nep-sea New Economics Papers
on South East Asia
Issue of 2008‒05‒24
four papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Deep determinants of economic growth – empirical verification with panel data models By Tomasz Brodzicki; Dorota Ciolek
  3. Myanmar Sugar SMEs: History, Technology, Location and Government Policy By San Thein; Kudo, Toshihiro
  4. Knowledge hubs and knowledge clusters: Designing a knowledge architecture for development. By Evers, Hans-Dieter

  1. By: Tomasz Brodzicki (Faculty of Economics, University of Gdansk); Dorota Ciolek (Faculty of Management, Department of Econometrics, University of Gdansk)
    Abstract: We verify the impact of the so-called deep determinants on the level of economic real GDP per capita for an unbalanced panel of 207 economies within the period 1996-2004 using the Hausman-Taylor method of estimation. Institutional variables are detected to be endogenous. The results confirmed the assumed impact of deep determinants on the observed disparities in economic development. In most cases the basic specification of the model suggested by the empirical literature (log of openness, rule of law, distance from equator) is statistically significant and the impact of the variables has the anticipated direction. Several other specifications are tested and they perform pretty well. As the distance from equator has been detected not to be statistically insignificant in several specifications (for Asia and Europe) a combination of exogenous geographical variables enters the model with positive results. The basic specification of the model fits well the context of Africa and South America. It however performs badly for Asia. The quality of institutions is of prime importance for southern hemisphere economies as well as for former (currently economies in transition) and current socialist economies. The permanent improvement in the quality of institutions is the key determinant of success of economic transformation – underperformance in this area leads to smaller gains in terms of GDP per capita levels attained.
    Keywords: economic growth, economic development, institutions, geography, openness, panel data models, Hausman-Taylor estimator
    Date: 2008–05
  2. By: Al-Amin, Abul Quasem; Jaafar, Abdul Hamid; Siwar, Chamhuri
    Abstract: Environmental pollution is now a serious problem in many developing countries. One approach to mitigate the problem is to implement various pollution control policies. However, due to a lack of adequate quantitative models, the economic impacts and effectiveness of many pollution control policies are still unknown. Therefore, there is a greater need to know whether economic liberalization, trade, environment and social welfare can be joined in one direction under environmental taxation and policies. Empirical studies for developed countries reveal that imposition of a carbon tax would decrease CO2 emissions significantly and might not dramatically reduce economic growth. To our knowledge there has not been any research done to simulate the economic impact of emission control policies in Malaysia. Studying the potential economic impact of emission control policies is very important because inappropriate policies that reduce carbon emission may at the same time reduce highly economic growth. It is thus important to find the correct pollution tax that could be imposed such that environmental pollution is reduced at the same time does not dampen economic growth. The method developed for this study is applied computable general equilibrium model (MYCGE) for imposing environmental taxation policies in the Malaysian economy. Three simulations were carried out using a Malaysian Social Accounting Matrix. The first simulation is related to the trade based and the last two are carbon based simulations. The model results indicate that further trade liberalization is not sensitive in the Malaysian economy. Particularly, the reasons could be attributed to the fact that Malaysian export duty is already low and Malaysian trade policy already highly liberalized. The carbon tax policy illustrates that a 1.21 percent reduction of carbon emission (via carbon tax) reduces the nominal GDP by 0.82 percent and exports by 2.08 percent; a 2.34 percent reduction of carbon emission reduces the nominal GDP by 1.90 percent and exports by 3.97 percent and a 3.40 percent reduction of carbon emission reduces the nominal GDP by 3.17 percent and exports by 5.707 percent.
    Keywords: Trade; Air Emission; Environmental General Equilibrium; Malaysian Economy
    JEL: C68 Q5 B22
    Date: 2008–05–16
  3. By: San Thein; Kudo, Toshihiro
    Abstract: Small and medium enterprises (SMEs) engaged in sugar processing in Myanmar appeared in the last decade of the socialist era. An acute sugar deficit, restricted trade in white sugar, and high demand from the conventional dairy business led to the growth of sugar SMEs by appropriate blending of semi-finished products (syrup) in the fields, which were then processed in vacuum pans and centrifugals to obtain white sugar. This became a tradable commodity and sugar SMEs grew in clusters in big cities. They are family-owned businesses. However, they lack the bagasse-based power generation. In recent years, large modern sugar factories operated by private and military companies have emerged as key players. The current shortage of fuel feedstock and competition for raw materials have become driving forces that shift sugar SMEs from market-oriented to raw material-oriented locations. Internal competition among key players made sugar price highly volatile, too. Being placed on a level playing field, the whole industry should be upgraded in terms of price and quality to become export-oriented.
    Keywords: Myanmar (Burma), Small and medium enterprise (SME), State-owned economic enterprise (SEE), Sugar, Sugarcane, Resource-based location, Market economy, Mandalay, Pyawbwe
    JEL: L11 L52 L66 N85
    Date: 2008–04
  4. By: Evers, Hans-Dieter
    Abstract: With globalisation and knowledge-based production, firms may cooperate on a global scale, outsource parts of their administrative or productive units and negate location altogether. The extremely low transaction costs of data, information and knowledge seem to invalidate the theory of agglomeration and the spatial clustering of firms, going back to the classical work by Alfred Weber (1868-1958) and Alfred Marshall (1842-1924), who emphasized the microeconomic benefits of industrial collocation. This paper will argue against this view and show why the growth of knowledge societies will rather increase than decrease the relevance of location by creating knowledge clusters and knowledge hubs. A knowledge cluster is a local innovation system organized around universities, research institutions and firms which successfully drive innovations and create new industries. Knowledge hubs are localities with high internal and external networking and knowledge sharing capabilities. Both form a new knowledge architecture within an epistemic landscape of knowledge creation and dissemination, structured by knowledge gaps and areas of low knowledge intensity. The paper will focus on the internal dynamics of knowledge clusters and knowledge hubs and show why clustering takes place despite globalisation and the rapid growth of ICT. The basic argument that firms and their delivery chains attempt to reduce transport (transaction) costs by choosing the same location is still valid for most industrial economies, but knowledge hubs have different dynamics relating to externalities produced from knowledge sharing and research and development outputs. The paper draws on empirical data derived from ongoing research in the Lee Kong Chian School of Business, Singapore Management University and in the Center for Development Research (ZEF), University of Bonn, supported by the German Aeronautics and Space Agency (DLR).
    Keywords: knowledge; knowledge and development; industrial agglomeration; knowledge hub; cluster; space
    JEL: D21 D23 D8
    Date: 2008

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