nep-sea New Economics Papers
on South East Asia
Issue of 2008‒10‒13
twelve papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Industrialization after a Deep Economic Crisis: Indonesia By Haryo Aswicahyono; Dionisius Narjoko; Hal Hill
  2. The Current Global Financial Turmoil and Asian Developing Countries By Yilmaz Akyuz
  3. Suggested Rules of Origin Regime for EAFTA By Medalla, Erlinda; Supperamaniam, M.
  4. AGEFIS:Applied General Equilibrium for FIScal Policy Analysis By Arief Anshory Yusuf; Djoni Hartono; Wawan Hermawan; Yayan
  6. Rules of Origin: Regimes in East Asia and Recommendations for Best Practice By Medalla, Erlinda
  7. Impacts of the Free Trade Area of the Pacific (FTAAP) on Production, Consumption, and Trade of the Philippines By Rodriguez, U-Primo
  8. Growth literature and policies for the developing countries By Rao, B. Bhaskara; Cooray, Arusha
  9. Examining Exchange Rates Exposure, J-Curve and the Marshall-Lerner Condition for High Frequency Trade Series between China and Malaysia By Hooy, Chee-Wooi; Chan, Tze-Haw
  10. Organizational Member Learning and the Influential Factors: The Empirical Study of Thailand By Pruksapong, Mutarika
  11. Demand for Skills, Supply of Skills and Returns to Schooling in Cambodia By Chris SAKELLARIOU
  12. Race, Ethnicity and the Dynamics of Health Insurance Coverage By Fairlie, Robert W.; London, Rebecca A.

  1. By: Haryo Aswicahyono; Dionisius Narjoko; Hal Hill
    Abstract: Indonesia experienced a deep economic contraction as a result of the 1997-98 Asian crisis. This paper examines trends and patterns in the country’s industrial sector in the wake of the crisis, and against the backdrop of the changed policy and institutional environment. Prior to the crisis Indonesia was one East Asia’s fastest industrializers, whereas its industrial growth is now one of the slowest. Moreover, prior to the crisis, manufacturing was a ‘leading sector’ in the economy, whereas it is now growing at about the average. We examine how and why the record within manufacturing is diverse. Also unit labour costs rose sharply immediately following the crisis. In consequence, industrialization has also become less employment elastic, and employment in the formal sector has hardly increased. Foreign ownership has risen substantially, while concentration levels remain largely unchanged. Industrial exports have performed indifferently, notwithstanding the large boost to competitiveness following the sharp depreciation of the Rupiah in 1997-98. The process of small firms ‘graduating’ to larger units has slowed, and most of the output growth is now coming from existing firms rather than new entrants. We link these outcomes both to general, economy-wide factors as well as a range of particular policy interventions that have had sector-specific effects.
    Keywords: Indonesia, industrialization, economic crises
    JEL: L16 O14
    Date: 2008
  2. By: Yilmaz Akyuz (Third World Network)
    Date: 2008
  3. By: Medalla, Erlinda; Supperamaniam, M.
    Abstract: <p>In moving toward the East Asian vision of a community, a rational, enabling regime of rules of origin (ROOs) that would encourage deeper economic integration and shared prosperity should be established. This means a set of ROOs that is trade facilitating even as it attempts to prevent trade deflection, with enough safeguards for inclusive development both within and across countries in the region.</p> <p>To provide a clear understanding of the ROO and their proper application, this paper discusses the various approaches in determining the rules of origin. It also looks at the different ROO regimes in East Asia then points out some of the recurring ROO issues. Finally, the paper suggests key features of the ROO for the effective implementation and success of any preferential agreement such as the EAFTA.</p>
    Keywords: rules of origin, preferential trade agreements, free trade agreement (FTA), regional trade agreement, East Asia
    Date: 2008
  4. By: Arief Anshory Yusuf (Department of Economics, Padjadjaran University); Djoni Hartono (Graduate Program of Economics, University of Indonesia); Wawan Hermawan (Department of Economics, Padjadjaran University); Yayan (Department of Economics, Padjadjaran University)
    Abstract: AGEFIS (Applied General Equilibrium model for FIScal Policy Analysis) is a Computable General Equilibrium (CGE) model designed specifically, but not limited, to analyze various aspects of fiscal policies in Indonesia. It is yet, the first Indonesian fully-SAM-based CGE model solved by Gempack. This paper describes the structure of the model and illustrates its application.
    Keywords: AGEFIS, CGE, Fiscal Policy, Indonesia
    JEL: C68 D58 H30
    Date: 2008–10
  5. By: Shafaeddin, Mehdi
    Abstract: This study of regional South-South (S-S) trade and cooperation in East, South and South-East Asian countries (ESSEA) aims to provide an economic rationale for S-S trade; shed some light on the extent and pattern of S-S trade in the ESSEA region; examine the dynamic forces behind the expansion of such trade, and its shortcomings and vulnerabilities; propose policies for enhancing and strengthening regional cooperation; and identify areas for further research. The main conclusion of the study is that, while the rapid expansion of trade among ESSEA countries has been mainly the result of industrialization and industrial collaboration in the form of production sharing, it has not been driven through the operation of market forces alone. South-South trade can also be used as a policy-driven vehicle for industrialization in lower-income countries, and is linked to the principle of dynamic comparative advantage. The resultant expansion of supply capabilities and diversification of the structure of production and trade, in turn, potentially leads to further expansion of S-S trade and to the geographical diversification of trade for the countries involved, with a positive impact on their bargaining power. However, enhancing S-S trade requires proactive policy measures for cooperation that go beyond tariff reduction and trade agreements. The paper begins by providing a rationale for S-S trade as a vehicle for promoting industrialization and development. It goes on to show that regional trade has expanded rapidly in ESSEA mainly through intra-industry trade in the form of production sharing in electrical and electronic products. The region has become not only the most dynamic area for S-S trade, but also a major force in international trade in general. Nevertheless, intraregional trade among ESSEA countries has led to three main developments that these countries need to consider collectively and address through joint policy initiatives in order to further promote industrialization and development.
    Keywords: Trade; Trade policy; industrial policy; regionalism; South-south trade; China; Asia-Pacific
    JEL: N85 O38 O24 O53 O10 D20 L60 Q18 F00 F15 N65 Q17 F10 L70
    Date: 2008–08
  6. By: Medalla, Erlinda
    Abstract: <p>With globalization and advances in information and communication technology (ICT) leading to growing international production sharing, amidst the increasing trend in preferential trading arrangements (PTAs), rules of origin (ROO) has been beset with difficult recurring issues. First and foremost is the cost of ROO administration. Second, ROO as part of PTAs could generate new barriers to trade, thus taking with one hand what the other hand has given. In turn, this gives rise to another key concern: its potential use as a protectionist tool.</p> <p>To achieve the East Asian vision of a community, any RTA it would endeavor to establish should set a rational, enabling regime of ROO that would facilitate even as it attempts to prevent trade deflection, with enough safeguards for inclusive development both within and across countries in the region. There is a consensus that the movement should be toward more simple and unrestrictive ROO.</p>
    Keywords: rules of origin, free trade agreement (FTA), regional trade agreement, preferential trading arrangements (PTAs), East Asia
    Date: 2008
  7. By: Rodriguez, U-Primo
    Abstract: <p>This paper examines the economy-wide impacts of a Free Trade Area of the Asia Pacific (FTAAP) on the Philippine economy. In particular, it uses an applied general equilibrium model to determine the effects of alternative scenarios on aggregate and sectoral outputs, consumption, and international trade. The paper also compares the FTAAP to reforms which are confined to the ASEAN plus 3 and to a broader set of tariff changes that covers all the trading partners of the Philippines.</p> <p>The findings of the paper are as follows. First, the FTAAP is likely to benefit the Philippines in the form of higher aggregate output and employment. However, such gains are not projected for all industries as the simulation results indicate declines in the outputs of activities related to rice and corn. Second, the benefits from the FTAAP are likely to come more from the removal of tariffs on nonagriculture products. Finally, the aggregate gains from the FTAAP are larger than an arrangement which is limited to ASEAN plus 3 countries. However, the differences in the impacts do not appear to be very large.</p>
    Keywords: international trade, Philippines, free trade area, applied general equilibrium models, Asia Pacific Economic Cooperation
    Date: 2008
  8. By: Rao, B. Bhaskara; Cooray, Arusha
    Abstract: This paper examines a recent view of Pritchett (2006) that there is a wide gap between growth literature and the policy needs of the developing countries. Growth literature has focussed on the long term growth outcomes but policy makers of the developing countries need rapid improvements in the growth rate in the short to medium terms. We take the view that this gap can be reduced if attention is given to the dynamic effects of policies. With data on Singapore, Malaysia and Thailand we argue that an extended version of the Solow (1956) model is well suited for this purpose. We found that the short to medium term growth effects of investment rate are much higher than its long run effects. Dynamic simulations for Singapore showed that these short run growth effects are significantly higher than the steady state growth rate for up to 10 years.
    Keywords: Solow Growth Model; Endogenous Growth; Dynamic Growth Effects of Investment Rate; Policies for Developing Countries.
    JEL: O11
    Date: 2008–10–05
  9. By: Hooy, Chee-Wooi; Chan, Tze-Haw
    Abstract: Over the last decade, China and Malaysia have committed to export-led growth policy based on maintenance of their undervalued currencies. Both nations had succumbed to pressure of revaluation to de-peg their currency against the USD, the same day in July 2005. This unique scenario motivated us to examine the dynamic nexus of exchange rate impact on bilateral export and import flows between China and Malaysia. Our analysis contributed in using high frequency monthly data for the recent period from January 1990 to January 2008, based on the Autoregressive Distributed Lag (ARDL) bound testing procedure and generalised impulse response analysis. Our empirical findings reveal that the Marshall-Lerner condition holds that real depreciation accelerates trade expansion in the long run but only the short run import demands adhere to the potential J-curve pattern. Domestic and foreign incomes are significant and correctly signed, suggesting that the China-Malaysia exports and imports are determined by demand side effects. In brief, the study supports for the complementary role of China instead of conflicting (competing) features in the China-Malaysia bilateral trading
    Keywords: Exchange rates; Trade; J-curve; Marshall-Lerner Condition; ARDL Bounds test
    JEL: F10 F41 C01
    Date: 2008–08–31
  10. By: Pruksapong, Mutarika
    Abstract: Based on the literatures of organizational learning and change, this research continues to focus on the individual level of learning in organization. Individual learning comprises of at least the cognitive and behavioral aspects as the two represent two different phenomenon and complementary to each other. A questionnaire survey was conducted with employees of corporations in Thailand with an attempt to seek for factors in which influence the level of learning in individuals in both cognitive and behavioral contexts. Among the three influential factors, perceived negative impact from change hinders the cognitive buy-in of change initiative the most, while the general understanding of the necessity of organizational learning and change depicted as the strongest factor in inducing individual’s participative cooperation to change projects. Additionally, the overall results suggest that organizations in which are involved in organizational change movement should pay attention in educating their employees to be highly aware of the importance of organizational learning and change in general, as well as, creating more of the direct positive impact and less of the direct negative impact from any specific change movement, in order to be able to gain employees’ cognitive understanding of and behavioral cooperation to the change.
    Keywords: Organizational Member Learning; Organizational Learning; Organizational Change; Thailand
    JEL: M19 M12 M10
    Date: 2008–10–07
  11. By: Chris SAKELLARIOU (Division of Economics, Nanyang Technological University, Singapore)
    Abstract: In this paper I take a detailed look into the returns to schooling in Cambodia using the 1997 and 2003-04 Socioeconomic Surveys of Households and alternative estimation techniques (OLS vs. Family Fixed Effects and Instrumental Variables). The main focus of the analysis has to do with differences by sector (public vs. private). In Cambodia, the average educational attainment of workers in the public sector is significantly higher compared to the private sector. Without considering issues of selection into the public vs. the private sector, the wage premium for one additional year of schooling in the private sector is about twice that in the public sector for both men and women. Furthermore, the average return to one additional year of potential labor market experience is higher in the private sector. This raises questions about the reasons for the self-selection of more educated workers in the public sector in Cambodia. The picture changes drastically, especially in the case of female employment, once the assumption that the location of individuals in the public and private sectors is the outcome of a random process. However, after correcting for selection bias using Heckman's correction, one additional year of schooling still increases earnings by more in the private sector for men, but the spread between sectors narrows. However for women, one additional year of schooling increases earnings in the public sector by more than in the private sector. Furthermore, now the return to one additional year of potential labor market experience is significantly higher in the public sector, for both men and women. Other findings indicate that the supply of more educated workers has outstripped demand, resulting in a decline in the return to tertiary education and a stable return to secondary education. The dynamics of the demand and supply of skills and their changes over the time suggest that the supply of post-primary skills is adequate, except perhaps in the private sector.
    Date: 2008–05
  12. By: Fairlie, Robert W. (University of California, Santa Cruz); London, Rebecca A. (Stanford University)
    Abstract: Using matched data from the 1996 to 2004 Current Population Survey (CPS), we examine racial patterns in annual transitions into and out of health insurance coverage. We first decompose racial differences in static health insurance coverage rates into group differences in transition rates into and out of health insurance coverage. The low rate of health insurance coverage among African-Americans is due almost entirely to higher annual rates of losing health insurance than whites. Among the uninsured, African-Americans have similar rates of gaining health insurance in the following year as whites. Estimates from the matched CPS also indicate that the lower rate of health insurance coverage among Asians is almost entirely accounted for by a relatively high rate of losing health insurance. In contrast to these findings, differences in health insurance coverage between Latinos and whites are due to group differences in both the rate of health insurance loss and gain. Using logit regression estimates, we also calculate non-linear decompositions for the racial gaps in health insurance loss and gain. We find that two main factors are responsible for differences in health insurance loss between working-age whites and minorities: job loss and education level. Higher rates of job loss account for 30 percent of the health insurance gap for African-Americans and Asians, and 16 percent of the health insurance gap for Latinos. Lower levels of education explain roughly 15 percent of the gap for African-Americans and Latinos (Asians' higher levels of education serve to close the gap). Higher rates of welfare and SSI participation among African-Americans also serve to widen the gap in health insurance loss by 8 percent.
    Keywords: race, health insurance, insurance dynamics
    JEL: I1 J15
    Date: 2008–09

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