nep-sea New Economics Papers
on South East Asia
Issue of 2007‒04‒28
twelve papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Flying geese or sitting ducks: China’s impact on the trading fortunes of other Asian economies By Alan G. Ahearne; John G. Fernald; Prakash Loungani; John W. Schindler
  2. Foreign Investment in Chinese Joint Stock Banks: 1996-2006 By Abotsi, Kodjo
  3. R&D and Export Intensities in Automotive Parts Firms in China, Malaysia, Philippines and Taiwan: Does Ownership Matter? By Rajah RASIAH
  4. Does " good government " draw foreign capital ? Explaining China ' s exceptional foreign direct investment inflow By Yeung, Bernard; Lixin Colin Xu; Morck, Randall; Fan, Joseph P. H.
  5. Offshoring, Outsourcing, and Production Relocation—Labor-Market Effects in the OECD Countries and Developing Asia By Jacob Funk Kirkegaard
  6. Is Bonded Labor Voluntary? Evidence from the Liberation of the Kamaiyas in the Far-Western Region of Nepal By Espen Villanger
  7. Avian influenza is a deadly disease that can spread rapidly through poultry. By David Vanzetti
  8. Global Sourcing, Technology, and Factor Intensity: Firm-level Relationships By TOMIURA Eiichi
  9. Absolute poverty measures for the developing world, 1981-2004 By Ravallion, Martin; Chen, Shaohua
  10. How the Distribution of After-Tax Income Changed Over the 1990s Business Cycle: A Comparison of the United States, Great Britain, Germany and Japan By Richard V. Burkhauser; Takashi Oshio; Ludmila Rovba
  11. Mind Coskewness: A Performance Measure for Prudent, Long-Term Investors By Alexandros Kostakis
  12. Understanding the puzzling effects of technology shocks By Pengfei Wang; Yi Wen

  1. By: Alan G. Ahearne; John G. Fernald; Prakash Loungani; John W. Schindler
    Abstract: This paper updates our earlier work (Ahearne, Fernald, Loungani and Schindler, 2003) on whether China, with its huge pool of labor and an allegedly undervalued exchange rate, is hurting the export performance of other emerging market economies in Asia. We continue to find that while exchange rates matter for export performance, the income growth of trading partners matters far more. This suggests the potential for exports of all Asian economies to grow in harmony as long as global growth is strong. We also examine changes in export shares of Asian economies to the U.S. market and find evidence that dramatic changes in shares are taking place. Many of these changes are consistent with a 'flying geese' pattern in which China moves into the product space vacated by the Asian NIEs or with greater integration of trade across Asia in the production of final goods. Nevertheless, China’s dramatic gains in recent years do increase the pressure on Asian economies, particularly in ASEAN and South Asia, to seek areas of comparative advantage.
    Date: 2006
  2. By: Abotsi, Kodjo
    Abstract: This article reviews the foreign investment in China joint stock banks and analyze the motivations behind these investments. We will start by reviewing the comparative advantage of local joint stock banks as foreign investment recipients, as compared to larger state-owned commercial banks or smaller cities banks; we will then study the effects on efficiency and overall performance of minority foreign investment in joint stock banks in China. Finally, we will try to identify the opportunities that will beneficiate joint stock banks in China after liberalization in 2007, and how foreign banks can make the most of it.
    Keywords: china banking; china finance; investment in china; foreign banks in china; joint stock banks in china
    JEL: G0 F3
    Date: 2007–03
  3. By: Rajah RASIAH
    Abstract: This paper seeks to examine the importance of ownership in R&D intensities and export ownership in the automotive parts firms in China, Indonesia, Malaysia, Philippines and Taiwan. Consistent with the portfolio and ownership, location and internationalization theories of foreign direct investment about asset specific advantages, the pooled regressions show higher R&D intensities in local firms than in foreign firms. Export-orientation was only highly correlated with R&D intensities in the local samples. The results also show foreign ownership to be highly correlated with export-orientation in the pooled regressions but not in the individual country regressions.
    Date: 2007–04
  4. By: Yeung, Bernard; Lixin Colin Xu; Morck, Randall; Fan, Joseph P. H.
    Abstract: China is now the world ' s largest destination of foreign direct investment (FDI), despite assessments highlighting its institutional deficiencies. But this FDI inflow corresponds closely to predicted FDI flows into China from a model that predicts FDI inflow based on government quality indicators and controls and is estimated across a sample of other weak-institution countr ies. The only real discrepancy is that, if government quality is measured by constraints on executive power, China receives somewhat more FDI than the model predicts. This might reflect an underestimation of the strength of these constraints in China, a unique institutional setting for FDI operations, FDI based on expected future institutional improvements, or a unique Chinese model of development. The authors conclude that Ockham ' s razor disfavors the last. They also note that FDI may be elevated because Chinese institutions protect foreign firms better than domestic ones.
    Keywords: Foreign Direct Investment,Economic Theory & Research,Legal Products,Investment and Investment Climate,Parliamentary Government
    Date: 2007–04–01
  5. By: Jacob Funk Kirkegaard (Peterson Institute for International Economics)
    Abstract: This working paper evaluates the validity of available data on and the extent of the impact of offshoring on service-sector labor markets in the United States, EU-15, and Japan. A three-tier data validity hierarchy is identified. The impact of offshoring on employment in the three regions is found to be limited. Correspondingly, developing Asia is unlikely to experience large employment gains as a destination region. The paper highlights the case of the Indian IT industry, where the majority of job creation has been in local Indian companies rather than foreign multinationals. Domestic entrepreneurs have played a crucial role in the growth of the Indian IT-related service industry. However, increased tradability of services and associated skill bias in favor of higher skilled workers could have an uneven employment impact on developing Asia. Some high-skilled groups are benefiting and will continue to benefit dramatically from new employment opportunities and rising wage levels. Meanwhile, the same skill bias may eliminate many employment opportunities for unskilled or low-skilled groups in the region. Developing Asian countries therefore face a double educational challenge in the coming years: the need to simultaneously improve both primary aCreation-Date: 2006-06
    Keywords: Service Sectors, Offshoring, Production Relocation, Data Source Validity, Automation, Highly Skilled Workers
    JEL: F23 J21
    Date: 2007–04
  6. By: Espen Villanger
    Abstract: The UN estimates that 20 million are held in bonded labor. Several economic analyses assert that bonded laborers accept these contracts voluntarily, which could imply that a ban would make such laborers worse off. We question the voluntary nature of bonded labor, discuss different theories and new evidence on the issue, and propose a new mechanism whereby landlords keep workers trapped. With different types of landlords not revealed to the laborer, we show how some landlords manipulate loan terms so that the laborer becomes bonded if future labor is rendered as collateral. Enforcement mechanisms and the monopolistic market for credit thus play a joint role. Providing alternative sources of credit, offering proper conflict resolution institutions for settling labor-contract disputes and banning the practice of bonded labor could emancipate bonded laborers, which would make them better off.
    Keywords: Asia Nepal Bonded labor Debt slavery
    JEL: C72 D40 J41 O10
    Date: 2006
  7. By: David Vanzetti
    Abstract: There are many documented cases of transmission from birds to people, but as yet only rare instances of human to human transmission. Nonetheless, public health officials are concerned about the possibility of a human pandemic, and many countries have policies of banning imports of live birds and poultry meat from infected regions. The potential impacts on Indonesia of a production shock, a shift in consumption or a trade ban are assessed using a heterogeneous product model where imports are differentiated by source. Empirical results suggest the likely trade impacts in Indonesia are minimal because its trade is a small share of production.
    JEL: F13 Q17
    Date: 2007
  8. By: TOMIURA Eiichi
    Abstract: This paper empirically examines how technology and capital intensity are related with the firm's global sourcing decision. Firm-level data are derived from a survey covering all manufacturing industries in Japan without any firm-size threshold. Firms are disaggregated by their make-or-buy decision (in-house or outsourcing) and by their choice of sourcing location (offshore or domestic). Capital-intensive or R&D-intensive firms tend to source in-house from their FDI affiliates rather than outsourcing to independent suppliers. This paper also confirms that high productivity is related with offshore sourcing. These findings are basically robust even after industry and firm-size are controlled for.
    Date: 2007–04
  9. By: Ravallion, Martin; Chen, Shaohua
    Abstract: The authors report new estimates of measures of absolute poverty for the developing world over 1981-2004. A clear trend decline in the percentage of people who are absolutely poor is evident, although with uneven progress across regions. They find more mixed success in reducing the total number of poor. Indeed, the developing world outside China has seen little or no sustained progress in reducing the number of poor, with rising poverty counts in some regions, notably Sub-Saharan Africa. Ther e are encouraging signs of progress in reducing the incidence of poverty in all regions after 2000, although it is too early to say if this is a new trend.
    Keywords: Rural Poverty Reduction,Population Policies,Pro-Poor Growth and Inequality,Services & Transfers to Poor
    Date: 2007–04–01
  10. By: Richard V. Burkhauser (Cornell University); Takashi Oshio (Cornell University); Ludmila Rovba (Cornell University)
    Abstract: We find that, over their 1990s business cycles, the entire distribution of after-tax household size-adjusted income moved to the right in the United States and Great Britain while inequality declined. In contrast, Germany and Japan had less income growth, a rise in inequality and a decline in the middle mass of their distributions that spread mostly to the right, much like the United States experienced over its 1980s business cycle. In the United States and Japan, younger persons fared relatively better than older persons while the opposite was the case in Great Britain and Germany.
    Date: 2006–12
  11. By: Alexandros Kostakis
    Abstract: This study examines how negative skewness a¤ects the behaviour of prudent investors. It also shows how the commonly used frame- work in the intertemporal asset pricing and the dynamic portfolio- consumption choice literature can generate negative skewness in asset reutrns. Given this impact, an extra premium is required in order to hold an asset with negatively coskewed returns. This premium was, on average, 2.09% p.a. for the UK stock market universe. Hence, a new performance measure, the intercept of the Harvey-Siddique two-factor asset pricing model is suggested for prudent, long-term investors. Us- ing this model, the performance of UK unit trusts is examined over the period 1991-2005. Despite exhibiting signi.cantly negative mana- gerial ability, trust managers were successful in reaping part of this negative coskewness premium.
    Date: 2007–04
  12. By: Pengfei Wang; Yi Wen
    Abstract: Under aggregate technology shocks, both aggregate inputs and sectorial inputs decline initially and then rise permanently. However, under sector-specific technology shocks, sectorial inputs decline permanently. In addition, sectorial output is very responsive to aggregate technology shocks but not so to sector-specific technology shocks. We show that a flexible-price RBC model with firm entry and exit is consistent with these stylized facts.
    Date: 2007

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