nep-sea New Economics Papers
on South East Asia
Issue of 2007‒05‒12
23 papers chosen by
Kavita Iyengar
Asian Development Bank

  1. China's Entrepreneurs By Linda Yueh
  2. Exchange Rate Cooperation in East Asia – Why a Basket Approach may be best By Peter Wilson
  3. China's Growth to 2030: The Roles of Demographic Change and Investment Premia By Rod Tyers; Jane Golley
  4. China's Growth to 2030: Demographic Change and the Labour Supply Constraint By Rod Tyers; Jane Golley
  5. Governance in Southeast Asia: Issues and Options By Gonzalez, Eduardo T.; Mendoza, Magdalena L.
  6. Regional Economic Integration and its Impacts on Growth, Poverty and Income Distribution: The Case of Indonesia By Djoni Hartono; D.S. Priyarsono; Tien Dung Nguyen; Mitsuo Ezaki
  7. Preferential trade agreements and agricultural trade liberalization in Asia and the Pacific By Mikic, Mia
  8. Assessing the Value of Clean Air in a Developing Country: A Hedonic Price Analysis of the Jakarta Housing Market, Indonesia By Arief Anshory Yusuf; Budy P. Resosudarmo
  9. The Politico-Strategic Dimension of the US Proposal for a Free Trade Agreement with the Philippines By de Castro, Renato Cruz
  10. Preferential Trading Agreements and Agricultural Liberalization in East and Southeast Asia By Pasadilla, Gloria
  11. FDI Investment Incentive System and FDI Inflows: The Philippine Experience By Aldaba, Rafaelita Mercado
  12. Global Demography: Fact, Force and Future By David E. Bloom; David Canning
  13. State of Trade and Investments in the Philippines By Balboa, Jenny D.; Medalla, Erlinda
  14. The Economy-wide Impact of Controlling Energy Consumption in Indonesia: An Analysis Using a Social Accounting Matrix Framework By Djoni Hartono; Budy P. Resosudarmo
  15. The Trade Strategy of the European Union: Time for a Rethink? By Evenett, Simon J
  16. The Economy-wide Impact of Fuel Oil, Gas and Electricity Pricing and Subsidy Policies as well as Their Consumption Improvement Efficiency in Indonesia By Djoni Hartono; Budy P. Resosudarmo
  17. The global implications of freer skilled migration By Rod Tyers; Iain Bain; Jahnvi Vedi
  18. Financial Liberalisation in Emerging Markets: How Does Bank Lending Change? By Hübler, Olaf Hübler; Menkhoff, Lukas; Suwanaporn, Chodechai
  19. HIV/AIDS in Rural Northeast Thailand: Narratives of the Impacts of HIV/AIDS on Individuals and Households By Michael P. Cameron
  20. Intellectual Property Rights: Talking Points for RP-US FTA Negotiations By Tantuico, Delia S.; Zshornack, Errol Wilfred
  21. Profit Maximisation: Secular Versus Islamic’ in Sayyid Tahir et al (Ed) ‘Readings in Microeconomics: An Islamic Perspective’ Longman, Malaysia 1992 (Chapter 20, PP. 239-255). By Hasan, Zubair
  22. The McKenna Rule and UK World War I Finance By James M Nason; Shaun P Vahey
  23. Implications of an RP-US FTA on the Philippine Financial Services Industry and the Philippine Economy By Calderon-Kabigting, Leila Y.; Patiu, Liberty S.

  1. By: Linda Yueh
    Abstract: This paper investigates the traits of the self-employed entrepreneurs in urban China, an economy rife with informational and institutional imperfections, under-developed financial markets, but a growing and important non-state sector. The self-employed make on average 20% more than non-entrepreneurs, but are similar in their age, marital status, educational attainment, and socio-economic background. Fewer are Communist Party members and more have experienced unemployment. Social networks are significant in entrepreneurship, while women and older workers are less likely to become self-employed unless they have experienced unemployment. Motivation and drive, as do attitudes toward risk, are also determinative factors.
    Keywords: Asia, China, Self-employment, Entrepreneurship, Social networks
    JEL: J44 O53 O12
    Date: 2007
  2. By: Peter Wilson (Department of Economics, National University of Singapore)
  3. By: Rod Tyers; Jane Golley (College of Business and Economics, Australian National University)
    Abstract: China's economic growth has, hitherto, depended on its relative abundance of production labour and its increasingly secure investment environment. Within the next decade, however, China's labour force will begin to contract. This will set its economy apart from other developing Asian countries where relative labour abundance will increase, as will relative capital returns. Unless there is a substantial change in population policy, the retention of China's large share of global FDI will require further improvements in its investment environment. These linkages are explored using a new global demographic model that is integrated with an adaptation of the GTAP-Dynamic global economic model in which regional households are disaggregated by age and gender. Interest premia are integral with projections made using these models and in this paper their influence on China's economic growth performance is investigated under alternative assumptions about fertility decline and labour force growth. China's share of global investment is found to depend sensitively on both its labour force growth and its interest premium though the results suggest that a feasible continuation of financial reforms will be sufficient to compensate for a slowdown and decline in its labour force.
    Keywords: Chinese economy, demographic change, investment risk and economic growth
    JEL: C68 E22 E27 F21 F43 J11
    Date: 2006–05
  4. By: Rod Tyers; Jane Golley (College of Business and Economics, Australian National University)
    Keywords: Chinese economy, demographic change, labour market and economic growth
    JEL: C68 E27 F21 F43 J11 J13 J26
    Date: 2006–06
  5. By: Gonzalez, Eduardo T.; Mendoza, Magdalena L.
    Abstract: This paper attempts to analyze governance systems in Southeast Asia and proposes some policy suggestions that can improve governance practices in the region. It also discusses the links between governance and official development assistance and the role of the Japan Bank for International Cooperation. To put the discussion on governance systems in a proper context, the paper discusses the governance and growth nexus in Southeast Asia; describes the operating governance systems in Southeast Asia; analyzes economic governance, more specifically in the areas of economic management and growth, revenue generation, social spending, access to services, cost of doing business, and corporate governance; and examines political governance, focusing on the rule of law and judicial independence, conflict management, and voice participation. Regardless of level of development, Southeast Asian countries need to establish and strengthen their transparency and accountability structures, both in the public and private sectors, in order to continue the momentum for broad-based growth. It is also necessary to strengthen the fiscal autonomy of their sub-national units, and provide more room for participation by civil society groups. More responsive and simplified regulatory structures are needed, and so are strong law enforcement mechanisms. The rise of ethnic tensions argues for better peace-building institutions to narrow the gap between groups. In all these, the ultimate challenge lies in seeking allies and building constituencies for reform. To make ODA better managed and more effective, donors must work in partnership (that is, have a common basket) rather than in competition. Donors can also enhance the value of aid by increasingly providing ideas and not just goods, untying aid and allowing recipient countries to take “ownership” and greater flexibility in the use of aid. For Japanese development assistance, in particular, Japanese aid agencies must adopt a strategic approach to assisting poverty reduction in the poorer countries of Southeast Asia, while extending their concessional window to middle-income countries. Japan can do well in providing “ideas aid” based on the Japanese experience. Japanese ODA can have higher leverage if an increasing part of the aid is used for institution building and reforms in governance.
    Keywords: governance, development program, corruption
  6. By: Djoni Hartono (Department of Economics, University of Indonesia); D.S. Priyarsono (Bogor Agriculture University); Tien Dung Nguyen (Ministry of Trade, Vietnam); Mitsuo Ezaki (Nagoya University)
    Abstract: Indonesia is facing the trade liberalization and regional economic integration with several free trade areas, i.e. bilateral FTA, regional FTA and multilateral FTA. The aim of this paper is to analyze the impact of those international relationships on Indonesian economic growth, poverty and income distribution. By using a Global Computable General Equilibrium (GCGE) model, we made eighteen simulations to analyze the current and the potential international relationship that is faced by Indonesia. Generally, Indonesia gains significant benefit in terms of real GDP, output and welfare except FTA with India. FTA also increases the household income of rural group higher than the urban group ones. Unskilled labor experiences more advantages than skilled labor and poor household gain more benefit than the rich household both in rural and urban areas. Those conditions imply that FTA potentially could be a solution for national poverty reduction.
    Keywords: Economic integration, Indonesia
    JEL: F15
    Date: 2007–03
  7. By: Mikic, Mia
    Abstract: The paper addresses preferential trade agreements in Asia and the Pacific with the objective of identifying their characteristics which can be useful in assessing the effects of their implementation. The paper relies mostly on the Asia-Pacific Trade and Investment Agreements Database (APTIAD) in sourcing data and information for analysis. On 26 February 2007 APTIAD was tracking 125 preferential trade agreements one party of which was a member of ESCAP. Eighty seven of those agreements of various types are in force, 62 of them being bilateral agreements, 11 regional trade agreements (RTAs), and 11 country-bloc agreements (the residual is made up of agreements of different scope, i.e. global and country-plurilateral.). The paper utilizes information on membership and coverage of agreements as well as statistical data on goods trade flows in discussing selected important aspects of preferential trade in Asia and the Pacific: (a) the rapid proliferation of preferential trade and revealed preference for bilateral links; (b) strong tolerance for engagement in multiple trade agreements with the same trading partner; and (c) reluctance to commit to full and quick liberalization in merchandise trade, or expose other than industrial goods trade areas to preferential liberalization. The extent of liberalization of trade in agricultural goods through the PTAs in the region is focus of a separate section which also briefly discusses “new” arguments for agricultural trade protectionism in developing countries. Penultimate section discusses the ways in which PTAs could be harnessed to work as complementary with the multilateral trading regime. Some policy recommendations are offered as well.
    Keywords: preferential trade; multilateral liberalization; bilateral trade agreements; regional trade agreements; agriculture trade; Asia; Pacific; APTIAD
    JEL: F53 F15 F14
    Date: 2007–03
  8. By: Arief Anshory Yusuf (Australian National University, Research School of Pacific and Asian Studies); Budy P. Resosudarmo (Australian National University, Research School of Pacific and Asian Studies)
    Abstract: This paper is motivated by the common argument that clean air is a luxury good and has much less or even no value in a less developed country. It applies a hedonic property value analysis, a method commonly used to infer the value of clean air in developed countries, using a combination of data on house values and their characteristics from the Indonesian Family Life Survey, and data of the ambient level of six different pollutants in Jakarta, Indonesia. The result suggests that air quality may affect property value in Jakarta, indicating a preference toward environmental amenities. Moreover, this study is one of the first hedonic studies that may potentially give comparable estimates of the value of clean air in developing countries.
    Keywords: Hedonic Prices, Air Pollution, Indonesia
    JEL: R22 H40 Q21 C14
    Date: 2006–02
  9. By: de Castro, Renato Cruz
    Abstract: This research paper examines the politico-strategic motivations of the Bush Administration’s effort to foster Free Trade Agreements to a number of countries, including the Philippines. It argues that FTAs are being used by the U.S. as means of advancing the trade interest of American business, as well as ensuring its leadership in the global political economy. The article observes that the current attempt of the Bush Administration to push for FTAs is driven by political dynamics. Among these are the competition between the Congress and the White House, the U.S. strategy in the war on terror, pressuring the E.U to another round of trade liberalization negotiations, and ensuring American access to the East Asian regional economy. The article then discusses the specific politico-strategic motives of the Bush Administration in its offer of an FTA to the Philippines. In conclusion, it explores the possible political ramifications of an FTA with the U.S. on Philippine society and how the Philippine government can respond to this offer of a preferential trading arrangement from its major security ally.
    Keywords: East Asia FTA, preferential trading arrangements, competitive trade liberalization, American economic hegemony, war on terror, Trade Promotion Authority Act, Trade Negotiating Authority of 2001, Philippine foreign policy
    Date: 2006
  10. By: Pasadilla, Gloria
    Abstract: The paper analyzes how various preferential trading arrangements deal with agriculture liberalization and examines a few case studies highlighting the provisions on agriculture. It assesses the effect of preferential trade agreements on agriculture trade flows in the case of ASEAN. It finds that while the tariff reduction on all goods, including agriculture, in ASEAN provides a marked advantage from the MFN tariff rates, intra-ASEAN agriculture trade have not been all that significant. Most of the growth in the intra-ASEAN trade had come from trade in industry; and if total agriculture trade had expanded, much of it was due to trade outside the region. The paper argues that AFTA, by original design, had not really been made to boost intraregional agriculture trade, but rather to facilitate the interindustry trade arising out of the vertically integrated network of manufacturing transnational corporations.
    Keywords: tariff, ASEAN, ASEAN Free Trade Area (AFTA), free trade agreement (FTA), regional trade liberalization, preferential trading arrangements, relative tariff ratios, agriculture
    Date: 2006
  11. By: Aldaba, Rafaelita Mercado
    Abstract: This paper examines the country’s investment incentive program for foreign investors and its success in attracting substantial FDI inflows. The analysis compares the FDI incentive system and FDI performance of the Philippines with other Asian countries. Since it is difficult to untangle the effect of tax incentives from other factors, the analysis also takes into account other factors such as level of competitiveness, costs of doing business and availability of infrastructure. Our experience tends to suggest that in the absence of fundamental factors such as economic conditions and political climate, tax incentives alone are not enough to generate a substantial effect on investment decisions of investors nor can they compensate for the deficiencies in the investment environment.
    Keywords: foreign direct investment, investment incentives, corporate taxation
    Date: 2006
  12. By: David E. Bloom; David Canning (Harvard School of Public Health)
    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.
  13. By: Balboa, Jenny D.; Medalla, Erlinda
    Abstract: <br>The last two decades have witnessed a tremendous increase in global trade and investments. This has been followed by a shift in the pattern of FDI inflow, which had gradually become more favorable to the developing countries. Consequently, this resulted in an increase in competition among developing countries to attract FDI, resulting in further liberalization of economies, removal or loosening of restrictions on operations of foreign firms in host countries and higher investment incentives. This also prompted economies to form or join regional trade agreements and bilateral investment treaties.</br> <br>Like most developing countries, the Philippines positioned itself for this transition. Investment policies had been revised to create a more favorable investment environment. Incentive packages to foreign investors are also improved. Yet despite these efforts, the Philippines continue to lag behind, especially relative to other countries in Southeast Asia, in capturing a sizeable portion of trade and investment flows. The Philippine experience in the past twenty years show that trade and investment policies are not sufficient to pump up inflows. As important are the internal processes that accompany these policies, infrastructure and government support that will sustain the transition.</br>
    Keywords: infrastructure, foreign direct investment, incentives, ASEAN trade and investment flows, government policies, investment treaties, policy gaps and failures, government support
    Date: 2006
  14. By: Djoni Hartono (Department of Economics, University of Indonesia); Budy P. Resosudarmo (Australian National University)
    Abstract: Escalating oil prices and the need to control carbon emissions sound the alarm for Indonesia to reduce or be more efficient in its energy use. To create an incentive for society to be more energy efficient, the government needs to reduce the current energy subsidy, which, in any case, has imposed a tremendous fiscal burden on the country. This paper aims to analyse the impact on the economy of energy policies aiming to reduce and to improve the efficiency of energy use, particularly on the income of various household groups. This paper will, first, construct a Social Accounting Matrix for Indonesia with detailed energy sectors and, second, utilise various multiplier analyses to observe and understand the impact of these energy policies.
    Keywords: Social Accounting Matrix, Energy, Indonesia
    JEL: Q4
    Date: 2007–01
  15. By: Evenett, Simon J
    Abstract: The European Union is the world's largest trader, a fact that on the face of it ought to convert into considerable clout in international commercial negotiations. Yet, since the World Trade Organization's (WTO's) creation in 1995, it is difficult to point to a string of successes for the European Commission's (EC's) often beleaguered trade negotiators. Even the enthusiasm associated with the launch of the Doha Round in 2001 has dissipated as these negotiations have repeatedly stalled, with many questioning what can feasibly be accomplished at the WTO in the near to medium term. A 2006 EC decision to abandon its moratorium on negotiating new free trade agreements seems more of a stop-gap measure to maintain some negotiating momentum than a systematic strategy to leverage European clout. Worse, it carries the risk of seriously undermining the multilateral trading system if EC negotiations with Korea tempt Japan, and in turn possibly even the United States, to eventually seek preferential access to the European Union's markets. With so little to show for the last 10 years and the future of the multilateral trading system decidedly uncertain, a fundamental rethink of the ends and means of European trade policy is in order. That rethink needs to take account of the following realities: a shift away from a bipolar towards a multi-polar WTO; recognition of the fact that the principal liberalising accomplishment to date of the multilateral trading system has been the freeing of manufactured goods trade between industrialised countries and that many other potential reforms have either stalled or proved, on implementation, to be highly controversial; substantial opposition among many prominent groups in the leading trading powers to further trade reform (even in countries experiencing fast economic growth or export growth); and a greater emphasis on signing bilateral and regional free trade agreements (whose liberalising intent and impact is often highly circumscribed). Once the superficial attractions associated with the scramble for preferential market access in Asia fade, European trade policymakers ought to confront these realities. At a minimum, the search will then be on for a modus vivendi with the new trading powers. This will require thought to be given to the likely future offensive and defensive commercial interests of all concerned, bearing in mind the differences in level of development and overseas corporate exposure and organisation. The ultimate goal should be to identify the potential basis for future multilateral trade accords. Properly conceived, future European trade strategy could contribute significantly to the renewal of one of the most successful post-war international economic institutions.
    Keywords: commercial policy; European Union; trade policy; WTO
    JEL: F13 F15
    Date: 2007–05
  16. By: Djoni Hartono (Department of Economics, University of Indonesia); Budy P. Resosudarmo (Australian National University)
    Abstract: In Indonesia, the government determines the domestic prices of energy; namely fuel oil, such as gasoline, automotive diesel oil (ADO) and kerosene, gas and electricity. In response to the weakening of rupiah during the 1997/1998 economic crisis and the increasing of the world price of crude oil, the government tends to increase the energy subsidy on domestic prices of fuel oil, gas and electricity, rather than letting these domestic prices follows the world prices of fuel oil, gas and electricity. Currently domestic prices of fuel oil, such as gasoline, automotive diesel oil, kerosene as well as gas and electricity are significantly lower than the world prices of those commodities. Meanwhile government subsidy for fuel oil, gas and electricity has reached approximately 30 per cent of total government expenditure. There have been suggestions that the government should eliminate this subsidy letting the prices of fuel oil, gas and electricity equal to the world prices, since, among others, energy subsidy has foregone government’s opportunities to spend more on development expenditures that would improve the country’s growth rate. On the other hand various groups keep pressing the government to keep the prices of fuel oil, gas and electricity; i.e. do not reduce the energy subsidy, since the poor could not afford higher prices of fuel oil, gas and electricity.
    Keywords: fuel subsidy, CGE, Indonesia
    JEL: D30 D50
    Date: 2006–12
  17. By: Rod Tyers (School of Economics, College of Business and Economics, Australian National University); Iain Bain; Jahnvi Vedi
    Abstract: One consequence of the trade and technology driven increases in skill premia in the older industrial regions since the 1980s has been a perceived “skill shortage” in those regions, along with freer migration of skilled and professional workers from developing regions. While skilled migration flows remain too small to have large short-run effects on labour markets, a further opening to skilled migrants by the industrialised North could see substantial changes in labour markets and overall growth performance. The links between demographic change, migration flows and growth performance are here explored using a new demographic sub-model that is integrated with an adaptation of the GTAP-Dynamic global economic model in which regional households are disaggregated by age and gender. Skilled migration flows are assumed to be motivated by real wage differences to an extent that is variably constrained by immigration policies. A uniform relaxation of these constraints has most effect on labour markets in the traditional migrant destinations, Australia, Western Europe and North America, where it restrains the skill premium and substantially enhances GDP growth. The skill premium is raised, however, in regions of origin, and particularly in South Asia, although the extent of this is shown to depend sensitively on the responsiveness of skill acquisition to regional skill premia.
    Keywords: Demographic change, skilled migration, labour markets, economic growth.
    JEL: C68 E22 E27 F21 F43 J11
    Date: 2006–06
  18. By: Hübler, Olaf Hübler; Menkhoff, Lukas; Suwanaporn, Chodechai
    Abstract: Financial liberalisation has often failed in the past due to underestimated problems of structural change. We analyse such changes in lending behaviour of Thai commercial banks during a liberalisation phase by way of unique micro data. Liberalisation has expected positive effects, such as lowering the interest rate spread and collateral requirements. Liberalisation causes structural change, such as a decline in collateral-based and relationship banking. However, the liberalisation evidence is consistent with more risk taking, such as lending to more risky projects and less protection against default. The Thai experience suggests obvious policy lessons.
    Keywords: financial liberalisation, lending decisions, emerging economies, Thailand
    JEL: O16 F30 G21
    Date: 2007–05
  19. By: Michael P. Cameron (University of Waikato)
    Abstract: HIV/AIDS is one of the greatest public health and development challenges currently faced by the global community. Amongst reported statistics, such as the estimated 39.5 million people infected with HIV at the end of 2006, the human face of HIV/AIDS is often lost. This paper presents several narratives of the impacts of HIV/AIDS on individuals and households, drawn from a 2003 survey of 71 HIV/AIDS patients in Khon Kaen Province, Northeast Thailand. These narratives illustrate the broad range of impacts of HIV/AIDS, as well as the diverse coping strategies that are employed to deal with those impacts. The narratives also demonstrate how the HIV/AIDS epidemic impacts not just those who are HIV-infected and other members of their household, but also the wider community.
    Keywords: HIV/AIDS; poverty; Thailand
    JEL: I19
    Date: 2007–04–30
  20. By: Tantuico, Delia S.; Zshornack, Errol Wilfred
    Abstract: Intellectual property rights-–copyrights, trademarks, patents, trade secrets, and related rights-–have become increasingly important with the advent of increased international trade, global and knowledge-based economy and fast developing technology. A strong intellectual property rights regime is necessary in order to attract foreign trade and direct investments. For this reason, the protection of intellectual property rights has become an important negotiating item in all FTAs which the United States has entered into. In view of the proposed RP-US FTA negotiations, this paper seeks to determine whether the existing intellectual property regime in the Philippines provides adequate and sufficient legal protection of intellectual property rights. It also seeks to determine whether the administrative and judicial processes are adequate and speedy and acceptable in the enforcement and protection of said rights in the light of FTAs already entered into by the United States with other countries, in general, and with Singapore, in particular, which will be the benchmark for the RP-US FTA. Other relevant issues in the protection of intellectual property rights such as the annual review of ountries by the United States Trade Representative in relation to Special 301 of the U.S. Trade Law; piracy of optical media, including books and pharmaceuticals; and the Trade-Related Aspects of Intellectual Property Rights (TRIPS) are also discussed. The author proposes certain provisions to be added to the Intellectual Property Code; sustained, consistent and stricter implementation of intellectual property laws including more efforts at curbing piracy; and more importantly, a strong political will and a strong determination to strengthen intellectual property rights, as necessary to make the IPR regime up to par with U.S. and international.
    Keywords: World Trade Organization, investment, intellectual property rights, market access, free trade agreement (FTA), trade-related aspects of intellectual property rights (TRIPS), dispute settlement, Optical Media Act, E-commerce Law, legal protection, capability building
    Date: 2006
  21. By: Hasan, Zubair
    Abstract: This paper argues that profit maximization of mainstream economics though unrealistic serves a useful function in price theory formation. In Islamic economics too we need it for the same purpose. Maximization per se is value neutral. What is maximized, how, and to what end are the real issue to be investigated in a case. Profit maximization from an Islamic perspective can be accommodated if all the Islamic norms of conducting business are scrupulously observed. In that case it will simply work as a pressure for attaining efficiency both in resource allocation and production. One need not throw away the baby with the bath water. The paper shows profit maximization as conducive to social well-being. under an Islamic dispensation. It would lead to a lower price, greater output, and lower risk as compared to a competitive firm under secular framework.
    Keywords: Profit maximization
    JEL: D2 D21
    Date: 2007
  22. By: James M Nason; Shaun P Vahey (Reserve Bank of New Zealand)
    Abstract: This paper argues that UK WWI fiscal policy followed the ‘English method’ identified by Sprague (1917) and his discussants, and revived by the US to finance the Korean War (see Ohanian 1997). During WWI, UK fiscal policy adopted the “McKenna rule” named for Reginald McKenna, Chancellor of the Exchequer (1915-16). McKenna presented his fiscal rule to Parliament in June 1915. The McKenna rule guided UK fiscal policy for the rest of WWI and the interwar period. We draw on narrative evidence to show that motivation for the McKenna rule came from a desire to treat labour and capital fairly and equitably, not pass WWI costs onto future generations, and commit to a debt retirement path and higher taxes. However, a permanent income model suggests the McKenna rule adversely affected the UK because a higher debt retirement rate produces a lower consumption-output ratio. Data from 1916-37 supports this prediction.
    JEL: E6 N4
    Date: 2007–04
  23. By: Calderon-Kabigting, Leila Y.; Patiu, Liberty S.
    Abstract: The paper discusses financial liberalization in the context of a proposed RP-US FTA. It discusses the state of the financial industry, in general, and also reviewed the US-Chile and US-Singapore FTAs to be able to arrive at the proposed provisions for the RP-US FTA. It also tackles the reforms that have to be undertaken in order to make the Philippine financial services industry globally competitive and be more prepared to embrace the opportunities of an FTA with the US.
    Keywords: capital markets, financial liberalization, financial services, electronic commerce (e-commerce), corporate governance, market access, cross-border transactions, foreign ownership limitations, international capital standards, harmonization of standards and practices
    Date: 2006

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