nep-sea New Economics Papers
on South East Asia
Issue of 2007‒12‒15
ten papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Japan’s Positive and Negative Aid Sanctions Policy Toward Asian Countries: Case Studies of Thailand and Indonesia By Furuoka, Fumitaka
  2. Regional integration in South Asia : what role for trade facilitation ? By Otsuki, Tsunehiro; Wilson, John S.
  3. Regional and Outward Economic Integration in South-East Asia By Weber, Enzo
  4. How Does Ownership Structure Affect Capital Structure and Firm Value? Recent Evidence from East Asia By Nigel Driffield; Sarmistha Pal
  5. Atlas of wooden furniture industry in Jepara, Indonesia By Jean-Marc Roda; Philippe Cadène; Philippe Guizol; Levania Santoso; Achmad Uzair Fauzan
  6. Relative Export Structures and Vertical Specialization: A Simple Cross-Country Index By Amador, Joao; Cabral, Sonia; Ramos Maria, Jose
  7. Offshoring and Relative Labor Demand in Swedish Firms By Andersson, Linda; Karpaty, Patrik
  8. Scope and Space for small scale poultry production in developing countries By Ahuja Vinod; Sen Arindam
  9. Is Well-being U-Shaped over the Life Cycle? By Blanchflower, David G.; Oswald, Andrew J.
  10. A short analysis on the stricter European regulations on tropical hardwood imports and their side effects By Jean-Marc Roda; Eric Aretz; Hin Fui Lim

  1. By: Furuoka, Fumitaka
    Abstract: In this paper, Japan’s positive and negative aid sanctions policy toward Asian countries since the introduction of new aid guidelines will be examined and discussed. Japan can choose to impose negative aid sanctions (the suspension or a decrease in foreign aid) on recipient countries where undesirable policy changes occur, while positive aid sanctions (an increase in foreign aid) would be applied to aid recipients that conduct desirable polices in the light of Japan’s ODA Charter. The Japanese government implemented four positive aid sanctions in Asia, i.e. in Mongolia, Cambodia, Central Asian republics of the former Soviet Union and Vietnam. However, Japan was reluctant to employ negative aid sanctions in the region despite various violations of human rights in Thailand and Indonesia.
    Keywords: Foreign Aid; Japan; Asia; Thailand; Indonesia
    JEL: F35 O53
    Date: 2007–12–11
  2. By: Otsuki, Tsunehiro; Wilson, John S.
    Abstract: The trade performance of countries in South Asia over the past two decades has been poor relative to other regions. Exports from South Asia have doubled over the past 20 years to approximately USD 100 billion. In contrast, East Asia ' s exports grew ten times over the same period. The low level of intraregional trade has contributed to weak export performance in South Asia. The empirical analysis in this paper demonstrates gains to trade in the region from reform and capacity building in trade facilitation at the regional level. When considering intraregional trade, if countries in South Asia raise capacity halfway to East Asia ' s average, trade is estimated to rise by USD 2.6 billion. This is approximately 60 percent of the total intraregional trade in South Asia. Countries in the region also have a stake in the success of efforts to promote capacity building outside its borders. If South Asia and the rest of the world were to raise their levels of trade facilitation halfway to the East Asian average, the gains to the region would be estimated at USD 36 billion. Out of those gains, about 87 percent of the total would be generated from South Asia ' s own efforts (leaving the rest of the world unchanged). In summary, we find that the South Asian region ' s expansion of trade can be substantially advanced with programs of concrete action to address barriers to trade facilitation to advance regional goals.
    Keywords: Transport Economics Policy & Planning,Transport and Trade Logistics,Common Carriers Industry,Trade Policy,Free Trade
    Date: 2007–12–01
  3. By: Weber, Enzo
    Abstract: The subject of this paper tackles macroeconomic integration of the South-East Asian countries South Korea, Singapore and Taiwan. Economically, the analysis is based on notions of stochastic long-run convergence and business cycle synchrony in the GDPs. According tests for cointegration and common serial correlation features reveal a high degree of coherence in long-run growth and medium-run fluctuations. This allows extracting a common stochastic growth trend and a common business cycle. Further analysis shows that both of these components are subject to stronger influences from the US than from Japan. Convergence towards these matured economies conspicuously appears since the 1990s.
    Keywords: Economic Integration; Cointegration; Common Cycles; South-East Asia
    JEL: F15 C32 E32
    Date: 2007–04
  4. By: Nigel Driffield; Sarmistha Pal
    Abstract: The present paper examines the effects of ownership structures on capital structure and firm valuation and argues that the effects of separation of control from cash flow rights on capital structure and firm value also depend on the separation of control from management as well as legal rules and enforcement defining investors’ protection. We obtain firm-level panel data 3SLS estimates from four East Asian countries worst affected by the last Crisis. There is evidence that the general wisdom that higher control than cash flow rights may lower firm value may be reversed among owner-managed family firms in the sample countries.
    Date: 2007–02
  5. By: Jean-Marc Roda (Bois tropicaux - Production et valorisation des bois tropicaux - CIRAD : UPR40); Philippe Cadène (SDEDT - Sociétés en developpement dans l'espace et dans le temps - CNRS : UMR7135 - Université Denis Diderot - Paris VII); Philippe Guizol (Bois tropicaux - Production et valorisation des bois tropicaux - CIRAD : UPR40); Levania Santoso (CIFOR - Center for International Forestry Research - CGIAR); Achmad Uzair Fauzan (CIFOR - CIFOR - Center for International Forestry Research - CGIAR)
    Abstract: In this document, we study the industrial district of Jepara, Indonesia. It is specialised in furniture production, for 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 was designed, and merged with existing methods for the analysis of forest production networks and social networks. This method allows to take into account and to accurately assess the number of very small workshops that cannot be evaluated by classical methods. We demonstrate that both the official statistics and the existing literature about Jepara considerably underestimate the extent of the wood industry and its activities. 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 considerable revenue: between 11 900 and 12 300 billion Rp/year of added value (about 1 billion euros/year), that is to say between 70 and 78 million Rp/worker/year. The district of Jepara consumes between 1.5 and 2.2 million m3/year of roundwood, and in other words, we found that the use of around 9 m3 of roundwood sustains one full-time employee for a year. The organisation of the production is typical of an industrial district, featuring a high level of intertwined relationships and subcontracting among highly specialised production units and a prevalence of small and very small units in various steps of the production rather than bigger, integrated units.
    Keywords: Indonesia; Java, furniture; timber; industrial district; production network; manufacturing cluster; flexible specialisation; SME; teak; trade
    Date: 2007–10–01
  6. By: Amador, Joao; Cabral, Sonia; Ramos Maria, Jose
    Abstract: Relative export structures have changed substantially over the last forty years. We map these changes using a new cross-country specialization index - the B* -, defined as the export weight of a given product on total domestic exports, "normalized" by the average weight across all countries of the world. This indicator is close to the Revealed Comparative Advantage index suggested in Balassa (1965); it has been used as an intermediate calculation in some papers but it has never been highlighted or interpreted as an alternative index in its own right. We provide empirical evidence on the shape of the distribution of the B* for different technological sectors (high, medium-high, medium-low and low-technology sectors), how it has evolved through time and how its intra-distribution dynamics behave. The results indicate a relatively important degree of persistence, although the cross-country specialization distributions depict substantial differences as we move up the technology ladder. Special attention is given to the G5 countries and China. These economies are relatively more specialized in high-tech and medium high-tech products. China shows a striking increase in specialization in high-tech products and a substantial decrease in low-tech. Finally, by computing the B* for both exports and imports, we have identified countries with significant vertical specialization activities. These activities are predominant in high-tech industries and seem to be geographically concentrated in East-Asia.
    Keywords: International Trade; Export Specialization; Balassa Index; Distribution Dynamics; Vertical Specialization
    JEL: C14 F14 O50
    Date: 2007–01
  7. By: Andersson, Linda (Department of Business, Economics, Statistics and Informatics); Karpaty, Patrik (Department of Business, Economics, Statistics and Informatics)
    Abstract: The objective of this paper is to analyze relative employment effects in Sweden due to offshoring. In contrast to most previous studies in this field, our analysis is based on firm level data. More specifically the dataset contains Swedish manufacturing firms, 1997-2002. In addition we have access to actual firm level import data on intermediate goods and services, respectively. The results show that the relative demand for high skilled labor is positively affected by service offshoring and offshoring of goods to Asia, but negatively affected by offshoring to high income countries. The relative demand for medium skilled labor is negatively affected by offshoring of goods to Eastern Europe, but positively affected by offshoring to high income countries. In contrast to expectations, the results show that the relative demand for low skilled labor is positively affected by offshoring of goods to Eastern Europe. However, these results are related to very small elasticities, which in turn translates into a small number of jobs affected.
    Keywords: Offchoring; firm level; data relative employment; translog cost function
    JEL: F14 F23 L23
    Date: 2007–10–29
  8. By: Ahuja Vinod; Sen Arindam
    Abstract: In recent years there has been growing recognition among the development community of the role of small scale commercial poultry production in accelerating the pace of poverty reduction and reaching out to the poorest of the poor. There is also growing evidence to demonstrate the role of small scale poultry in enhancing the food and nutrition security of the poorest households and in the promotion of gender equality. At the same time, the market and production context of poultry production has been changing rapidly over the last two decades. Rapid economic growth and urbanization in developing countries has resulted in fast expansion of industrial large scale, vertically integrated, poultry production units, specially in Asia. Opportunities have also expanded for small scale poultry enterprises due to improved market access infrastructure and a preference structure that might still favour free range birds and eggs. As a result, there has been increased market orientation even among small scale poultry enterprises. These changes have brought large and small production systems in overlapping competitive space which has created both challenges and opportunities. These changes have raised concerns about the sustainability of small scale poultry production systems due to (i) intensified competition from large scale producers who can exercise significant control over the poultry value chain (including concentrated holding of genetic stock of industrial poultry by a few multinational corporations), and (ii) the public perception that small units of production may be dangerous reservoirs of diseases, specially in the wake of recent outbreaks of HPAI. In the light of that background, this paper attempts to summarize the nature of small scale poultry production across nations and brings together some evidence on the viability of small scale poultry production in the wake of expanding large scale production systems with substantial economies of scale, well organized and integrated supply chains and the ability to respond to various types of risks. The paper argues that the main challenge for small-scale/rural poultry is organizational, not technical. Based on a review of available evidence, the paper concludes that it is important to continue to promote village poultry to contribute towards household nutrition security and livelihood support but concerted efforts must be made to find organizational solutions to minimize public health risks and provide appropriate extension support on issues like disease prevention, predation, improving hatchability, etc. Unfortunately most government extension programs in the developing countries are not oriented towards addressing the needs of poor households. While some private sector organizations (such as Kegg Farm in India) have invested significantly towards developing fast growing and more productive birds without requiring significant additional inputs, and have also made sufficient investment for developing the distribution network for birds, extension and public health support systems continue to be the weak point, making them vulnerable to exogenous shocks. This requires a well orchestrated public policy response in support of small scale poultry production.
    Date: 2007–12–06
  9. By: Blanchflower, David G. (Dartmouth College, USA, University of Stirling, NBER, IZA, CESifo and Member, Monetary Policy Committee Bank of England); Oswald, Andrew J. (Department of Economics, University of Warwick UK)
    Abstract: We present evidence that psychological well-being is U-shaped through life. A difficulty with research on this issue is that there are likely to be omitted cohort effects (earlier generations may have been born in, say, particularly good or bad times). First, using data on 500,000 randomly sampled Americans and West Europeans, the paper designs a test that can control for cohort effects. Holding other factors constant, we show that a typical individual’s happiness reaches its minimum -- on both sides of the Atlantic and for both males and females -- in middle age. Second, evidence is provided for the existence of a similar U-shape through the life-course in East European, Latin American and Asian nations. Third, a U-shape in age is found in separate well-being regression equations in 72 developed and developing nations. Fourth, using measures that are closer to psychiatric scores, we document a comparable well-being curve across the life cycle in two other data sets : (i) in GHQ-N6 mental health levels among a sample of 16,000 Europeans, and (ii) in reported depression and anxiety levels among 1 million U.K. citizens. Fifth, we discuss some apparent exceptions, particularly in developing nations, to the U-shape. Sixth, we note that American male birth-cohorts seem to have become progressively less content with their lives. Our paper’s results are based on regression equations in which other influences, such as demographic variables and income, are held constant.
    Keywords: Happiness ; aging ; well-being ; GHQ ; cohorts ; mental-health ; depression ; life-course
    JEL: D1 I3
    Date: 2007
  10. By: Jean-Marc Roda (Bois tropicaux - Production et valorisation des bois tropicaux - CIRAD : UPR40); Eric Aretz (Alterra - Centre for Ecosystem studies, - Wageningen University and Research Centre); Hin Fui Lim (FRIM - Forest Research Institute of Malaysia - FRIM)
    Abstract: This paper analyses the side effects of the stricter regulation on tropical hardwood or timber imports. It considers the place of Europe within the global timber market, where Europe accounts only for a very limited share. It also explains the high selectivity of European markets, with its consequences. While tropical wooden furniture and other secondary processed products are not considered as timber here, their question is also discussed. The number of empirical studies specifically dealing with the side effects of EU regulations is limited, but the results are converging, showing that these regulations have a general adverse effect, contrary to the initial aim of promoting the sustainability of tropical timbers. These side effects are essentially to divert the trade towards countries with lower standards, and to add a burden on most of the producing countries which have already a set of comparative disadvantages for the production of legal or sustainable timber. The effects are positive on a limited number of companies which markets are very dependent of Europe. The question is then analysed from a broader perspective, replacing the effects of the EU regulations as an incidental factor compared to the increasing consumption of tropical timber by the three developing giants: Brazil, India and China.
    Keywords: timber trade; trade regulation; environmental regulation, Europe; tropical timber; tropical hardwwod; side effect; adverse effect
    Date: 2007–03–01

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