nep-sea New Economics Papers
on South East Asia
Issue of 2007‒05‒19
nine papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Service Sector Growth in China and India: A Comparison By Yanrui Wu
  2. Once Again: Ten years after the Asian Crisis By Beja, Jr., Edsel
  3. Financial Aspects of Transactions with FDI: Trade Credit Provision by SMEs in China By Ito, Seiro; Watanabe, Mariko; Yanagawa, Noriyuki
  4. Local causes, regional co-operation and global financing for environemntal problems: the case of Southeast Asian Haze pollution By Luca Tacconi; Frank Jotzo; R. Quentin Grafton
  5. Prospects for Development of the Garment Industry in Developing Countries: What Has Happened Since the MFA Phase-Out? By Yamagata, Tatsufumi
  6. Is the Log Export Ban Effective? Revisiting the Issue through the Case of Indonesia By Budy P. Resosudarmo; Arief Anshory Yusuf
  7. The Trade Strategy of the European Union: Time for a Rethink? By Simon J. Evenett
  9. Fiddling while carbon burns: why climate policy needs pervasive emission pricing as well as technology promotion By John C. V. Pezzey; Frank Jotzo; John Quiggen

  1. By: Yanrui Wu (UWA Business School, The University of Western Australia)
    Abstract: China and India have recently achieved spectacular economic growth. However, services in these two Asian giants have played a very different role. In India, the service sector contributes to more than 54 per cent of GDP while its GDP share in China is much smaller (below 41 per cent in 2004). To provide an explanation for the contrasting trajectories, this paper examines and compares service sector developments in these two Asian giants. It investigates the determinants of demand for services and sheds light on the outlook for service sector growth in the two countries.
    Keywords: China and India, Asia, service sector, growth determinants and regression analysis
    Date: 2007
  2. By: Beja, Jr., Edsel
    Abstract: A review of the economic performances of Indonesia, Malaysia, Philippines, South Korea, and Thailand in the past decade reveals that the countries have not fully recouped their losses from the 1997 Asian Crisis. It is important to understand how the crisis has affected these economies to appreciate the importance of dealing with the present challenges. Unless GDP per capita growth is higher than the current trend, the crisis-affected economies will continue to face the economic and social costs. A positive combination of policies is needed: taking up the useful components of the past arrangements and putting in the missing instruments for macroeconomic management and international cooperation.
    Keywords: Asian Crisis; Indonesia; Malaysia; Philippines; South Korea; Thailand
    JEL: B50 E60 E10 N10 O50 F40
    Date: 2007–05–15
  3. By: Ito, Seiro; Watanabe, Mariko; Yanagawa, Noriyuki
    Keywords: Incomplete contract, Trade credit, Spillover of technology, FDI, Government-owned firms, China, Foreign investments, Credit, Small and medium-scale enterprises
    JEL: G2 K0 O5 P31
    Date: 2007–04
  4. By: Luca Tacconi (Australian National University, Crawford School of Economics and Government); Frank Jotzo (Australian National University, Research School of Pacific and Asian Studies); R. Quentin Grafton (Australian National University, Crawford School of Economics and Government)
    Abstract: Lack of action on cross-border environmental problems in developing countries is often ascribed to gaps in local capacity and resources, failure of regional cooperation, and lack of financial support from rich countries. Using the case of the Southeast Asian Haze pollution from forest and peat fires in Indonesia, we explore the challenges posed by environmental problems whose causes are closely linked to local development and livelihood strategies, and whose impacts are local, regional (haze) as well as global (carbon emissions). We assess whether there are real opportunities to implement effectively the recent Association of Southeast Asian Nations (ASEAN) Agreement on Transboundary Haze Pollution. To address the deep determinants behind haze pollution, we propose signatories to the Agreement refocus their efforts to controlling peat fires rather than strive for a zero-burning regime. We also recommend a new approach to financing sustainable development based on rules and incentives, with a regional pool of funds, contributed by rich countries through the Global Environment Facility and countries in Southeast Asia.
    Keywords: ASEAN, climate change, fires, GEF, haze pollution, regional agreements
    JEL: Q54 O20 C60
    Date: 2006–12
  5. By: Yamagata, Tatsufumi
    Abstract: On January 1, 2005, the controlled trade regime on textiles and clothing which was based on the Multi-Fiber Arrangement (MFA) made in 1974 was abolished. This institutional change wrought great impacts on the world market for textiles and clothing.This paper reviews the impacts of the changes on the main markets and examines the prospects for the markets and the source countries. The main conclusions are as follows: (1) after the renewal of quantitative restrictions on Chinese garment exports were agreed with the US and the EU, the post-MFA surge in Chinese garment exports was significantly attenuated; (2) instead, the growth in garment exports from other Asian low-income countries to the two markets was revived in 2006; (3) the Japanese market has been kept almost intact from the impact of the regime shift; (4) some developing countries, such as Bangladesh and Cambodia, not only survived the liberalization but also have steadily expanded their garment exports throughout the transition; and (5) an indicative fact is that the profitability of the garment industry in Bangladesh and Cambodia was high on average according to surveys conducted in 2003, which might have bolstered the steady growth of garment exports in the past, and possibly future growth, too.
    Keywords: Garment, MFA phase-out, China, Bangladesh, Cambodia, Developing countries, Apparel industry, Exports, International agreements
    JEL: L67 O53
    Date: 2007–04
  6. By: Budy P. Resosudarmo (Australian National University, Research School of Pacific and Asian Studies); Arief Anshory Yusuf (Australian National University, Research School of Pacific and Asian Studies)
    Abstract: The effectiveness of a log export ban policy in achieving the twin goals of conservation and economic development has been vigorously debated by many researchers and policymakers for the last two decades or so. Despite the abundance of work focusing on this issue that demonstrates the perversity of this policy, many countries around the world still implement it. This paper will, first, review the economic and political arguments on the pros and cons of this policy. Second, it will review the Indonesian experience in implementing the policy in the 1980s and 2000s. Third, using a CGE model, this paper will predict the anticipated impact of implementing the log export ban policy on the national economy and on household incomes for various socio-economic groups.
    Keywords: log export ban policy, conservation and economic development, national economy, household incomes, CGE
    JEL: Q00
    Date: 2006–06
  7. By: Simon J. Evenett
    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: European Union, commercial policy, trade policy, WTO
    JEL: F13 F15
    Date: 2007–04
  8. By: Engvall, Anders Engvall (European Institute of Japanese Studies)
    Abstract: Ethnic minorities have a significantly higher poverty incidence than the majority in Lao PDR. Based on survey data the determinants of minority poverty are analyzed, the sources of inequality decomposed, and the expected impact of polices to address minority poverty estimated. Minority poverty is found to be due to limited access to resources, while minority resource use tends to be efficient. Yet, large differences in resource use between the minority groups are found. Decomposition shows that unequal access to resources and demographic variables largely explain the majority-minority poverty gap. A strategy for alleviating minority poverty in the Lao PDR is suggested: (1) broad policies covering education, infrastructure and agricultural development can address poverty among ethnic minorities; (2) policies should be tailored to the needs of the individual minority groups.
    Keywords: Lao PDR; Laos; poverty; ethnic minorities
    JEL: I32 J15 O12 O53
    Date: 2007–04–01
  9. By: John C. V. Pezzey (Australian National University,Centre for Resource and Environmental Studies); Frank Jotzo (Australian National University, Research School of Pacific and Asian Studies); John Quiggen (University of Queensland, School of Economics and Political Science)
    Abstract: Effective climate policy requires global emissions of greenhouse gases to be cut substantially, which can be achieved by energy supply technologies with lower emissions, greater energy use efficiency, and substitution in demand. For policy to be efficient requires fairly uniform, fairly pervasive emission pricing from taxes, permit trading, or combinations of the two, as well as significant government support for low-emission technologies. We compare the technology-focused climate policies adopted by Australia and the 'Asia-Pacific Partnership on Clean Development and Climate' (AP6), against this ideal policy yardstick. We find that such policies omit the need for emission pricing to achieve abatement effectively and efficiently; they over-prescribe which abatement actions should be used most; they make unrealistic assumptions about how much progress can be achieved by voluntarism and cooperation, in the absence of either adequate funding or mandatory policies; and they unjustifiably contrast technology-focused policy and the Kyoto Protocol approach as the only two policies worth considering, and thus ignore important combined policy options.
    Keywords: climate policy, greenhouse gas emissions, abatement, emission taxes, emissions trading, technology policy, innovation, Asia-Pacific Partnership, AP6
    JEL: Q00
    Date: 2006–12

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