nep-sea New Economics Papers
on South East Asia
Issue of 2009‒09‒19
twelve papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Trade Performance of Fruit and Vegetable Industry in Selected ASEAN Countries By F.A., Emmy; Ismail, Mohd Mansor
  2. Financial Integration between Indonesia and Its Major Trading Partners By Abdul Karim, Bakri; Abdul Majid, M. Shabri; Abdul Karim, Samsul Ariffin
  3. Effectiveness and Commitment to Inflation Targeting Policy: Evidences from Indonesia and Thailand By Siregar, Reza.Y.; Goo, Siwei
  4. Co-integration and Causality Analysis on Developed Asian Markets For Risk Management & Portfolio Selection By Aldrin Herwany; Erie Febrian
  5. Poverty as Child Labor Internal Migration’s Determinant By Eva Nurwita
  6. Volatility Forecasting Models and Market Co-Integration: A Study on South-East Asian Markets By Erie Febrian; Aldrin Herwany
  7. Firm Heterogeneity and Different Modes of Internationalization: Evidence from Japanese Firms By Ryuhei Wakasugi; Ayumu Tanaka
  8. The value of vocational education : high school type and labor market outcomes in Indonesia By Newhouse, David; Suryadarma, Daniel
  9. Measuring the quality of education and health services : the use of perception data from Indonesia By Dasgupta, Basab; Narayan, Ambar; Skoufias, Emmanuel
  10. "Modelling the Interactions Across International Stock, Bond and Foreign Exchange Markets" By Abdul Hakim; Michael McAleer
  12. Diversification in land and labor allocation in response to shocks among small-scale farmers in central Vietnam By Duc, Tung Phung; Waibel, Hermann

  1. By: F.A., Emmy; Ismail, Mohd Mansor
    Abstract: This paper examines the trade performance for thirteen commodities in the fruit and vegetable industry in relation to that of selected ASEAN countries (Philippines, Indonesia, Singapore and Thailand), based on Revealed Comparative Advantage (RCA) indicator. The analysis shows that Singapore has comparative advantage in 5 commodities (ground-nuts, hazelnuts, plums, apricots and walnuts), Philippines has comparative advantage in 3 commodities (tomatoes nes prepared or preserved, tomatoes whole or in peaces and cherries), Thailand and Malaysia has comparative advantage in 2 commodities (citrus fruits, fruit and vegetable juice, and tomatoes and apple juice, respectively) while Indonesia has comparative advantage in 1 commodity (cashew nuts). Malaysia has comparative advantage only in tomatoes and apple juice but comparative disadvantage in other commodities such as cashew nuts, walnuts and fruit and vegetable juice. The RCA index for apple juice in Malaysia is increasing over the years 2000 to 2006 indicating improvement in comparative advantage. However, the comparative advantage of tomatoes is constant.
    Keywords: Trade performance; fruit and vegetable sector; revealed comparative advantage and ASEAN.
    JEL: F14 O57 L66
    Date: 2009–06–22
  2. By: Abdul Karim, Bakri; Abdul Majid, M. Shabri; Abdul Karim, Samsul Ariffin
    Abstract: This study examines stock market integration among the emerging stock market of Indonesia and its major trading partners (Japan, the US, Singapore and China). We employ the newly proposed autoregressive distributed lag (ARDL) approach to cointegration and recent weekly stock market data spanning from July 1998 to December 2007. The results indicate the Indonesian stock market is cointegrated with the stock markets of the US, Japan, Singapore and China. Thus, this implies that the opportunities for international investors to gain benefits from international portfolio diversification in those markets are limited. In addition, any development in Japan, the US, Singapore and China markets should be considered by the Indonesian government in making policies regarding to the stock market of Indonesia.
    Keywords: Stock Market Integration; Portfolio Diversification; Trading Partners
    JEL: C32 F15
    Date: 2009–09–14
  3. By: Siregar, Reza.Y.; Goo, Siwei
    Abstract: The chief objective of our paper is to highlight basic features of the IT policies adopted by Indonesia and Thailand, and to evaluate the commitment of the monetary authorities and the overall performances of the IT regime. The results demonstrate that the IT regime in these two economies has had some success, but not during the immediate aftermath of the Lehman Brothers’ collapse in the last quarter of 2008. Furthermore, the implementations of the IT policy in these two Southeast Asian economies have largely been “flexible” during the stable period, seeking the balance between narrowing output gap, managing exchange rate volatility, and anchoring inflationary pressure. However during the turbulent period, there had been a heightened focus in anchoring inflationary expectation.
    Keywords: Inflationary Expectation; Output Gap; Inflation Targeting; Pass-through; Monetary Policy Rule.
    JEL: E58 E52 F31 F33
    Date: 2009–09–13
  4. By: Aldrin Herwany (Research Division, Laboratory of Management FE UNPAD); Erie Febrian (Finance & Risk Management Study Group (FRMSG) FE UNPAD)
    Abstract: Both practitioners and academicians demand a linkage model across financial markets, particularly among regional capital markets, for both risk management and portfolio selection purposes. Researchers frequently use co-integration and causality analysis in investigating the dependence or co-movement of three or more stock markets in different countries. However, they conducted the causality in mean tests but not the causality in variance tests. This study assesses the co-integration and causal relations among seven developed Asian markets, i.e Tokyo, Hongkong, Korea, Taiwan, Shanghai, Singapore, and Kuala Lumpur stock exchanges, using more frequent time series data. It employs the recently developed techniques for investigating unit roots, co-integration, time-varying volatility, and causality in variance. For estimating portfolio market risk, this study employs Value-at-Risk with delta-normal approach. The results show whether fund managers would be able to diversify their portfolio in these developed stock markets either in long run or short run.
    Keywords: Risk Management, Causality, Co-integration, Asian Stock Markets
    JEL: G0
    Date: 2009–09
  5. By: Eva Nurwita (Department of Economics, Padjadjaran University)
    Abstract: Migration is an unavoidable problem for economic development in third world countries. Indonesia is an archipelagic country with high viscosity of its population’s internal migration. Over flooding wave of internal migration from periphery region to the core of growth poles increases the spatial disparities between regions. Not only for the labor force at their productive age, empirical evidences revealed the fact that the wave also involved children to work as a child labor. This research tries to estimate how does poverty in periphery determines the wave of migration toward urban agglomeration region as their core. Using data from the Indonesian Census 2000 for Java Island, global spatial effect and local statistics was estimated by spatial econometrics method.
    Keywords: Child Labor, Internal Migration, Spatial Econometrics
    JEL: O15 J13 C31
    Date: 2009–08
  6. By: Erie Febrian (Finance & Risk Management Study Group (FRMSG) FE UNPAD); Aldrin Herwany (Research Division, Laboratory of Management FE UNPAD)
    Abstract: Volatility forecasting is an imperative research field in financial markets and crucial component in most financial decisions. Nevertheless, which model should be used to assess volatility remains a complex issue as different volatility models result in different volatility approximations. The concern becomes more complicated when one tries to use the forecasting for asset distribution and risk management purposes in the linked regional markets. This paper aims at observing the effectiveness of the contending models of statistical and econometric volatility forecasting in the three South-east Asian prominent capital markets, i.e. STI, KLSE, and JKSE. In this paper, we evaluate eleven different models based on two classes of evaluation measures, i.e. symmetric and asymmetric error statistics, following Kumar’s (2006) framework. We employ 10-year data as in sample and 6-month data as out of sample to construct and test the models, consecutively. The resulting superior methods, which are selected based on the out of sample forecasts and some evaluation measures in the respective markets, are then used to assess the markets cointegration. We find that the best volatility forecasting models for JKSE, KLSE, and STI are GARCH (2,1), GARCH(3,1), and GARCH (1,1), respectively. We also find that international portfolio investors cannot benefit from diversification among these three equity markets as they are cointegrated.
    Keywords: Volatility Forecasting, Capital Market, Risk Management
    JEL: G0
    Date: 2009–09
  7. By: Ryuhei Wakasugi (Institute of Economic Research, Kyoto University); Ayumu Tanaka (Graduate School of Economics, Kyoto University)
    Abstract: This paper examines how differently productivity heterogeneity of firms sorts their export and foreign direct investment (FDI) between North and South as well as between single and multiple destinations. The empirical examinations based on 12,000 Japanese firm-level data present new findings; the rank of productivity differently sorts the internationalization modes between North (North America and Europe) and South (East Asia); the productivity of firms internationalizing in both North America and Europe is remarkably higher than that of firms internationalizing in either North America or Europe, regardless the modes of internationalization, export or FDI, even if the productivity of firms internationalizing in North America is similar to the productivity of firms in Europe. This paper confirms that the difference in wage rate or fixed costs causes different modes of internationalization from the standard theoretical prediction based on the Helpman-Melitz-Yeaple model.
    Keywords: productivity-cutoff, export, FDI, North, South, East Asia
    JEL: F10 F14 F23
    Date: 2009–09
  8. By: Newhouse, David; Suryadarma, Daniel
    Abstract: This paper examines the relationship between the type of senior high school attended by Indonesian youth and their subsequent labor market outcomes. This topic is very timely, given the government’s recent decision to dramatically expand vocational enrollment. The analysis controls for an unusually rich set of predetermined characteristics, and exploits longitudinal data spanning 14 years to separately identify cohort and age effects. There are four main findings. First, students are sorted into different school types largely on the basis of their entering exam score. Public schools attract the highest-scoring students, while private vocational schools serve the lowest-scoring students. Second, after controlling for a variety of characteristics, including test scores, male public school graduates earn a substantial premium over their privately schooled counterparts. Third, private vocational school graduates fare at least as well as private general graduates, despite coming from more disadvantaged socioeconomic backgrounds. Finally, the returns to public vocational education have declined sharply for the most recent cohort of men. This raises important concerns about the current expansion of public vocational education, and the relevance of the male vocational curriculum in an increasingly service-oriented economy.
    Keywords: Tertiary Education,Secondary Education,Education For All,Labor Markets,Teaching and Learning
    Date: 2009–09–01
  9. By: Dasgupta, Basab; Narayan, Ambar; Skoufias, Emmanuel
    Abstract: Satisfaction surveys offer a potentially convenient and cost-effective means for measuring the quality of services. However, concerns about subjectivity and selection bias impede greater use of satisfaction data. This paper analyzes satisfaction data about health and educational services from the 2006 second round of the Governance and Decentralization Survey in Indonesia to assess whether satisfaction data can serve as reliable indicators of quality, despite dubiously high levels of reported satisfaction. The authors use an expectation disconfirmation model that posits that a user’s satisfaction with a facility improves with the (positive) difference between the actual quality of the facility and the household’s expected standard for quality, which is influenced by its socioeconomic characteristics. The findings show that, after taking into account the expectations of households, reported satisfaction does vary significantly with objective indicators of quality. The analysis also checks for possible selection bias affecting the results by using a two-stage selection model. The model yields policy-relevant insights into the aspects of service delivery that most affect satisfaction, highlights differences across rich and poor districts, and shows that once the role of expectations has been factored in, the variation in user satisfaction can be highly informative for policymakers and researchers alike.
    Keywords: Housing&Human Habitats,Health Monitoring&Evaluation,Governance Indicators,Access to Finance,Education For All
    Date: 2009–08–01
  10. By: Abdul Hakim (Faculty of Economics, Indonesian Islamic University); Michael McAleer (Econometric Institute, Erasmus School of Economics, Erasmus University Rotterdam and Tinbergen Institute and Center for International Research on the Japanese Economy (CIRJE), Faculty of Economics, University of Tokyo)
    Abstract: The benefits of investing internationally depend on three conditions, namely cross-country correlations, market volatilities, and future changes in currency risks (see Odier and Solnik (1993)). This paper investigates these conditions for several countries. Many papers have modelled both domestic interactions across asset markets and international interactions in individual asset markets in isolation, but rarely have they examined international interactions across asset markets. The paper fills this gap by modelling the international interactions across stock, bond and foreign exchange markets. Two models that meet these purposes are the VARMA-AGARCH model of McAleer et al. (2009) and the VARMA-GARCH model of Ling and McAleer (2003). The countries that will be modelled in this paper are Australia, Japan, Singapore, New Zealand and USA.
    Date: 2009–09
  11. By: Sudaryanto, Tahlim; Susilowati, Sri Hery; Sumaryanto
    Abstract: Acording to agricultural cencus data, the percentage of small farms (holding <0.5 ha) has increased from 48.5% in 1993 to 56.5% in 2003. Evidence from micro panel data is also inline with this observation. In rice farming region of Java, average farm size has declined from 0.49 ha in 1995 to 0.36 ha in 2007. In the off-Java region, average farm size declined from 1.49 ha in 1995 to 1.35 ha in 2007. The increasing trend of small farm is due to several factors, namely: high population presure coupled with limited non-farm employment, persistent trend of land conversion to non-farm use, and traditional practice of land inheritance. Due to small farm size, rural farm household have to diversify their income to meet their family needs. In Java, 51.7% of household income in 2007 is accounted for nonfarm income. This observation implies that strategic policies to increase household income in rural areas are by increasing access to land resources coupled with promoting off-farm and non-farm employment.
    Keywords: small farm, land conversion, non-farm employment, Labor and Human Capital, Land Economics/Use,
    Date: 2009–08–20
  12. By: Duc, Tung Phung; Waibel, Hermann
    Abstract: The paper analyzes the relationship between the allocation of labor and land of the households, the number of crops grown and the number of income sources of the households with different types of shocks and risks. It uses the data from the first phase of the household survey in three provinces of Central of Vietnam, conducted within the scope of the DFG research project âImpact of shocks on the vulnerability to poverty: consequences for development of emerging Southeast Asian economiesâ. The results suggest that the households diversify their portfolio (labor and land) into different income generating activities in order to cope with shocks. Among the different types of shocks and risks, agriculture and economic shocks and risks are the main factors to explain the (ex-post) risk-coping strategies and the (ex-ante) risk management of the households. The number of crops grown and the number of income sources from the households experienced with shocks are higher than others. In addition, the high-risk expectation households diversify their labor and land more than the low risk expectation households. The access to credit and market, the number of household labor, the education of the household head, and the wealth of the household are also very important factors that impact on the diversification level of the households.
    Keywords: Diversification, risk management, risk coping strategies, Vietnam, Farm Management, Labor and Human Capital,
    Date: 2009–10

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