nep-sea New Economics Papers
on South East Asia
Issue of 2007‒11‒24
twelve papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Ideas and innovation in East Asia By Hu, Albert; Brahmbhatt, Milan
  2. The Thai Currency Crisis: Fracture in a Fixed Exchange Rate Regime By Hartogh, Matthew
  3. Effects of Trade Openness on the Steady State Growth Rates of Selected Asian Countries with an Extended Exogenous Growth Model By Rao, B. Bhaskara; Singh, Rup
  4. Panel data analysis of “export-led growth” hypothesis in ASEAN By Furuoka, Fumitaka
  5. Psychological health before, during, and after an economic crisis : results from Indonesia, 1993 - 2000 By Thomas, Duncan; Friedman, Jed
  6. Strengthening Cluster Building in Developing Country alongside the Triple Helix: Challenge for Indonesian Clusters - A Case Study of the Java Region By IRAWATI, DESSY
  7. Transparency, trade costs, and regional integration in the Asia Pacific By Wilson, John S.; Shepherd, Ben; Helble, Matthias
  8. Urbanization, educational expansion, and expenditures inequality in Indonesia in 1996, 1999, and 2002: By Akita, Takahiro; Miyata, Sachiko
  9. Understanding The Triple Helix Model from The Perspective of the Developing Country: A Demand or A Challange for Indonesian Case Study? By IRAWATI, DESSY
  10. Atlas of wooden furniture industry in Jepara, Indonesia By Roda, Jean-Marc; Cadène, Philippe; Guizol, Philippe; Santoso, Levania; Uzair Fauzan, Achmad
  11. Income Distribution Dynamics and Pro-Poor Growth in the World from 1970 to 2003 By Hajo Holzmann; Sebastian Vollmer; Julian Weisbrod
  12. Willingness to Pay for Drinking Water and Sanitation Availability in Indonesia By Djoni Hartono; Bilang Nauli Harahap

  1. By: Hu, Albert; Brahmbhatt, Milan
    Abstract: The generation, diffusion, absorption and application of new technology, knowledge or ideas are crucial drivers of development. This paper surveys the diverse approaches to innovation adopted by East Asian economies, the problems faced and outcomes achieved, as well as possible policy lessons. Knowledge flows from advanced countries remain the primary source of new ideas in developing economies. The authors evaluate the role of three main channels for knowledge flows to East Asia - international trade, acquisition of disembodied knowledge and foreign direct investment. The paper then looks at the exceptionally fast growth in domestic innovation efforts in Korea, Taiwan (China), Singapore and China, drawing on information about R & D as well as original analysis of patent and patent citation data. Citation analysis shows that while East Asian innovations continue to draw heavily on knowledge flows from the US and Japan, citations to the same or to other East Asian economies are quickly rising, indicating the emergence of national and regional knowledge stocks as a foundation for innovation. A last section pulls together findings about policies and institutions to foster innovation, under three heads: the overall business environment for innovation (macroeconomic stability, financial development, openness, competition, intellectual property rights and the quality of communications infrastructure), human capital development, and government fiscal support for innovation.
    Keywords: E-Business,Knowledge Economy,Economic Theory & Research,Technology Industry,Agricultural Knowledge & Information Systems
    Date: 2007–11–01
  2. By: Hartogh, Matthew
    Abstract: Abstract If the financial press had been paying attention to some crucial barometers of currency instability in Thailand last year, the ensuing crisis in Asia would perhaps not have been so much of a surprise. On July 2,1997, the Thai government allowed the Baht to float against the Dollar for the first time in a decade. As we all now know, this effective devaluation set of a train of events which would shock all of the Asian economies which had hitherto enjoyed unqualified growth and prosperity for the last several years.
    Keywords: Exchange Rates Currency Baht
    JEL: E42
    Date: 2007–01–01
  3. By: Rao, B. Bhaskara; Singh, Rup
    Abstract: The Solow growth model is extended with an endogenous growth framework to estimate the effects of trade openness on the steady state growth rate (SSGR). Estimates of the augmented production functions are used to compute the SSGRs for Singapore, Malaysia, Hong Kong, India and Thailand. That good policies increase the growth effects of openness is also tested with an interactive term. Our results show that Singapore has the highest SSGR of 2.75%, followed by Hong Kong and Thailand with 2.5%. India and Malaysia have lower SSGRs of 1.7% and 0.5% respectively.
    Keywords: Exogenous and Endogenous Growth; Trade Openness; Steady State Growth Rate; Country Specific Estimates with Time Series Data; Asian Countries
    JEL: O33
    Date: 2007–11–21
  4. By: Furuoka, Fumitaka
    Abstract: This study employs panel data analysis to examine relationship between exports and economic growth in five ASEAN countries (i.e. Malaysia, Indonesia, the Philippines, Singapore and Thailand). Three separate methods are used: (1) pooled Ordinary Least Squares (OLS), (2) one-way fixed/random effects, and (3) two-way fixed/random effects. Empirical results show that the one-way fixed effects analysis is the best model among different models. As the one-way fixed effects model shows, there has been a significant positive relationship between exports and economic growth in the five ASEAN nations.
    Keywords: export-led growth hypothesis; ASEAN
    JEL: F43
    Date: 2007–11–20
  5. By: Thomas, Duncan; Friedman, Jed
    Abstract: The 1997 Indonesian financial crisis resulted in severe economic dislocation and political upheaval, and the detrimental consequences for economic welfare, physical health, and child education have been previously established in numerous studies. We also find the crisis adversely impacted population psychological well-being. We document substantial increases in several different dimensions of psychological distress among male and female adults across the entire age distribution over the crisis period. In addition, the imprint of the crisis can be seen in the differential impacts of the crisis on low education groups, the rural landless, and residents in those provinces that were hit hardest by the crisis. Elevated levels of psychological distress persist even after indicators of economic well-being such as household consumption had returned to pre-crisis levels suggesting long-term deleterious effects of the crisis on the psychological well-being of the Indonesian population.
    Keywords: Health Monitoring & Evaluation,Disease Control & Prevention,Gender and Health,Population Policies,Health Systems Development & Reform
    Date: 2007–11–01
    Abstract: This paper is a component of my conceptual foundation paper due to PhD field work in Indonesia to understand the possibility and the chance for developing country such as Indonesia to strengthen cluster building alongside The Triple Helix model within the region of Java. This paper is a conceptual paper based on case study in Indonesia related to the Triple Helix and cluster approach for chosen Industrial Clusters in Java. In this paper, the focus will be on six selected industrial clusters across the Java region. They are Gresik Industrial District in East Java, Tugu Wijaya Semarang in Central Java, Sentul Bogor in West Java, Jababeka in Bekasi, Kujang Industrial District, and Kawasan Berikat Nusantara in Jakarta. In conjunction with the fact in Indonesian industrial condition, Indonesian government initiated the setting up of industrial district which later known as 2 industrial cluster to make existence easier for both domestic and international investors by providing all necessary infrastructure, facilities and housing in one safe location - at a reasonable cost - thus providing a secure base for industry and manufacturing. Regarding clustering approach, Indonesia has a very long tradition of SMEs (Small and Medium Sized Enterprises) cluster around similar activities. In 2002, the cluster comprised approximately 3700 firms mostly SMEs employing 58.000 permanent workers (Loebis and Schmitz, 2005). They are usually craft industries and export oriented driven. About 70% of the cluster production is exported while the rest is sold on the domestic markets. However, little is known about the critical success factors that determine economic development of cities and regions and empirical studies that draw lessons for policy are scarce (Tichy, 1998), specifically for implementing cluster approach in industry/manufacturing sector in Indonesia. Moreover, there are good reasons to doubt to what extent a purely sectoral view is adequate to analyse region economic growth and to design policies. There are many indications that urban economic growth increasingly seems to emerge from fruitful cooperation between economic actors, who form innovative networks. It is in these geographically concentrated network configurations, or ‘cluster’ that value-added and employment growth in urban regions is realised. This demands a new policy approach in urban economic development, specifically for Indonesian study. Accordingly, it is motivating to investigate the process of cluster building in industrial district in Java region as the important region due to economic, social, and political condition. Thus, details can be read in the following section within this paper.
    Keywords: Cluster; Triple Helix; SMEs;
    JEL: O5
    Date: 2007–01–07
  7. By: Wilson, John S.; Shepherd, Ben; Helble, Matthias
    Abstract: The authors show in this paper that increasing the transparency of the trading environment can be an important complement to traditional liberalization of tariff and non-tariff barriers. Our definition of transparency is grounded in a transaction cost analysis. The authors focus on two dimensions of transparency: predictability (reducing the cost of uncertainty) and simplification (reducing information costs). Using the Asia Pacific Economic Cooperation (APEC) member economies as a case study, the authors construct indices of importer and exporter transparency for the region from a wide range of sources. Our results from a gravity model suggest that improving trade-related transparency in APEC could hold significant benefits by raising intra-APEC trade by proximately USD 148 billion or 7.5 pecent of baseline trade in the region.
    Keywords: Economic Theory & Research,Free Trade,Emerging Markets,Debt Markets,Trade Policy
    Date: 2007–11–01
  8. By: Akita, Takahiro; Miyata, Sachiko
    Abstract: "This paper considers urban-rural location and education as the main causes of expenditure inequality and attempts to examine inequality changes associated with urbanization and educational expansion in Indonesia from 1996 to 2002, using Indonesian monthly household consumption expenditure data. It introduces a hierarchical framework of inequality decomposition by population subgroups, which enables researchers to analyze inequality resulting from differences in educational attainment as well as inequality within each educational group, after the effects on inequality of urban–rural differences in the composition of educational attainments are removed. It finds that the urban sector's higher educational group contributes significantly to overall inequality. Inequality within the group increased significantly once Indonesia recovered from the financial crisis of 1998. This, together with educational expansion in urban areas, led to a conspicuous rise in urban inequality. Overall expenditure inequality has increased markedly, due not only to the rise in urban inequality but also a widening urban-rural disparity, accompanied by a population shift from the rural to the urban sector. Since more people will obtain higher education as the economy continues to develop, and more jobs requiring specialized skills become available in urban areas, urban inequality is likely to remain high. In order to mitigate urban inequality and thus overall inequality, the government needs to introduce policies that could reduce inequality among households whose heads have a tertiary education." from Authors' Abstract
    Keywords: Expenditure inequality, Urbanization, Educational expansion, Theil index, Two-stage nested inequality decomposition analysis,
    Date: 2007
    Abstract: This paper is based on the conceptual and theoretical analysis regarding the triple helix model as the demand or a challenge for developing country, particularly the Indonesian case study under investigation. The paper will discuss the essential stages required to establish a robust synergy between three different actors: the university, the industry and the government alongside the local context in Indonesia, mainly the role of university in providing help for SMEs in Indonesia together with the government or other institutional developing agencies. This paper will also explore the promotion of SMEs by clustering approach as the fact that Indonesian SMEs are scattered across the region. Furthermore, this paper will analyse the potential strengths and weaknesses within Indonesian SMEs, of setting up appropriate strategic movements for the future of the triple helix paradigm itself. It will start with the lessons, learned from the implementation of the triple helix implementation in the developed countries then it will look at the local Indonesian context in order to bridge the gaps within the actors involved.
    Keywords: Triple Helix; Cluster Approach; SMEs (Small and Medium Sized Enterprises); University – Industry - Government Relations
    JEL: O5
    Date: 2006–09–12
  10. By: Roda, Jean-Marc; Cadène, Philippe; Guizol, Philippe; Santoso, Levania; Uzair Fauzan, Achmad
    Abstract: In this document, we study the industrial district of Jepara, Indonesia. It is specialised in furniture production, for the Indonesian consumption, as well as for worldwide exports. We summarize the main features of the dynamics of the firms involved in the Jepara industrial complex with a quantitative analysis of flows among them, and between them and markets elsewhere. A specific method of spatial analysis has been designed, and merged with other existing methods for the analysis of forest production networks and social networks. This method allows to take in account and to accurately assess the number of very small workshops that can not be evaluated by classical methods. We demonstrate that the extent of wood industry and activities is considerably underestimated by both the official statistics and the existing literature about Jepara. We present the results through synthesis maps. A total of 15 271 units of production have been identified, employing approximately 170 000 workers in Jepara. The activity generates creates a considerable revenue: between 11 900 to 12 300 billions Rp/year of added value (about 1 billion Euros/year), that is to say between 70 to 78 million Rp/worker/year. The district of Jepara consumes between 1.5 to 2.2 millions m3/year or round wood, and in other words, we found that the use of around 9 m3 of round wood, sustain 1 fulltime employee per year. The organisation of the production is typical of an industrial district, with a high level of intertwined relationships and sub-contracting between the production unites, a high specialisation of them, and a prevalence of the small and very small units in various steps of the production, compared to the bigger integrated units.
    Keywords: Indonesia; Java; furniture; timber; industrial district; production network; manufacturing cluster; flexible specialisation; SME; teak; trade.
    JEL: Q23 L73 L11 L69 Q17 O53 L23 F14
    Date: 2007
  11. By: Hajo Holzmann (Institute of Stochastics, University of Karlsruhe / Germany); Sebastian Vollmer (Ibero-America Institute, University of Goettingen / Germany); Julian Weisbrod (Department of Economics, University of Goettingen / Germany)
    Abstract: We estimate and analyze the global income distribution from national log-normal income distributions for the years 1970 to 2003, as well as the income distribution of seven regional subsamples. From these distributions we obtain measures for global and regional inequality and poverty, and find decreasing global poverty and inequality during the time period. By decomposing inequality into within and between country inequality using Theils’ measure of inequality, we observe declining inequality between countries whereas overall inequality within countries increased. Furthermore, we calculate growth incidence curves for five year periods between 1970 and 2003, as well as a growth incidence curve for the entire period and corresponding rates of pro-poor growth. In the global income distribution, the 8.5th to 63.5th global income percentiles experienced above average percentile growth rates, while the remaining very lowest quantiles experienced also the lowest percentile growth rates. Using the regional decomposition we find that while in 1970 more than half of the worlds extreme poor and poor people lived in East Asia, it is Sub-Saharan Africa where nowadays two thirds of the extreme poor and half of the worlds poor live.
    Keywords: Global income distribution, poverty, inequality, growth incidence curves, pro-poor growth convergence
    JEL: I32 I31 O47 F01
    Date: 2007–09–11
  12. By: Djoni Hartono (Department of Economics, University of Indonesia); Bilang Nauli Harahap
    Abstract: When sustainability of access and quality, is the primary concern, water and saniatioan should be considered as economic goods. Therefore, we need more accurate information on the amount of people’s willingness to pay. This study attemp to (i) identify the effects of drinking water supply and home sanitation on the rent price of a house, (ii) calculating the value of marginal implicit price (marginal willingness to pay) for drinking water and sanitation, and (iii) examine factors that affects the availability of drinking water supply and sanitation. Using the hedonic price model, we conclude that: (i) the availability of water piped facilities or pump water affect rent price of houses in urban areas, while the availability of toilet facilitated with septic tank influences rent price of houses both in urban and rural areas; (ii) garbage handlings through collection by authorized agency influences rent price of houses both in urban and rural areas, (iii) the WTP for piped facilities or pumped water in urban area is Rp. 6,850 per month, while the WTP for toilet facilitated with septic tank is Rp. 15,800, and the WTP for garbage collection is Rp. 11,950 per month. The logistic model approach revealed that households’ economic and social conditions such as age, number of family members, breadwinner’s education, and expenditure per capita influence the availability of drinking water facilities in the form of piped water or pumped water, sanitation facilities in the form of toilet with septic tank, and garbage handling facilities. Human capital or the level of education is very crucial in the possibilities of ownership of drinking water and sanitation facilities.
    Keywords: access to drinking water and sanitation, Willingness to pay, hedonic price model, logistic model
    JEL: Q51 D12 C21 C25
    Date: 2007–11

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