nep-sea New Economics Papers
on South East Asia
Issue of 2009‒04‒18
thirteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Climate Change Vulnerability Mapping for Southeast Asia By Arief Anshory Yusuf; Herminia Francisco
  2. External Adjustments and Coordinated Exchange Rate Policy in Asia By Eiji Ogawa; Kentaro Iwatsubo
  3. Analysis on ƒÀ and ƒÐ Convergences of East Asian Currencies By Eiji Ogawa; Taiyo Yoshimi
  4. Re-examining Symmetry of Shocks for East Asia: Results Using a VAR with Sign Restrictions By Vu Tuan Khai
  5. The Pig Waste Question: An Assessment of Slurry Disposal Options in Thailand By Siriporn Kiratikarnkul
  6. How useful is Growth Literature for Policies in the Developing Countries? By Rao, B. Bhaskara; Cooray, Arusha
  7. The Distributional Impact of Environmental Policy: The Case of Carbon Tax and Energy Pricing Reform in Indonesia By Arief Anshory Yusuf
  8. The Impact of Coal Mining on the Economy and Environment of South Kalimantan Province, Indonesia By Luthfi Fatah
  9. Asia's Underachiever: Deep Constraints in Philippine Economic Growth By Briones, Roehlano M.
  10. Dynamics of structural transformation: An empirical characterization in the case of China, Malaysia, and Ghana By Badibanga, Thaddee; Diao, Xinshen; Roe, Terry; Somwaru, Agapi
  11. What’s Went Wrong With Mesdaq Market? By Wan Mahmood, Wan Mansor; Syed Tazhili, Sharifah Nurhidayu
  12. Global Yield Curves and Sovereign Bond Market Integration By ZHU Xiaoneng; Shahidur RAHMAN
  13. Liberalization with Endogenous Institutions: A Comparative Analysis of Agricultural Reform in Africa, Asia, and Europe By Johan F.M. Swinnen; Anneleen Vandeplas; Miet Maertens

  1. By: Arief Anshory Yusuf (Padjadjaran University/EEPSEA); Herminia Francisco (Economy and Environment Program for Southeast Asia (EEPSEA))
    Abstract: This paper provides information on the sub-national areas (regions/districts/provinces) most vulnerable to climate change impacts in Southeast Asia. This assessment was carried out by overlaying climate hazard maps, sensitivity maps, and adaptive capacity maps following the vulnerability assessment framework of the United Nations’ Inter-governmental Panel on Climate Change (IPCC). The study used data on the spatial distribution of various climate-related hazards in 530 sub-national areas of Indonesia, Thailand, Vietnam, Lao PDR, Cambodia, Malaysia, and the Philippines. Based on this mapping assessment, all the regions of the Philippines; the Mekong River Delta in Vietnam; almost all the regions of Cambodia; North and East Lao PDR; the Bangkok region of Thailand; and West Sumatra, South Sumatra, West Java, and East Java of Indonesia are among the most vulnerable regions in Southeast Asia.
    Keywords: Climate change, vulnerability, Southeast Asia, Mapping
    JEL: Q54 Q56
    Date: 2009–01
  2. By: Eiji Ogawa; Kentaro Iwatsubo
    Abstract: In this paper, we estimate structural VAR models with contemporaneous restrictions based on neo-classical and Keynesian theories to investigate whether the cause of current account surpluses for East Asian economies is a gsaving gluth or undervalued currencies. Analytical results show that the major determinant of the current account is the real effective exchange rate for all East Asian countries with the exception of China for which the major determinant is domestic GDP. Accordingly, the recently requested revaluation of the Chinese yuan may not be an effective policy for reducing the Chinese current account surplus, and may affect other Asian current accounts. We also investigate whether a Chinese currency revaluation would contribute to the improvement of current account imbalances in East Asia and find that a revaluation would improve the current accounts of Japan, Korea, Indonesia, and Thailand. Since the trade structures of major East Asian countries are substitutes with that of China, a Chinese currency revaluation might not lead to a decrease, rather that an increase, in East Asian current account surpluses. Coordination of currency policy among East Asian countries is, therefore, needed to solve the global current account imbalance.
    Date: 2009–03
  3. By: Eiji Ogawa; Taiyo Yoshimi
    Abstract: This paper investigates recent diverging trends among East Asian currencies as well as recent movements of the weighted average value of East Asian currencies (Asian Monetary Unit: AMU) and deviations (AMU Deviation Indicators) of the East Asian currencies from the average values by ƒÀ and ƒÐ convergence methods. Our empirical analysis shows that linkages with the US dollar have been weakening since 2001 or 2002 for some of the East Asian countries. On the other hand, the monetary authority of China continues stabilizing the exchange rate of the Chinese yuan against the US dollar even though it announced its adoption of a currency basket system. It is found that the weighted average of East Asian currencies has been appreciating against the US dollar while depreciating against the currency basket of the US dollar and the euro until the global financial crisis in 2008. Also, the analytical results on ƒÀ and ƒÐ Convergences show that deviations among the East Asian currencies have been widening@in recent years, reflecting the fact that these countriesf monetary authorities are adopting a variety of exchange rate systems. In other words, a coordination failure in adopting exchange rate systems among these monetary authorities increases volatility and misalignment of intra-regional exchange rates in East Asia.
    JEL: F31 F33
    Date: 2009–03
  4. By: Vu Tuan Khai
    Abstract: I revisit the hotly debated topic regarding the possibility of introducing a common currency for East Asia from the point of view of shock symmetry. I first point out a serious problem of the existing studies which use the VAR method with long-run restrictions developed by Blanchard and Quah (1989) in that the signs of the impulse response functions to the same structural shock are not necessarily consistent across the countries. This means that the high (low) correlations of structural shocks do not necessarily imply low (high) costs of a common currency area. To overcome this problem, I apply the VAR method with sign restrictions developed by Uhlig (2005). I used the AD-AS model to impose sign restrictions on the responses of GDP and CPI to demand and supply shocks. One main finding is that demand shocks are significantly positively correlated among almost all East Asian countries. But overall, East Asia as a whole is not suitable for a common currency because correlations of supply shocks are low.
    Keywords: Structural VAR, Long run restriction, Sign restriction, Symmetry of Shocks, Common Currency, East Asia
    JEL: E32 F33 F41
    Date: 2009–03
  5. By: Siriporn Kiratikarnkul (Faculty of Economics, Maejo University)
    Abstract: The disposal of pig farm waste is becoming a major environmental challenge across Southeast Asia. To help find the best solution to this problem, this study has looked at the situation in Thailand where the government is promoting the use of biogas conversion plants as a way forward. The study finds that, as it is currently implemented, biogas conversion actually provides fewer benefits than many of the other waste management solutions that are being used. However the report also finds that, if the necessary investment was made to allow farmers to use biogas to produce electricity and sell this to the national grid, then biogas conversion would become a good option.
    Keywords: Waste, Thailand
    JEL: Q53
    Date: 2008–12
  6. By: Rao, B. Bhaskara; Cooray, Arusha
    Abstract: This paper examines the growing gap between the theoretical and empirical growth literature and the policy needs of the developing economies. Growth literature has focussed mainly on the long term growth outcomes, but policy makers of the developing economies need rapid improvements in the short to medium term growth rates; see Pritchett (2006). This paper argues that this gap can be reduced by distinguishing between the short to medium term dynamic effects of policies from their long run equilibrium effects. With data on Singapore, Malaysia and Thailand we show that an extended version of the Solow (1956) model is well suited for this purpose. This is despite the common belief that the Solow model has no use for policy and is not applicable to the developing countries. We find that the short to medium term growth effects of the investment ratio are quite significant and they may persist for up to 10 years.
    Keywords: Solow Growth Model; Endogenous Growth; Dynamic Growth Effects of Investment Ratio; Policies for Developing Countries.
    JEL: O11
    Date: 2009–04–10
  7. By: Arief Anshory Yusuf (Department of Economics, Padjadjaran University)
    Abstract: This research is an attempt to further understand the social and environmental dimension of sustainable development focusing on the impact of environmental reforms, such as pollution reduction and energy pricing policy, has on inequality and poverty for the case of Indonesia. A multi-sector, multi-household, Computable General Equilibrium (CGE) model is used to provide the basis for two important empirical case studies: (i) the effects of a carbon tax, and (ii) energy pricing reforms. The main finding from the carbon tax study suggests that in contrast to most studies from developed countries, the introduction of a carbon tax in Indonesia would not necessarily be regressive. It is shown to be strongly progressive in rural areas, and either neutral or slightly progressive in urban areas, with overall progressive distributional effect nationwide. The industries that experience the largest contraction are generally more energy intensive. The owners of factors of production in these industries are largely concentrated among higher income households and people living in the cities. For the analysis of counter factual scenarios on energy price reforms, the results suggest recognizing the difference between urban and rural household's income and expenditure patterns are crucial in the attempt to minimize the adverse distributional impacts of the energy pricing reform. In general, this study shows there is not necessarily a conflict between environmental and equity objectives, especially when the policies or reforms to achieve environmental goals are carefully designed.
    Keywords: Carbon tax, Climate change, Indonesia
    JEL: Q58 Q54
    Date: 2008–10
  8. By: Luthfi Fatah (Faculty of Agriculture, Lambung Mangkurat University)
    Abstract: This study investigates the impact of coal mining on the economy and environment of South Kalimantan Province, one of the most important coal producing regions in Indonesia. It uses a Social Accounting matrix to assess how the industry affects the province's economy and the livelihoods of its people. It also investigates what policy options will best reduce its negative environmental impacts at least cost to the province's economy. The study, by Luthfi Fatah of Lambung Mangkurat University, finds that mining is one of the most significant parts of the province's economy and that it is steadily growing in importance. However, it also shows that the industry disproportionately benefits the better-off sectors of society and is having an unacceptable impact on the environment. Fatah recommends that policy makers slow the growth in coal mining through regulation of small-scale mining. This should help the environment. He also suggests that the government boost investment in agricultural -based activities to improve the employment prospects of the poorer sectors of society.
    Keywords: Coal, Kalimantan
    JEL: Q32
    Date: 2008–06
  9. By: Briones, Roehlano M.
    Abstract: Numerous studies have tried to explain the poor growth performance of the Philippines. This paper critically reviews related literature on constraints to long-run growth, as it applies to the Philippines. We evaluate several factors, namely: culture, corruption, and institutions. The last offers the most convincing explanation for mediocre growth. Hence, to raise the country’s growth trajectory, I recommend: sustained policy reform; less hand-wringing over Filipino culture and corruption; and above all, focused and sustained development of functional capitalistic institutions.
    Keywords: Philippines, development, institutions, growth constraints
    Date: 2009
  10. By: Badibanga, Thaddee; Diao, Xinshen; Roe, Terry; Somwaru, Agapi
    Abstract: "The paper develops a metric of structural transformation that can account for the production of new varieties of goods embodying advancements in technological know-how and design. Our measure captures the dynamics of an economy's transformation and can be viewed as an extension of Hausmann and Klinger's static measure. We apply our measure to four-digit-level SITC trade data of China, Malaysia, and Ghana over the period 1962–2000. The results show that two important factors characterize the rapid transformation of the Chinese economy: the high proximity of its export basket to three main industrial clusters—capital goods, consumer durable goods, and intermediate inputs—and the increase in the values of the new goods belonging to those three clusters. Malaysia exhibits a similar but more modest pattern. In contrast, the structure of the Ghanaian economy appears unchanged over the entire 1962–2000 period. That economy is dominated by primary goods clusters, and the values of the goods in those clusters have remained relatively low. We also discuss qualitatively the role of policies and institutions in spurring transformation in the three countries." from authors' abstract
    Keywords: Structural transformation, Discovery, technological change, Development strategies,
    Date: 2009
  11. By: Wan Mahmood, Wan Mansor; Syed Tazhili, Sharifah Nurhidayu
    Abstract: What’s wrong with companies listed in the MESDAQ market as more and more is leaving for more established counter of the main board of Bursa Malaysia. There is the general perception that companies listed in the MESDAQ Market lack in quality – low prices. This study looks at the problem of MESDAQ by analyzing various criteria such as stock returns and the number of press release by the SC in relation with the civil suit cases due to financial fraud of the companies listed under the MESDAQ Market. The results show that the return for MESDAQ Market index is lower than that of the Main Board index. The results also show more companies in the MESDAQ Market fail do not follow the rules and procedures of the Security Commission.
    Keywords: MESDAQ market; technology based firms; high growth companies
    JEL: G18
    Date: 2008–03–20
  12. By: ZHU Xiaoneng (Division of Economics,School of Humanities and Social Sciences, Nanyang Technological University, Singapore); Shahidur RAHMAN (Nanyang Technological University, Singapore)
    Abstract: We extract global yield curve factors based on the affine arbitrage-free dynamic Nelson-Siegel model. The measure of integration proposed in the paper allows time-varying partial segmentation of national and global government bond markets. It takes into account the maturity structure of yields, therefore it is consistent in time series and cross-section as well. Though global factors and country-specific factors are highly correlated, the international bond market is less integrated than one might expected based on correlation analysis or prior knowledge of investment restrictions. The difference stems from 1) the integration asymmetry of factors:level factor is more integrated than slope and curvature factors; 2) heterogeneous factors dynamics: one factors integration may accompany the segmentation of other factors. Yet the expected integration is stable over the last two decades.
    Date: 2009–02
  13. By: Johan F.M. Swinnen; Anneleen Vandeplas; Miet Maertens
    Abstract: Thirty years ago, a vast share of the poor and middle income countries were heavily state-controlled. The effects of the liberalizations in the 1980s and 1990s differed strongly between regions in Africa, Asia and Europe. This paper first documents these differences in reform effects in a comparative framework and then develops a model to formally analyze how liberalization affects production and income distribution when institutions that govern production and exchange are also affected. We derive hypotheses on how the endogenous institutional adjustments affect the supply response to the liberalizations. We use these insights to forward a series of explanations on the differences in performance across countries following liberalization.
    Keywords: Agricultural supply chains, growth, development, regional comparisons
    JEL: O12 O18 O43 O57 Q12 Q13
    Date: 2009

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