nep-sea New Economics Papers
on South East Asia
Issue of 2008‒11‒18
twenty papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Long-run growth patterns within Asian NIEs: Empirical analysis based on the panel unit root test, allowing the heterogeneity of time trend and endogenous multiple structural breaks By Matsuki, Takashi; Usami, Ryoichi
  2. Indonesian Trainees in Japanese SMEs, Capital Accumulation and Micro-Small Business Development in Indonesia: A Preliminary Study By Wempi, Saputra; Budhi , Setiawan; Erkata , Yandri
  3. What Lessons have been learnt since the East Asian Crisis in 1997/98? CIBS, Capital Flows, and Exchange Rates By Pircher, Marion
  4. Supply Chains and Rural Development in the Asia Pacific Region By Armbruster, Walter J.; Coyle, William T.
  5. Endowments, location or luck ? evaluating the determinants of sub-national growth in decentralized Indonesia By McCulloch, Neil; Sjahrir, Bambang Suharnoko
  6. Vietnam Following in China?s Footsteps: The Third Wave of Emerging Asian Economies By Chaponniere, Jean-Raphael; Cling, Jean-Pierre; Zhou, Bin
  7. Decentralization Policy and Equality: A Theil Analysis of Indonesian Income Inequality By Djoni Hartono; Tony Irawan
  8. Market power and subsidies in the Indonesian palm oil industry By Chalil, Diana
  9. Reducing fuel subsidy or taxing carbon? Comparing the two instruments from the economy, environment, and equity perspective for Indonesia By Arief Anshory Yusuf; Arief Ramayandi
  10. Economic Impact Analysis of Marker-Assisted Breeding in Rice By Alpuerto, Vida; Norton, George W.; Alwang, Jeffrey
  11. Recession, Depression, and Financial Crisis: Everything Economists Want to Know But Are Afraid to Ask By Graeme Donald Snooks
  12. The World Distribution of Household Wealth By Davies, James B.; Sandstrom, Susanna; Shorrocks, Anthony; Wolff, Edward N.
  13. Avian influenza and the poultry trade By Nicita, Alessandro
  14. Tendency of corruption and its determinants among public servants: A case study on Malaysia By Duasa, Jarita
  15. Bioeconomic meta-modelling of Indonesian agroforests as carbon sinks By Wise, Russell; Cacho, Oscar
  16. The significance of Sampling Design on Inference: An Analysis of Binary Outcome Model of Children’s Schooling Using Indonesian Large Multi-stage Sampling Data By Ekki Syamsulhakim
  17. National Policies -Date Attract FDI in R&D: An Assessment of Brazil and Selected Countries By Zanatta, Mariana; Strachman, Eduardo; Carvalho, Flavia; Varrichio, Pollyana C.; Camillo, Edilaine; Barra, Mariana
  18. Measurement and Explanation of Inequality in Health and Health Care in Low-Income Settings By van Doorslaer, Eddy; O'Donnell, Owen
  19. Migration and Farm Efficiency: Evidence from Northern Thailand By Nonthakot, Phanin; Villano, Renato
  20. Lifetime Income and Housing Affordability in Singapore By Tilak Abeysinghe; Jiaying Gu

  1. By: Matsuki, Takashi; Usami, Ryoichi
    Abstract: This study examines whether or not the convergence of per capita output—which is categorized as catching-up and long-run convergence, defined by Oxley and Greasley (1995)—exists within Asian newly industrializing economies (Asian NIEs), namely, Hong Kong, Singapore, South Korea, and Taiwan. The newly developed panel unit root test, which can allow for multiple structural breaks at various unknown break dates for each time series, is applied to the panels for 1960–2004, which includes the period of the Asian financial crisis. Moreover, in order to confirm the coexistence of the different growth patterns within the Asian NIEs, the heterogeneity—in terms of the inclusion or exclusion of a linear time trend and the types of breaks (in level or slope)—is allowed for each series in the test. The empirical results show that Hong Kong and Singapore have long-run convergence, whereas Korea and Taiwan are yet to converge with Hong Kong.
    Keywords: convergence; Asian NIEs; unit roots; nonstationary panels; structural breaks
    JEL: O47 O53 C23 C01
    Date: 2008
  2. By: Wempi, Saputra; Budhi , Setiawan; Erkata , Yandri
    Abstract: Indonesia is one of the world important suppliers of young trainees in Japan. We present a preliminary study’s result on Indonesian trainees in Japanese SMEs and their potential to develop micro-small business in Indonesia. This paper utilizes three step approaches. First, an online survey of potency of Indonesian trainees in Japan has been conducting since October 2007 followed up by a Japan-wide Entrepreneurship and Banking Trainings (PWEP). Second, web-based business start-ups consultation forums for Indonesian trainees have been conducted since January 2008 followed up by networking creation with Bank of Indonesia. Third, a key performance indicator of business proposed and money invested was developed. We report three main findings: first, over 70% of Indonesian trainees were working at manufacturing-based Japanese SMEs and might acquire a necessary human capital in developing micro-small manufacturing-based business start-ups. In addition, more than 60% of them could save their income at least 25-40% of their total monthly income, suggested that capital foundation required for business creation might then be compromised. Second, the structural constraint of unmonitored Indonesian trainees might cause problems in which—after having cultural distress while working in Japan and less conducive condition in managing their capital after returning to Indonesia—the potential to become an law-breaking overstay workers is considerably high and might cause a more sophisticated problem in the future. Third, the importance of directing step for Indonesian trainees who are interested in creating businesses and key performance indicators for measuring its achievement are acknowledged.
    Keywords: Indonesian trainees; Japanese SMEs; PWEP; capital accumulation; key performance indicator; compliance meter
    JEL: J61 J24 L26
    Date: 2008–11–10
  3. By: Pircher, Marion
    Abstract: This paper discusses the movement of capital flows -Date and Date the exchange rate regimes and monetary policies of China, India, Brazil, and South Africa (CIBS). Furthermore, we compare the level of financial stability, and the composition and duration of capital flows of the countries on a policy level according -Date the ? ?third generation? crisis models?; following which the East Asian Crisis of 1997/98 linkages between the corporate and financial sec-Daters, and foreign short-term debt are given further attention. The paper concludes by comparing all four countries and analysing possible risks in CIBS financial systems.
    Keywords: international financial markets, financial stability, capital flows, exchange rates, China, India, Brazil, South Africa
    Date: 2008
  4. By: Armbruster, Walter J.; Coyle, William T.
    Abstract: Rapid income growth and urbanization are having profound impacts on the food system, food producers and rural areas in the developing Asia Pacific economies. Meeting the challenge of rural development will depend on better integrating rural areas with fast-growing urban areas where the composition of food demand is changing and the logistics of supply are growing more complex. Possible government options include investment in transportation infrastructure€Բoads, railroads and waterway€ԡnd providing rural communities and small-scale producers the tools they need to better adapt to the rapid spread of modern supermarkets and their supply chains.
    Keywords: Community/Rural/Urban Development,
    Date: 2008
  5. By: McCulloch, Neil; Sjahrir, Bambang Suharnoko
    Abstract: Indonesia's"big bang"decentralization in 2001 shifted much of the responsibility for local economic development from central government to district and city governments, which today number more than 450. But the performance of these districts has varied widely. This paper attempts to understand the determinants of sub-national (district/city) growth in Indonesia and map how these determinants have changed since before the 1997/98 economic crisis. The authors exploit a rich dataset that includes a wide range of district-level characteristics, including education, population, cultural, economic, and infrastructure variables, as well as a set of variables relating to distance, to try to explain growth. The analysis finds that, after accounting for differences in other variables, poorer districts tend to grow faster than better off districts. Similarly, there is evidence of spatial divergence, in the sense that districts tend to grow faster if their neighbors are growing quickly. However, the quality of the existing district-level data makes it difficult to identify whether endowments or factors related to distance are systematically associated with growth.
    Keywords: Achieving Shared Growth,Economic Growth,Economic Theory&Research,Inequality,Nutrition
    Date: 2008–11–01
  6. By: Chaponniere, Jean-Raphael; Cling, Jean-Pierre; Zhou, Bin
    Abstract: Vietnam has been following China?s path closely and very successfully for the last two decades, since the adoption of ?Doi moi? in 1986. Over those last two decades, economic growth rates in both countries have been the highest worldwide (with GDP growing by 8 per cent and 10 per cent per year, respectively). The increase of the Vietnamese share of world trade is the highest of all major Asian exporters (including China) since the mid-1990s. In the current international context, doubts have been raised by some economists concerning the possibility for new Asian countries -Date take-off and join the group of emerging countries. Several obstacles might block this emergence, such as the rise of China and the stringent rules of the World Trade Organization (WTO). This paper addresses this question with regard -Date Vietnam, who joined the WTO at the beginning of 2007: we study Vietnam?s potential for sustainable growth and international integration. We start by briefly describing economic reform and trade policies in Vietnam, and their results in terms of economic growth and world integration. We then analyse Vietnamese trade specialization and the bilateral relationship with China. Finally, we assess the competition between Vietnam and China on world markets, and show that the export structures are very different. Both countries have benefited Date a boom in their textile and clothing exports following the cessation of quotas (in the case of China) and the signing of USBTA (in the case of Vietnam). For Vietnam, reducing the specialization in textiles and clothing, and joining the Asian production network in electronics, represents a major challenge.
    Keywords: export-led growth, WTO, Vietnam, China
    Date: 2008
  7. By: Djoni Hartono (Department of Economics, University of Indonesia); Tony Irawan (Department of Economics,Faculty of Economics and Management; Bogor Agricultural University)
    Abstract: The decentralization policy has been implemented for almost 8 years in Indonesia. One of the main purposes of decentralization policy was to increase economic growth followed by equality. In this paper, we construct gini coefficient and Theil indices of sector income distribution to evaluate the trend of Indonesian income inequality during the implementation of the policy. We will analyze the equality between sector and within sector (e.q. agriculture, industry and services) both in the country and province level data. The output of this study is expected could answer the question whether there is a growth with equality during the implementation of decentralization both between and within sector.
    Keywords: Decentralization, Inequality, Theil indices
    JEL: E62 I32
    Date: 2008–10
  8. By: Chalil, Diana
    Abstract: Cooking oil is known as an essential commodity in Indonesia. Having such an important role, the Indonesian government often interfered the cooking oil market to assure its price remain low. To do so, the government uses a subsidy policy as one of its instruments. A dynamic duopoly model is applied to evaluate the impact of subsidies given the structure of the industry. Estimation results suggest an evidence of both an increase in the consumer surplus but a decrease in aggregate welfare due to market power. A possible reason is proposed, but, in order to obtain a clear explanation, further research is required.
    Keywords: market power, subsidy, Indonesian palm oil industry, Agricultural Finance, Crop Production/Industries, Demand and Price Analysis,
    Date: 2008
  9. By: Arief Anshory Yusuf (Department of Economics, Padjadjaran University); Arief Ramayandi (Center for Economics and Development Studies Dept. of Economics, Padjadjaran University)
    Abstract: Reducing fuel subsidy and taxing carbon have a tendency toward reducing energy consumption and carbon emissions. However, both instruments may have differing impacts in their magnitudes of the emissions reduction and on the economy as a whole. Using INDONESIA-E3 (Economy-Equity-Environment) model, a computable general equilibrium (CGE) model which includes carbon emissions, carbon taxation, as well as, strong feature in distributional analysis, this paper compares and contrast the two instruments to find which policy is better in improving the three pillars of sustainable development: economy, equity, and the environment. The result suggests that given the same amount of government budget saving, carbon tax is relatively superior to using a fuel subsidy reduction instrument, because it can accelerate the decline in CO2 emissions with a lower cost on the economy in terms of GDP reduction with more favorable distributional effect. This has not taken into account the economic incentives it creates for the economy to be less reliant on carbon-intensive energy.
    Keywords: Carbon Tax, Fuel Subsidyc Climate Change, CGE, Indonesia
    JEL: D30 D58 Q40 Q48 Q54 Q56 Q58
    Date: 2008–10
  10. By: Alpuerto, Vida; Norton, George W.; Alwang, Jeffrey
    Abstract: The benefits of developing and releasing salinity-tolerant and phosphorous-deficiency-tolerant rice in Bangladesh, India, Indonesia and the Philippines were estimated for marker-assisted breeding as compared to conventional breeding using economic surplus analysis. Marker-assisted breeding is estimated to save at least 2 to 3 years in the breeding cycle and result in incremental benefits over 25 years in the range of $300 to $800 million depending on the country, stress, and time lags. Salinity and phosphorous deficient soils are difficult problems to solve through conventional breeding because of €ܧenetic load€ݠor undesirable traits that accompany desirable ones during backcrossing. MAB, enabled by advances in genomics and molecular mapping is more precise and hence time-saving. Solving salinity and P-deficiency problems is important, regardless of whether MAB or CB is used, as the cumulative benefits are at least $220 million and as much as $4 billion over the next 25 years depending on the problem and country.
    Keywords: Crop Production/Industries,
    Date: 2008
  11. By: Graeme Donald Snooks
    Abstract: Once again the economic experts are telling us that the current (October 2008) financial “crisis” will lead to a deep recession or depression. The financial press is even claiming that we are headed for “global meltdown”. Heard it all before? The last time was in 1998 when we were told that the financial difficulties in the East would generate the “East Asian meltdown”, which would last for at least a decade and would generate a “global economic crisis”. The economic summit called by President Bush for later in 2008 is reminiscent of the G7 and G22 meetings called to discuss similar issues in 1998. And yet nothing happened. Of course the financial gurus, such as Alan Greenspan were quick to claim the credit, but the truth is that financial crises are supply-side happenings that generate a lot of excitement among the stock market speculators but have little real-world fallout as long as the dynamic strategies being pursued by the world’s leading societies are viable. The stock market crash of 1987 is another case in point: nothing serious happened in the real economy. Depressions only occur when dominant dynamic strategies are finally exhausted and new ones are slow to emerge: as happened in the USA during the 1920s and 1930s. The conventional wisdom among the orthodox economic fraternity, that the Great Depression was the outcome of the 1929 Wall Street crash, is totally incorrect. Economists and their political masters will only understand the relationship between recession, depression, and financial crisis, when they have developed a realist general dynamic theory of human society. Until then, economic policy will be confused, ineffective, and distorting. A general dynamic theory is presented in this paper and used to analyse financial crises and economic downturns. To the degree that the real global economy is in trouble, it is due not to financial mismanagement, but to the misconceived policy of inflation targeting pursued for the past decade or so. Once again, our compulsion to intervene exceeds our capacity to understand the implications of our actions.
    Keywords: financial crisis, depression, dynamic-strategy theory, inflation targeting, economic policy, global meltdown.
    JEL: O40 O50 O43 E31 E32 E42 E50 E60
    Date: 2008–10
  12. By: Davies, James B.; Sandstrom, Susanna; Shorrocks, Anthony; Wolff, Edward N.
    Abstract: There has been much recent research on the world distribution of income, but also growing recognition of the importance of other contributions -Date well-being, including those of household wealth. Wealth is important in providing security and opportunity, particularly in poorer countries that lack full social safety nets and adequate facilities for borrowing and lending. We find, however, that it is precisely in the latter countries where household wealth is the lowest, both in absolute and relative terms. Globally, wealth is more concentrated than income both on an individual and national basis. Roughly 30 per cent of world wealth is found in each of North America, Europe, and the rich Asian-Pacific countries. These areas account for virtually all of the world?s -Datep 1 per cent of wealth holders. On an official exchange rate basis India accounts for about a quarter of the adults in the bot-Datem three global wealth deciles while China provides about a third of those in the fourth -Date eighth deciles. If current growth trends continue, India, China and the transition countries will move up in the global distribution, and the lower deciles will be increasingly dominated by countries in Africa, Latin American and poor parts of the Asian-Pacific region. Thus wealth may continue -Date be lowest in areas where it is needed the most.
    Keywords: wealth, net worth, personal assets, wealth inequality, households, balance sheets, portfolios
    Date: 2008
  13. By: Nicita, Alessandro
    Abstract: Because of high mortality rates, high rates of contagion, and the possibility of cross-species infection to mammals including humans, high pathogenic avian influenza is a major concern both to consumers and producers of poultry. The implications of the avian influenza for international poultry markets are large and include the loss of consumer confidence, loss of competitiveness, loss of market shares, supply shortages, and disruptions of trade flows. This paper illustrates the effect that high pathogenic avian influenza has had on the trade flows of poultry products. The findings suggest that outbreaks of avian influenza have greatly restructured the international flow of poultry products. Consequent to high pathogenic avian influenze, Brazil has emerged as the world's largest supplier of frozen raw chicken products, while poultry industries in Southeast Asia have largely refocused their export markets by converting production from unprepared to prepared poultry meat.
    Keywords: Avian Flu,Livestock&Animal Husbandry,Markets and Market Access,Trade Law,Economic Theory&Research
    Date: 2008–03–01
  14. By: Duasa, Jarita
    Abstract: This study attempts to analyze determinants of corruption tendency on a single country, namely Malaysia, using cross-sectional data. Using survey questions on sample of respondents in two states of Malaysia, Kuala Lumpur and Selangor, data are collected and logit model is developed for estimation. The results from the regression on sample indicate that age negatively contributes to corruption tendency among government servants. The results also show that there are two departments, namely Police and Immigration departments, which have high probability of corruption and large spending, in particular, payments of personal debt, is positively contribute to high tendency of corruption among government servants.
    Keywords: Tendency of corruption; public servants; Logit model
    JEL: C42 C31 H00
    Date: 2008
  15. By: Wise, Russell; Cacho, Oscar
    Abstract: In many areas of developing countries, economic and institutional factors often combine to give farmers incentives to clear forests and repeatedly plant food crops without sufficiently replenishing the soils. These activities lead to large-scale land degradation and contribute to global warming through the release of greenhouse gases into the atmosphere. We investigate whether agroforestry systems might alleviate these trends when carbon-credit payments are available under the Clean Development Mechanism of the Kyoto Protocol. A meta-modelling framework is adopted, comprising an econometric-production model of a smallholding in Sumatra. The model is used within a dynamic-programming algorithm to determine optimal combinations of tree/crop area, tree-rotation length, and firewood harvest. Results show the influence of soil-carbon stocks and discount rates on optimal strategies and reveal interesting implications for joint management of agriculture and carbon.
    Keywords: bio-economic meta-modelling, Indonesia, agroforestry, carbon credits, dynamic programming, Environmental Economics and Policy, Resource /Energy Economics and Policy,
    Date: 2008
  16. By: Ekki Syamsulhakim (Department of Economics, Padjadjaran University)
    Abstract: This paper aims to exercise a rather recent trend in applied microeconometrics, namely the effect of sampling design on statistical inference, especially on binary outcome model. Many theoretical research in econometrics have shown the inappropriateness of applying i.i.dassumed statistical analysis on non-i.i.d data. These research have provided proofs showing that applying the iid-assumed analysis on a non-iid observations would result in an inflated standard errors which could make the estimated coefficients inefficient if not biased. Consequently, a policy-affecting quantitative research would give an incorrect - usually of type-1 errors - in its conclusion. Using a dataset sourced from the third cycle of the Indonesia Family Life Survey (IFLS), which sampling design involved multi-stage clustering and stratification, this paper shows discrepancies in the estimation result of probit regressions of a child attending school when the estimated standard errors are adjusted and not. The computation also shows a considerable change in the level of confidence in not-rejecting the null hypothesis of the explanatory variables. This paper provides more evidence that statistical analysis should always take into account the sampling design in collecting the data.
    Keywords: Applied microeconometrics, survey data, IFLS, design effects, economics of education, demand for schooling
    JEL: C12 C42 C81 I21
    Date: 2008–10
  17. By: Zanatta, Mariana; Strachman, Eduardo; Carvalho, Flavia; Varrichio, Pollyana C.; Camillo, Edilaine; Barra, Mariana
    Abstract: This paper is part of a project based on a broad data collection of policies in selected countries, with a special focus on the attraction of foreign R&D investments. The purpose of the research is -Date contribute -Date effective policy-making, capable of fostering multinational corporations? (MNCs) investments in Brazil. In this context, the paper aims at identifying and examining the main policies -Date attract MNC technological activities in China, India, Ireland, Israel, Singapore, and Taiwan, in order -Date illustrate successful experiences and, based on them, -Date analyse the Brazilian case. The experiences and, based on them, -Date analyse the Brazilian case. The international experiences are analysed bearing in mind that foreign direct investment (FDI) attraction policies are part of industrial and development policies, and should not be assessed or used in isolation. ...
    Keywords: industrial policy, technology, foreign direct investment, MNC R&D activites
    Date: 2008
  18. By: van Doorslaer, Eddy; O'Donnell, Owen
    Abstract: This paper describes approaches -Date the measurement and explanation of income-related inequality and inequity in health care financing, health care utilization and health and considers the applicability and the feasibility of these methods in low-income countries. Results Date a comparative study of 14 Asian countries are used -Date illustrate the main issues. The structure of health finance in low-income countries, in particular the heavy reliance on out-of-pocket payments, means that the equity issues in finance are quite different Date those of concern in high-income countries. Primary concern is not with the distribution of contributions -Date pre-payment mechanisms but with the deterrent effect of payments on utilization and the distribution of uninsured payment risks. Measurement of inequity in utilization of health care in low-income countries is constrained by the lack of reliable measures of health that can be used -Date standardize for need. Nonetheless, sufficient is known of the distribution of need in many circumstances in order -Date make inferences about equity Date inequality in health care use. The empirical analyses demonstrate that, in low-income countries, the better-off tend -Date pay more for health care, both absolutely and in relative terms. But they also consume more health care. Health care is financed is largely according -Date the benefit principle. Assessing the distributional performance of health systems in low-income settings therefore requires examination of finance and utilization simultaneously.
    Keywords: health inequality, equity
    Date: 2008
  19. By: Nonthakot, Phanin; Villano, Renato
    Abstract: This paper investigates the relationship between labour migration and agricultural productivity in the Northern Province of Thailand. Drawing on maize production data from a household survey, we estimate a stochastic production function to evaluate the effects of migration, remittances and salient characteristics of migrants on the mean maize output and levels of technical efficiency. Evidence shows that remittances and number of migrant workers facilitate maize production. It was also found that remittances, duration of migration, gender and education of migrants enhance the productive capacity of maize farmers.
    Keywords: Migration, stochastic frontier, technical efficiency, maize, Thailand, Crop Production/Industries, Labor and Human Capital,
    Date: 2008
  20. By: Tilak Abeysinghe (Department of Economics, National University of Singapore); Jiaying Gu (Department of Economics, National University of Singapore)
    Abstract: The existing measures of housing affordability are essentially short-run indicators that compare current income with property prices. Taking into consideration that a housing purchase is a long-horizon decision and the property price reflects the discounted present value of future mortgage payments, we develop a housing affordability index as the ratio of lifetime income to housing price. Lifetime income is computed by obtaining the predicted income from a regression over the working life from age 20 to 64 for each birth cohort for which limited data were available. Lifetime income of Singapore households by three income quantiles (lower, median, and upper quartiles) shed new light on the increasing income inequality. The affordability index reveals informative trends and cycles in housing affordability both in the public and private sectors. We argue why residential property price escalations need to be avoided by showing that such price increases do not necessarily create a net wealth effect for the aggregate of households
    Keywords: lifetime income inequality, long-run housing affordability, wealth effect, price effect
    JEL: R21 D31 D91
    Date: 2008–07

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