nep-sea New Economics Papers
on South East Asia
Issue of 2007‒04‒09
23 papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Differences in Technology Transfers to China Among European and Japanese Elevator Companies By Mizuno, Junko
  2. Hot Money Inflows and Monetary Stability in China: How the People's Bank of China Took up the Challenge By Vincent Bouvatier
  3. Financial Liberalisation and Breaks in Stock Market Volatility: Evidence from East Asia By Panicos Demetriades; Michaeil Karoglou; Siong Hook Law
  4. Foreign exchange markets in south-east Asia 1990-2004: An empirical analysis of spillovers during crisis and non-crisis periods By Alex Mandilaras; Graham Bird
  5. Asia's economic growth:trends and patterns By Venu Menon, Sudha
  6. Is It Worthwhile for Indonesia to Rush into a Free Trade Deal with Japan? By Oyamada, Kazuhiko
  7. The surge of Preferential Trade Agreements across Asia: What is at stake? By Christian Milelli
  8. Liquidity Risk Aversion, Debt Maturity, and Current Account Surpluses: A Theory and Evidence from East Asia By Shin-ichi Fukuda; Yoshifumi Kon
  9. Resource Augmentation for Meeting the Millennium Development Goals in the Asia Pacific Region By Raghbendra Jha; T. Palanivel
  10. "Liquidity Risk Aversion, Debt Maturity, and Current Account Surpluses: A Theory and Evidence from East Asia" By Shin-ichi Fukuda; Yoshifumi Kon
  11. Institutional adaptation for integrated water resources management: An effective strategy for managing Asian River Basins By Yaw Opoku-Ankomah; Youssouf Dembélé; Ben Y. Ampomah; Léopold Somé
  12. Does the Wagner’s Law hold for Thailand? A Time Series Study By Sinha, Dipendra
  13. Exchange rate pass-through in emerging markets By Michele Ca’ Zorzi; Elke Hahn; Marcelo Sánchez
  14. Global Demography: Fact, Force and Future By Bloom, David; Canning, David
  15. Asian Catch Up, World Growth and International Capital Flows in the XXIst Century: a Prospective Analysis with the INGENUE 2 Model By Michel Aglietta; Vladimir Borgy; Jean Chateau; Michel Juillard; Jacques le Cacheux; Gilles Le Garrec; Vincent Touze
  16. Effects of Volatility of Exports in the Philippines and Thailand By Sinha, Dipendra
  18. Homeownership Gaps Among Low-Income and Minority Households By Donald Haurin; Christopher Herbert; Stuart Rosenthal
  19. Financial Development, Openness and Institutions: Evidence from Panel Data By Badi Baltagi; Panicos Demetriades; Siong Hook Law
  20. Singapore’s Recurrent Budget Surplus The Role of Conservative Growth Forecasts By Tilak Abeysinghe; Ananda Jayawickrama
  21. Property Rights and the Urban Environment: Local Public Goods in Indonesian Cities By Hoy, M.; Jimenez, E.
  22. North-South Regionalism By Claude Grasland; Pierre Beckouche
  23. Multinational firms, global value chains and the organization of technology transfer By Federica Saliola; Antonello Zanfei

  1. By: Mizuno, Junko
    Abstract: This report analyzes technology transfers and education for local engineers within overseas subsidiaries of Japanese and European companies that have advanced into China, and examines differences among them. Based on the assumption that if the quality of trained local engineers is different, the international division of labor is also different, I aim to clarify how they are different.
    Keywords: Technology transfers, Fostering local engineers, International division of labor, Mechanical industry, Holding company, Joint ventures, China, Japan, Europe
    JEL: O14 O30
    Date: 2007–03
  2. By: Vincent Bouvatier (Universite Paris 1)
    Abstract: Non-foreign direct investment capital inflows in China were particularly strong in 2003 and 2004. They were even stronger than current account surpluses or net foreign direct investment inflows. As a result, the pace of international reserves accumulation in China increased significantly. This paper investigates if the rapid build up of international reserves in 2003 and 2004 was a source of monetary instability in China. The relationship between international reserves and domestic credit is examined with a Vector Error Correction Model (VECM), estimated on monthly data from March 1995 to December 2005. Empirical results show that this relationship was stable and consistent with monetary stability. Direct and indirect Granger causality tests are implemented to show how the People's Bank of China (PBC) achieved this monetary stability
    Keywords: hot money inflows, international reserves, VECM, Granger causality
    JEL: C32 E5
    Date: 2007–02–02
  3. By: Panicos Demetriades (University of Leicester); Michaeil Karoglou (University of Leicester); Siong Hook Law (University Putra Malaysia)
    Abstract: This paper examines the short and medium term impact of financial reforms on stock market volatility in five East Asian emerging markets. Several newly proposed tests are employed to identify and verify the number and timing of structural breaks in the variance dynamics. The detected breakdates do not correspond to official liberalisation dates. The magnitude and direction of the change in volatility is estimated using parametric and non-parametric techniques. Our findings suggest that by taking into account the possibility of multiple breaks, a richer evolution of volatility is obtained than by focusing on official liberalisation dates. We also show that focussing on official liberalisation dates results in inaccurate inference
    Date: 2007–02–02
  4. By: Alex Mandilaras (University of Surrey); Graham Bird (University of Surrey)
    Abstract: The East Asian crisis of 1997 sparked an extensive literature in an effort to explain the causes and spread of heightened foreign exchange (FX) market pressures in the region. In this paper we model FX movements and calculate spillover effects covering the extended period between 1990 and 2004. Using Markov switching vector autoregressions, we find substantial evidence that FX correlations vary across crisis and non-crisis states, a result that bears implications for international portfolio diversification and reserve pooling. Contagion effects are also present during crises. Finally, we gauge the ability of stock market indices to forecast time-varying transition probabilities and discover positive results
    Keywords: East Asia, Currency Crisis
    JEL: F3
    Date: 2007–02–02
  5. By: Venu Menon, Sudha
    Abstract: The spectacular growth of economies in Asia over the past few years has amazed the economics profession and has evoked a torrent of books and articles attempting to explain the phenomenon. Since 1960 Asia, the largest and most populous of the continents has become richer faster than any other region of the world. Asian growth, like that of the Soviet Union in its high-growth era, seems to be driven by extraordinary growth in inputs like labor and capital rather than by gains in efficiency. Of course, this growth has not occurred at the same pace all over the continent. The eastern countries turned in a superior performance, although variations in achievement can be observed here too. This impressive achievement is, however, still modest compared with the phenomenal growth of Developed countries in the west. Strong Total Factor Productivity [TFP] rapid accumulation of physical and Human Capital and trade policy coupled with effective policy intervention played vital role in Asia’s spectacular success. Naturally, sustainable growth performance and elimination of poverty demand greater role of institutional reforms industrial development and macro economic stability.
    Keywords: Asia; economy; growth
    JEL: O4
    Date: 2007–03–28
  6. By: Oyamada, Kazuhiko
    Abstract: This report represents a preliminary attempt to refine some basic ideas on the potential impact Indonesia might experience from a free trade arrangement with Japan, using a forward-looking, multi-regional, multi-sectoral applied general equilibrium model of global trade to capture growth effects through capital accumulation paying attention to the changes in the patterns of interregional capital flows that might happen even before the policy change occurs. The simulation results revealed that the welfare gains of rushing into trade liberalization with Japan are not so large. This makes out that taking time over negotiations might be the best choice for Indonesia if the government places priority on convincing the Indonesian people that a free trade deal with Japan will definitely bring positive effects, while proceeding rapidly might be the answer if the country is serious about recovering the welfare levels that might be lowered by free trade arrangements among Malaysia, the Philippines, and Japan.
    Keywords: Applied general equilibrium, Economic growth, Forward-looking, Free trade agreement, Interregional capital flows, International trade, International agreements, Trade policy, Indonesia, Japan
    JEL: C68 D58 D90 F15 F41 O41
    Date: 2007–03
  7. By: Christian Milelli (EconomiX - [CNRS : UMR7166] - [Université de Paris X - Nanterre])
    Abstract: Economists along with policy makers are generally viewing trade agreements as a ‘second best' process for trade expansion and economic growth on a global scale. The current surge of Preferential Trade Agreements on a bilateral basis, particularly in Asia, is somehow challenging such common view. The following paper is grounded on updated rough facts and put forward that the standard economic approach is a bit flawed. Obviously, the outcomes and prospects for Asian countries seem much more problematic insofar as power asymmetry and discrimination are embedded in these arrangements.
    Keywords: Asia; Preferential Trade Agreement; Regionalization
    Date: 2007–03–30
  8. By: Shin-ichi Fukuda; Yoshifumi Kon
    Abstract: The purpose of this paper is to show that macroeconomic impacts might be very different depending on what strategy developing countries will take. In the first part, we investigate what macroeconomic impacts an increased aversion to liquidity risk can have in a simple open economy model. When the government keeps foreign reserves constant, an increased aversion to liquidity risk reduces liquid debt and increases illiquid debt. However, its macroeconomic impacts are not large, causing only small current account surpluses. In contrast, when the government responds to the shock, the changed aversion increases foreign reserves and may lead to a rise of liquidity debt. In particular, under some reasonable parameter set, it causes large macroeconomic impacts, including significant current account surpluses. In the second part, we provide several empirical supports to the implications. In particular, we explore how foreign debt maturity structures changed in East Asia. We find that many East Asian economies reduced short-term borrowings temporarily after the crisis but increased short-term borrowings in the early 2000s. We discuss that our results have important implications for the recent deterioration in the U.S. current account.
    JEL: F21 F32 F34
    Date: 2007–04
  9. By: Raghbendra Jha; T. Palanivel
    Abstract: This paper examines whether the resource positions of the developing counties in the Asia Pacific region and the support they are receiving from donor countries are adequate to ensure that the MDG will be attained by 2015. It begins by examining the extant record of economic growth and emphasises the need for higher economic growth in order to accelerate the pace of poverty reduction. It argues that neither the level of economic growth nor its current structure can ensure that MDG1 is attained by 2015. The paper argues that domestic savings and investment rates in most large developing countries in the Asia Pacific region are not high enough for growth rates to rise high enough to ensure that MDG1 (halving poverty measured at $1 PPP per capita over the period 1990—2015) is attained. Further, the ICOR in most of these countries has been stagnant or rising in many of these countries so that it would be unrealistic to expect sharp enough rises in the productivity of capital to ensure that existing investment rates can ensure that MDG1 is attained by 2015. The paper then examines some of the reasons for this lacklustre performance. Tax revenues have been stagnant and public expenditures on education and health have been low whereas many developing countries in the Asia Pacific region bear substantial burdens of debt servicing. Many of these countries also face considerable capital flight, exacerbating already tentative external situations. Furthermore whereas the current outlook for FDI looks promising for some Asian countries, international aid has been stagnant and in, many cases, net financial flows into developing countries has been negative. The paper then considers avenues for increasing the resource base for these counties. It considers a variety of measures including tax reform and expenditure switching policies. It advances policies to reduce capital flight and argues that international debt reduction should accompany any policy to increase international aid to the developing countries of the Asia Pacific region. It lists a number of additional sources of multilateral aid that could replenish developing country resources but argues that measures to increase the absorptive capacity of developing countries as well as reduction in the volatility of aid must accompany to increase international aid. Further, increases in international aid should ensure that the real exchange rates of the recipient countries should not rise. If the real exchange rates were to rise, some of these countries could be exposed to Dutch disease type of phenomena.
    Keywords: Millennium Development Goals, Asia Pacific Countries, Resource Augmentation
    JEL: E01 E61 F42 F29
    Date: 2007
  10. By: Shin-ichi Fukuda (Faculty of Economics, University of Tokyo); Yoshifumi Kon (Graduate School of Economics, University of Tokyo)
    Abstract: After a series of crises, many developing countries came to recognize that reducing liquidity risk is an important self-protection. However, they have alternative strategies for the self-protection. The purpose of this paper is to show that macroeconomic impacts might be very different depending on which strategy developing countries will take. In the first part, we investigate what macroeconomic impacts an increased aversion to liquidity risk can have in a simple open economy model. When the government keeps foreign reserves constant, an increased aversion to liquidity risk reduces liquid debt and increases illiquid debt. However, its macroeconomic impacts are not large, causing only small current account surpluses. In contrast, when the government responds to the shock, the changed aversion increases foreign reserves and may lead to a rise of liquidity debt. In particular, under some reasonable parameter set, it causes large macroeconomic impacts, including significant current account surpluses. In the second part, we provide several empirical supports to the implications. In particular, we explore how foreign debt maturity structures changed in East Asia. We find that many East Asian economies reduced short-term borrowings temporarily after the crisis but increased short-term borrowings in the early 2000s. Since short-term debt is liquid debt, the instantaneous change after the crisis is consistent with the case where only private agents responded to increased aversion to liquidity risk. However, accompanied by substantial rises in foreign exchange reserves, the change in the early 2000s is consistent with the case where the government also started to respond. We discuss that our results have important implications for the recent deterioration in the U.S. current account.
    Date: 2007–04
  11. By: Yaw Opoku-Ankomah; Youssouf Dembélé; Ben Y. Ampomah; Léopold Somé (CSIR Water Research Institute of Ghana.; Environmental and Agricultural Research Institute (INERA); Water Resources Commission of Ghana)
    Keywords: River basin development / Irrigation management / Institutional development / Organizations / Water allocation / Developing countries
    Date: 2006
  12. By: Sinha, Dipendra
    Abstract: Wagner’s Law suggests that as the GDP of a country increases, so does its government expenditure. We test for the Law for Thailand using recent advances in econometric techniques. Both total and per capita GDP and government expenditure are used. Ng-Perron unit root tests show that all variables are integrated of order 1. Toda-Yamamoto tests of Granger causality show that there is no causality flowing from either direction between GDP and government expenditure. Autoregressive Distributed Lag (ARDL) tests of cointegration show very weak evidence of a long-run relationship between GDP and government expenditure. Thus, we do not find much evidence that the Wagner’s Law holds for Thailand.
    Keywords: Wagner's Law; causality
    JEL: O11 H50 C22
    Date: 2007–02–26
  13. By: Michele Ca’ Zorzi (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Elke Hahn (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Marcelo Sánchez (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.)
    Abstract: This paper examines the degree of Exchange Rate Pass-Through (ERPT) to prices in 12 emerging markets in Asia, Latin America, and Central and Eastern Europe. Our results, based on three alternative vector autoregressive models, partly overturn the conventional wisdom that ERPT into both import and consumer prices is always higher in “emerging” than in “developed” countries. For emerging markets with only one digit inflation (most notably the Asian countries), passthrough to import and consumer prices is found to be low and not very dissimilar from the levels of developed economies. The paper also finds robust evidence for a positive relationship between the degree of the ERPT and inflation, in line with Taylor’s hypothesis once two outlier countries (Argentina and Turkey) are excluded from the analysis. Finally, the presence of a positive link between import openness and ERPT, while plausible theoretically, finds only weak empirical support. JEL Classification: C32, E31.
    Keywords: Exchange Rate Pass-Through, Emerging Markets.
    Date: 2007–03
  14. By: Bloom, David; Canning, David
    Abstract: In the past 50 years, the world accelerated its transition out of long-term demographic stability. As infant and child mortality rates fell, populations began to soar. In most countries, this growth led to falling fertility rates. Although fertility has fallen, the population continues to increase because of population momentum; it will eventually level off. In the meantime, demographic change has created a ‘bulge’ generation, which today appears in many countries as a large working-age population. This cohort will eventually become a large elderly population, in both developed and developing countries. Population growth has been the subject of great debate among economists and demographers. Until recently, most have agreed on a middle ground, in which population growth per se has no effect on economic growth. New evidence suggests that changes in the age structure of populations – in particular, a rising ratio of working-age to non-working-age individuals – leads to the possibility of more rapid economic growth, via both accounting and behavioural effects. The experiences of east Asia, Ireland and sub-Saharan Africa all serve as evidence of the effect of demographic change on economic growth (or lack thereof). Both internal migration (from rural to urban areas) and international migration complicate this picture. The overall implications of population growth for policy lie in the imperative for investments in health and education, and for sound policies related to labour, trade and retirement. Understanding future trends is essential for the development of good policy. Demographic projections can be quite reliable, but huge uncertainties – in the realms of health, changes in human life span, scientific advances, migration, global warming and wars – make overall predictions extremely uncertain.
    Keywords: demography; population; aging
    JEL: J11
    Date: 2006–11
  15. By: Michel Aglietta; Vladimir Borgy; Jean Chateau; Michel Juillard; Jacques le Cacheux; Gilles Le Garrec; Vincent Touze
    Abstract: The world has been trapped in a paradox for a few years. The world saving investment balance defies the teaching of international economics. Whereas rich aging countries should provide financing to poorer and younger ones, the opposite has arisen, at least as far as the US is concerned. Controversy has raged on the sustainability of this pattern of world financing. Opinions diverge on the timing of adjustment to “a more normal pattern”. Macroeconomists talk about a sustainable US deficit of 3% of GDP. But why should the US carry a deficit forever? The present paper takes a different view. It does not try to make prediction on the adjustment being smooth or bumpy. But it attempts to define what might be the “normal pattern” in XXIst century global capitalism. Such an approach cannot obviously be that of a single country, be it the US. Only the perspective of a world growth regime is valid. This regime should encapsulate the most salient long-run trends in the world economy for the next fifty years or so. These trends are the demographic transition and the catching up of very large emerging market countries.
    Keywords: Computable General Equilibrium Models; CGEM; international capital flows; life cycle models and saving; economic growth of open economies; international factor movements; growth
    JEL: C68 F21 D91 F43
    Date: 2007–01
  16. By: Sinha, Dipendra
    Abstract: There have been numerous studies on the relationship between volatility of exports and economic growth. Most of these studies have used cross-section data. Recently, some studies have used time series data to study the relationship. However, there have been no studies which have used the GARCH methodology to study export volatility. This paper fills the void. It uses quarterly data for the Philippines and Thailand to study the effects of export volatility. We find that for both countries, the shock to volatility of growth of exports is permanent. Also, past volatility is significant in predicting future volatility.
    Keywords: GARCH; volatility; exports
    JEL: C22 F10
    Date: 2007–04–05
  17. By: Hsiao Chink Tang
    Abstract: This paper investigates the relative strength of four monetary policy transmission channels (exchange rate, asset price, interest rate and credit) in Malaysia using a 12-variable open economy VAR model. By comparing the baseline impulse response with the constrained impulse response where a particular channel is being switched off, the interest rate channel is found to be the most important in influencing output and inflation in the horizon of about two years, and the credit channel beyond that. The asset price channel is also relevant in the shorter-horizon, more so than the exchange rate channel, particularly in influencing output. For inflation, the exchange rate channel is more relevant than the asset price channel.
    Date: 2006–08
  18. By: Donald Haurin (Department of Economics, Ohio State University); Christopher Herbert (Abt Associates, Inc.); Stuart Rosenthal (Department of Economics, Syracuse University)
    Abstract: While homeownership rates currently stand at historically high levels for all segments of the U.S. population, large gaps are present comparing various groups of the population. As of the third quarter of 2006, the non-Hispanic white homeownership rate was 76 percent while black and Hispanic homeownership rates were below 50 percent, and the Asian rate was 60 percent. The ownership gap between black and white households is larger in 2006 than 1990, while that between Hispanics and whites is only slightly smaller. Households with very-low income had a homeownership rate that was 37 percentage points below the rate for high-income households. These gaps have changed little over the last 50 years. The primary goal of this study is to synthesize what is known about the determinants of gaps in homeownership rates by income, racial, and ethnic status. We first present a conceptual framework for analyzing the determinants of homeownership. We then review the literature that identifies the relative importance of various contributing factors to observed homeownership gaps, separating the factors into those that are observed and those that are part of an unexplained residual that represents unmeasured factors such as discrimination, lack of information about the home buying and mortgage financing process, and omitted socio-economic variables.
    JEL: J1 J7 R21 R31
    Date: 2007–01
  19. By: Badi Baltagi (Department of Economics University of Leicester); Panicos Demetriades (University of Leicester); Siong Hook Law (University Putra Malaysia)
    Abstract: Using dynamic panel data techniques and several data sets, we provide new evidence on the effects of openness and institutions on financial development. Our findings suggest that openness and institutions are potentially very important factors for different aspects of financial development. They do not however provide much support to the simultaneous openness hypothesis of Rajan and Zingales (2003), suggesting that a more nuanced openness or political economy story may be required to explain the variation of financial development across countries and over tim
    Keywords: Financial development, Trade Openness, Financial Openness, Financial Liberalisation, Dynamic Panel Data Analysis
    JEL: F19 G29
    Date: 2007–02–02
  20. By: Tilak Abeysinghe (Department of Economics, National University of Singapore); Ananda Jayawickrama (Department of Economics, National University of Singapore)
    Abstract: Aided by strong economic growth the Singapore government has been able to keep both the tax rate and the government expenditure rate low and yet generate healthy budget surpluses year after year. Although the gap between the tax rate and the government expenditure rate is the obvious source of the surplus, this paper shows the presence of another subtle source, a surplus generated by conservative growth forecasts that lay the base for revenue projections. An omitted variable bias in a model based on the tax smoothing hypothesis led us to consider the role played by the growth forecast error in predicting the budget surplus. Our computations show that on average the underprediction of the tax base (GDP) must have contributed about $376 million per year to the realized budget surplus over the period 1990-2005. This appears to be simply a byproduct of the Government’s philosophy of “fiscal prudence”.
    Keywords: Tax smoothing model, Reported and adjusted budget surplus, GDP forecast errors.
    JEL: H61 H62
  21. By: Hoy, M.; Jimenez, E.
    Date: 2006
  22. By: Claude Grasland (GC - Géographie-cités - [CNRS : UMR8504] - [Université Panthéon-Sorbonne - Paris I][Université Denis Diderot - Paris VII] - [Ecole Normale Supérieure Lettres et Sciences Humaines], RIATE - Réseau interdisciplinaire pour l'aménagement du territoire européen - [CNRS : UMS2414][DATAR] - [Université Denis Diderot - Paris VII]); Pierre Beckouche (LADYSS - Laboratoire dynamiques sociales et recomposition des espaces - [CNRS : UMR7533] - [Université Panthéon-Sorbonne - Paris I][Université Paris VIII Vincennes-Saint Denis][Université de Paris X - Nanterre])
    Abstract: Planning and other territorial policies within Europe are more and more dependant upon its relations with the rest of the world. The growing international flows (migrants, trade, investments, polluting agents) interact with the European territories; moreover, the vision the Europeans have of their place in the world, has a strong impact on the EU's policies. Many political decisions apparently related to purely “internal affairs”, are in fact based on a wider conception of the world. <br /><br />Three dominant representations of Europe in the world are currently available: (i) the “continent” view, which describes territories in the traditional – but still active – shape of continents or civilisation areas; (ii) the “centre-periphery” view, which stresses the dissymmetry of the North-South relations; (iii) the “archipelago” view, based on the networking organisation of space, which highlights the remote connections of territories. Each of these views provides partial evidence of reality. They are not really contradictory, but they have to be distinguished because their territorial impacts are quite different, and because they give rise to different European territorial policies. <br /><br />(1) The “continent” view of Europe entails several assets: Central and Eastern European member states would benefit from subsidies and western private foreign direct investments; Trans-European Networks would be implemented at a large European scale, which would be favourable to all the European territory; the German territory would become the genuine centre of Europe. On the other hand, this view drives to territorial shortcomings: a “Nimby” interpretation of the European Neighbourhood Policy would have negative impacts on the peripheral parts of the EU's space; obstructing population exchanges with the neighbourhood would hamper the European economy and territory as a whole, and increase its ageing. <br />(2) The “centre-periphery” view would quite deeply change the European geography due to a greater Euro-Mediterranean economic integration, despite being asymmetrical. More than the eastern peripheral parts of the Union, its southern ones would benefit from this change. In the short run, the European economy would partly catch up with its Asian and American counterparts, although not on the high-tech basis of the Lisbon Strategy. Nevertheless, the relocation of the environmental burden (Dirty-Difficult-Dangerous activities) to the southern shore could only be a short-term solution. A prominent policy of migration control would diminish the rise of the European Mediterranean rim, and would not reduce the brain drain. <br />(3) The “archipelago” view would drive to many territorial advantages: most of the major European cities would become highly internationalized metropolitan areas; western countries, which benefit from such metropolises, would experience a particularly fast economic growth. On the other hand, territorial disparities in Europe would increase, within Western Europe and within the new member states – which would rapidly loose their competitive advantage due to the rise of salaries and costs in their capital cities. The destabilisation would be dramatic in the Mediterranean neighbouring countries, due to a tough 2010 liberalisation of trade, namely in agriculture (rural emigration toward the large cities' suburbs and toward Europe). <br /><br />The paper shows a desirable and feasible vision of Europe that would imply the territorial assets of the three former views without their main shortcomings. This vision is based on the idea that Europe and its neighbours represent one major world region, according to the North-South regionalism that occurs between the US and Mexico, or between Japan and its emerging peripheries. Here, the European Neighbourhood Policy becomes the key policy to complement the Lisbon Strategy and to enhance all European territorial policies. Completing a regulated North-South regionalism in the European region, would imply two main innovations: <br /><br />a) along with the four freedoms (goods, services, capital, people), four principles of common action should be added: solidarity with the southern shore of the Mediterranean (and over a longer time span with Sub-Saharan Africa); creation of meshing networks over the greater regional territory (banking services connecting the two shores, integrated transport and electricity networks, compatible patterns of higher education's degrees in order to promote mobility); economic complementary (a better sharing of the value chain in agriculture, manufacturing and services); common policies for regional public goods (air and sea pollution namely). <br />b) The tools of the European Regional Policy have to be widely used by such an ENP, in order to develop efficient territories, to tackle the many social issues in the South which cannot be met without taking the local territories into account, to enhance local actors as a key way for democratisation, and in order to coordinate the various European actions in this neighbourhood through an Euromed Spatial Development Perspective.
    Keywords: Europe, neighbourhood policy, north-south, regionalisation, prospective, spatial planning, Mediterranean, Africa
    Date: 2007–03–30
  23. By: Federica Saliola (The World Bank); Antonello Zanfei (Department of Economics, Università di Urbino "Carlo Bo")
    Abstract: This paper combines insights from different streams of literature to develop a more comprehensive framework for the analysis of technology transfer via value chain relationships. We integrate the existing literature in three ways. First, we consider value chain relationships as a multi-facet process of interaction between buyers and suppliers, involving different degrees of knowledge transmission and development. Second, we assess whether and to what extent value chain relationships are associated with the presence of multinationals and with their embeddedness in the host economy. Third, we take into account the capabilities of local firms to handle the technology as a factor influencing knowledge transfer through value chain relationships. Using data on 1385 firms active in Thailand in 2001-2003, we apply a multinomial logit model to test how the nature and intensity of multinational presence and the competencies of local firms affect the organisation of international technology transfer. We find that knowledge intensive relationships, which are characterized by a significant transmission of technology along the value chains, are positively associated with the presence of global buyers in the local market, with the efforts of MNCs to adapt technology to local contexts, and with the technical capabilities of domestic firms. By contrast, the age of subsidiaries and the share of inputs purchased locally appear to increase the likelihood of value chain relationships with a lower technological profile. Key words: Global value chain, multinationals, technology transfer, knowledge spillovers
    Keywords: Global value chain, multinationals, technology transfer, knowledge spillovers
    JEL: F10 F23 O33
    Date: 2007–03

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