nep-sea New Economics Papers
on South East Asia
Issue of 2010‒09‒03
ten papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Impacts of Current Global Economic Crisis on Asia's Labor Market By Huynh, Phu; Kapsos, Steven; Kim, Kee Beom; Sziraczki, Gyorgy
  2. How ICTs Raise Manufacturing Performance: Firm-level Evidence in Southeast Asia. By Tomohiro MACHIKITA; Masatsugu TSUJI; Yasushi UEKI
  3. Detecting Effective Knowledge Sources in Product Innovation: Evidence from Local Firms and MNCs/JVs in Southeast Asia By Tomohiro MACHIKITA; Shoichi MIYAHARA; Masatsugu TSUJI; Yasushi UEKI
  4. Carbon Footprint Labeling Activities in the East Asia Summit Region: Spillover Effects to Less Developed Countries By Xunpeng SHI
  5. An Admiralty for Asia: Isaac le Maire and conflicting conceptions about the corporate governance of the VOC By Gelderblom, O.; Jong, A. de; Jonker, J.
  6. Demand Growth in Developing Countries By David Abler
  7. From Regional to Intercontinental Trade: The Successive European Trade Empires from the Sixteenth to the Eighteenth Century in Asia By Sami Bensassi
  8. Solicited and Unsolicited Credit Ratings: A Global Perspective By Poon, Winnie P. H.; Chan, Kam C.
  9. Analyzing and Forecasting Volatility Spillovers and Asymmetries in Major Crude Oil Spot, Forward and Futures Markets By Chia-Lin Chang; Michael McAleer; Roengchai Tansuchat
  10. Market Efficiency of Oil Spot and Futures: A Mean-Variance and Stochastic Dominance Approach By Hooi Hooi Lean; Michael McAleer; Wing-Keung Wong

  1. By: Huynh, Phu (Asian Development Bank Institute); Kapsos, Steven (Asian Development Bank Institute); Kim, Kee Beom (Asian Development Bank Institute); Sziraczki, Gyorgy (Asian Development Bank Institute)
    Abstract: The paper investigates the labor market and social impacts of the global financial and economic crisis in Asia and the Pacific as well as national policy responses to the crisis. It draws on recent macroeconomic, trade, production, investment, and remittances data to assess the employment and social consequences of the crisis, including falling demand for labor, rising vulnerable and informal employment, and falling incomes and their related pressures on the working poor. The paper provides some projections of the impact on unemployment, vulnerable employment, working poverty, and labor productivity in the region in 2009. It demonstrates that labor market recovery is likely to lag behind output growth, based on the experience of Asian labor markets following the 1997 Asian financial crisis. The paper underscores some policy options that are likely to have positive outcomes toward generating employment and boosting aggregate demand, improving social protection and welfare on the basis of decent work principles, and promoting a sound and sustainable economic and labor market recovery.
    Keywords: asian labor market; labor policies; global financial crisis
    JEL: E24 I30 J08 J20
    Date: 2010–08–23
  2. By: Tomohiro MACHIKITA (Inter-Disciplinary Studies Center, Institute of Developing Economies, Japan); Masatsugu TSUJI (Graduate School of Applied Informatics, University of Hyogo, Japan); Yasushi UEKI (Bangkok Research Center, IDE/JETRO, Thailand)
    Abstract: This paper examines the effects of information and communication technologies (ICTs) on business performance, using firm-level data obtained through a questionnaire survey in four ASEAN countries (Indonesia, The Philippines, Thailand and Vietnam). Sources of information and new technologies exchanged via ICTs by firms are also explored to investigate the mechanism behind ICT adoption. Empirical results verify that the introduction of ICT to reorganize business processes is significantly correlated with business performance, in particular the development of export markets and improvement of production management. ICTs facilitate access to information and technologies accumulated in in-house departments and joint-venture (JV) affiliates of the respondent firms. There are considerable differences between multinational companies (MNCs)/JVs and local firms. MNCs/JVs make use of information and technologies obtainable via ICTs from their own R&D departments, JVs established with local partners and foreign-owned suppliers/customers to improve factory management, mostly for product quality improvement and production cost reduction. In contrast, local firms interconnect their own R&D departments via ICTs to enhance their business performance in broader areas than MNCs/JVs, including the development of export markets.
    Date: 2010–08–01
  3. By: Tomohiro MACHIKITA (Inter-Disciplinary Studies Center, Institute of Developing Economies, Japan); Shoichi MIYAHARA (School of Economics, Aoyama Gakuin University, Japan); Masatsugu TSUJI (Graduate School of Applied Informatics, University of Hyogo, Japan.); Yasushi UEKI (Bangkok Research Center-Japan External Trade Organization, Thailand)
    Abstract: This paper examines the effects of internal and external sources of knowledge on the introduction of new products based on new technologies or information at firms which responded to a questionnaire survey conducted in four Southeast Asian countries. The results confirm that local firms make full use of locally available sources of new technology or information to achieve product innovation. On the other hand, foreign-owned firms depend mainly on internal R&D capacities and also possibly upon cooperation with local universities. These findings highlight the fact that local firms complement their lack of internal resources for product innovation with external knowledge sources. Foreign-owned firms utilize their international production networks to concentrate their resources on innovative activities.
    Date: 2010–08–01
  4. By: Xunpeng SHI (Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: Abstract: This paper discusses carbon footprint (CFP) labeling activities in the East Asia Summit (EAS) region with a focus on their spillover effects on less developed countries (LDCs). Due to increased and increasing economic integration, implementation of CFP labeling schemes in one country will have significant impact on others. The impact is particularly significant for LDCs in the EAS region because: the EAS production networks are highly integrated, which provide necessary condition for the spill-over effects to be generated; LDCs generally lack the capacity to measure and label CFP of their products; and exports from LDCs often produced by relatively small producers. However, the effective inclusion of LDCs in labeling schemes may offer more and cost-effective opportunities for carbon emission reductions. The presence of spillover effects means that countries that are implementing carbon labeling schemes need to take stakeholders outside of their boundaries into consideration. The disadvantages of LDCs can be reduced by well designed carbon labeling schemes, by innovative solutions to low cost data collection and certification, and by technical transfer, training and capacity building.
    Date: 2010–07–01
  5. By: Gelderblom, O.; Jong, A. de; Jonker, J.
    Abstract: The Dutch East India Company or VOC in 1602 showed many characteristics of modern corporations, including limited liability, freely transferable shares, and well-defined managerial functions. However, we challenge the notion of the VOC as the precursor of modern corporations to argue that the company was a hybrid, combining elements from traditional partnerships with a governance structure modeled on existing public-private partnerships. The company’s charter reflected this hybrid structure in the preeminent position given to the Estates General as the VOC’s main principal, to the detriment of shareholders’ interests. Protests by Isaac le Maire and Willem Usselinx about the board’s disregard for shareholders rooted in a conviction that it ought to conform to traditional partnerships with their judicious balance between stakeholders’ interests. However, the perceived public interest of a strong military presence in Asia prevented shareholders’ protests from changing the corporate governance.
    Keywords: dutch east india company;VOC;corporate governance
    Date: 2010–06–24
  6. By: David Abler
    Abstract: This report prepared by a consultant, Dr. David Abler of Penn State University in the United States, examines structural changes in the demand for agricultural products arising from economic growth in a number of large developing and emerging economies comprising primarily the BRIIC group of countries (Brazil, Russia, India, Indonesia and China). It reviews and evaluates a number of studies made of the effects of economic growth in large developing and emerging economies on agricultural product demand and the structure of demand. In particular, the report seeks to evaluate the effects of economic growth and rising incomes on the composition of agricultural product demand across product categories (e.g. cereals vs. meat), within product categories (e.g. lower-quality cereals vs. higher-quality cereals) and on the evolution of price and income elasticities of demand for agricultural products - that is, how rapidly are they moving toward the low elasticities seen in many OECD countries. The report also utilises the results of these studies to draw out the possible implications for agricultural commodity demand, commodity prices, and possible price volatility.
    Keywords: economic growth, agricultural food demand, price and income elasticities of demand, food quality, demand attributes, agricultural commodity prices, price volatility
    Date: 2010–07
  7. By: Sami Bensassi
    Abstract: For a very long time, the areas available for continuous long-distance trade were limited to territories the size of Braudel's Mediterranée (1949). Whatever the commercial organizations (merchants in the Roman or the Fatimid Empires, the Hanseatic League, the Florentine Companies), their trade was not able to directly handle branches more than a month's sailing from their main base (in the best conditions). During the three centuries after Vasco de Gama had reached India, European trading areas dramatically expanded to the shores of Asia, and a long period of harsh competition set the East India Companies of the main European powers of the time against one another. This paper intents to provide answers to two questions: what were the elements that allowed these companies to maintain transactions over such vast areas? And why were some of these companies far more successful than the others? To answer these two questions we have available extensive literature covering the intersection of history, business and economy, generally focusing on one company or on a particular aspect of trade (Chauduri, 1978; Israel, 1989; Subrahmanyan, 1993; Ames, 1996). Our task will be to briefly review these sources, to extract information from them and to compare the economic adaptations and innovations that allowed these companies to be the greatest of their time.
    Keywords: European Trade Empires; Estado da Índia; Dutch East India Company; English East India Company.
    JEL: B52 F02 N70
    Date: 2010–08–11
  8. By: Poon, Winnie P. H. (Asian Development Bank Institute); Chan, Kam C. (Asian Development Bank Institute)
    Abstract: We conducted a global study of the long-term issuer ratings of nonfinancial firms from Standard and Poor's Ratings Services (S&P) for the period 1998–2003. Specifically, we focused on the solicited versus unsolicited ratings and sample-selection bias in the analysis. Unlike the literature, we adopted an improved method using Wooldridge’s instrumental-variable approach to mitigate the concern of specification errors in Heckman’s model. We found that the probability of seeking a long-term issuer rating is positively related to the size and profitability of the firm, and negatively related to the growth opportunities and debt levels of the firm. The credit rating is positively related to the sovereign rating, size, and profitability of the issuer, and negatively related to the debt ratio of the issuer. Consistent with the literature, we found sample-selection bias in credit ratings. Our findings suggest that the firms with solicited ratings seem to be more profitable, more liquid, and have lower leverage than the issuers with unsolicited ratings. After controlling for sample-selection bias and some key financial ratios, we found that unsolicited firms, on average, seem to have lower long-term issuer ratings.
    Keywords: corporate long-term issuer ratings; solicited and unsolicited
    JEL: D53 G15 G24
    Date: 2010–08–23
  9. By: Chia-Lin Chang (Department of Applied Economics, National Chung Hsing University); Michael McAleer (Erasmus University Rotterdam, Tinbergen Institute, The Netherlands, and Institute of Economic Research, Kyoto University); Roengchai Tansuchat (Faculty of Economics, Maejo University)
    Abstract: Crude oil price volatility has been analyzed extensively for organized spot, forward and futures markets for well over a decade, and is crucial for forecasting volatility and Value-at- Risk (VaR). There are four major benchmarks in the international oil market, namely West Texas Intermediate (USA), Brent (North Sea), Dubai/Oman (Middle East), and Tapis (Asia- Pacific), which are likely to be highly correlated. This paper analyses the volatility spillover and asymmetric effects across and within the four markets, using three multivariate GARCH models, namely the constant conditional correlation (CCC), vector ARMA-GARCH (VARMA-GARCH) and vector ARMA-asymmetric GARCH (VARMA-AGARCH) models. A rolling window approach is used to forecast the 1-day ahead conditional correlations. The paper presents evidence of volatility spillovers and asymmetric effects on the conditional variances for most pairs of series. In addition, the forecast conditional correlations between pairs of crude oil returns have both positive and negative trends. Moreover, the optimal hedge ratios and optimal portfolio weights of crude oil across different assets and market portfolios are evaluated in order to provide important policy implications for risk management in crude oil markets.
    Keywords: Volatility spillovers, multivariate GARCH, conditional correlation, crude oil prices, spot returns, forward returns, futures returns
    JEL: C22 C32 G32
    Date: 2010–08
  10. By: Hooi Hooi Lean (School of Social Sciences, Universiti Sains Malaysia); Michael McAleer (Erasmus University Rotterdam, Tinbergen Institute, The Netherlands, and Institute of Economic Research, Kyoto University); Wing-Keung Wong (Department of Economics, Hong Kong Baptist University)
    Abstract: This paper examines the market efficiency of oil spot and futures prices by using both mean-variance (MV) and stochastic dominance (SD) approaches. Based on the West Texas Intermediate crude oil data for the sample period of 1989-2008, we find no evidence of any MV and SD relationship between oil spot and futures indices. This infers that there is no arbitrage opportunity between these two markets, spot and futures do not dominate one another, investors are indifferent to investing in spot or futures, and the spot and futures oil markets are efficient and rational. Our empirical findings are robust to each sub-period before and after the crises for different crises, and also to portfolio diversification.
    Keywords: Stochastic dominance, risk averter, oil futures market, market efficiency
    JEL: C14 G12 G15
    Date: 2010–08

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