area. The first Freight Village in Greece, with the contribution of the private, public and EU capital has already been in operation since 2001, contributing to the rationalized management of trade flows, the development of cross-border trade, the provision of high quality services to consumers, the increase in employment and to the regional development of the degraded border area of Serres. The variables of the model are based on economic, social, commercial, environmental and other elements and statistical data, as well as on field research at the Freight Village and at the region. Finally, the paper reaches certain conclusions and makes a series of proposals. The conclusions refer to the degree and range of consequences of the Promachonas Freight Village to the regional development of Serres. The proposals refer to the development of a Balkan network of Freight Villages and other secondary transport infrastructures within the framework of the existing and scheduled Trans-European Networks (T.E.N.s), aiming at the regional development of the Balkans.
    Date: 2006–08
  16. By: Bonpasse, Morrison
    Abstract: This is the only book in print in the world about the single global currency, and is the only book in the world priced in 147 currencies. It describes the origins of the current worldwide foreign exchange system, and tells how to change it; and save the world - trillions. The multicurrency foreign exchange trading system was developed about 2,500 years ago to enable people of different currency areas to trade. That system has become far more sophisticated in the meantime and handles $2.5 trillion per day; but it is very expensive and risky. It is now time to replace that system with a single global currency. In a 3-G world with a single global currency managed by a global central bank within a global monetary union: - Annual transaction costs of $400 billion will be eliminated. - Worldwide asset values will increase by about $36 trillion. - Worldwide GDP will increase by about $9 trillion. - Global currency imbalances will be eliminated. - All Balance of Payments problems will be eliminated. - Currency crises will be prevented. - Currency speculation will be eliminated. - The need for foreign exchange reserves, with a current annual opportunity cost of approximately $470 billion, will be eliminated. Such gains are realistic and attainable if the world decides to pursue them. The monetary unions of Europe, the Caribbean, Africa and Brunei/Singapore have shown the way. What the people of the world want is sound, stable money and the end to the obsolete multicurrency foreign exchange system. A single global currency is no longer a utopian dream, but a realistic projection of what has been learned from current monetary unions, especially the euro. Each successive annual edition of this book will be priced in the remaining number of currencies until we reach, in the words of Nobel Prize winner, Robert Mundell, that odd number, preferably less than three: one The world needs to set the goal of a single global currency, to be managed by a global central bank, within a global monetary union, and begin planning - now.
    Keywords: single global currency; money; currency; monetary union; global monetary union; global central bank; global imbalances; current account; balance of payments; transaction charges; foreign exchange; foreign exchange reserves; monetary reserves; gold; international monetary fund; SDR; special drawing rights; optimal currency area; OCA; Robert Mundell; John Stuart Mill; dollar; European Monetary Union; euro; European Central Bank; Single Global Currency Association; Bretton Woods; John Maynard Keynes; bancor; dollarization; euroization; exchange rate; exchange rate regime; peg; float;
    JEL: F33 F02 F31
    Date: 2006–04–24
  17. By: Marina van Geenhuizen; Nurul Indarti
    Abstract: In developed countries, localized learning in clusters of small and medium-sized firms is seen as beneficial for innovation in these firms. This paper questions whether such a situation is also true for small firms in developing countries. By examining 90 furniture manufacturers in the district of Jepara (Indonesia) we observe knowledge access mainly through one-sided local learning mechanisms, e.g. in-house learning-by-doing and informal contacts with buyers (contractors). This pattern tends to cause a dominance of product innovation (changes in design) and low levels of newness, and points to a lack of advantages from local learning. The major principle behind this is the way in which subcontracting relations are structured. However, the furniture manufacturers in Jepara are willing to connect with global knowledge, but financial obstacles prevent a change. This situation calls for the establishment of centres or renewal of existing centres where global knowledge can be accessed e.g. through the Internet, and support can be given in absorption of the new knowledge.
    Date: 2006–08

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