nep-sea New Economics Papers
on South East Asia
Issue of 2009‒07‒28
fourteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Past and Future of Human Capital in Southeast Asia: From 1970 to 2030 By Anne Goujon; Samir K.C.
  2. The Asian Crisis Contagion: A Dynamic Correlation Approach Analysis By Essahbi Essaadi; Jamel Jouini; Wajih Khallouli
  3. Is a common currency area feasible for East Asia? A multivariate structural VAR approach By Hsiufen Hsu
  4. The Endogeneity of Transpacific Trade Imbalances By Freitag, Stephan
  5. Rebalancing Growth in Asia By Eswar S. Prasad
  6. Market-Based Approaches to Environmental Management: A Review of Lessons from Payment for Environmental Services in Asia By Bhim Adhikari
  7. Behind the Border Trade Facilitation in Asia-Pacific: Cost of Trade, Credit Information, Contract Enforcement and Regulatory Coherence By Yann Duval; Chorthip Utoktham
  8. Adolescent precursors of early union formation among Asian American and Whites By Yen-hsin Alice Cheng; Nancy S. Landale
  9. External Shocks, Household Consumption and Fertility in Indonesia By Kim Jungho; Alexia Prskawetz
  10. Does Fertility Decrease the Welfare of Households? An Analysis of Poverty Dynamics and Fertility in Indonesia. By Kim Jungho; Henriette Engelhardt; Alexia Prskawetz; Arnstein Aassve
  11. How Does Decentralised Minimum-Wage Setting Affect Unemployment and informality? The Case of Indonesia By Margherita Comola; Luiz de Mello
  12. Duty-free market access in the Republic of Korea: Potential for least developed countries and Bangladesh By Mostafa Abid Khan; Mohammad Farhad
  13. Entrepreneurial intentions: The influence of organizational and individual factors By Lee, Lena; Wong, Poh Kam; Foo, Maw Der; Leung, Aegean
  14. What Do We Expect from Our Friends? By Quoc-Anh Do; Stephen Leider; Markus M. Mobius; Tanya Rosenblat

  1. By: Anne Goujon; Samir K.C.
    Abstract: This paper examines levels of educational attainment in Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam for the period 1970-2030 through the reconstruction and projection of levels of educational attainment. While the study of the past shows that the determination to invest in education has been strong in the six countries, the investments were implemented at different pace and intensity, the projections show the legacy of past investments. In Singapore, Malaysia, and Thailand, there will be tangible increases in the proportion of the working age population with a tertiary education. The Philippines will have a dichotomous society where large proportions will either have a tertiary education or only a primary education. In Indonesia, the bulk of the working age population will shift from primary in 2000 to secondary by 2030. The projection horizon and the trend type of scenario do not allow Vietnam to catch up with the other countries.
    Keywords: Southeast Asia, education, human capital
    Date: 2009–05
  2. By: Essahbi Essaadi (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines); Jamel Jouini (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579, Université 7 Novembre de Carthage - université 7 Novembre de Carthage); Wajih Khallouli (Ecole Supérieure des Sciences Economiques et Commerciales de Tunis - Université de Tunis)
    Abstract: In this paper we are testing for contagion caused by the Thai baht collapse of July 1997. In line with earlier work, shift-contagion is defined as a structural change within the international propagation mechanisms of financial shocks. We adopt Bai and Perron's (1998) structural break approach in order to detect the endogenous break points of the pair-wise time-varying correlations between Thailand and seven Asian stock market returns. Our approach enables us to solve the misspecification problem of the crisis window. Our results illustrate the existence of shift-contagion in the Asian crisis caused by the crisis in Thailand.
    Keywords: Shift-contagion; time-varying correlation; sequential selection procedure
    Date: 2009
  3. By: Hsiufen Hsu (Osaka School of International Public Policy (OSIPP),Osaka University)
    Abstract: In this paper the feasibility of forming a common currency area in East Asia is investigated. A three-variable SVAR model is employed to identify three types of shocks, i.e. global, regional, and domestic shocks. The empirical results do not provide strong support for forming a common currency area in this region because the symmetric "prevalent shock" cannot be defined. However, it is found that since the late 1990s the importance of asymmetric domestic shocks has declined while that of symmetric global and regional shocks has increased. Furthermore, East Asia is as symmetric as the Euro Area in terms of the correlation of global and regional shocks. The findings suggest that most East Asian economies have become symmetric in terms of economic shocks, and imply that a common currency area may become viable through deepening regional integration.
    Keywords: Common currency area, Monetary integration, OCA, SVAR, East Asia
    JEL: F3 F4
    Date: 2009–07
  4. By: Freitag, Stephan
    Abstract: The growing trade imbalances between the United States and East Asia have triggered controversial debates on the global imbalances since the new millenium. Previous contributions have explained the trade imbalances as uni-directional causalities running either from East Asia to the United States or vice versa. This paper proposes reverse causality and mutual interest rather than uni-directional exogeneity as explanations for the transpacific trade imbalances. Applying panel GMM estimators this study finds econometric evidence for an endogeneity of the transpacific trade imbalances. The specific roles of ten East Asian countries within the transpacific imbalance dynamics are identified by asymmetric interaction terms. The estimations reveal a significant impact of U.S. macro policies and East Asian interventions in the foreign exchange markets on the transpacific trade imbalances.
    Keywords: Transpacific Trade Imbalances; Macro Policies; Dynamic Panel Estimations
    JEL: F32 E63 C33
    Date: 2009
  5. By: Eswar S. Prasad
    Abstract: Rebalancing growth patterns of Asian economies is an important component of the overall rebalancing effort that will be required in the world economy. In this paper, I provide an empirical characterization of the composition of GDP levels and growth rates for the key emerging markets and other developing economies in Asia. China has by far the lowest share of private consumption to GDP in Asia and, during this decade, has recorded the lowest rate of employment growth relative to GDP growth. Investment growth has dominated GDP growth in China during this decade but is also important in the cases of India and Vietnam. <br> <br>To examine the global implications of domestic growth patterns in Asia, I analyze saving-investment balances, the composition of national savings, and the determinants of the evolution of household saving rates. During 2000-08, household saving rates (relative to household income) have risen gradually in China and India but fallen sharply in Korea. Corporate savings have surged across Asia during this period, becoming the main component of gross national savings in the region. In terms of sheer magnitudes, China’s national savings and current account surpluses dominate the region’s saving-investment balances. China accounts for just under half of GDP in Asia ex-Japan, but accounts for 60 percent of total gross national savings and nearly 90 percent of the current account surplus of the region. Finally, I discuss some policy implications that come out of the analysis on how to shift the patterns of growth, especially in China, from a welfare-enhancing perspective.
    JEL: E2 F3 F4
    Date: 2009–07
  6. By: Bhim Adhikari
    Abstract: In this paper, we review several case studies from Asia on payment for environmental services to understand how landowners decide to participate in payment for environmental services (PES) schemes. The analysis demonstrates the significance of four major elements facilitating the adoption and implementation of PES schemes: property rights and tenure security, transaction costs, household and community characteristics, communications, and the availability of PES-related information. PES schemes should target win-win options through intervention in these areas, aimed at maintaining the provision of ecological services and improving the conditions for local inhabitants. [WP No. 134].
    Keywords: resource management, forestry sector, Indonesia, Asia, payment for environmental services, PES, property rights, security, transaction costs, household, community, communications, ecological srvices, local inhabitants, Philippines, Information, socio-ecological, Viet Nam
    Date: 2009
  7. By: Yann Duval; Chorthip Utoktham (United Nations Economic and Social Commission for Asia and the Pacific ( UNESCAP), Thailand)
    Abstract: This paper evaluates the potential contribution of both trade and business facilitation measures to trade and export competitiveness, as well as the potential gains from adopting a more integrated and coherent approach to trade and business (investment) facilitation.
    Keywords: Behind the Border, Trade Facilitation, Cost of Trade, Credit Information, Contract Enforcement, Regulatory Coherence, Asia-Pacific
    JEL: F1
    Date: 2009–05
  8. By: Yen-hsin Alice Cheng (Max Planck Institute for Demographic Research, Rostock, Germany); Nancy S. Landale
    Abstract: This study investigates the relatively low rates of early marriage and cohabitation among Asian Americans compared to Whites. With an emphasis on family value socialization and other precursors measured in adolescence, data from Waves 1 and 3 of Add Health are used to test five hypotheses. Analyses of early marriage indicate that the Asian-White difference is driven primarily by differences in adolescent sexual and romantic relationship experiences, and several measures of family values play a stronger role among Asian Americans than Whites. Asian-White differences in cohabitation persist net of SES and other adolescent precursors, but differences are attenuated when parental value socialization, intimate relationship experiences, and educational investments are controlled. These results are interpreted within a culturally sensitive conceptual framework that emphasizes independent versus interdependent construals of the self.
    Keywords: America
    JEL: J1 Z0
    Date: 2009–07
  9. By: Kim Jungho; Alexia Prskawetz
    Abstract: This paper examines the impact of idiosyncratic income shocks on household consumption, educational expenditure and fertility in Indonesia, and assesses whether the investment in human capital of children and fertility are used to smooth household consumption. Using six different kinds of self-reported economic hardships, our findings indicate that coping mechanisms are rather efficient for Indonesian households that perceive an economic hardship. Only in case of unemployment we find a significant decrease in consumption spending and educational expenditure while fertility increases. Theses results indicate that households that perceive an unemployment shock use children as a means for smoothing consumption. Regarding the death of a household member or natural disaster we find that consumption even increases. These results are consistent with the argument that coping mechanisms even over-compensate the actual consumption loss due to an economic hardship. One important lesson from our findings is that different types of income shock may lead to different economic and demographic behavioral adjustments and therefore require specific targeted social insurance programs.
    Keywords: Consumption, Insurance, Fertility and Indonesia
    Date: 2009–05
  10. By: Kim Jungho; Henriette Engelhardt; Alexia Prskawetz; Arnstein Aassve
    Abstract: It is generally accepted that lower population growth is associated with positive economic development. Although there is a large body of literature supporting this hypothesis at the macro level, few studies have analyzed the causal e®ect of fertility on household welfare at the micro level. In this paper we present an empirical analysis of the relationship between household welfare and fertility for Indonesia - a country which has experienced unprecedented economic growth and sharp fertility declines over recent decades. The focus of our paper is twofold: First, we introduce and apply propensity score matching methods to study the rela- tionship between fertility outcomes and economic variables at the household level. Secondly, we explicitly test for the sensitivity of our results with respect to alternative measures of welfare at the household level. When consumption expenditure per person is used as a measure of welfare, the analysis suggests that the correlation between fertility and household welfare is sensitive to the choice of the parameters governing economics of scale and equivalence scales at the household level. The lower these values are the less likely will an additional child depress household welfare. On the other hand, when the share of food in total expenditure is used as a measure of welfare, the result does not produce a decisive sign of the correlation between fertility and household welfare.
    Keywords: Poverty Dynamics, Fertility, Welfare, Household Size, Indonesia
    Date: 2009–05
  11. By: Margherita Comola; Luiz de Mello
    Abstract: The Indonesian labour market is characterised by widespread informality. To some extent, these outcomes can be attributed to a sharp increase in the real value of the minimum wage since 2001, when minimum-wage setting was decentralised to the provincial governments. To test this hypothesis, this paper uses survey data on the labour market (Sakernas), household income and expenditure (Susenas) and the industrial sector (Survei Industri) to construct a district-level dataset spanning the period 1996 to 2004. The effects of changes in the minimum wage on unemployment, formal-sector employment and the incidence of informality in urban areas are estimated separately by fixed effects and jointly by a seemingly unrelated regression (SUR) estimator. Our findings show that an increase in the minimum-to-mean wage ratio is associated with a net increase in employment: a rise in informal-sector employment more than compensates for job losses in the formal sector. This Working Paper relates to the 2008 OECD Economic Assessment of Indonesia (<P>Comment la décentralisation de la fixation du salaire minimum affecte le chômage et l’informalité ? L’expérience de l’Indonésie<BR>Le marché du travail indonésien est caractérisé par une importante informalité. Dans une certaine mesure, ces résultats peuvent être attribués à une forte augmentation de la valeur réelle du salaire minimum depuis 2001, quand la fixation du salaire minimum a été décentralisée vers les provinces. Pour tester cette hypothèse, ce document utilise les données des enquêtes sur le marché du travail (Sakernas), sur les revenus et les dépenses des ménages (Susenas) et sur le secteur industriel (Survei Industri) pour construire une base de données au niveau des administrations locales pour la période entre 1996 et 2004. Les effets de l’évolution du salaire minimum sur le chômage, sur l’emploi du secteur formel et sur l’informalité urbaine sont estimés séparément par un modèle à effets fixes et conjointement par SUR. Nos résultats suggèrent qu’une augmentation du ratio salaire minimum/salaire moyen entre 1996 et 2004 est accompagnée d’une nette augmentation de l’emploi : une augmentation de l’emploi du secteur informel a plus que compensé les pertes d’emploi du secteur formel. Ce Document de travail se rapporte à l’Évaluation économique de l’OCDE de l’Indonésie, 2008 (
    Keywords: unemployment, chômage, employment, emploi, Indonesia, salaire minimum, minimum wage, informality, informalité, Indonésie
    JEL: J23 J31 J64
    Date: 2009–07–08
  12. By: Mostafa Abid Khan; Mohammad Farhad (The Catholic University of Korea,)
    Abstract: The paper attempts to assess the benefits of Duty-Free and Quota-Free Market (DFQF) access initiatives of the Republic of Korea for least developed countries (LDCs), which have been in place since 1 January 2008. Following a brief introduction on the background of this initiative, this paper examines the exports profile of LDCs, reviews the DFQF scheme of the Republic of Korea, and assesses the potential benefits of the DFQF scheme for LDCs as well as Bangladesh. The export profile of LDCs shows that the share of those countries in world exports in recent years has increased; this can be attributed to price increases for petroleum constituting a major share of LDC total exports. The Republic of Korea is the tenth largest destination of LDC exports, which indicates that the DFQF initiatives of the Republic of Korea for LDCs will have a positive impact on LDC exports. The DFQF scheme of the Republic of Korea covers 6,967 tariff lines, representing about 59 per cent of the all tariff lines of its Customs Schedule. There are at least 25 chapters where product coverage within the chapter is very low, notably below 10 per cent. These include garments, made-up textiles, and major agricultural products including fisheries. Among the DFQF lines, 1,464 lines are duty-free on a most-favoured nation (MFN) basis. Hence, LDCs enjoy tariff preferences on 5,503 tariff lines, while the average margin of preference on these lines is 7.89 per cent. The margin of preferences in most cases is either 6 per cent or 8 per cent. In order to enjoy the preference granted under the scheme, the products should be wholly obtained, or should have at least 50 per cent value addition. Analysis also reveals that the DFQF scheme covers 36.1 per cent of LDCs’ export to the Republic of Korea in 2007, keeping 64.9 per cent of current LDC exports to that country outside the purview of preferential treatment. Only three major export items from LDCs – copper cathodes, raw tobacco and plywood – enjoy -free access. Bangladesh, Congo, the Lao People’s Democratic Republic, Malawi, Myanmar, Tanzania, Uganda and Zambia are likely to benefit from duty-free access for these items. The Republic of Korea is the seventh-largest destination for Bangladesh exports. Bangladesh enjoys preferential access to the Republic of Korea under the Asia-Pacific Trade Agreement (APTA). DFQF access for LDCs adds 5,471 tariff lines for Bangladesh under preferential access. However, analysis shows that the additional lines cover only 4.63 per cent of Bangladesh’s exports to the Republic of Korea in 2007. However, there are important apparel articles in the scheme that may yield benefits for Bangladesh. APTA continues to remain attractive to Bangladesh because of higher trade coverage and more relaxed rules of origin. Nevertheless, the DFQF scheme currently offered by the Republic of Korea is a milestone for the developing countries’ initiative for LDCs, and one that is likely to lead to other countries coming up with similar initiatives. In time, the Republic of Korea is likely to incrementally increase the product coverage, which will lead to higher trade coverage and more favourable rules of origin, and will yield significant benefits for LDCs.
    Keywords: least developed countries, Bangladesh, Korea, market access,
    JEL: F1
    Date: 2009–03
  13. By: Lee, Lena; Wong, Poh Kam; Foo, Maw Der; Leung, Aegean
    Abstract: An individual's intent to pursue an entrepreneurial career can result from the work environment and from personal factors. Drawing on the entrepreneurial intentions and the person–environment (P–E) fit literatures, and applying a multilevel perspective, we examine why individuals intend to leave their jobs to start business ventures. Findings, using a sample of 4192 IT professionals in Singapore, suggest that work environments with an unfavorable innovation climate and/or lack of technical excellence incentives influence entrepreneurial intentions, through low job satisfaction. Moderating effects suggest that an individual's innovation orientation strengthens the work-environment to job-satisfaction relationship; selfefficacy strengthens the job-satisfaction to entrepreneurial intentions relationship.
    Keywords: Entrepreneurial intentions Job satisfaction Self-efficacy
    JEL: L26 M13
    Date: 2009
  14. By: Quoc-Anh Do (School of Economics, Singapore Management University); Stephen Leider (Harvard University); Markus M. Mobius (Harvard University); Tanya Rosenblat (Iowa State University)
    Abstract: We conduct a field experiment in a large real-world social network to examine how subjects expect to be treated by their friends and by strangers who make allocation decisions in modified dictator games. While recipients’ beliefs accurately account for the extent to which friends will choose more generous allocations than strangers (i.e. directed altruism), recipients are not able to anticipate individual differences in the baseline altruism of allocators (measured by giving to an unnamed recipient, which is predictive of generosity towards named recipients). Recipients who are direct friends with the allocator, or even recipients with many common friends, are no more accurate in recognizing intrinsically altruistic allocators. Recipient beliefs are significantly less accurate than the predictions of an econometrician who knows the allocator’s demographic characteristics and social distance, suggesting recipients do not have information on unobservable characteristics of the allocator.
    Keywords: dictator games, beliefs, baseline altruism, directed altruism, social networks
    JEL: C73 C91 D64
    Date: 2009–06

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