nep-sea New Economics Papers
on South East Asia
Issue of 2010‒12‒11
eight papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Asian Economic Integration and Cooperation: Challenges and Ways Forward for Pan-Asian Regionalism By Durgesh K. Rai
  2. The Determinants of Bilateral FDI: Is Asia Different? By Peter A. Petri
  3. What factors determine student performance in East Asia? New evidence from TIMSS 2007 By Hojo, Masakazu; Oshio, Takashi
  4. Beyond the Golden Era: Asia Pacific Cooperation after the Global Financial Crisis By Peter A. Petri
  5. Free Trade Agreement between People’s Republic of China and India: Likely Impact and Its Implications to Asian Economic Community By Swapan K. Bhattacharya; Biswa N Bhattacharyay
  6. Workplace Concentration of Immigrants By Fredrik Andersson; Monica Garcia-Perez; John Haltiwanger; Kristin McCue; Seth Sanders
  7. Comparing the Copenhagen Emissions Targets By Frank Jotzo
  8. The Singapore Experience: The evolution of technologies, costs and benefits, and lessons learnt By Kian-Keong Chin

  1. By: Durgesh K. Rai
    Abstract: As the Asian economies have grown larger and become more complex, they have also be-come more integrated at both the regional and the subregional level. Yet although economic integration has increased, regionalism in the sense of economic cooperation at both the pan-Asian and subregional levels has lagged behind. Regionalism or economic cooperation in terms of bilateral or multilateral FTAs is a relatively new phenomenon, but one that has in-creased rapidly in recent years. However, the progress of Asian regionalism faces several challenges. Also, the increasing number of FTAs could lead to a “spaghetti-bowl effect” and reduce trade volume instead of increasing it. In addition to resolving the existing challenges, actors in the region need to convert some of the existing FTAs into a broader one that can serve as a hub for further integration. Given the potential economic gains and future eco-nomic dynamism of the region, this paper suggests the pursuit of the Comprehensive Eco-nomic Partnership in East Asia (CEPEA) rather than the East Asia Free Trade Area (EAFTA).
    Keywords: economic integration, regionalism, economic cooperation, ASEAN, SAARC, spaghetti-bowl effect, FTAs
    Date: 2010–11
  2. By: Peter A. Petri (International Business School, Brandeis University)
    Abstract: Intra-Asian foreign direct investment (FDI) is dominated by flows from high technology economies to medium technology economies, while FDI elsewhere primarily consists of flows among high technology economies. This distinctive pattern is not due simply to differences in the relative distribution of Asian FDI recipients by technology, or to systematic differences in Asia’s technology characteristics. A gravity model analysis is used to explore whether Asian FDI patterns differ significantly from those elsewhere, and if so, in what ways. The results show that Asian FDI flows, in contrast to other FDI flows, systematically favor hosts with relatively low technology achievement and relatively strong intellectual property rights regimes. This type of “Asian exceptionalism” is consistent with “flying geese” theories that have argued that Asian development is the result of technology flows among economies that occupy nearby rungs of the technology ladder.
    Keywords: Foreign Direct Investment, FDI, Asia, Technology Transfer, Gravity Model, Intellectual Property Rights, Flying Geese Paradigm
    JEL: F21 O33 O34
    Date: 2010–03
  3. By: Hojo, Masakazu; Oshio, Takashi
    Abstract: This study investigates what factors determine students’ academic performance in five major economies in East Asia, using the dataset from the 2007 survey of Trends in International Mathematics and Science Study (TIMSS). We explicitly consider initial maturity differences, endogeneity of class size, and peer effects in regression analysis. We find that a student’s individual and family background is a key determinant of educational performance, while institutional and resource variables have a more limited effect. Peer effects are significant in general, but ability sorting at the school and/or class levels makes it difficult to interpret them in Hong Kong and Singapore.
    Keywords: Educational production function, Initial maturity differences, Peer effects, Class size, Asia
    JEL: I21 I22
    Date: 2010–12
  4. By: Peter A. Petri (International Business School, Brandeis University)
    Abstract: The half century leading up to the crisis of 2008-2009 was the best such period in world economic history, especially in the Asia Pacific. Peace and relative economic stability permitted unprecedented liberalization, economic integration, and advances in productivity and growth. But the institutions and strategies of this system are hitting roadblocks. Economic power has become more diffuse and the challenges for cooperation more complex. The world trading system may be entering a period of “contested stability”—continuity with limited prospects for forward progress. In this system cooperation will involve managing interdependence rather than negotiating new agreements. A new, layered approach to cooperation is likely to emerge, with stronger bilateral and regional mechanisms complementing weaker global processes, such as the G-20. World growth need not suffer if new, distributed drivers of productivity emerge to replace deepening economic integration as the engine of progress.
    Keywords: Asian Economic Growth, International Cooperation, Globalization, Interdependence, WTO, Trade Policy
    JEL: F01 F02 F13 F15 F53
    Date: 2010–11
  5. By: Swapan K. Bhattacharya; Biswa N Bhattacharyay
    Abstract: Open regionalism and trade cooperation between the world’s two largest developing countries, the People’s Republic of China (PRC) and India, can foster outward-oriented development and intra-regional trade based on comparative advantage and available factor endowments. In view of the recent wave of worldwide subregional and bilateral trade cooperation, and the recent suspension of Doha negotiations by the World Trade Organization, the opportunity costs of not moving toward greater trade integration between the PRC and India could be increasing. This paper presents the recent trends in the PRC-India trade and examines empirically the likely impact of their preferential and free trade agreements using Gravity Model under different comparative-static scenarios. It also discusses the implications of PRC-India trade cooperation on the formation of the Asian Economic Community. [ADB Institute Discussion Paper No. 59]
    Keywords: India, China, Economic Cooperation, Trade, Free Trade Agreement, Gravity Model, Asian Economic Community
    Date: 2010
  6. By: Fredrik Andersson; Monica Garcia-Perez; John Haltiwanger; Kristin McCue; Seth Sanders
    Abstract: To what extent do immigrants and the native-born work in separate workplaces? Do worker and firm characteristics explain the degree of workplace concentration? We explore these questions using a matched employer-employee database that extensively covers employers in selected MSAs. We find that immigrants are much more likely to have immigrant coworkers than are natives, and are particularly likely to work with their compatriots. We find much higher levels of concentration for small businesses than for large ones, that concentration varies substantially across industries, and that concentration is particularly high among immigrants with limited English skills. We also find evidence that neighborhood job networks are strongly positively associated with concentration. The effects of networks and language remain strong when type is defined by country of origin rather than simply immigrant status. The importance of these factors varies by immigrant country of origin—for example, not speaking English well has a particularly strong association with concentration for immigrants from Asian countries. Controlling for differences across MSAs, we find that observable employer and employee characteristics account for almost half of the difference between immigrants and natives in the likelihood of having immigrant coworkers, with differences in industry, residential segregation and English speaking skills being the most important factors.
    Keywords: concentration, segregation, immigrant workers, social networks
    Date: 2010–11
  7. By: Frank Jotzo (Crawford School of Economics and Government, The Australian National University)
    Abstract: Following the Copenhagen climate Accord, developed and developing countries have pledged to cut their greenhouse gas emissions, emissions intensity or emissions relative to baseline. This analysis puts the targets for the major countries on a common footing, and compares them across different metrics. Targeted changes in absolute emissions differ markedly between countries, with continued strong increases in some developing countries but significant decreases in others including Indonesia, Brazil and South Africa, provided reasonable baseline projections are used. Differences are smaller when emissions are expressed in per capita terms. Reductions in emissions intensity of economies implicit in the targets are remarkably similar across developed and developing countries, with ChinaÕs emissions intensity target spanning almost the same range as the implicit intensity reductions in the United States, EU, Japan, Australia and Canada. Targeted deviations from business-as-usual are also remarkably similar across countries, and the majority of total global reductions relative to baselines may originate from China and other developing countries. The findings suggest that targets for most major countries are broadly compatible in important metrics, and that while the overall global ambition falls short of a two degree trajectory, the targets by key developing countries including China can be considered commensurate in the context of what developed countries have pledged.
    Keywords: Climate Change, mitigation, developing countries, emissions intensity
    JEL: Q54
    Date: 2010–10
  8. By: Kian-Keong Chin
    Abstract: Singapore is an island-state with a land area of about 710 square km, measuring 42 km across and 23 km from north to south. Densely populated with more than 4.8 million people, its transport needs are served by an infrastructure of 147 km of MRT/LRT lines and 3,300 km of roads catering to more than 900,000 vehicles. Given its land constraints, Singapore’s overall transportation strategy cannot rely on building roads and more roads to serve its populace’s travel needs. It needs a comprehensive and affordable public transport system and sustainable demand management tools.
    Date: 2010–01

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