nep-sea New Economics Papers
on South East Asia
Issue of 2007‒08‒08
23 papers chosen by
Kavita Iyengar
Asian Development Bank

  1. The Asian Crisis: a Perspective after Ten Years By W. Max Corden
  2. Changing Features of the Automobile Industry in Asia:Comparison of Production, Trade and Market Structure in Selected Countries By Biswajit Nag; Saikat Banerjee; Rittwik Chatterjee
  3. The Effects of Agricultural Trade Liberalisation under the Doha Development Agenda with Special Reference to the Asia Pacific Region: A Brief Survey By Dionisius A. Narjoko; Raymond Atje
  4. The Chinese economy, seen from Japan and the Netherlands By Wim Suyker
  5. The Political Economy of Pre-industrial Trade in Northeast Asia By Hun-Chang Lee
  6. Ten Years After: Financial Crisis Redux or Constructive Regional Financial and Monetary Cooperation? By Yap, Josef T.
  7. Customs Mapping and Analysis of South Asian Agricultural Trade Liberalization Effort By Parakrama Samaratunga; Manoj Thibbotuwawa
  8. The Malaysian Capital Controls: A Success Story? By Prema-Chandra Athukorala
  9. Asian drivers and the future of responsible production and consumption: exploring a research question and hypotheses for future research. By Knorringa, Peter
  10. The Effects of Agricultural Trade Liberalisation under the Doha Development Agenda with Special Reference to the Asia Pacific Region: A Brief Survey By Jayatilleke S. Bandara
  11. Shaping APEC: Perspectives from the Philippines By Medalla, Erlinda; Balboa, Jenny D.
  12. Assessing Barriers to Trade in Education Services in Developing Asia - Pacific Countries:An Empirical Exercise By Ajitava Raychaudhuri; Prabir De
  13. The Challenge of Structural Change in APEC Economies By Robert A Buckle; Amy A Cruickshank
  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. Capital Flows, Financial Integration, and International Reserve Holdings: The Recent Experience of Emerging Markets and Advanced Economies By Maria Stromqvist; Sunil Sharma; Woon Gyu Choi
  16. The buffer stock model redux? An analysis of the dynamics of foreign reserve accumulation By Giulio Cifarelli; Giovanna Paladino
  17. Saving and Demographic Change: The Global Dimension By Barry Bosworth; Gabriel Chodorow-Reich; ;
  18. Campaigning for the Japanese Lower House: From Mobilising to Chasing Voters? By Patrick Köllner
  19. Murdering the Alphabet: Identity and Entrepreneurship among Second Generation Cubans, West Indians, and Central Americans By Patricia Fernández-Kelly; Lisa Konczal
  20. Indigenous Knowledge and Innovations for Managing Resources, Institutions and Technologies Sustainably: A Case of Agriculture, Medicinal Plants and Biotechnology By Gupta Anil K.
  21. A Comparative Analysis of Japanese, U.S., and Korean Firms on IT and Management By MOTOHASHI Kazuyuki
  22. Educational Implications of School Systems at Different Stages of Schooling By Jung Hur; Kang Changhui
  23. Modal Estimates of Services Barriers By Nora Dihel; Ben Shepherd

  1. By: W. Max Corden
    Abstract: This paper presents a simplified overview of the causes of and policy responses to the East Asian financial crisis, focusing on the four principal countries involved, namely, Thailand, Indonesia, Malaysia and Korea. The main point is that there was a prolonged investment boom in these countries and an ending to the episode in the form of a 'hard landing' was neither inevitable nor predictable, but was set off by events in Thailand and reinforced in Indonesia’s case by political factors. There was a clear relationship between severity of the exchange rate crises and the short-term foreign borrowing that was denominated in foreign currency, usually dollars, and was unhedged. There were several policy responses, notably efforts to rescue the banks and various private corporations. Only in the Korean case was there a systematic attempt to get foreign creditors to reschedule the payments they were owed. There were some special features of each of our four countries. In particular, in Indonesia, there was an interaction of a political with an economic crisis, Malaysia did not incur significant short-term debts unlike the other three countries, while Thailand adhered too long to a fixed exchange rate.
    Keywords: Asian crisis, exchange rate policy, foreign capital, currency mismatch
    JEL: F20 F40 O53
    Date: 2007
  2. By: Biswajit Nag; Saikat Banerjee; Rittwik Chatterjee (Indian Institute of Foreign Trade)
    Abstract: The global automotive industry, increasingly characterized by global mergers and relocation of production centers to emerging developing economies, is in the grips of a global price-war. The industry is subject to imperfect competition which has resulted in too much of everything — too much capacity, too many competitors and too much redundancy and overlap. The industry is concerned with consumer demands for styling, safety, and comfort; and with labor relations and manufacturing efficiency. In this context, the study examines the growth patterns, changes in ownership structures, trade patterns and role of governments of selected Asian countries (viz. China, India, Indonesia and Thailand) in the automobile sector.
    Keywords: Automobile, Asia, Market Structure
    JEL: F1
    Date: 2007–07
  3. By: Dionisius A. Narjoko; Raymond Atje (Centre for Strategic and International Studies)
    Abstract: This study attempts to fill this gap and aims to draw some lessons from Indonesia’s experience, by examining the export-supply response of firms in Indonesian manufacturing. The study asks two questions. First, what is the picture of export-supply response of firms in Indonesian manufacturing during and after the 1997/98 economic crisis?, and second, which factors determine the firms’ export-supply response?
    Keywords: Export, Indonesia, Indonesian Manufacturing
    JEL: F1
    Date: 2007–02
  4. By: Wim Suyker
    Abstract: This paper assesses the consequences of the rapid Chinese economic development for Japan and the Netherlands. China has become the most important supplier of import goods for Japan and the fourth most important one for the Netherlands. With two-thirds of Dutch imports from China being re-exported, the emergence of China has enhanced the role of the Netherlands as European distribution centre. As for exports, China is now a major market for Japan, but not for the Netherlands. This is in line with gravity models of foreign trade. The same holds for differences in foreign direct investment (FDI), with Japan the biggest investor in China and the Netherlands a minor one. The emergence of China has increased purchasing power of Japanese and Dutch households, while its effects on labour markets and income distribution are relatively modest. In spite of differences between Japan and the Netherlands, the consequences for economic policy of the increasing role of China are very similar.
    Keywords: China; Dutch economy; Japan; globalisation; trade; scenario analysis; FDI
    JEL: F14 F23 F40 F47 J31 O40 O57
    Date: 2007–07
  5. By: Hun-Chang Lee
    Abstract: This paper examines why the countries of Northeast Asia (China, Korea, and Japan) in the early nineteenth century traded much less (as measured by the proportion of trade to GDP) than most countries in other parts of the world. It is argued that the most important reason for this are government policies that suppressed private trade. It is shown that these restrictive trade policies were designed to maximize the total net benefit from trade, covering not only economic net benefits but also non-economic benefits in the fields of diplomacy, defense, culture, and internal politics.
    Keywords: trade policy, Northeast Asia, tribute system, private trade, maritime ban, geography, culture
    Date: 2007–08
  6. By: Yap, Josef T.
    Abstract: In response to the 1997 East Asian financial crisis many schemes were initiated to reform the international financial architecture. The proposed reforms had two wide-ranging objectives: (i) to prevent currency and banking crises and better manage them when they occur; and (ii) to support adequate provision of net private and public flows to developing countries, particularly low-income ones. Unfortunately the progress has been uneven, asymmetric, and patchy. This is largely because the structural problems related to the supply side of capital flows have not been addressed, particularly the unipolar character of the global financial system. As a result, many East Asian economies face many of the same conditions that prevailed immediately prior to the crisis: huge capital inflows heavily tilted toward hot money, rapid appreciation of currencies in real terms, surging stock prices, and little policy space to implement countercyclical measures in the event of a crisis. The difference is that many countries have accumulated a large amount of foreign exchange reserves but at the expense of domestic investment and economic growth. In order to resolve the problems that are posed by volatile capital flows it is important to accelerate East Asian cooperation and integration, particularly with regard to the objective of using regional savings for regional infrastructure projects. Political rapprochement between China and Japan is a necessary condition both to move regional cooperation and integration forward and to overhaul the unipolar global financial system.
    Keywords: capital flows, real effective exchange rate, international financial architecture, disaster myopia
    Date: 2007
  7. By: Parakrama Samaratunga; Manoj Thibbotuwawa (Institute of Policy Studies)
    Abstract: This paper maps the agricultural trade liberalization effort of the South Asian Economies(SAEs) and it consists of four sections. The second section presents the nature of agricultural trade in the SAEs. The third section presents the agricultural policy changes and employs various approaches to measure the levels of agricultural trade liberalization. The forth section presents institutional development that has led to agricultural trade liberalization of SAEs and the final section presents conclusions, based on the findings of the previous sections.
    Keywords: South Asia, Agricultural Trade Liberalization
    JEL: F1
    Date: 2006–12
  8. By: Prema-Chandra Athukorala
    Abstract: This paper aims to contribute to the debate on the use of temporary controls on capital outflows as a crisis resolution measure my examining the outcome of Malaysia’s radical response to the 1997-98 financial crisis. The analysis suggests that carefully designed temporary capital controls were successful in providing Malaysian policy makers a viable setting for aiding the recovery process through the standard Keynesian therapy. Capital controls also assisted banking and corporate restructuring by facilitating the mobilization of domestic resources, and more importantly, by providing a cushion against possible adverse impact on market sentiment of 'national' initiatives. Of course other countries should be cautious in deriving policy lessons from Malaysia because a number of factors specific to Malaysia seem to have significantly conditioned the outcome of the capital-control based recovery package.
    Keywords: Asian financial crisis, Capital controls, Malaysia
    JEL: F32 F41 O53
    Date: 2007
  9. By: Knorringa, Peter
    Abstract: This paper raises two questions to take a first step in developing a research agenda to assess the developmental relevance of responsible production, which includes both Fair Trade and Corporate Social Responsibility (CSR) initiatives. The first question is: How likely is it that responsible production becomes increasingly mainstreamed? After defining responsible production and contrasting the models and realities of Fair Trade and CSR, I present the rather optimistic 'business case' for a 'race to the top' which would also imply a further mainstreaming of responsible production. However, this optimism is put in perspective with some sobering observations about how the rise of China and India as centers of global production and consumption may well limit the reach of responsible production. The second question to begin assessing the developmental relevance of responsible production is: To what extent can we expect the 'tool' of responsible production to enhance developmental outcomes? Notwithstanding the limited overall reach of responsible production, I will argue that it might be feasible to develop 'pockets' of responsible production in which various stakeholders have found ways to selectively work together in order to enhance the localized depth of responsible production. The paper concludes with formulating some hypotheses for further research and putting forward the policy relevance of such research.
    Keywords: Asian drivers, corporate social responsibility, fair trade, responsible production, NGOs, labour standards, Asia, China, India
    Date: 2007
  10. By: Jayatilleke S. Bandara (Griffith Business School, Australia)
    Abstract: The main purpose of this paper is to survey the results of recent quantitative studies on the effects of Agricultural Trade Liberalization with special reference to the Asia-Pacific region under the July Framework Agreement or the “July Package” of the Doha Development Agenda, DDA (the decision adopted by the General Council of the WTO on 1 August 2004, see WTO, 2004, WT/L/579).
    Keywords: Agricultural Trade Liberalization, Doha Development
    JEL: F1
    Date: 2007–02
  11. By: Medalla, Erlinda; Balboa, Jenny D.
    Abstract: APEC’s vision of integrating the APEC has remained, for the most part, intangible. Cultural differences, socioeconomic disparity, and lack of a defined structure and leadership have been cited by many as major obstacles. Lately, there has been a proliferation of regional groups in Asia, creating an impression that APEC is no longer a priority for its members. Thus, various inquests into APEC’s role and relevance in the Pacific region have come to fore. Several options and strategies has been presented to reshape APEC and transform it into a much more relevant, responsive, viable, and cohesive regional group. These options range from a reevaluation of the APEC agenda, to administrative improvements and more radical changes. What kind of role has APEC played that has particularly benefited developing countries like the Philippines? What else could be done to make APEC more effective as a key player in the global economy and a vehicle for countries in the Pacific Region to maximize economic gains in a multilateral trading environment? This short paper provides a perspective on how APEC should be shaped from the point of view of a developing economy member, particularly the Philippines.
    Keywords: World Trade Organization, ASEAN, regional integration, APEC, free trade area, developing countries
    Date: 2007
  12. By: Ajitava Raychaudhuri; Prabir De (Jadavpur University)
    Abstract: The study, thus, touches only tip of an iceberg in terms of its analytical power to explain movement of students across nations. It points out to the definite existence of country specific barriers and from a pilot case study in India, highlights some of these possible barriers. However, future studies should be attempted to understand the extent of barriers to trade in education services through more intensive primary survey and bilateral country studies.
    Keywords: Trade in Education Services, Asia-Pacific
    JEL: F1
    Date: 2007–05
  13. By: Robert A Buckle; Amy A Cruickshank (New Zealand Treasury)
    Abstract: Improving New Zealand’s economic performance is one of the key outcomes driving the work of the New Zealand Treasury and international connections are an important means of achieving that. The promotion of sustainable economic growth and improved living standards in the Asia-Pacific region through enhanced trade and economic integration lies at the heart of APEC’s mission. While APEC’s focus has traditionally been on trade and investment liberalisation and facilitation, it is increasingly turning its attention also to the role played by “behind-the-border” policies in enabling or impeding regional economic integration (also commonly referred to as “structural policies” or “structural barriers”). This paper surveys the theoretical and empirical literature on economic growth and income convergence processes in the Asia-Pacific region. The review suggests that structural policies are impeding growth and convergence, and that structural policy reforms could bring about large economic gains to the region. The paper also looks at the role that APEC can play in promoting and managing the challenges of structural change in the region. It concludes that structural change is an important challenge facing the Asia- Pacific region, and APEC provides New Zealand and other member economies with an important forum to promote improvements in economies’ domestic structural policies.
    Keywords: Structural reform, APEC, income convergence, economic growth, regional integration, Economic Committee
    JEL: F15 O19 R11
    Date: 2007–07
  14. By: Djoni Hartono; Budy P. Resosudarmo
    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, they need to understand the full consequences of adopting more efficient energy use strategies toward their incomes. 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: Energy economics, government policy, technological change, social accounting matrix
    JEL: Q43 Q48 E64 O21
    Date: 2007
  15. By: Maria Stromqvist; Sunil Sharma; Woon Gyu Choi
    Abstract: This paper examines the interaction between capital flows and international reserve holdings in the context of increasing financial integration. For emerging markets the sensitivity of reserves to net capital flows was negative in the 1980s, but became positive after the Asian crisis when these countries used net capital flows to build up reserves. For advanced countries, net capital flows had a negative effect on reserves, especially in recent years. Using measures of financial globalization, we also provide evidence that the sensitivity of reserves to net capital flows increased with globalization for emerging markets while it decreased for advanced countries.
    Date: 2007–07–11
  16. By: Giulio Cifarelli (Università degli Studi di Firenze, Dipartimento di Scienze Economiche); Giovanna Paladino (Intesa-Sanpaolo Economic Research Dept. and LUISS University, Economics Dept)
    Abstract: Emerging market economies have recently accumulated large stocks of foreign reserves. In this paper we address the question of what are the main factors accounting for reserve holdings in nine developing countries located in Asia and Latin America. Monthly data from January 1985 to May 2006 are used to estimate for each country the long run equilibrium reserve demand, based on the buffer stock model, the short run dynamics governing the process of reserve accumulation (decumulation) and the factors which may influence the speed of adjustment of actual to desired reserves. Cointegration analysis suggests that the buffer stock precautionary model accounts for the optimal reserve demand. The corresponding VECMs are further interpolated, using the permanent and transitory innovations decomposition procedure of Gonzalo and Ng (2001), in order to assess the relative impact of the time series on the convergence to equilibrium after a shock. Finally the (asymmetric) effect on the speed of convergence of positive/negative changes in signal variables - such as the excess reserves of the previous period, relative competitiveness and US monetary stance - is found to be significant, in line with mercantilistic and fear of floating motives for hoarding international reserves.
    Keywords: Emerging markets reserves, cointegration, P-T components decomposition, asymmetric adjustment
    JEL: F32 F34 F36
    Date: 2007
  17. By: Barry Bosworth; Gabriel Chodorow-Reich (Brookings Institution); ;
    Abstract: This paper uses a panel data set of 85 countries covering 1960-2005 to investigate the macroeconomic linkages between national rates of saving and investment and population aging. The issue takes on added significance because of the recent suggestion that the decline in global interest rates has been driven by demographic changes in the industrial economies. We do find a significant correlation between the age composition of the population and nations’ rates of saving and investment, but the effects vary substantially by region. They are very strong for the non-industrial economies of Asia, but weak in the high-income countries. We also find evidence of demographic effects on both the public and private components of national saving. Furthermore, we conclude that the demographic effects on saving will be less disruptive than sometimes believed because of offsetting declines in investment. However, the effects on saving are stronger than those for investment, implying that most aging economies will ultimately be pushed in the direction of current account deficits. In contrast to some of the recent discussion, we find that demographic change is already exerting a downward pressure on saving in the high-income economies and that the current evidence of a global saving glut is related more to the weakness of investment – particularly in Asia – and the high short-run saving of the oil-producing countries. We conclude with a discussion of why the effects appear to be so strong in Asia.
    Keywords: national saving rates, populating aging, global interest rates, investment, demographic change
    Date: 2007–02
  18. By: Patrick Köllner (GIGA Institute of Asian Studies)
    Abstract: Electioneering for the Japanese Lower House has undergone significant changes in recent years. Not only institutional but also other environmental changes are pushing political actors in Japan to complement the hitherto dominant vote-mobilisation approach by vote-chasing strategies. Such strategies target in particular unaffiliated voters and emphasise party leaders. Yet, the notion of an ‘Americanisation’ of campaigning in Japan seems pre-mature at best. Notably, electioneering for the Lower House has become more party-oriented in the course of introducing new voter chasing strategies. It remains to be seen though whether specific campaign instruments and tactics used in recent general elections, such as the manifesto approach, can generate value-added in the longer term.
    Keywords: Election campaigning, mixed-member electoral system, voter targeting, Americanisation thesis, Japan
    Date: 2007–07
  19. By: Patricia Fernández-Kelly (Princeton University); Lisa Konczal (Barry University)
    Abstract: Nearly a decade ago the notion of segmented assimilation was first introduced to elucidate the differential patterns of incorporation of recent immigrants into American society (Portes 1995). The concept took stock of two concomitant trends (a) the rapid increase in migration to the United States, particularly from Asia and Latin America since the 1970s and (b) sensible changes in the character and quality of employment resulting from industrial re-composition and global integration during the same period. Segmented assimilation called for a nuanced understanding of immigrant prospects showing that absorption into the receiving society does not occur monolithically—it is affected by factors such as immigrants’ knowledge and skills, the type of their reception in areas of destination, and even the proximity of specific groups with which immigrant children relate at the local level. Variations resulting from the interaction of such factors matter especially in the age of globalization when employment alternatives are significantly different from those that were available to newcomers in the late 19th or early 20th centuries.
  20. By: Gupta Anil K.
    Abstract: Communities living close to nature invariably evolve a language to understand and interpret the variations and discontinuities in nature. A flower of new colour, an unusually tall plant, an unseasonal germination or an extraordinary fruiting have attracted human attention in every part of the world. Some of these odd plants got selected either for curiosity or for a purposive characteristic and became a local crop variety. Some got analysed for their therapeutic property and became a medicinal plant. Some were combined with other plants, insects, fungi or other materials such as animal urine, milk, minerals or other compounds to develop various kinds of biotechnological products useful as drugs, dyes or derivatives. It is not surprising therefore that civilizational societies whether in Latin America or Asia or Africa have had a tremendously rich knowledge base drawing upon local resources. In this paper, I first discuss the framework in which indigenous knowledge systems for agriculture, medicinal plants and biotechnology can be analysed. In second part, I suggest ways in which policy makers can try to blend the formal and the informal institutional contexts of technological knowledge. Lastly, I suggest some areas for further research, action and policy interventions through cooperative Indo-Brazilian and S African dialogue.
    Date: 2007–07–18
  21. By: MOTOHASHI Kazuyuki
    Abstract: In this paper, the contribution of information technology (IT) use to management performance is compared between Japanese, U.S., and Korean firms, based on an analysis using data from the "International Comparative Survey of Firms' IT Strategies" (RIETI). The results reveal that Japanese firms have received positive effects from "mission critical systems," which include routine business activities such as personnel management, accounting information systems, and ordering, whereas U.S. firms are effectively using "informational systems;" systems that perform intricate analyses of a firm's data, such as supporting management strategies or developing new customers. The results also show that Korean firms trail Japanese firms in deploying IT systems, with the exception of enterprise resource planning (ERP) systems. The section on the internal IT organization of the firm, which reveals the importance placed by firms on using IT as a tool to accomplish corporate strategy, indicates that U.S. firms place the highest importance, followed by Japanese firms, and finally by Korean firms. With regard to the relation with outsourcing firms of IT systems, U.S. firms are treating outsourcing firms as partners for consulting on technology trends whereas a large number of Japanese firms perceive them as a means of cost reduction.
    Date: 2007–08
  22. By: Jung Hur (Department of Economics, National University of Singapore); Kang Changhui (Department of Economics, National University of Singapore)
    Abstract: In educating students national public school systems use different methods of grouping students by ability across schools. We consider four different school systems of student allocation at different stages of schooling and their educational implications. Our two-period model suggests that both the frequency and sequence of ability grouping play an important role in producing educational implications. As different households prefer different combinations of school systems, the overall performance of a school system is determined by how households are distributed over income and a child's ability and the voting of households.
    Keywords: Education, Comprehensive and Selective School Systems
    JEL: D11 I20
    Date: 2007
  23. By: Nora Dihel; Ben Shepherd
    Abstract: This paper presents improved approaches to measurement of services barriers by using alternative weighting methods and improved econometric specifications; the data include barriers affecting each mode of services supply and additional sector-specific regulatory variables. We provide an illustration of these improvements for banking, insurance, telecom (fixed and mobile), professional (engineering) and distribution services in selected countries in Africa, Asia, Central and Eastern Europe, Latin America and the Middle East. We report sector-specific restrictiveness indices at aggregate and modal levels along with aggregate and modal tax equivalents. We also provide confidence intervals for each estimated tax equivalent to take into account the limitations in the estimation techniques. Indeed these limitations lead us to argue against a strict interpretation of the empirical results and in favor of a more flexible, qualitative interpretation, combined with rank ordering of countries for indicative purposes.
    Keywords: telecommunications, insurance, banking, services barriers/restrictions, trade restrictiveness index, tax equivalent, regulatory measures, distribution, engineering
    Date: 2007–04–13

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