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on South East Asia |
| By: | Shin-ichi Fukuda (Faculty of Economics, University of Tokyo) |
| Abstract: | In this paper, we explore how the Asian money markets have been integrated with the London money market since the 1990s. The Asian money markets we explore in the paper are the interbank markets in Tokyo, Singapore, and Hong Kong as well as those in Malaysia and Thailand. After matching the currency denomination, we investigate how each of Asian interbank rates has been synchronized with the London Interbank Offered Rate (LIBOR) since the 1990s. The sample period of our analysis is noteworthy because it includes two crisis periods, that is, 1997-1999 when the Asian financial crisis happened and 2007-2009 when the global financial crisis happened. We find that both Tokyo and Hong Kong markets as well as offshore markets in Singapore and Malaysia were highly synchronized with the London market in non-crisis periods. However, onshore markets in Singapore, Malaysia, and Thailand were less correlated with the London market and their interbank offered rates frequently showed substantial deviations from the covered interest parity. More interestingly, each Asian interbank rate showed substantially different degree of integration with the LIBOR in the two crisis periods. During the global financial crisis in 2007-2009, we find that the SIBOR remained to be highly integrated with the dollar-denominated LIBOR. However, there were remarkable asymmetric responses in the other Asian markets in how to reflect regional risk premium under the global financial crisis. The asymmetric impacts in the dollar-denominated and local currency-denominated markets had a feature of "home bias" reflecting different liquidity premia under the financial crisis. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:tky:fseres:2010cf719&r=sea |
| By: | Chia, Siow Yue (Asian Development Bank Institute) |
| Abstract: | The global financial and economic crisis has affected East Asia mainly through the trade channel. The region remains heavily dependent on export markets in Europe and North America through both direct exports to these destinations and indirect exports via the export of parts and components to other East Asian countries, particularly the People's Republic of China, which are then assembled and exported as final goods to Europe and North America. The need to rebalance growth in East Asia in the post-crisis era requires measures to strengthen domestic demand and emphasize intra-regional demand. Production networks have been integrating East Asia and this integration process is being hastened by the rapid growth of regional and bilateral trade and economic agreements since the late 1990s. The trigger point for regionalism in East Asia appears to be the 1997-1998 Asian financial crisis, and regionalism is being accelerated by the dismal outlook for the Doha Development Round, the economic rise of the People's Republic of China and India, and the ongoing global financial crisis. Proposals on regional trade architecture include Association of Southeast Asian Nations (ASEAN)+3 and ASEAN+6 for East Asia, the Free Trade Area of the Asia Pacific, and an extension of the Trans-Pacific Strategic Economic Partnership. The case for a new regional trade architecture includes improved competitiveness and economic dynamism from a large integrated market; increased intra-regional flows of trade, investment, and human resources; expansion and deepening of production networks; a rebalancing of growth towards regional demand; and a stronger and cohesive voice in international fora and organizations. Challenges include the pressures of protectionism in an economic recession, the question of whether there is a common political vision, the existence of multiple and overlapping free trade agreements with the accompanying problem of the noodle bowl, and the wide development gap among the region's economies. |
| Keywords: | fta asia restructuring; asean response financial crisis; rebalancing growth asia; regional trade policy cooperation; architecture east asia |
| JEL: | F13 F15 |
| Date: | 2010–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0191&r=sea |
| By: | Hamanaka, Shintaro (Asian Development Bank) |
| Abstract: | Despite a commonplace view that Asian regionalism lacks institutions, Asia, in fact, is full of regional institutions and frameworks in various forms. The rise and fall of regional institutions in Asia is an extremely dynamic process. Using a game theory approach, this paper hypothesizes that the dynamic nature of Asian regionalism can be explained by a "regionalism cycle." The institutional outcome of regionalism in Asia has been cyclical because the game played by Japan and the United States does not have a stable equilibrium. This paper tests the hypothesized regionalism cycle using actual cases of regional institutions in the field of financial cooperation and regional summit meetings. |
| Keywords: | regionalism; Regionalism cycle; Asian Monetary Fund (AMF); East Asia Summit (EAS); Game Theory |
| JEL: | F15 F36 |
| Date: | 2010–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbrei:0042&r=sea |
| By: | Banomyong, Ruth (Asian Development Bank Institute) |
| Abstract: | Supply chain management in Asia is a relatively new topic but is a key challenge for all Asia-based manufacturers and traders trying to integrate into the “global market.” The purpose of this paper is to describe key supply chain issues faced in Asia. Many of these issues are related to the importance of a properly managed supply chain in enhancing firms' competitiveness, as well as supply chain security issues that force Asian firms to comply with numerous regulatory requirements. The critical role played by Asia-based logistics providers in facilitating supply chain integration is further explored. Logistics providers must be able to design effective and efficient supply chains in order to meet clients' needs. A case study is then presented to illustrate how supply chain dynamics affects supplier selection. |
| Keywords: | supply chain dynamics; supply chain management; supply management; supply chain dynamics asia; asia logistics provider; supply chain integration asia |
| JEL: | L14 |
| Date: | 2010–01–07 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0184&r=sea |
| By: | Plummer, Michael (Asian Development Bank Institute) |
| Abstract: | The ongoing global economic crisis has punished Asian economies severely, despite the fact that its origins derive from outside the region. The global economic crisis was transmitted through real and financial channels, underscoring how vulnerable the region is to external shocks. This paper explores the microeconomic origins of the financial crisis and endeavors to ascertain how crises might be mitigated in the future through better regulation, supervision, and institution-building. Moreover, it makes the case for closer economic cooperation in order to internalize key externalities associated with modern global finance. This cooperation, in turn, should take place at the appropriate level, with incentives for cooperation at the global, regional, and subregional levels. It explores the potential for the creation of an Asian Financial Stability Board and deepening other initiatives in Association of Southeast Asian Nations (ASEAN)+3 and ASEAN forums. However, it stresses that the most important financial reforms in Asia will need to take place at the national level. |
| Keywords: | asian regional capital flows; mitigate future financial crises; financial regulation; capital flows |
| JEL: | F33 F36 G28 |
| Date: | 2010–02–25 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0201&r=sea |
| By: | Hidenobu Okuda; Yasushi Take |
| Abstract: | This study investigates the factors determining the capital structure of Indonesian listed companies before and after the implementation of economic reform policies subsequent to the 1997-1998 Asian financial crisis. The estimation analysis of the panel data for the period 1994-1997 and 2000-2006 reveals several factors that determined substantive change in the financing activities of these listed companies. The capital structure of Indonesian companies had not been explained sufficiently by the standardized theory of corporate financing, which had not considered the effects of the specific social and political elements as well as business conglomerates, before the Asian financial crisis. However, the capital structure of Indonesian companies became fitted more to the corporate financing theory, after the influence of social and political factors of corporate attributes weakened substantially following the post-crisis reform policies. This significant change is considered to result from institutional change caused by the financial and corporate reforms in the post-financial crisis era. |
| Keywords: | Corporate Finance, Capital Structure, Ethnic network, Indonesia |
| JEL: | G32 G34 G38 |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:hst:ghsdps:gd09-108&r=sea |
| By: | Sumie Sato (Graduate School of Economics, Kobe University); Mototsugu Fukushige (Graduate School of Economics, Osaka University) |
| Abstract: | Using the Atkinson inequality measure of income distribution, we analyze the impact of China as a single country and examine the effect of its domestic income inequality on total income inequality among East Asian countries. First, we find that China's domestic income inequality exacerbated income inequality among East Asian countries from the 1980s, and this effect became even more pronounced from 1990. Second, the growth of China's per capita GDP had an equalizing effect on income distribution in a framework of ASEAN + China, but this effect was reversed around 1997. However, relative to higher income countries such as Japan and South Korea, China's per capita GDP remains low, and although China has contributed to income inequality in the area, it has recently had a more equalizing effect. |
| Keywords: | East Asia, China, income inequality, free trade agreement, harmonious society |
| JEL: | O15 D31 F43 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1006&r=sea |
| By: | Patnaik, Ila (National Institute of Public Finance and Policy); Shah, Ajay (National Institute of Public Finance and Policy) |
| Abstract: | In this paper, we examine capital account openness and exchange rate exibility in 11 Asian countries. Asia has made slow progress on de jure capital account openness, but has made much more progress on de facto capital account openness. While there is a slow pace of increase in exchange rate exibility, most Asian countries continue to have largely inexible exchange rates. This combination { of moving forward with de facto capital account integration without bringing in exchange rate exibility { has lead to procyclicality of monetary policy when capital ows are procyclical. The paper emphasises the case for a consistent monetary policy framework. |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:npf:wpaper:10/64&r=sea |
| By: | Wignaraja, Ganeshan (Asian Development Bank Institute); Olfindo, Rosechin (Asian Development Bank Institute); Pupphavesa, Wisarn (Asian Development Bank Institute); Panpiemras, Jirawat (Asian Development Bank Institute); Ongkittikul, Sumet (Asian Development Bank Institute) |
| Abstract: | Thailand-an outward-oriented regional production hub-is one of East Asia's most active users of free trade agreements (FTAs) as an instrument of commercial policy. By December 2009, Thailand had 11 concluded FTAs, and more were either under negotiation or proposed. Thai trade negotiators have striven to secure market access via FTAs, but little is known on how FTAs actually affect exporting firms. A survey of 221 exporters in leading sectors forms the basis for the first systematic study of the business impact of FTAs in Thailand. Key findings are as follows: (i) 24.9% of respondents used Thai FTAs as of 2007-2008, and this figure seems set to rise; (ii) 45.9% of respondents said that FTAs had influenced their business plans; (iii) 26.2% of firms felt that dealing with multiple rules of origin adds to business costs, and this is estimated to be less than 1% of export sales; (iv) more than half the sample firms have consulted with government and business associations on FTAs; and (v) a significant demand existed for business development services to adjust to FTAs, particularly for small and medium enterprises (SMEs). The findings suggest that Thailand should refine its FTA strategy to take better advantage of regional trade agreements. The study concludes with specific recommendations to improve business awareness of FTAs, encourage greater utilization of FTA preferences, increase competitiveness of local firms, and mitigate the potential effect of multiple rules of origin. |
| Keywords: | thailand fta impact; thailand afta business; thailand economy ftas |
| JEL: | F10 F15 O24 |
| Date: | 2010–01–29 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0190&r=sea |
| By: | Asher, Mukul (Asian Development Bank Institute) |
| Abstract: | The current global economic crisis has led to greater prominence for the issue of strengthening social protection systems in Asia. This paper analyzes the key factors determining and the possible avenues for strengthening social protection systems in Asia. The choice of an appropriate combination of avenues depends on the initial starting point, public policy objectives, institutional, fiscal, and other capabilities. <p>Following introductory remarks, Section 2 discusses demographic and labor market trends in Asia. It stresses that rapid ageing and large, informal labor markets pose challenges for Asian social protection systems, while making the role of the state even more essential. This is followed in Section 3 by an overview of social security systems in Asia. The key point is that while there are fairly elaborate social security programs in Asia, primarily for formal sector employees, this does not necessarily imply that the schemes are well designed, have wide coverage, or are financially sustainable. Section 4 discusses four general avenues to strengthening social protection systems. These emphasize greater professionalism, parametric and systemic reforms, social assistance, and social pensions, as well as others such as microfinance institution-initiated pensions. <p>The final section provides concluding observations. The global economic crisis provides a potential opportunity for strengthening social protection systems. However, the construction of multitiered social protection systems will require much greater professionalism, experimentation, political and organizational leadership, and vision. |
| Keywords: | asia social protection systems; strengthening social systems; social development; global economic crisis; social protection systems |
| JEL: | H55 H87 J11 J18 J21 J26 |
| Date: | 2010–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0198&r=sea |
| By: | Brooks, Douglas H. (Asian Development Bank Institute); Stone, Susan F. (Asian Development Bank Institute) |
| Abstract: | The sharp decline in trade volume and value during the current economic crisis has contributed to lower transportation costs and reduced waiting times at border crossings, reducing the urgency of progress on trade facilitation. Meanwhile, greater trade is expected to play a key role in recovery, and in sustaining growth afterwards. The crisis offers an excellent opportunity to make progress on facilitating intra-Asian trade and boosting the region's contribution to global economic recovery. <p>This paper examines the status of, and challenges to, trade facilitation among the Asian Asia-Pacific Economic Cooperation members, and the roles of hard and soft infrastructure (including logistics) in improving that performance. Analysis with a computable general equilibrium framework indicates that even a relatively modest reduction in trade costs can yield significant gains. Gross domestic product in the region expands and countries move into a more diversified trading pattern. Of particular relevance for policy considerations is that the results vary considerably across bilateral trade routes and commodity categories. |
| Keywords: | asian apec members infrastructure; regional integration; trade facilitation |
| JEL: | F13 F15 F17 O24 |
| Date: | 2010–02–25 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0200&r=sea |
| By: | Sarmidi, Tamat; Salleh, Norlida H |
| Abstract: | This study aims to test a hypothesis that postulate a positive inter-relationship between international flows of tourist, trade and economic growth. Although tourism is one of the major components in the trade of services, and it has been certified by large number of literatures on the strong correlation between tourism industry and economic development, yet not much is known on the dynamic inter-relationship between these three variables. Closing-up this gaping hole, this study employs the cointegration tests under autoregressive distributed lag (ARDL) structure to investigate a dynamic inter-relationship between economic development, total trade (import and export) and number of tourist arrival for Malaysia and her major tourism partners ((ASEAN countries) . The estimated result based on the long run time series behavior for number of tourist arrival, volume of total trade and economic development’s indicator shows that these three variables are moved in tandem. Interestingly, in the analysis of short run behavior, we find that number of tourist arrival has significantly Granger caused total trade flows at least for some countries. At the same time, in the short-run, we find that both growth in total trade (export and import) and international tourists’ arrival to Malaysia have uni-directionally Granger caused real income growth and there is statistical evidence for international trade to lead tourist arrival. |
| Keywords: | economic growth; trade; tourism; cointegration; and Malaysia |
| JEL: | F00 F41 A10 |
| Date: | 2010–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:21056&r=sea |
| By: | De, Prabir (Asian Development Bank Institute) |
| Abstract: | This study is a comprehensive, empirical analysis of the linkages between governance, institutions, and regional infrastructure. The empirical results indicate that governance and institutions are crucial for regional infrastructure development: every one point improvement in governance results in a 1 to 1.5 point rise in regional infrastructure. Countries (and regions) with higher income, stronger institutions, better governance, and more open economies are likely to have higher levels of regional infrastructure. The findings of this paper suggest that our efforts to promote regional infrastructure must not be limited to traditional policy measures aimed at attracting investment in infrastructure, but must also address policy reform across a number of areas. Thus, institutions and governance must play an important complementary role in strengthening Asia’s regional infrastructure. |
| Keywords: | regional infrastructure asia; governance; institutions; economics; governance; infrastructure; regional infrastructure asia |
| JEL: | F10 F15 O19 |
| Date: | 2010–01–04 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0183&r=sea |
| By: | Wignaraja, Ganeshan (Asian Development Bank Institute); Lazaro, Dorothea (Asian Development Bank Institute); DeGuzman, Genevieve (Asian Development Bank Institute) |
| Abstract: | Within East Asia, the outward-oriented Philippine economy is a latecomer to using free trade agreements (FTAs) as a trade policy instrument and has relied heavily on the Association of Southeast Asian Nations (ASEAN) for regional liberalization. While negotiating FTAs has consumed scarce time and other resources, limited attention has been hitherto given to evaluating the impact of FTAs-particularly the 15-year-old ASEAN Free Trade Area (AFTA) agreement-on business activity in the Philippines. Using a survey of 155 manufactured goods exporters from three sectors (transport equipment, processed foods, and electronics), this study deals with three questions: (i) Do firms use AFTA and why?; (ii) What impedes firms from using AFTA and other FTAs?; and (iii) What can be done to improve FTA use at firm level in the future? The study finds that utilization of AFTA is higher than expected from existing studies and is set to double in the future. Econometric analysis suggests that firm age, domestic ownership, awareness of FTAs, and membership in the transport sector increase the probability of using AFTA. Surprisingly, among nonusers, a lack of information is the biggest barrier to FTA use. Other impediments to use include the availability of export processing zone incentive schemes, low most-favored-nation rates (particularly in electronics), delays in origin administration, rent-seeking behavior, and nontariff measures in partner country markets. Interestingly, the majority of firms do not think that multiple rules of origin in overlapping Asian FTAs add significantly to business costs. However, there is room for improvement in the system of AFTA rules of origin (e.g., lower value content and introduction of self-certification mechanisms). The examination of institutional support reveals an excess demand for a range of support services (e.g., information, technology-based, and small or medium enterprise extension services) that will enable firms to use FTAs more effectively in the future. The paper concludes by making the case for better mainstreaming of FTAs into Philippine national trade policy and for improving support services to firms. |
| Keywords: | philippines fta impact; philippines fta business; philippines economy ftas |
| JEL: | F10 F15 O24 |
| Date: | 2010–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0185&r=sea |
| By: | Winkler, Adalbert (Asian Development Bank Institute) |
| Abstract: | How much can regional monitoring of financial markets and coordination of financial sector policies contribute to preventing and mitigating financial crises? This paper reviews and compares the experiences of Europe and Asia, which have taken different routes and have achieved different levels of regional financial integration. The analysis suggests that the harmonization and coordination of regulation and supervision, with a strong focus on maturity and currency mismatch problems, would constitute an important step toward mitigating the risk of crisis. However, regional monitoring and coordination will remain difficult as long as lender-of-last-resort activities and fiscal support packages are organized on a national level. Against this background, the crisis is a wake-up call for further progress on monetary integration in Asia along the lines of the reformed Chiang Mai Initiative. In Europe, the crisis reveals the need to establish a sustainable regulatory and supervisory structure that properly defines and reflects the responsibilities of regional and national authorities in crisis management, including its fiscal |
| Keywords: | regional financial integration; european lessons; asian financial policies; financial crisis; financial markets; financial sector policies |
| JEL: | F15 F33 F36 G38 |
| Date: | 2010–02–24 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0199&r=sea |
| By: | Filardo, Andrew (Asian Development Bank Institute); Genberg, Hans (Asian Development Bank Institute) |
| Abstract: | Monetary policy frameworks in the Asia and Pacific region have performed well in the past decade as judged by inflation outcomes. We argue that this is due to three principal factors: (i) central banks have focused on price stability as the primary objective of monetary policy, (ii) institutional setups have been put in place that are supportive of the central banks' abilities to carry out their objectives, and (iii) economic policies in general have been supportive of the pursuit of price stability, in particular the adoption of prudent fiscal policies that have reduced concerns of fiscal dominance. <p>The financial systems in the region have also held up well in the face of the current crisis, notwithstanding more adverse liquidity conditions in several markets and pressures on certain exchange rates that spilled over from the West. <p>It may nevertheless be useful to ask whether changes in monetary policy frameworks should be contemplated. This paper concludes that: (i) for economies with well developed financial markets, there may be little value in using unconventional monetary policies in the absence of financial crises, because in normal times such policies are not likely to be effective and may further reduce the efficiency of the financial market; (ii) a good case can be made for elevating the role of the misalignment of asset prices (including exchange rates) and financial imbalances in the conduct of monetary policy; and (iii) financial stability should take on greater importance as an objective for public policy. Whether and how much of the financial stability objective should be assigned to the central bank is still an open question. |
| Keywords: | asian monetary policy frameworks; pacific monetary policy frameworks; future changes; monetary policy strategies; asia monetary policy |
| JEL: | E52 E58 |
| Date: | 2010–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0195&r=sea |
| By: | Asmy, Mohamed; Rohilina, Wisam; Hassama, Aris; Fouad, Md. |
| Abstract: | This paper attempts to examine the short-run and long-run causal relationship between Kuala Lumpur Composite Index (KLCI) and selected macroeconomic variables namely inflation, money supply and nominal effective exchange rate during the pre and post crisis period from 1987 until 1995 and from 1999 until 2007 by using monthly data. The methodology used in this study is time series econometric techniques i.e. the unit root test, cointegration test, error correction model (ECM), variance decomposition and impulse response function. The findings show that there is cointegration between stock prices and macroeconomic variables. The results suggest that inflation, money supply and exchange rate seem to significantly affect the KLCI. These variables considered to be emphasized as the policy instruments by the government in order to stabilize stock prices. |
| Keywords: | Kuala Lumpur Stock Exchange; Money Supply; Nominal Effective Exchange Rate; ECM |
| JEL: | A12 C22 A10 |
| Date: | 2009–04–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:20970&r=sea |
| By: | Cho, Yoon Je (Asian Development Bank Institute) |
| Abstract: | This paper discusses the role of state intervention for prevention, containment, and resolution of financial crises based mainly on the Korean experience during the 1997 Asian financial crisis. Crises in emerging market and developing economies tend to be more complicated than those faced by advanced economies because they are twin crises: financial and currency crises. Such crises require the development of a comprehensive strategy covering the stabilization of the domestic financial market and the foreign exchange market, closely coordinated responses by different government bodies, an extraordinary effort for financial restructuring, and the introduction of a new regulatory framework. This effort should be based on an effective crisis management team of experts given a clear mandate with well defined power; strong political support; effective communication with the market players, both domestic and foreign; and sufficient mobilization of public funds. In this regard, this paper emphasizes the importance of building a reliable information base, prompt actions, orchestrating political consensus, and a balanced approach to restructuring and regulation among different types of financial institutions. The paper also highlights the need for a new international financial architecture matching the rapid integration into the global market of the financial markets of emerging and developing economies while their currency remains non-convertible. |
| Keywords: | state intervention financial crises; korea asian financial crisis; crisis prevention containment resolution; financial sector |
| JEL: | E58 F34 F36 G18 G21 G28 N20 O16 |
| Date: | 2010–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0196&r=sea |
| By: | Ralph Paprzycki; Keiko Ito |
| Abstract: | This paper shows that foreign direct investment (FDI), production and trade networks have been a principal driver of East Asian integration. A key element in this has been the role of production sharing, in which different stages of the production process are dispersed across countries in the region. The rise of such patterns of production has been facilitated by the unilateral liberalization of trade and investment by governments in the region to attract FDI. However, liberalization and the resulting pattern of regional integration have been heavily concentrated in a select number of industries (led by electrical machinery) and are largely confined to a particular form of supply]side integration (production sharing), and the region continues to depend on external demand. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:hst:ghsdps:gd09-117&r=sea |
| By: | Markandya, Anil (Asian Development Bank Institute); Setboonsarng, Sununtar (Asian Development Bank Institute); Hui, Qiao Yu (Asian Development Bank Institute); Songkranok, Rachanee (Asian Development Bank Institute); Stefan, Adam (Asian Development Bank Institute) |
| Abstract: | This paper provides estimates of the costs of organic agriculture (OA) programs, and sets them in the context of the costs of attaining the United Nations' Millennium Development Goals (MDGs). It analyzes the costs of OA programs in four case studies: Wanzai, PRC; Wuyuan, PRC; Kandy, Sri Lanka; and Ubon Ratchathani, Thailand. The results show considerable variation across the case studies, suggesting that there is no clear structure to the costs of adopting OA. Costs do depend on the efficiency with which the OA adoption programs are run. The lowest cost programs were more than ten times less expensive than the highest cost ones. A further analysis of the gains resulting from OA adoption reveals that the costs per person taken out of poverty was much lower than the World Bank's estimates, based on income growth in general or based on the detailed costs of meeting some of the more quantifiable MDGs (e.g., education, health, and environment). |
| Keywords: | organic agriculture un mdg; millennium development goals organic; organic agriculture asia mdg |
| JEL: | Q01 Q18 Q56 |
| Date: | 2010–02–09 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0193&r=sea |
| By: | Ross H. McLeod |
| Abstract: | Attempts to maintain prices different from those that would otherwise be determined by supply and demand are virtually guaranteed to result in illegal behaviour, including in the case of laws that determine the salaries of civil servants. In Indonesia, private sector salaries are highly progressive with respect to increasing levels of responsibility, whereas the civil service structure is very flat, resulting in an enormous gap between private and public sector salaries at higher levels of management. As a consequence, informal--and often illegal--income generating practices are observed that make public sector careers far more attractive than formal remuneration levels would suggest. It is argued here that it is unhelpful to view endemic corruption simply in terms of unprincipled behaviour. Rather, it is best understood in terms of institutional weakness in the form of continued reliance on entrenched personnel management practices from the Soeharto era that deliberately ignored market realities. |
| Keywords: | franchise, Indonesia, rents, private taxation, bureaucratic extortion |
| JEL: | D72 D73 P16 P17 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2010-02&r=sea |
| By: | Muliaman D. Hadad (Bank Indonesia, Jakarta, Indonesia); Maximilian J. B. Hall (Dept of Economics, Loughborough University); Wimboh Santoso (Bank Indonesia, Jakarta, Indonesia); Karligash Kenjegalieva (Dept of Economics, Loughborough University); Richard Simper (Dept of Economics, Loughborough University) |
| Abstract: | In this study, we utilise a new, non-parametric efficiency measurement approach which combines the semi-oriented radial measure data envelopment analysis (SORM-SBM-DEA) approach for dealing with negative data (Emrouznejad et al., 2010) with the slacks-based efficiency measures of Tone (2001, 2002) to analyse productivity changes for Indonesian banks over the period Quarter I 2003 to Quarter II 2007. Having constructed the Malmquist indices, using data provided by Bank Indonesia (the Indonesian central bank), for the banking industry and different bank types (i.e., listed and Islamic) and groupings, we then decomposed the industry’s Malmquist into its technical efficiency change and frontier shift components. Finally, we analysed the banks’ risk management performance, using Simar and Wilson’s (2007) truncated regression approach, before assessing its impact on productivity growth. The first part of the Malmquist analysis showed that average productivity changes for the Indonesian banking industry tended to be driven, over the sample period, by technological progress rather than by frontier shift, although a relatively stable pattern was exhibited for most of the period. However, at the beginning of the considered period, state-owned and foreign banks, as well as Islamic banks, exhibited volatile productivity movements, mainly caused by shifts in the technological frontier. With respect to the risk management analysis, most of the balance sheet variables were shown to have had the expected impact on risk management efficiency. While the risk management decomposition of technical efficiency change and frontier risk components demonstrated that, by the end of the sample period, the change in risk management efficiency and risk management effects had the same dynamic pattern, resulting in the analogous dynamics for technical efficiency changes. Therefore, a strategy based on the gradual adoption of newer technology, with a particular focus on internal risk management enhancement, seems to offer the highest potential for boosting the productivity of the financial intermediary operations of Indonesian banks. |
| Keywords: | Indonesian Finance and Banking; Productivity; Efficiency. |
| JEL: | C23 C52 G21 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2010_04&r=sea |
| By: | Mohan, Rakesh (Asian Development Bank Institute); Kapur, Muneesh (Asian Development Bank Institute) |
| Abstract: | Capital flows to emerging market economies (EMEs) have been characterized by high volatility since the 1980s. In recent years (especially since 2003), although gross as well as net capital flows to the EMEs have increased, they could not be absorbed domestically. Overall, savings have flowed uphill from EMEs to advanced economies, challenging the conventional view that capital flows to EMEs are always beneficial through augmentation of their resources leading to greater investment. Full capital account liberalization can impart avoidable volatility and have an adverse impact on growth prospects of EMEs. Available evidence is strongly in favor of a calibrated and well-sequenced approach to opening up the capital account and its active management, along with complementary reforms in other sectors. Greater caution is needed in the liberalization of debt flows. <p>Despite much advice to the contrary, most EMEs manage their capital accounts actively to cushion their economies from undue volatility, including interventions in the foreign exchange markets accompanied by sterilization. Sound macroeconomic and financial policies-accompanied by prudent capital account management, greater exchange rate flexibility, purposive use of prudential regulation, and continued financial market development practiced by most Asian EMEs over the past decade-have cushioned their economies from the current global financial crisis that started in 2007. They have successfully achieved a virtuous circle of continuing growth, low and stable inflation, and financial stability. How these elements can be best combined will depend on the country and on the period: There is no "one size fits all." <p>Such a discretionary approach does put a great premium on the skill of policymakers and can run the risk of markets perceiving central bank actions becoming uncomfortably unpredictable. Such risk is mitigated by a record of successful management. |
| Keywords: | capital flows emerging markets; liberalization regulation capital flows; emerging markets capital account management; capital flows; emerging market economies |
| JEL: | E42 E44 E52 E58 F30 F40 G15 |
| Date: | 2010–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0186&r=sea |