nep-sea New Economics Papers
on South East Asia
Issue of 2007‒02‒03
twenty papers chosen by
Kavita Iyengar
Asian Development Bank

  1. The "Catching up" Process of Manufacturing in East Asia By Hiratsuka, Daisuke
  2. Rules of Origin and Local Content in East Asia By Kuroiwa, Ikuo
  3. Trade, Exchange Rates, and Macroeconomic Dynamics in East Asia: Why the Electronics Cycle Matters By Kumakura, Masanaga
  4. Chairmanship in ASEAN+3:A Shared Rule of Behavior By Suzuki, Sanae
  5. Economic Reforms and Income Inequality in Urban China By Okushima, Shinichiro; Uchimura, Hiroko
  6. Effectiveness and Challenges of Three Economic Corridors of the Greater Mekong Sub-region By Ishida, Masami
  7. Mass Unemployment in South Africa: A Comparative Study with East Asia By Hirano, Katsumi
  8. East Asia's Economic Development cum Trade "Divergence" By Ishido, Hikari
  9. Outward FDI from and intraregional FDI in ASEAN : trends and drivers By Hiratsuka, Daisuke
  10. Estimation Technique of International Input-Output Model by Non-survey Method By Okamoto, Nobuhiro; Sano, Takao; Inomata, Satoshi
  11. The Regional Development Policy of Thailand and Its Economic Cooperation with Neighboring Countries By Tsuneishi, Takao
  12. Monetary and Exchange Rate Policy in Malaysia before the Asian Crisis By Umezaki, So
  13. Prioritization of Policies: A Prototype Model of a Flowchart Method By Kuchiki, Akifumi
  14. Towards the Compilation of a Consistent Asian International I-O Tableï¼The Report of the General Survey on National I-O Tablesï¼ By Inomata, Satoshi
  15. Business Cycles and Seasonal Cycles in Bangladesh By Rahman, Pk. Md. Motiur; Yamagata, Tatsufumi
  16. The Asset Management Industry in Asia: Dynamics of Growth, Structure, and Performance By Ingo Walter; Elif Sisli
  17. Career Crisis? Impacts of Financial Shock on the Entry-Level Labor Market: Evidence from Thailand By Machikita, Tomohiro
  18. Theoretical Models Based on a Flowchart Approach to Industrial Cluster Policy By Kuchiki, Akifumi
  19. Is Learning by Migrating to a Megalopolis Really Important? Evidence from Thailand By Machikita, Tomohiro
  20. Are Job Networks Localized in a Developing Economy? Search Methods for Displaced Workers in Thailand By Machikita, Tomohiro

  1. By: Hiratsuka, Daisuke
    Abstract: This paper examines the "catching up" process of manufacturing in East Asia within the framework of North and South location. Results of this study indicate that latecomers of the ASEAN Four and China have advanced the "catching up" process. At the same time, second-runners of the Asian NIES have more extensively increased their "catching up" with Japan. Most "catching up" was realized in a very short period in the 1990s, and the advancement of the "catching up" process has moved into various industries from nondurable products to light machinery products. However, it has not yet advanced in heavy machinery such as in the industrial machinery and machine tool industries.
    Keywords: Manufacuturing industries, Industrial policy, ASEAN (Association of Southeast Asian Nations), East Asia, Southeast Asia
    Date: 2007–01
  2. By: Kuroiwa, Ikuo
    Abstract: Rules of Origin (RoO) are an integral part of all trade rules. In order to be eligible for Common Effective Preferential Tariffs (CEPT) under AFTA and similar arrangements under the ASEAN-China FTA, a product must satisfy the conditions relative to local content. The paper tries to calculate local content as well as cumulative local content in East Asian economies, with use of the Asian International Input-Output Tables; it also investigates factors of change in local content by applying decomposition analysis. The paper finds that the cumulation rule increased local content of the electronics industry more significantly than local content of the automotive industry, and the contribution of the cumulation rule increased in the period 1990-2000, due to rising dependency on neighboring ASEAN countries and China.
    Keywords: Rules of origin, Local content, International input-output tables, Southeast Asia, East Asia, China, ASEAN, Trade policy, International trade, International agreements, Manufacturing industries
    JEL: C67 F15 L60
    Date: 2007–01
  3. By: Kumakura, Masanaga
    Abstract: Against the background of increasing regional trade and investment, there is growing interest in monetary and macroeconomic policy coordination in East Asia. Although there is a sizable literature on macroeconomic linkages among East Asian countries and the potential merit of policy coordination in the region, the existing studies tend to examine these issues exclusively in terms of macroeconomic variables and do not consider how these aggregate variables are influenced by one prominent feature of a number of East Asian economies: their heavy dependence on the electronics industry. Although active engagement in the global electronics industry has been a powerful growth engine for the Asian countries, it has also left their economies vulnerable to cyclical fluctuations in the world electronics market. As the cycle of the global electronics industry exerts profound impacts on the medium-term dynamics of the Asian economies, it is imperative to take an explicit account of its influence when studying the way in which the regional economies are linked to one another and how this relationship can be altered by a specific policy initiative. We illustrate the importance of this point by examining recent studies on: (1) trade competition between China andother Asian countries and the role of the Chinese renminbi therein; and (2) the effect offluctuations in the yen/dollar exchange rate on the regional economies.
    Keywords: Electronics cycle, Export competition, Renminbi, Yen/dollar exchange rate, Electronics, International trade, Foreign exchange, East Asia, Southeast Asia
    JEL: F14 F15 F33
    Date: 2006–10
  4. By: Suzuki, Sanae
    Abstract: ASEAN+3 is a cooperative framework among ASEAN members and the countries of Japan, China and Korea. It functions at the senior official, ministerial and summit levels. This article concerns how institutions in ASEAN+3 affect development of the direction and nature of this framework. ASEAN+3 is regarded as a loose framework that has regularized meetings as its main activity but has no organizational settings such as the secretariat. Little institutional analysis has been conducted on the development of this framework. This article introduces ‘Chairmanship' as an analytical concept in which the chair or chairing member plays an important role in preparing and managing meetings. ‘Chairmanship' is therefore an institution with an organizational element. It is also a shared rule of behavior among member states in that the chair's roles are not explicitly written in documents. Thus, it can be argued that the ASEAN+3 framework has an institution with an organizational element that affects development of its characteristics.
    Keywords: ASEAN+3, Chairmanship, The chair, ASEAN, Preparation of meetings, Regional economic cooperation, International economic relations, Southeast Asia, Japan, China, South Korea
    Date: 2006–12
  5. By: Okushima, Shinichiro; Uchimura, Hiroko
    Abstract: This paper reports the results of an analysis of changes in income inequality, and in its determinants, in urban China since the economic reforms that began in 1978. The intention is to identify new characteristics of economic inequality. It first shows that income differentials acrossand in provinces widened and that their economic rankings were becoming fixed during the period from 1988 to 1995. Second, age was the major factor in inequality in 1988, while education became the important factor in 1995. Third, education significantly contributed to increasing inequality during the period. Fourth, the higher education-level groups had less within-group inequality. These changes reflect the penetration of the market mechanism into China after the reforms. However, this will be problematic without equality of opportunity.
    Keywords: Asia, China, Income inequality, Economic reform, Education, Urban, Income distribution, Economic policy
    JEL: D31 J31 P20
    Date: 2006–10
  6. By: Ishida, Masami
    Abstract: Since the Greater Mekong Sub-region (GMS) program began in 1992, activities have expanded and flourished. The three economic corridors are composed of the East-West, North-South, and Southern; these are the most important parts of the flagship program. This article presents an evaluation of these economic corridors and their challenges in accordance with the regional distribution of population and income, population pyramids of member countries, and trade relations of member economies.
    Keywords: GMS, Mekong, Population, Trade, Human resources, Economic development, Income distribution, International trade, Southeast Asia, Thailand, Cambodia, Laos, Myanmar, Vietnam, China
    JEL: F10 J60 O22 R12
    Date: 2006–10
  7. By: Hirano, Katsumi
    Keywords: Employment, Unemployment, South Africa, Malaysia
    Date: 2006–10
  8. By: Ishido, Hikari
    Abstract: This paper addresses some salient features of how some of "successful" East Asian economies have been faring in terms of enhancing their export competitiveness. That export becomes more divergent in terms of its unit price as more technology-enhancing economic activity is undertaken within an economy, is the primary message that this study conveys. This is indeed what Schumpeter had addressed in conjunction with his "creative destruction" thesis. From this perspective, East Asia's export-led industrialization has been attained through a particular policy focus upon high "trade divergence" sectors underpinned by a generally high level of manufacturing flexibility. The experience of Malaysia's development serves as the strong case in point. As an East Asia-wide FTA is expected to facilitate "divergent" export-led industrialization through enhanced knowledge interaction, this dynamic or "divergent" impact that knowledge creation could exert should come to the fore of relevant policy arguments, together with static consideration of trade creation and diversion. A formal statistical test of the "divergence hypothesis" above is called for with a view to building upon this preliminary study.
    Keywords: International trade, Trade policy, International competition, Exports, Asia, East Asia
    JEL: F10 F13 O10
    Date: 2007–01
  9. By: Hiratsuka, Daisuke
    Abstract: Developing-country transnational corporations (TNCs) are increasing in importance in the global economy. Outward FDI from developing countries is a proxy indicator to measure how much of an important role enterprises of developing countries have played in the world market and how they benefit from globalization where border barriers are reduced. This study finds that ASEAN enterprises have extended their business activities within ASEAN, East Asia, and then to the world, as both regional and global players.
    Keywords: Economic integration, International economic integration, FDI, Southeast Asia, Foreign investments, ASEAN
    JEL: F15 F23 O53
    Date: 2006–11
  10. By: Okamoto, Nobuhiro; Sano, Takao; Inomata, Satoshi
    Abstract: The Asian International Input-Output (IO) Table that is compiled by Institute of Developing Economies-JETRO (IDE), was constructed in Isard type form. Thus, it required a lot of time to publish. In order to avoid this time-lag problem and establish a more simple compilation technique, this paper concentrates on verifying the possibility of using the Chenery-Moses type estimation technique. If possible, applying the Chenery-Moses instead of the Isard type would be effective for both impact and linkage analysis (except for some countries such as Malaysia and Singapore and some primary sectors. Using Chenery-Moses estimation method, production of the Asian International IO table can be reduced by two years. And more, this method might have the possibilities to be applied for updating exercise of Asian IO table.
    Keywords: International Input-Output, Non-survey, Chenery-Moses, Compilation, Input-output tables, Econometric model, Asia
    JEL: C67 D57
    Date: 2007–01
  11. By: Tsuneishi, Takao
    Abstract: Thailand has recently strengthened its economic policy toward its neighboring countries in coordination with domestic regional development. It is widely recognized that economic cooperation with neighboring countries is essential in preventing the inflow of illegal labor and effectively utilizing labor and resources through the relocation of production bases. This direction is strengthened by elaborating the GMS-EC and the ECS (Economic Cooperation Strategy). In addition, economic dependency of the neighboring countries on Thailand is generally high. In this report, firstly, Thai regional development policy will be made clear in relation to its economic policy toward neighboring countries as well as the status quo of the industrial estates. Secondly, Thai policy toward the neighboring countries is examined referring to the concept of wide-ranging economic zones, regional economic cooperation and special border economic zones. Thirdly, the paper will discuss how closely the economies between Thailand and the neighboring countries are related through trade and investment. Lastly, some implications on Japan's economic cooperation will also be explored.
    Keywords: Industrial estates, GMS-EC, ECS, Economic corridors, Border zones, Regional economic cooperation, Regional planning, Development policy, Thailand, Cambodia, Laos, Myanmar, Vietnam
    JEL: O53 R11
    Date: 2006–10
  12. By: Umezaki, So
    Abstract: This paper provides a case study to characterize the monetary policy regime in Malaysia, from a medium- and long-term perspective. Specifically, we ask how the central bank of Malaysia, Bank Negara Malaysia (BNM), has structured its monetary policy regime, and how it has conducted monetary and exchange rate policy under the regime. By conducting three empirical analyses, we characterize the monetary and exchange rate policy regime in Malaysia by three intermediate solutions on three vectors: the degree of autonomy in monetary policy, the degree of variability of the exchange rate, and the degree of capital mobility.
    Keywords: Monetary policy, Exchange rate, Capital control, Malaysia, Foreign exchange, Capital market
    JEL: E42 E58 F41
    Date: 2006–12
  13. By: Kuchiki, Akifumi
    Abstract: This paper builds a prototype model of how to prioritize policies by using a flowchart. We presented the following six steps to decide priorities of policies: Step 1 is to attain the social subsistence level (primary education, health care, and food sufficiency); Step 2 is to attain macroeconomic stability; Step 3 is to liberalize the economy by structural adjustment programs; Step 4 is capacity building specific to a growth strategy by facilitating sufficient infrastructure (physical infrastructure and institutions); Step 5 is to initiate a growth strategy; and Step 6 is to narrow income inequalities. We illustrated the effectiveness of our "flowchart method" in case studies of Morocco, Laos, Vietnam, and China. The first priority of reforms in Morocco was given to social sectors of primary education and health care, particularly in the rural areas at Step 1. Laos should not put much emphasis on growth strategy before educational reform, attainment of macroeconomic stability, and institutional capacity building at Steps 1, 2, and 3. Vietnam can focus on reforming the state-run enterprises and developing the stock markets at Step 5 of growth strategies. We found that we should apply our flowchart method to China not nation-wide but province-wide.
    Keywords: Prioritization, Flowchart, Policies, Economic policy, Economic planning, Development policy, Morocco, Laos, Vietnam, China
    JEL: O21 P41
    Date: 2006–10
  14. By: Inomata, Satoshi
    Abstract: This paper reports on the survey of the characteristic features of national input-output tables compiled by the member countries of the Asian International Input-Output Table project. In making any inter-regional tables, the presentation format of each constituent table has to be carefully studied in order to design a common adjustment rule. The survey was conducted in the period of 2003-04, with invaluable cooperation from each collaborating institution of the project. Some analytical findings are drawn from the survey results, such as the similarity between each national table and the Japanese table, the responsiveness to the 1993 SNA, and the major areas of conflict regarding the presentation format.
    Keywords: Input-output tables, Presentation format, Asia
    JEL: C67 D57
    Date: 2006–10
  15. By: Rahman, Pk. Md. Motiur; Yamagata, Tatsufumi
    Abstract: The empirical regularities of the Bangladesh business and seasonal cycles are documented in this study. Spectrums, seasonality, volatility, cyclicality, and persistence in the level and variance of macroeconomic variables in Bangladesh are explored using monthly and quarterly macroeconomic series. Most of the features of U.S. and East-Southeast Asian business cycles are common to Bangladeshi business cycles; however, there are some differences. As is seen in the U.S. and European economies, seasonal cycles accentuate the features of business cycles in Bangladesh. To our surprise, the seasonal cycles in Bangladesh embody the features of business cycles in the U.S. and East-Southeast Asian economies more thoroughly than they do the business cycles in Bangladesh.
    Keywords: Business cycles, Seasonal cycles, Bangladesh
    JEL: E32 O53
    Date: 2006–10
  16. By: Ingo Walter; Elif Sisli
    Date: 2006
  17. By: Machikita, Tomohiro
    Abstract: We utilize Thailand's the financial crisis in 1997 as a natural experiment which exogenously shifts labor demand. Convincing evidence from the Thailand Labor Force Survey support the hypothesis that both employment opportunities and wages shrunk for new entrants after the crisis. We find that workers who entered before the crisis experienced job losses and wage losses. But these losses were smaller than those of new entrants after the crisis. We also find that new entrants after the crisis experienced a 10% reduction in the overtime wages compared to new entrants before the crisis.
    Keywords: Crisis, Financial crises, Entry-Level labor Market, Job loss, Treatment Effects, Thailand, Labor market, Employment, Wages
    JEL: C21 D83 J63 J64
    Date: 2007–01
  18. By: Kuchiki, Akifumi
    Abstract: This article examined the issue of whether or not the currency exchange rate, country risk, and cooperate tax rate affect decisions of multinational firms to invest in industrial clusters. First, if the exchange rate between a multinational company in an industry of diminishing returns to scale and a developing country is appreciated, then production in the developing country should increase. Second, if the investment period becomes longer, the currency exchange rate of a multinational company's country should be revalued more in order for it to further invest in the developing country. Third, if the investment period becomes longer, the developing country's risk should become less. Fourth, compensation for the developing country's high risk can be made by lowering its corporate tax rate.
    Keywords: Flowchart approach, Industrial cluster policy, Capacity building, Institutions, Exchange rate, Country risk, Corporate tax rate, Foreign investments, Industrial policy, Econometric model, International business enterprises, Asia, East Asia, Southeast Asia
    JEL: L22 L5 R11
    Date: 2006–10
  19. By: Machikita, Tomohiro
    Abstract: We examine the effects of learning by migrating on the productivity of migrants who move to a “megalopolis†from rural areas using the Thailand Labor Force Survey. The main contribution is to the development a simple framework to test for self-selection on migration decisions and learning by migrating into the urban labor market, focusing on experimental evidence in the observational data. The role of the urban labor market is examined. In conclusion, we find significant evidence for sorting: the self-selection effects test (1) is positive among new entrants from rural areas to the urban labor market; and (2) is negative among new exits that move to rural areas from the urban labor market. Further, estimated effects of learning by migrating into a “megalopolis†have a less significant impact. These results suggest the existence of a natural selection (i.e. survival of the fittest) mechanism in the urban labor market in a developing economy.
    Keywords: Self-selection, Learning by migrating, Survival of the fittest, Exits, Thailand, Population movement, Labor market
    JEL: D83 J61 R23
    Date: 2007–01
  20. By: Machikita, Tomohiro
    Abstract: Effects of localized personal networks on the choice of search methods are studied in this paper using evidence of displaced workers by establishment closure in Thailand Labor Force Survey, 2001. For the blocks/villages level, there is less significant evidence of local interactions between job-seekers and referrals in developing labor markets. The effects of localized personal networks do not play an important role in the probability of unemployed job-seekers seeking assistance from friends and relatives. Convincing evidence from the data supports the proposition that both self-selection of individual background-like professions and access to large markets determine the choice of job search method.
    Keywords: Local Interactions, Job Search Methods, Referrals, Asymmetric Information, Thailand, Unemployment, Labor market, Network
    JEL: C21 J63 J64 O18
    Date: 2007–01

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