nep-sea New Economics Papers
on South East Asia
Issue of 2007‒07‒13
ten papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Managing Growth: The Role of Export, Inflation and Investment in three ASEAN Neighboring Countries By Liwan, Audrey; Lau, Evan
  2. French banks in Hong Kong (1860s-1950s): Challengers to British banks? By Hubert BONIN (GREThA)
  3. International Equity Flows and Speculative Bubbles: Some Empirical Evidence for the Asia-Pacific Region By Pierdzioch, Christian; Kizys, Renatas
  4. Horticultural Exports of Developing Countries: Prospects and Issues By Shah, Deepak
  5. The Marginal Cost of Public Funds for Excise Taxes in Thailand By Worawan Chandoevwit and Bev Dahlby
  6. Exchange Rate Exposure of Sectoral Returns and Volatilities: Evidence from Japanese Industrial Sectors By Prabhath Jayasinghe; Albert K. Tsui
  7. India's Trade Practices in Livestock Sector By Shah, Deepak
  8. Le marché du travail urbain en Thaïlande est-il segmenté ? Analyse à l'aide d'un modèle à changement de régime endogène avec règle de séparation inconnue By Kumlaï Jongkong
  9. Civil Conflict and Displacement: Village-Level Determinants of Forced Migration in Aceh By Mathias Czaika; Krisztina Kis-Katos
  10. Fiscal Misperceptions Associated with Tax Expenditure Spending: the Case of Pronatalist Tax Incentives in Sinapore By Poh Eng Hin

  1. By: Liwan, Audrey; Lau, Evan
    Abstract: This study investigates the relationship between export, inflation, investment and economic growth for three ASEAN countries namely Indonesia, Malaysia, and Thailand. In general, the results revealed that export has a positive impact on growth. As for, Malaysia and Thailand, inflation has a negative impact on growth; while for Indonesia it has a positive impact. The inflation rate for Indonesia is almost consistent for a several years, which have lead to a positive relationship between inflation and growth. However, there is also a modest increase in the rate of inflation for certain years. The results also shows that investment have a positive impact on growth for Indonesia, Malaysia and Thailand.
    Keywords: Economic growth; export; inflation; investment; ASEAN
    JEL: F0
    Date: 2007–07–10
  2. By: Hubert BONIN (GREThA)
    Abstract: French banking expansion in China and South-East Asia had to respect the powerful influence of British banks there. From the 1860s French merchant and banking interests had been involved in Hong Kong business because of the colonial developments in Indochina and the links between this area and the Hong Kong centre. The growth of commercial links between the colony and China favoured further integration of banking and currency exchanges with Hong Kong, through the Banque de l’Indochine corporation, competing with Hsbc. It was itself committed to finance Asian-French commercial flows (silk, etc.) directly (Lyon, Bordeaux, Paris) or indirectly (London branch) took part to banking links with France. But Hong Kong also became a bridgehead for Banque de l’Indochine into southern China (Canton, etc.) from the1890s up to the 1930s and, in parallel with the Shanghai branch, its branch there asserted itself as a part of French expansion in the Far-East.
    Keywords: Imperialism, First Globalization; Bank; Overseas; China; Hong-Kong; Guangzhou
    JEL: G20 N25
    Date: 2007
  3. By: Pierdzioch, Christian; Kizys, Renatas
    Abstract: We analyzed the causal links between U.S. international equity flows, speculative bubbles, and fundamentals in the stock markets of ten countries of the Asia-Pacific region over the period 1991–2006. We used a state-space model to estimate speculative bubbles and fundamentals. We estimated vector autoregressive models to test for causality patterns. We found that speculative bubbles caused international equity flows. International equity flows, in contrast, did not cause speculative bubbles. In addition, there is only weak evidence of causal links between international equity flows and fundamentals. Our results are consistent with momentum-trading on the side of international investors.
    Keywords: Stock markets; Speculative bubbles; International equity flows; Asia-Pacific region; Kalman filter; Vector autoregressive model; Causality tests
    JEL: F3 G15
    Date: 2007–07–10
  4. By: Shah, Deepak
    Abstract: This paper seeks to evaluate the present and future prospects of developing and developed countries in agricultural exports in general and in horticultural exports in particular. The study also evaluates the behaviour of international export prices for agricultural commodities, both for developing and developed nations. In general, this study provides an insight into the direction in which various developed and developing countries are heading for insofar as their agricultural and horticultural exports are concerned in the changed market conditions. The study has made a few major observations. First, the study shows decline in market share of developing countries’ in world agricultural exports in the face of marginal increase in their market share in world fruits and vegetable (F&V) exports during the period between 1981 and 1997. Second, although the study shows lower market share of developing countries’ in world F&V exports during the period between 1981 and 1997, the growth in F&V exports as proportion of total agricultural exports is noticed to be much faster for developing countries’ as against the developed countries’ during the same period. Third, though agricultural exports of Least Developed Countries (LDC) have grown only marginally between 1981 and 1997, the growth in their F&V exports is seen to have been tremendous, especially after the late eighties period. Similarly, Socialist Countries of Asia (SCA) and developing countries of Oceania have also shown sharp increases in their F&V exports after the late eighties period. Fourth, while except America, other Africa and Oceania, all the developing countries have shown decline in their market share in total F&V exports of Developing Market Economies (DME), Asia shows rise in its market share not only in agriculture but also in F&V exports of DME. Another major observation of this study is in terms of instabilities in export prices. The instabilities in export prices of agricultural commodities, including horticultural ones, are noticed to be more sharp for developing world as compared to developed world. The study, therefore, has categorically emphasized upon the fact that the future growth in horticulture production and trade, especially of developing world, will mainly depend on future price mechanism and also on the import demand of these high value crops in various regions of the world.
    Keywords: Horticultural Exports Developing Countries
    JEL: F10
    Date: 2007–07–09
  5. By: Worawan Chandoevwit and Bev Dahlby
    Abstract: The authors extend the Ahmad and Stern (1984) framework for calculating the marginal cost of public funds (MCF) for excise taxes in Thailand by incorporating non-tax distortions caused by (a) environmental externalities, (b) public expenditure externalities, (c) market power in setting prices, (d) addiction, and (e) smuggling or tax evasion. Our calculations, based on our benchmark parameter values, indicates that the MCFs are 0.532 for fuel excise taxes, 2.187 for tobacco excise taxes, 2.132 for alcohol excise taxes and 1.080 for the VAT. Using pro-poor distributional weights does not change the relative social marginal cost of raising revenues through the excise taxes.
    Keywords: marginal cost of public funds, excise taxes, tax reform, excess burden
    Date: 2007–07–05
  6. By: Prabhath Jayasinghe (Department of Economics, National University of Singapore); Albert K. Tsui (Department of Economics, National University of Singapore)
    Abstract: Most studies of exchange rate exposure of stock returns do not address three relevant aspects simultaneously. They are, namely: sensitivity of stock returns to exchange rate changes; sensitivity of volatility of stock returns to volatility of changes in foreign exchange market; and the correlation between volatilities of stock returns and exchange rate changes. In this paper, we employ a bivariate GJR-GARCH model to examine all such aspects of exchange rate exposure of sectoral indexes in Japanese industries. Based on a sample data of fourteen sectors, we find significant evidence of exposed returns and its asymmetric conditional volatility of exchange rate exposure. In addition, returns in many sectors are correlated with those of exchange rate changes. We also find support for the “averaged-out exposure and asymmetries” argument. Our findings have direct implications for practitioners in formulating investment decisions and currency hedging strategies.
    Keywords: exchange rate exposure; asymmetric volatility spillovers; GARCH-type models; conditional correlation
    JEL: C22 F31 G12 G15
    Date: 2007–06
  7. By: Shah, Deepak
    Abstract: India is known for its livestock wealth and ranks high among the nations having bovine population. However, despite having huge livestock population, India stands insignificant in the world trade of livestock products. The recent concerted efforts made by the government in the era of liberalization after opening of the national economy to the international market have certainly boosted India’s export trade of livestock products to newer heights. The findings of this study show considerable increase in the export trade of India in meat and meat products and also in respect of milk and milk products, both in quantity and value terms. The export trade of India in milk and milk products got a real boost only after the early nineties period, i.e., in the era of liberalization. The estimates in this study also show an increasing trend in export trade of India in processed livestock products. The increase in livestock exports of India witnessed after the early nineties period is chiefly because of liberalization of trade and several trade policy changes coupled with surge in international prices of many livestock based products. The upswing in livestock exports of India in due course of time has also filtered into significant increase in her share not only in Asia but also in world export trade. But, the results of this study still indicate a marginal presence of India in world trade of majority of the livestock products. It is only in the case of bovine meat and also sheep and goat meat that India has shown a considerable share in the global trade of the same. The findings of this study also indicate that there will neither be any exportable surplus for milk nor meat and eggs in the near future. However, India still has enormous untapped potential in its livestock sector which if tapped in the desired manner and direction can lead us to emerge as the leading producer of milk and meat in the world in the years to come, but not in exports.
    Keywords: Trade India Livestock Sector
    JEL: F10 F1
    Date: 2007–07–05
  8. By: Kumlaï Jongkong (GED, Université Montesquieu Bordeaux IV)
    Abstract: Cet article tente d’évaluer un aspect spécifique du marché du travail urbain en Thaïlande en se basant sur la théorie du marché du travail segmenté. Le débat actuel sur la pauvreté et la persistance de l’inégalité est relié aux théories dominantes du capital humain et de la segmentation du marché du travail. Contrairement aux prédictions faites par la théorie néoclassique, les partisans de la théorie de la segmentation suggèrent qu’il existe des segments distincts au sein du marché du travail, à savoir les secteurs primaire et secondaire. Cette analyse s’inscrit dans une approche dualiste afin de montrer que le marché du travail se caractérise par deux fonctions de gains. Dans cette optique, une analyse économétrique est proposée à l’aide d’un modèle à changement de régime avec règle de séparation inconnue. Cette méthode permet d’échapper aux problèmes techniques de biais de sélection et de troncature qui font l’objet de critiques vis-à-vis des études antérieures. A l’aide d’une Enquête sur la main-d’œuvre (LFS), relative à la période 1985-2004, les résultats de l’analyse empirique confirment la dualité du marché du travail urbain en Thaïlande. En effet, deux aspects importants sont mis en évidence. En premier lieu, l’analyse montre que, non seulement les salaires dans le secteur secondaire sont relativement faibles, mais aussi que les taux de rendements au capital humain sont proches de zéros, notamment pour la variable liée à l’expérience professionnelle. Par conséquent, les résultats du test empirique permettent de rejeter l’hypothèse du modèle standard selon lequel il existe une fonction de gains unique. En deuxième lieu, l’étude de la répartition sectorielle des travailleurs, effectuée à l’aide du calcul des probabilités attachées aux secteurs primaire et secondaire, montre que près des trois quarts des individus sont classés dans le secteur secondaire où les salaires sont relativement faibles. En définitive, le test empirique et l’analyse de la répartition confirment l’existence de la dualité du marché du travail urbain en Thaïlande. This article attempts to evaluate a particular aspect of the urban labour market in Thailand along the lines of the theory of the labour market segmentation. The recent debate on the poverty and the persistence of the inequality frequently refers to two dominant theories, namely the theory of human capital and the theory of segmentation. Contrary to the predictions of the neo-classic theory, advocates of the segmentation theory suggest that there are several segments within the labour market, such as a primary and a secondary sector. This analysis follows a dualistic approach according to which the labour market is characterized by two wage functions instead of one equation. By this direction, we carry out an econometric analysis, using the switching model with unknown regime. This method escapes from the technical problems, namely the selection and truncation biases which give strong criticisms to former studies. Using the Labor Force Survey (LFS) from 1985 to 2004, the results of the empirical analysis confirm the duality of the urban labour market in Thailand. Indeed, it should be stressed two important aspects. First, the analysis shows that not only wages in the secondary sector are relatively low but the returns to the human capital are also close to zeros, particularly for the experience variable. Consequently, the results of the empirical test enable us to reject the assumption of the human capital according to which there is only one wage function. Second, the study of workers’ distribution carried out by using the probability attached to the primary sector and secondary shows that three quarter of individuals are classified in the secondary sector where wages are relatively low. Ultimately, the empirical test and the analysis of the distribution confirm the existence of the duality of the urban labour market in Thailand.(Full text in french)
    JEL: J31 J42
    Date: 2007–07
  9. By: Mathias Czaika (Department of International Economic Policy, University of Freiburg); Krisztina Kis-Katos (Department of International Economic Policy, University of Freiburg)
    Abstract: The purpose of this paper is to identify the determinants of displacement behavior based on various push and pull factors at the village level. The study concentrates on changes in village population during three years of civil conflict (1999-2002) in Aceh, Indonesia. The empirical analysis is based on a unique data–set from two census rounds of the Indonesian Village Potential Census (PODES). It uses data on around 5200 Acehnese villages and relates village level population change to conflict variables and traditional socio-economic determinants of migration. By applying quantile regressions, the push (outflow) factors and the pull (inflow) determinants of migration can also be distinguished. The study finds that the negative impact of conflict incidence on village population stock is mainly driven by reductions in inflow for slightly affected (inflow) villages, and by an outflow push for severely affected (outflow) villages. After controlling for conflict variables, socioeconomic factors remain significant and robust determinants for explaining internal displacements. Villages that are more dependent on agricultural production experience larger population outflows, and smaller population inflows, which reflects a clear rural–urban migration pattern. The presence of small–scale manufacturing industries helps to retain village population. These results emphasize that forced migration cannot be considered as only a result of a unidimensional fear of violence.
    Keywords: Displacement, civil conflict, Aceh
    JEL: C21 D74 R23
    Date: 2007–05
  10. By: Poh Eng Hin
    Abstract: Tax expenditures are a potentially expedient means through which politicians can implement spending programs that target benefits at a select few while ensuring that the cost and distributive effects of such programs remain largely imperceptible to the majority. This paper reports the results of an exploratory study to assess the extent and determinants of public awareness of pronatalist tax policy in Singapore, and of public perceptiveness of the cost and distributive outcomes of these pronatalist tax incentives. It is found that survey respondents largely are aware of the existence of the incentives. However, there is widespread ignorance (if not misperceptions) of the spending implications and hidden cost associated with these incentives and of their distributive biases along eugenic, income and ethnic dimensions. Non-beneficiaries of the tax expenditures not only are less likely to be aware of the existence of the incentives, they are also less likely to be perceptive of the distributive effects. Overall, the empirical findings are a testimony to why the tax expenditure route has proven to be such a politically expedient way for the Singapore Government to implicitly pursue its policy of selective pronatalism.
    Keywords: pronatalist tax policy, tax expenditures, tax incentives
    Date: 2007–07–05

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