nep-sea New Economics Papers
on South East Asia
Issue of 2010‒06‒26
nine papers chosen by
Kavita Iyengar
Asian Development Bank

  1. The Currency and Financial Crisis in Southeast Asia: A Case of 'Sudden Death' or Death Foretold'? By Ramkishen Rajan
  2. The Exchange Rate Regime in Asia: From Crisis to Crisis By Ila Patnaik; Ajay Shah; Anmol Sethy; Vimal Balasubramaniam
  3. How Would an Appreciation of the Yuan Affect the People's Republic of China's Surplus in Processing Trade? By Thorbecke, Willem
  4. Post crisis blues By Beja, Jr., Edsel
  5. Restraints On Capital Flows: What Are They? By Ramkishen Rajan
  6. Understanding Vietnam: A Look Beyond Facts and Figures By Tamara Trinh
  7. 人口结构转变过程中生育率与经济增长的关系 By Deng, Binbin
  8. State–society relations in a dynamic framework: The case of the Far East and Sub-Saharan Africa By Benczes, István; Szent-Iványi, Balázs
  9. Climate Change and Game Theory By Peter Wood

  1. By: Ramkishen Rajan
    Abstract: Almost all existing studies on the causes, consequences and policy implications of the economic and financial crisis faced by East Asia have provided only a cursory discussion of broad data at best, or have fallen into the trap of merely stating the weaknesses in the economies as a ‘matter of fact’ at worst. Ex-post facto analysis is of little value. In this paper, limiting our focus to the Southeast Asian economies (viz. Indonesia, Malaysia, Thailand and the Philippines), we carefully scrutinise the available economic data in a systematic manner, with a view to determining whether there were possible indications of discernible deterioration in economic ‘fundamentals’ that might have been indicative of an impending crisis. In other words, we aim to determine whether the crisis was a ‘death foretold’ (i.e. ‘an accident waiting to happen’) as most observers seem to assume, or a quick and ‘sudden death’ as Sachs et al. (1996b) have suggested of the Mexican crisis of 1994- 95. We take pains to focus solely on the policies/factors that seemed to have a direct impact on the crisis. To get a sense of proper prospective, both trends in the various indicators of the Southeast Asian economies from 1990 to 1996 (just prior to the onset of the crisis in mid-1997) is considered, as well as compare their performance to the Latin American economies of Argentina, Brazil and Mexico.[Working Paper No.1]
    Keywords: East Asia, implications, economic, financial, Indonesia, Malaysia, Thailand, Philippines,
    Date: 2010
  2. By: Ila Patnaik; Ajay Shah; Anmol Sethy; Vimal Balasubramaniam
    Abstract: Prior to the Asian financial crisis, most Asian exchange rates were de facto pegged to the US Dollar. In the crisis, many economies experienced a brief period of extreme flexibility. A `fear of floating' gave reduced flexibility when the crisis subsided, but flexibility after the crisis was greater than that seen prior to the crisis. Contrary to the idea of a durable Bretton Woods II arrangement, Asia then went on to slowly raise flexibility and reduce the role for the US Dollar. When the period from April 2008 to December 2009 is compared against periods of high in flexibility, from January 1991 to November 1991 and October 1995 to March 1997, the increase in flexibility is economically and statistically significant. This paper proposes a new measure of dollar pegging, the \Bretton Woods II score". [NIPFP WP No. 69].
    Keywords: flexibility, korea, economically, Exchange rate regime, Asia, Bretton Woods II hypothesis, dollar, pegging, US, Asia, financial crisis, china, India, macroeconomic policy, monetary policy
    Date: 2010
  3. By: Thorbecke, Willem (Asian Development Bank Institute)
    Abstract: Enormous trade surpluses are problematic for the People's Republic of China (PRC) and the rest of the world. They primarily stem from processing trade. This paper investigates how exchange rate changes would affect the PRC's imports for processing and processed exports. The results indicate that an appreciation throughout East Asian supply chain countries would reduce the PRC's surplus in processing trade, while an appreciation of the yuan alone might not. Even for an appreciation throughout East Asia, however, the sum of the exchange rate elasticities is not large. Thus, to rebalance the PRC's trade, exchange rate appreciations must be accompanied by other changes such as factor market liberalization and greater enforcement of environmental regulations.
    Keywords: global imbalances; exchange rate elasticities; yuan affect prc surplus; surplus processing trade
    JEL: F32 F41
    Date: 2010–06–18
  4. By: Beja, Jr., Edsel
    Abstract: Debates that emphasize rapid economic recovery from major crises can extinguish progressive views that examine fundamental issues for sound economic management of present-day capitalist systems, such as: the determination of appropriate modes of cooperation including the procedures for intervention during crises, the introduction of structural changes that enable domestic economies to pursue appropriate industrial policies as well as erect institutions that could withstand external shocks, and, more importantly, the pursuit of fundamental reforms in the international economic architecture to allow for the management of cross-border flows of resources as well as coordinated adjustments to economic imbalances. There remains a lot to be done to make present-day capitalist systems reach a balance between domestic and global goals and thereby allow them to enlarge economic welfare without compromising national sovereignty.
    Keywords: 1997 Asian Crisis; 2008 Global Crisis; post-crisis; economic policy
    JEL: H10 E32 F02 O20 E61
    Date: 2010–06–18
  5. By: Ramkishen Rajan
    Abstract: Though there has been much general debate recently about the pros and cons of capital controls, there remains substantial confusion and uncertainty about what exactly is entailed by the term ‘restraining global capital flows’. Popular discussion around this has typically been long on rhetoric and loose generalisations and acutely short on specifics. The aim of this paper is therefore to help refine the debate somewhat by clarifying and systematically categorising the various concepts that have been discussed in policy circles and the popular media. Two specific country experiences with restraining capital flows, viz. Chile and Malaysia are highlighted and discussed, as are the recent and muchpublicised proposals for exchange controls (a la Paul Krugman) and a global currency transactions tax in the forms of a Tobin tax.[Working Paper No. 3]
    Keywords: debate, capital controls, substantial, global capital flows, generalisations, systematically categorising, Chile, Malaysia, Paul Krugman, Tobin tax
    Date: 2010
  6. By: Tamara Trinh
    Abstract: Vietnam's (re) discovery in recent years by the international investor community gives the country a second chance to become and Asia tiger. The article looks into the economic, social, political, performance of the country.
    Keywords: china, vietnam, tourism, infrastructure and the banking sector, capital markets, education, diaspora, investments, foreign markets, tourism, IT sourcing, international, investor, Asia, community, India,
    Date: 2010
  7. By: Deng, Binbin
    Abstract: In recent decades, several East Asian economies have been going through the demographic transition at rapid paces. With total fertility rates well below replacement ratio, it is no surprise that childless families have begun to emerge on a large scale. This poses new challenges not only to public policymaking but also to the theoretical literature on quality-quantity tradeoff of children. When there are no children, the vehicle for human capital investment may simply disappear. This paper tries to shed some light on the issue above by drawing on some prelimenary statistics.
    Keywords: fertility choice; economic growth; childless families; demographic transition
    JEL: J13
    Date: 2009–10
  8. By: Benczes, István; Szent-Iványi, Balázs
    Abstract: According to the textbook approach, the developmental states of the Far East have been considered as strong and autonomous entities. Although their bureaucratic elites have remained isolated from direct pressures stemming from society, the state capacity has also been utilised in order to allocate resources in the interest of the whole society. Yet, society – by and large –has remained weak and subordinated to the state elite. On the other hand, the general perception of Sub-Saharan Africa (SSA) has been just the opposite. The violent and permanent conflict amongst rent-seeking groups for influence and authority over resources has culminated in a situation where states have become extremely weak and fragmented, while society – depending on the capacity of competing groups for mobilising resources to organise themselves mostly on a regional or local level (resulting in local petty kingdoms) – has never had the chance to evolve as a strong player. State failure in the literature, therefore, – in the context of SSA – refers not just to a weak and captured state but also to a non-functioning, and sometimes even non-existent society, too. Recently, however, the driving forces of globalisation might have triggered serious changes in the above described status quo. Accordingly, our hypothesis is the following: globalisation, especially the dynamic changes of technology, capital and communication have made the simplistic “strong state–weak society” (in Asia) and “weak state–weak society” (in Africa) categorisation somewhat obsolete. While our comparative study has a strong emphasis on the empirical scrutiny of trying to uncover the dynamics of changes in state–society relations in the two chosen regions both qualitatively and quantitatively, it also aims at complementing the meaning and essence of the concepts and methodology of stateness, state capacity and state-society relations, the well-known building blocks of the seminal works of Evans (1995), Leftwich (1995), Migdal (1988) or Myrdal (1968).
    Keywords: development state; failed state; state autonomy; state capacity
    JEL: O25 P45 P51
    Date: 2010–06–19
  9. By: Peter Wood (Resource Management in Asia-Pacific Program, Crawford School of Economics and Government, Australian National University)
    Abstract: This survey paper examines the problem of achieving global cooperation to reduce greenhouse gas emissions. Contributions to this problem are reviewed from non-cooperative game theory, cooperative game theory, and implementation theory. Solutions to games where players have a continuous choice about how much to pollute, games where players make decisions about treaty participation, and games where players make decisions about treaty ratification, are examined. The implications of linking cooperation on climate change with cooperation on other issues, such as trade, is examined. Cooperative and non-cooperative approaches to coalition formation are investigated in order to examine the behaviour of coalitions cooperating on climate change. One way to achieve cooperation is to design a game, known as a mechanism, whose equilibrium corresponds to an optimal outcome. This paper examines some mechanisms that are based on conditional commitments, and could lead to substantial cooperation.
    Keywords: Climate change negotiations; game theory; implementation theory; coalition formation; subgame perfect equilibrium
    Date: 2010–05

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