nep-sea New Economics Papers
on South East Asia
Issue of 2008‒04‒29
eleven papers chosen by
Kavita Iyengar
Asian Development Bank

  1. South Asian Integration Prospects and Lessons from East Asia By Ramesh Chandra; Rajiv Kumar
  2. Using a complex weighted-network approach to assess the evolution of international economic integration: The cases of East Asia and Latin America By Javier Reyes; Giorgio Fagiolo; Stefano Schiavo
  3. Bank Borrowing and Financing of Medium-sized Firms in Indonesia By Hamada, Miki
  4. The Evolution of Cleavages in the Indonesian Party System By Andreas Ufen
  5. Regional Integration and FDI in Emerging Markets By Julia Kubny; Florian Mölders; Peter Nunnenkamp
  6. Household Structures and Savings: Evidence from Household Surveys By Juan R. de Laiglesia; Christian Morrison
  7. Macroeconomic Crises since 1870 By Robert J. Barro; José F. Ursúa
  8. Can Horticulture be a Success Story for India? By Surabhi Mittal
  9. Interethnic Marriage: A Choice between Ethnic and Educational Similarities By Furtado, Delia; Theodoropoulos, Nikolaos
  10. La mobilité d’emploi et des bas salaires sur le marché du travail thaïlandais. Un modèle probit multinomial à régimes endogènes By Jongkon Kumlaï
  11. Migration Enclaves, Schooling Choices and Social Mobility By Piacentini, Mario

  1. By: Ramesh Chandra (Indian Council for Research on International Economic Relations); Rajiv Kumar (Indian Council for Research on International Economic Relations)
    Abstract: In the context of the low levels of regional cooperation among South Asian countries when compared with the successful results from cooperation in East Asia (consisting of South East and East Asian countries), the objective of this paper is first to assess the prospects of cooperation among South Asian economies and then to draw lessons from East Asian regional experiments for South Asian regionalism for the betterment of these prospects. The main argument of the paper is that South Asia should adopt a twin-track approach: better integration within itself and better integration with rest of the world particularly East Asia. Both tracks would complement and supplement each other ensuring a greater chance of success.
    Keywords: South Asian integration prospects, Lessons from East Asian regionalism, Open regionalism, Asian development
    JEL: F15 F33 F36 O19
    Date: 2008–01
  2. By: Javier Reyes; Giorgio Fagiolo; Stefano Schiavo
    Abstract: Over the past four decades the High Performing Asian Economies (HPAE) have followed a development strategy based on the exposure of their local markets to the presence of foreign competition and on an outward oriented production. In contrast, Latin American Economies (LATAM) began taking steps in this direction only in the late eighties and early nineties, but before this period these countries were more focused on the implementation of import substitution policies. These divergent paths have led to sharply different growth performance in the two regions. Yet, standard trade openness indicators fall short of portraying the peculiarity of the Asian experience, and to explain why other emerging markets with similar characteristics have been less successful over the last 25 years. We offer an alternative perspective on the issue by exploiting recently-developed indicators based on weighted-network analysis. We study the evolution of the core-periphery structure of the World Trade Network (WTN) and, more specifically, the evolution of the HPAE and LATAM countries within this network. Using random-walk betweenness centrality measure, the paper shows that the HPAE countries are more integrated into the WTN and many of them, which were in the periphery in the eighties, are now in the core of the network. In contrast, the LATAM economies, at best, have maintained their position over the 1980 - 2005 period, and in some cases have fallen in the ranking of centrality.
    Keywords: Networks; World trade web; international trade; weighted network analysis; integration; trade openness; LATAM vs. HPAE countries
    JEL: F10 D85
    Date: 2008–04
  3. By: Hamada, Miki
    Abstract: The improvement of financial intermediation functions is crucial for a robust banking system. When lending, banks have to cope with such problems as information asymmetry and adverse selection. In order to mitigate these problems, banks have to product information and improve their techniques of lending. During the 1998 financial crisis, Indonesia's banking system suffered severe damage and revealed that the country's banking intermediation functions did not work well. This paper examines the financial intermediation functions of banks in Indonesia and analyzes the importance of bank lending to firms. The focus is on medium-sized firms, and "relationship lending", one of the bank lending techniques, is used to examine financial intermediation in Indonesia. The results of logit regressions show that the relationship between a bank and a firm affects the probability of bank lending. The amount of borrowing and collateral are also affected by a firm's relationship with a bank. When viewed from the standpoint of relationship lending to medium-sized firms, Indonesian banks cannot be criticized for any malfunction of financial intermediation.
    Keywords: Relationship lending, Financial intermediation function, Medium-sized firms, Indonesia, Banks, Finance, Small and medium-scale enterprises
    JEL: G21 G30 N25
    Date: 2008–03
  4. By: Andreas Ufen (GIGA Institute of Asian Studies)
    Abstract: The basic patterns of the initial Indonesian party system have reemerged after more than four decades of authoritarianism. The cleavage model by Lipset and Rokkan is well-suited to analyzing the genesis of and the most salient features of this party system. However, in applying the approach, some adjustments have to be made. For instance, the national and industrial revolutions have to be conceived of differently. Moreover, it is useful to distinguish critical phases in the formation of parties. The four cleavages have to be reinterpreted and additional ones need to be identified. In Indonesia, economic cleavages are hardly significant in conflicts between political parties (especially the “capital” versus “labour” cleavage) or are expressed in terms of religion or allegiance to political leaders based in a specific region (“urban” versus “rural”). In addition, in comparison with 1999 and particularly with the 1950s, today’s cleavages are less marked. Thus, the Lipset- Rokkan model has to be combined with other approaches which underline the importance of clientelism and the dealignment of parties.
    Keywords: Indonesia, party system, cleavages, historical analysis
    Date: 2008–04
  5. By: Julia Kubny; Florian Mölders; Peter Nunnenkamp
    Abstract: Regional integration is often considered a means to improve member countries’ attractiveness to foreign direct investment (FDI). But regional integration agreements (RIAs) as well as FDI are too diverse to allow for generalized verdicts. Our case studies on Mercosur in Latin America, ASEAN and SAARC in Asia, and SADC in sub-Saharan Africa caution against high expectations in several respects. First, country-specific factors were often more important as a stimulus to FDI than regional integration per se. Second, member countries are unlikely to equally share RIA-induced FDI inflows, even though the larger and richer members are not necessarily the winners taking all. Third, the regional heavyweights Brazil, China, India, and the Rep. of South Africa have played a minor role so far in fostering effective regional integration through outward FDI
    Keywords: foreign direct investment, regional integration, Mercosur, ASEAN, SAARC, SADC
    JEL: F15 F23
    Date: 2008–04
  6. By: Juan R. de Laiglesia; Christian Morrison
    Abstract: This paper examines the relationship between household structures, the institutions that shape them and physical and human capital accumulation using household and individual data from China, Indonesia, Côte d’Ivoire and Ghana. Household structures differ greatly across countries and are very diverse within countries. In the two African countries studied a large share of the population live in extended households and/or polygamous ones. Such household structures are the exception or even absent in the Asian cases, where nuclear monogamous households prevail. This paper finds that polygamy is negatively related to capital accumulation. Wealth per capita is significantly lower in polygamous households even after controlling for income, age and literacy of the household head. A first analysis of the possible channels suggests that the larger size of polygamous households plays an important role. A similar result is found for education: enrolment rates are never higher but frequently lower in these households. The diversity across countries demonstrates that polygamy has very different meanings across societies... <BR>Ce document examine les relations entre les structures des ménages, les institutions qui les façonnent et l’accumulation de capital physique et humain, en utilisant des données par ménage et par individu en provenance de Chine, d’Indonésie, de Côte-d’Ivoire et du Ghana. Les structures des ménages varient beaucoup d’un pays à l’autre et sont très diverses à l’intérieur même des pays. Dans les deux pays africains étudiés une partie importante de la population vit dans des ménages étendus et/ou polygames. De telles structures des ménages sont l’exception ou même absentes dans les pays d’Asie où le ménage nucléaire et monogame prédomine. Ce document constate que la polygamie a une relation négative avec le processus d’accumulation de capital. La richesse par tête est significativement inférieure dans les ménages polygames même après avoir contrôlé par le revenu, l’âge et l’éducation du chef de ménage. Une première analyse des mécanismes possibles qui pourraient expliquer ces résultats suggère que la taille plus grande des ménages polygames joue un rôle important. On trouve un résultat semblable pour l’éducation : les taux de scolarisation ne sont jamais supérieurs mais souvent moins élevés dans ces ménages. La diversité selon les pays prouve que la polygamie a des significations très différentes selon les sociétés...
    Keywords: Africa, Afrique
    JEL: D12 J12 O12 O16 Z10
    Date: 2008–01
  7. By: Robert J. Barro; José F. Ursúa
    Abstract: We build on the Maddison GDP data to assemble international time series from before 1914 on real per capita personal consumer expenditure, C. We also improve the GDP data in many cases. The C variable comes closer than GDP to the consumption concept that enters into usual asset-pricing equations. (A separation of consumer expenditure into durables and non-durables is feasible for only a minority of cases.) We have essentially full annual data on C for 22 countries and GDP for 35 countries, and we plan to complete the long-term time series for a few more countries. For samples that start as early as 1870, we apply a peak-to-trough method for each country to isolate economic crises, defined as cumulative declines in C or GDP by at least 10%. The principal world economic crises ranked by importance are World War II, World War I and the Great Depression, the early 1920s (possibly reflecting the influenza epidemic of 1918-20), and post-World War II events such as the Latin American debt crisis and the Asian financial crisis. We find 87 crises for C and 148 for GDP, implying disaster probabilities around 3.6% per year. The disaster size has a mean of 21-22% and an average duration of 3.5 years. A comparison of C and GDP declines shows roughly coincident timing. The average fractional decline in C exceeds that in GDP during wartime crises but is similar for non-war crises. We simulate a Lucas-tree model with i.i.d. growth shocks and Epstein-Zin-Weil preferences. This simulation accords with the observed average equity premium of around 7% on levered equity, using a "reasonable" coefficient of relative risk aversion of 3.5. This result is robust to a number of perturbations, except for limiting the sample to non-war crises, a selection that eliminates most of the largest declines in C and GDP. We plan a statistical analysis that uses all the time-series data and includes estimation of long-run effects of crises on levels and growth rates of C and GDP. We will also study the bond-bill premium (empirically around 1%) and allow for time-varying disaster probabilities.
    JEL: E01 E21 E23 E44 G12
    Date: 2008–04
  8. By: Surabhi Mittal (Indian Council for Research on International Economic Relations)
    Abstract: India is the second largest producer of the fruits and vegetables in the world after China. Since the 1980s the international trade in fruits and vegetables has expanded rapidly. The number of commodities as well as the number of varieties produced and traded have drastically increased during the past 25 years. There is an overall increase in the demand of fruits and vegetables for consumption both in fresh and the processed form. Also there is a wide diversification in production pattern globally. Income in this sector is increasing which is driving the supply. In spite of being one of the largest producers of fruits and vegetables in the world, the export competitiveness among the Indian producers remains low. But with new marketing initiatives, the post-harvest losses and wastage due to poor infrastructure facilities such as storage and transportation are reduced to a considerable extent, yet a lot needs to be done in this sector. In an effort to overcome some of the problems associated with this sector, the case study of the successful SAFAL Market is presented in the paper. The study has observed a shift in cropping pattern in favour of horticulture in India in the past one-and-a-half decades. Analysis of the economic feasibility of this shift away from cereals to fruits and vegetable shows that it's economically viable and beneficial to shift towards horticulture production, but this diversification needs to be planned in a systematic manner. Certain strategies and policies are also suggested in this regards. The study confirms the changing consumption patterns and diversification, along with the outlook for the next 15-20 years in the light of shortage of supply to increased domestic demand. The major exports from India are mango, grapes, orange, apple, banana, mosambi, onion, potato, tomato and pumpkins. The major share of India's exports of fresh fruits and vegetables go to Bangladesh, Nepal, UAE, UK and Malaysia. Supply constraints, yield gaps and huge logistic costs affect our competitive and comparative advantage in world trade market. In this study the nominal protection coefficient and revealed comparative advantage are computed to check on the existing status. Study also identifies the potential states for the fruits and vegetables, for which India is globally competitive and has comparative advantage in production. These states should be targeted for enhancing the export potential of the country. The potential competing countries are also identified. Lessons from other developing countries focus on the growth of the horticulture sector through increased participation of small and marginal farmers in an organized manner and farmers being trained with entrepreneurial skills.
    Keywords: Horticulture, Cost Benefit Ratio, Competitiveness, Comparative Advantage, SAFAL Market
    JEL: Q13 Q17
    Date: 2007–08
  9. By: Furtado, Delia (University of Connecticut); Theodoropoulos, Nikolaos (University of Cyprus)
    Abstract: This paper examines the effects of education on intermarriage, and specifically whether the mechanisms through which education affects intermarriage differ by immigrant generation, age at arrival, and race. We consider three main paths through which education affects marriage choice. First, educated people may be better able to adapt to different cultures making them more likely to marry outside of their ethnicity (cultural adaptability effect). Second, because the educated are less likely to reside in ethnic enclaves, meeting potential spouses of the same ethnicity may be difficult (enclave effect). Lastly, if spouse-searchers value similarities in education as well as similarities in ethnicity, then the effect of education will depend on the availability of same-ethnicity potential spouses with a similar level of education (assortative matching effect). Using data from the 2000 U.S. Census, we find that controlling for the enclave effect, there is empirical evidence for both the cultural adaptability and assortative matching effects. Our estimates also suggest that assortative matching is relatively more important for the native born rather than the foreign born, for the foreign born that arrived young rather than old, and for Asians rather than Hispanics. We provide additional evidence suggestive of our hypotheses and discuss policy implications.
    Keywords: ethnic intermarriage, education, immigration
    JEL: J12 I21 J61
    Date: 2008–04
  10. By: Jongkon Kumlaï (GED, Université Montesquieu Bordeaux IV)
    Abstract: L’objectif de cette étude consiste à mettre en évidence la relation complexe entre les mobilités professionnelle et salariale dans un secteur à bas salaires, afin d’appréhender l’instabilité chronique du salaire, principale sources d’inégalité salariale. Pour dépasser les limites méthodologiques de l’hétérogénéité, un modèle probit multinomial à régimes endogènes est considéré, pour lequel les estimations sont convergentes, sans biais et axiomatiquement efficientes. Les enquêtes socio-économiques de panel, effectuées entre 2005 et 2007, permettent d’appréhender le fonctionnement dynamique du marché du travail urbain en Thaïlande. Les résultats montrent que le modèle de correction des effets endogènes est plus pertinent que celui de sélection exogène, car la majorité des paramètres des fonctions de gains semblent être sous-estimés. L’étude montre qu’il existe une corrélation positive entre le changement d’emploi et le bas salaire. Ainsi, les employés à bas salaires sont plus susceptibles de changer d’emploi, un résultat statistiquement confirmé par la significativité du coefficient de corrélation. Ensuite, il s’agit de savoir si la mobilité d’emploi à bas salaires est profitable aux employés mobiles de ce secteur. Les pertes salariales sont de l’ordre de 4,3 pour cent pour les personnes mobiles à bas salaires. Les personnes plus touchées par ces pertes en termes monétaires englobent les plus instruits, les travailleurs ayant une ancienneté importante, les individus ayant une longue durée de chômage, les personnes exerçant un travail à temps plein, et ceux qui travaillent dans les grandes entreprises. L’ampleur des coûts d’opportunité supportés par les personnes à bas salaires exige des programmes d’action spécifiques, afin de minimiser les effets négatifs de ces phénomènes. The main purpose of this study consists in highlighting a complex relation between the professional mobility and the wage change in a low wage sector. Moreover, we try to bring answers to the persistent wage instability within this group using an analysis of wage mobility. To take into account the specific technical limits of the unobserved heterogeneity, we consider a probit multinomial endogenous switching approach, instead of using the linear model. The socio-economic panel data, collected between 2005 and 2007, enables us to carry out an empirical analysis leading to show the dynamic of the urban labor market in Thailand. Thus, several observations directly drive to the main conclusion according to which the endogenous selection model is more relevant than that of exogenous transformation. In fact, the majority of parameters from the wage functions seem to be underestimated under the linear approach. Therefore, it is technically accurate to adopt the relevant multinomial switching model. The fundamental result from this study links to the fact that there is a positive correlation between the job mobility and the low wages: the low wage employees are more likely to perform a high job change, shown by the significant level of the correlation parameter of errors terms. Moreover, since the wage penalty from job mobility under exogenous model seems to be relatively low, it is particularly high along the lines of the endogenous approach. In this case, the wage losses are estimated about 4.3 percent for the low wage mover referred to stayers at the same sector. Most people implied in these wage losses include the employees with high educated level, the prime workers, those who have more tenure from the last job, those who come from the long spell of unemployment, those who have a full-time job and particularly those who work within a big companies. The extent of the wage penalties calls upon the specific programs of public policies in order to minimize the negative effects on wage instability in this specific sector.(Full text in french)
    JEL: J21 J62
    Date: 2008–04
  11. By: Piacentini, Mario
    Abstract: This paper investigates the presence of a network externality which might explain the persistence of low schooling achievements among internal migrants. A simple analytical framework is presented to show how an initial human capital disparity between migrants and non migrants can translate into persistent skill inequality if origin shapes the composition of social networks. We test empirically whether young migrantsschooling decisions are affected by the presence of covillagers at destination, using data on life-time histories of migration and education choices from a rural region of Thailand. Different modelling approaches are used to account for the self-selection of young migrants, for potential endogeneity of the network size, and for unobserved heterogeneity in individual preferences. The size of the migrant network is found to negatively affect the propensity of young migrants to pursue schooling while in the city. This fi…nding suggests that policies seeking to minimising strati…cation in enclaves might have a socially multiplied impact on schooling participation, and, ultimately, affect the socio-economic mobility of the rural born.
    Keywords: human capital; schooling; networks; migration; inequality
    JEL: O1 O10 O15
    Date: 2008–03–01

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