nep-sea New Economics Papers
on South East Asia
Issue of 2008‒10‒28
eleven papers chosen by
Kavita Iyengar
Asian Development Bank

  1. La contagion liée au changement des anticipations : évidence de la crise coréenne By Wajih Khallouli; René Sandretto; Mohamed Ayadi
  2. The Impact of Outsourcing on the Japanese and South Korean Labor Markets: International Outsourcing of Intermediate Inputs and Assembly in East Asia By Sanghoon Ahn; Kyoji Fukao; Keiko Ito
  3. In Search of Market Index Leaders: Evidence from Asian Markets By Canegrati, Emanueke
  4. The challenge of hunger: The 2008 Global Hunger Index By von Grebmer, Klaus; Fritschel, Heidi; Nestorova, Bella; Olofinbiyi, Tolulope; Pandya-Lorch, Rajul; Yohannes, Yisehac
  5. Age-structured Human Capital and Spatial Total Factor Productivity Dynamics By Mishra, Tapas; Jumah, Adusei; Parhi, Mamata
  6. Dynamic Economic Game Theory and Asian Free Trade Agreements By James P. Gander
  7. Beyond Macroeconomic Stability: The Quest for Industrialization in Uganda By Abebe Aemro Selassie
  8. Labour-Intensive Industrialisation in Indonesia, 1930-1975: Output Trends and Government Policies By Pierre van der Eng
  9. Inadequate Management and Declining Infrastructure: The Critical Recurring Cost Problem Facing Irrigation in Asia By Easter, K. William
  10. Inflation Targeting and Communication: It Pays Off to Read Inflation Reports By Katerina Smídková; Viktor Kotlán; David Navrátil; Ales Bulir
  11. When is a copula constant? A test for changing relationships By Busetti, F.; Harvey, A.

  1. By: Wajih Khallouli (Ecole Supérieure des Sciences Economiques et Commerciales de Tunis); René Sandretto (GATE, University of Lyon, CNRS, ENS-LSH, Centre Léon Bérard, France); Mohamed Ayadi (Université de Tunis, Institut supérieur de gestion (ISG))
    Abstract: The object of this article, applied to the case of Korean currency crisis of 1997-1998, is to identify the contagion through an empirical study of the investor anticipations dynamics which is freed from the pseudo explanation hiding place misery by ‘sunspot’. To this end, we develop a, Markov-switching model in line with Jeanne and Masson (2000), but in which we use endogenous probabilities of transition between the states from the economy so as to be able at the same time to identify and explain an effect of contagion. One of the principal contributions of our modelling is that it shows in the Korean case, an overlap of the role of country fundamentals and a self-fulfilling contagion resulting from a rupture in the "beliefs of the market", it self related to the crisis in Thailand and Indonesia.
    Keywords: East Asia crisis; Korean currency crisis; Contagion; Multiple equilibria; Anticipations; Self-fulfilling speculation, Markov-switching models
    JEL: C22 F31 F41
    Date: 2008
  2. By: Sanghoon Ahn; Kyoji Fukao; Keiko Ito
    Abstract: Applying a common empirical approach to comparable industry-level data on production, trade,and labor markets for Japan and South Korea, this paper aims to investigate the impacts of outsourcing on different sectors of the labor market focusing on differences in educational attainment. While outsourcing measures used in previous studies only take account of the outsourcing of intermediate inputs, this paper, utilizing the Asian International Input-Output Tables, incorporates the outsourcing of assembly. The econometric results indicate that outsourcing to Asia (particularly to China) has a negative impact on the demand for workers with lower education and a positive impact on the demand for workers with higher education both in Japan and Korea. Moreover, the international outsourcing of assembly has a significant impact on skill upgrading, particularly in the Korean electrical machinery sector.
    Keywords: Outsourcing, labor demand, skill upgrading, Japan, Korea, manufacturing, Asian International Input-Output Tables
    JEL: F14 F16
    Date: 2008–10
  3. By: Canegrati, Emanueke
    Abstract: This paper investigates the presence of Granger-causality amongst market indices in six Asian stock markets: Malaysia, India, China, Pakistan, the Philippine and Japan, from April 7th 1992 to July 23rd 2008. Using daily market returns I performed a Granger-causality test, based on the Vector Autoregressive (VAR) model, in order to detect the causalities amongst indices. Different sub-samples were considered, which take into account the distinction between bearish and bullish phases of the markets. Results show that there is not Granger-causality amongst stock returns for the overall sample, but that there is Granger-causality amongst some indices during bearish and bullish phases. In particular, I found that market index leaders does exist both in up and down trends, even though these market leaders are not necessarily the same in the two phases.
    Keywords: Granger-causality; Asian stock markets; market indices; VAR
    JEL: G14 G15
    Date: 2008–10–23
  4. By: von Grebmer, Klaus; Fritschel, Heidi; Nestorova, Bella; Olofinbiyi, Tolulope; Pandya-Lorch, Rajul; Yohannes, Yisehac
    Abstract: "With high food prices threatening the food security of millions of vulnerable households around the world, hunger and malnutrition are back in the headlines. The world is making only slow progress in reducing food insecurity, according to the Global Hunger Index (GHI). Some regions—in particular South and Southeast Asia, the Near East and North Africa, and Latin America and the Caribbean—have made significant headway in combating hunger and malnutrition since 1990, but in South Asia and Sub-Saharan Africa, the GHI remains high. Moreover, progress in Sub-Saharan Africa since 1990 has been marginal. The GHI is a tool developed by IFPRI for regularly tracking the state of global hunger and malnutrition. This year's index reflects data until 2006—the most recent available global data—and does not yet take account of the latest changes in the world food system, in which a number of factors are converging to raise prices for agricultural commodities to their highest levels in decades. Food prices appear likely to remain high in the near term, leading to food and nutrition insecurity for poor people around the globe. In this risky and changing environment, the GHI highlights key trends and the geographic areas of greatest vulnerability." from Text
    Keywords: Hunger, Undernutrition, Child mortality, Malnutrition in children, Food availability, Indicators, HIV/AIDS, Conflict, war, Developing countries, Transitional economies, Countries in transition, malnutrition, measurement, evaluation,
    Date: 2008
  5. By: Mishra, Tapas (World Population Program, International Institute for Applied Systems Analysis, Laxenburg, Austria); Jumah, Adusei (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria, and Department of Economics, University of Vienna, Vienna, Austria); Parhi, Mamata (BETA, Louis-Pasteur University, Strasbourg, France)
    Abstract: This paper models total factor productivity (TFP) in space and proposes an empirical model for TFP interdependence across spatial locations. The interdependence is assumed to occur due to age-structured human capital dynamics. A semi-parametric spatial vector autoregressive framework is suggested for modeling spatial TFP dynamics where the role of demographic state and technological change are explicitly incorporated in the model to influence their spatial TFP co-movements. Empirical scrutiny in case of Asian countries suggests that cross-country human capital differences in their accumulation and appropriation pattern significantly influenced TFP volatility interdependence. The finding of complementarity in TFP in spatial locations calls for joint policy program for improving aggregate and individual country welfare.
    Keywords: Total factor productivity, Spatial growth, Non-linearity, Human capital, Age-structure, Semi-parametric VAR
    JEL: C14 C31 E61 N10 O30 O47
    Date: 2008–10
  6. By: James P. Gander
    Abstract: The purpose of this paper is to use fairly standard game theory elements and apply them to free trade agreements (FTA) made within ASEAN countries and between ASEAN countries and outside countries and the rest of the world (ROW). The applications use some mathematics, but it is not my intent to burden unnecessarily the reader with the mathematics. My intent is to make the applications appeal to the practitioners who are directly or at least indirectly engaged in the process of making FTA’s and who are interested in a theoretical basis for FTA’s. The intent then could be described as being largely pedagogical. The main contribution of the paper is to show the structure and behavior of the backward solution method used in dynamic game theory.
    Keywords: Free Trade Agreements, ASEAN, Backward solution method
    Date: 2008
  7. By: Abebe Aemro Selassie
    Abstract: Uganda has registered one of the most impressive economic turnarounds of recent decades. The amelioration of conflict and wide ranging economic reforms kick-started rapid economic growth that has now been sustained for some 20 years. But there is a strong sense in policy making circles that despite macroeconomic stability and reasonably well functioning markets, economic growth has not translated into significant structural transformation. This paper considers (i) Uganda's record of economic transformation relative to the high growth Asian countries and (ii) the contending explanations as to why more transformation and higher growth has proved elusive.
    Keywords: Financial stability , Uganda , Industrialization , Economic recovery , Economic reforms , Economic growth , Economic policy ,
    Date: 2008–10–01
  8. By: Pierre van der Eng
    Abstract: Growth of industrial output for domestic consumption during 1930-75 was significant, but not continuous; growth (1932-41) was followed by decline (1942-46), recovery (1947-57), stagnation (1958-65) and acceleration (1966-75). Protective trade policies triggered growth in the 1930s, when industry policy favoured a balanced development of capital-intensive large and medium-sized ventures and labour-intensive small firms and firms in light industries. The gist of this policy continued during the late-1940s and 1950s, but industry policies increasingly favoured large, capital-intensive stateowned enterprises. By 1960, policies no longer targeted small ventures and labour-intensive industrialisation. After 1966, economic stabilisation and deregulation rekindled the momentum of industrialisation. Although policy interest in the development of small industrial ventures revived in 1975, large-scale labour-intensive industrialisation did start until the mid-1980s.
    Keywords: Manufacturing industry, Indonesia, industry policy, technological change
    JEL: L50 L60 N65
    Date: 2008
  9. By: Easter, K. William
    Abstract: This report reviews the recurring costs situation for irrigation in Asia. These are the costs associated with project operation and maintenance (O&M). As is well documented in the literature many developing countries have neglected project O&M which has resulted in a rapid depreciation of past irrigation investments (Carruthers, 1981). Irrigation systems fail to irrigate their planned or projected command areas and after a few years parts of the systems no longer function (Wade, 1975). The problem is that there are too few farmer or government agency incentives which foster investment of capital and human resources in O&M and assure that irrigation projects operate at a high level of performance over a long period of time. For example, there is lack of accountability for O&M because of the weak linkage between those providing O&M and those benefiting from O&M.
    Keywords: International Development, Land Economics/Use,
    Date: 2008–04–14
  10. By: Katerina Smídková; Viktor Kotlán; David Navrátil; Ales Bulir
    Abstract: Inflation-targeting central banks have a respectable track record at explaining their policy actions and corresponding inflation outturns. Using a simple forward-looking policy rule and an assessment of inflation reports, we provide a new methodology for the empirical evaluation of consistency in central bank communication. We find that the three communication tools-inflation targets, inflation forecasts, and verbal assessments of inflation factors contained in quarterly inflation reports-provided a consistent message in five out of six observations in our 2000-05 sample of Chile, the Czech Republic, Hungary, Poland, Thailand, and Sweden.
    Keywords: Inflation targeting , Central banks , Economic forecasting , Monetary policy , Transparency , Emerging markets , Chile , Czech Republic , Hungary , Poland , Thailand , Sweden ,
    Date: 2008–10–02
  11. By: Busetti, F.; Harvey, A.
    Abstract: A copula defines the probability that observations from two time series lie below given quantiles. It is proposed that stationarity tests constructed from indicator variables be used to test against the hypothesis that the copula is changing over time. Tests associated with different quantiles may point to changes in different parts of the copula, with the lower quantiles being of particular interest in financial applications concerned with risk. Tests located at the median provide an overall test of a changing relationship. The properties of various tests are compared and it is shown that they are still effective if pre-filtering is carried out to correct for changing volatility or, more generally, changing quantiles. Applying the tests to daily stock return indices in Korea and Thailand over the period 1995-9 indicates that the relationship between them is not constant over time.
    Keywords: Concordance; quantile; rank correlation; stationarity test; tail dependence.
    Date: 2008–08

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