nep-sea New Economics Papers
on South East Asia
Issue of 2007‒12‒08
nine papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Exploring and Sharing Asian Economic History: An Interim Report on the Asian Historical Statistics Database Project By Konosuke Odaka
  2. Industrial Policy in Asia By Kuchiki, Akifumi
  3. The Changing Dynamics of the East Asian Real Exchange Rates after the Financial Crisis: Further Evidence on Mean Reversion By Baharumshah, Ahmad Zubaidi; Chan, Tze-Haw; Aggarwal, Raj
  4. Ratings Versus Market-Based Measures of Default Risk of East Asian Banks By Eric Wong; Cho-Hoi Hui; Chi-fai Lo
  5. Monetary and Financial Cooperation among Central Banks in East Asia and the Pacific By Hans Genberg; Dong He
  6. Economic and Financial Integration between Hong Kong and Mainland China before the Open Door Policy 1965-75 By Catherine R Schenk
  7. Dissecting Offshore Outsourcing and R&D: A Survey of Japanese Manufacturing Firms By ITO Banri; TOMIURA Eiichi; WAKASUGI Ryuhei
  8. Do Small Farmers Borrow Less when the Lending rate Increases? The Case of Rice Farming in the Philippines By Briones, Roehlano
  9. Economía del departamento de Nariño: ruralidad y aislamiento geográfico By Joaquín Viloria de la Hoz

  1. By: Konosuke Odaka
    Abstract: This essay describes the aims and methods of an internationally linked, academic research project to create an economic database covering most of Asia. Named ASHSTAT, its purpose is to construct long-term, macro economic time series for the Russia, Central Asia, China, Korea, Taiwan, Indonesia, Philippines, Thailand, Vietnam, India, Pakistan, Egypt, and Turkey, using a standardised national accounting framework designed to maximise the compatibility and comparability of the data. The essay also discusses the value of the project, citing several illustrative examples, to show how cross-country comparison as well as time-based analysis may enhance the understanding of national economic development.
    Date: 2007–11
  2. By: Kuchiki, Akifumi
    Abstract: This paper examines three types of industrialization that have occurred in East Asia: the Japanese, Chinese and generic Asian models. Industrial policies in Japan and the Republic of Korea (ROK) initially protected local companies from foreign investors by imposing high tariffs on foreign investors. But Japan began introducing liberalization policies to attract foreign direct investment (FDI) in the 1960s, and the ROK began to welcome foreign technology in the 1970s. Meanwhile, the governments of the ASEAN countries and Taiwan established export-processing zones (EPZ) to invite FDI by offering preferential treatment, such as tax deductions and exemptions. China adopted similar industrial policies and also established EPZs, attracting the capital and know-how of multinationals and thereby strengthening the international competitiveness of local enterprises. This paper reaches the following three conclusions. First, it would have been difficult for East Asian countries to grow without FDI. Second, central governments were a crucial factor in these countries' growth strategies. Third, EPZs offering preferential treatment can effectively enhance aggregate growth in developing countries, and the Asian experience shows that this strategy can be applied to other countries that satisfy certain preconditions.
    Keywords: Industrial policy, Export-processing zones, Foreign direct investment, Government intervention, Market competition, Priority production method, Production rationalization method, Import-substituting industrialization, Export-oriented policy, East Asia, Southeast Asia, Japan, South Korea, China, Foreign investments, Exports
    JEL: G18 O14 R11
    Date: 2007–10
  3. By: Baharumshah, Ahmad Zubaidi; Chan, Tze-Haw; Aggarwal, Raj
    Abstract: Using an improved statistical methodology including tests designed for heterogeneous panels, this paper tests for mean reversion in monthly US Dollar based real exchange rates for nine East Asian countries, including those that were severely affected by the 1997 Asian financial crises. The empirical results reveals mean reversion in real Asian exchange rates is a feature of the post-crises sub-period (1997-2005) but not of the pre-crises sub-period (1981-1996). Additionally, we make a point that a faster speed of convergence to PPP and lower adjustment half-lives for real exchange rates compared to those reported for major industrialized country currencies and especially so for the post-crises period in Asia.
    Keywords: Purchasing power parity; Panel unit root tests; Asian financial crisis
    JEL: F40 C12 C23 F31
    Date: 2006–05
  4. By: Eric Wong (Research Department, Hong Kong Monetary Authority); Cho-Hoi Hui (Research Department, Hong Kong Monetary Authority); Chi-fai Lo (Institute of Theoretical Physics and Department of Physics, The Chinese University of Hong Kong)
    Abstract: This paper assesses whether agency ratings and market-based default risk measures are consistent for East Asian banks during the period 1996 to 2006. While the market-based measures are broadly consistent with the credit rating assessments for banks in developed economies, the discrepancy between ratings and the market-based measures for East Asian banks is significant. Credit ratings for East Asian banks were adjusted slowly during the onset of the Asian financial crisis. The relatively higher default risk implied by ratings during the post-crisis period is partly due to the conservatism of rating agencies and the unsolicited ratings. Discrepancies still exist after taking these two factors into account. From perspective of banking policies, the use of agency-based and market-based measures for calculating capital requirements for exposures to banks and deposit insurance premiums in East Asian economies could result in systematic differences.
    Keywords: Asian financial crisis, credit rating agencies, credit risk models
    JEL: G14 G13 G21 G32
    Date: 2007–08
  5. By: Hans Genberg (Research Department, Hong Kong Monetary Authority); Dong He (Research Department, Hong Kong Monetary Authority)
    Abstract: In this paper we show that monetary policy frameworks in the East Asia and Pacific region are heterogeneous, with exchange rate policies being subordinate to domestic price stability objectives in most regional economies. We then argue that in this environment it is undesirable to focus regional cooperation on exchange rate policies because of the risk of creating conflicts with domestic objectives that would lead to loss of central bank credibility and possibly speculative attacks. We also argue that the case for coordinated exchange rate policies is in fact weak, even after taking into account the region¡¦s traditional emphasis on export performance and increasing regional trade integration. Rather than focusing cooperation on the setting of policy instruments, we suggest an alternative that centres on developing more liquid financial markets in the region in the foreseeable future, and on harmonising the objectives of monetary policy and designing institutions that could form the basis of deeper forms of cooperation in the longer-term future.
    Keywords: Regional monetary cooperation, exchange rate coordination, East Asia
    JEL: E42 F33 F36
    Date: 2007–11
  6. By: Catherine R Schenk (University of Glasgow)
    Abstract: The ‘one country, two systems’ structure established to govern the relationship between Hong Kong SAR and Mainland China was an innovative and comprehensive solution to particular economic and political challenges posed by the return of Hong Kong to the PRC in 1997. At the time of the drafting of the Basic Law, the integration of the colony into the regional economy of Southeast China through outward FDI had already begun, and from the mid-1980s this process facilitated the transformation of the Hong Kong economy from a manufacturing base to one dominated by financial and commercial services. It was recognised on both sides of the negotiations that the territory’s viability and future prosperity relied on retaining independence over a range of key fundamentals, including a separate and independent currency and monetary system that was at the foundation of Hong Kong’s attraction as an international financial centre for the PRC and also for the rest of the Asian region. An important credibility mechanism for the HK$ (as for the inconvertible RMB at this time) was the exchange rate link to the US$. Since this was also the anchor for the RMB after 1997, the linked rate system kept the relationship between the RMB and the HK$ stable.
    Date: 2007–04
  7. By: ITO Banri; TOMIURA Eiichi; WAKASUGI Ryuhei
    Abstract: This paper summarizes main descriptive results from the survey on a wide range of offshore outsourcing and R&D. This survey covers more than five thousand large-sized firms across all manufacturing industries in Japan. The principal findings are as follows. Merely 21% of the firms are outsourcing offshore. Nearly two-thirds of the cases, firms are outsourcing production-related tasks to East Asia. More than one-third of the cases, especially often in R&D and customer supports, tasks are outsourced to own offshore affiliates within the boundary of multinational firm. Offshore R&D is often integrated with corporate headquarters and is motivated for supporting the production and sales in the local market. The survey also covers firm's evaluation of the intellectual property rights protection in 56 countries.
    Date: 2007–11
  8. By: Briones, Roehlano
    Abstract: The new generation of credit programs directed at small borrowers emphasizes financial sustainability. Based on anecdotal information (especially from microfinance experiences), proponents of cost recovery claim that raising formal lending rates would have a minimal impact on borrowing. Rigorous evidence for this conjecture is however sparse. This study conducts an econometric test of this conjecture using data from a survey of small rice farmers from the Philippines. Alternative regression techniques tend to reject the conjecture; in particular, a regression that controls for selection effects shows a unitary elastic response of formal borrowing to the lending rate.
    Keywords: credit demand; interest elasticity; rural credit; credit policy; Philippines; Asia
    JEL: O16 Q14
    Date: 2007
  9. By: Joaquín Viloria de la Hoz
    Abstract: Este documento analiza la estructura económica del Departamento de Nariño, e indaga sobre algunos elementos que han obstaculizado su desarrollo económico, como la falta de vías o de energía eléctrica en las zonas más apartadas del Departamento. En el período 1990-2004 la economía nariñense presentó un mayor dinamismo que la economía colombiana en su conjunto y mostró tasas de crecimiento superiores. Sin embargo, un contraste evidente se presenta en la economía del Pacífico nariñense: a pesar de ser la subregión más pobre del departamento, allí se concentra el 95% de las exportaciones de Nariño, representadas en aceite de palma y productos pesqueros. La actividad agropecuaria continúa siendo la base económica de Nariño, al aportar una tercera parte del producto departamental y un porcentaje considerable de sus exportaciones. En el documento se destacan los tres ejes de la economía de Nariño, los cuales deben fortalecerse de manera simultánea: la producción para el consumo nacional, las exportaciones agroindustriales (dirigidas a Europa, Asia, Norte y Latinoamérica) y el intercambio comercial con Ecuador.
    Date: 2007–11–28

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