nep-sea New Economics Papers
on South East Asia
Issue of 2011‒05‒24
thirteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Demand for Food of Indonesian Households: Evidence from Longitudinal Data By Pangaribowo, Evita Hanie
  2. Asian Rice Policies and WTO Commitments on Domestic Support Under Existing and Proposed Doha Round Provisions By Yang, Min-Hsien; Blandford, David
  3. Food Security - Global Trends and Region Perspective with Reference to East Asia By Chang, Ching-Cheng; Hsu, Shih-Hsun
  4. Supporting Household Consumption in the Time of Economic Crisis: Evidence from Food Security Program in Indonesia By Pangaribowo, Evita Hanie
  5. A changing role for universities in the periphery By Wilson Suzigan; Márcia Siqueira Rapini; Eduardo da Motta e Albuquerque
  6. The Sensitivity of Export Quantities to Exchange Rates in the Context of Intra-Industry Trade By Yoko Oguro
  7. Revisiting the palm oil boom: An examination of consumption in the oils complex By Sanders, Daniel; Balagtas, Joseph; Gruere, Guillaume
  8. Rural Non-farm Dynamics: Occupational Ladders and Earnings Mobility in Thailand By Chawanote, Chayanee; Barrett, Christopher B.
  9. Is Malaysia exempted from impossible trinity: empirical evidence from 1991-2009 By Lim, Ewe Ghee; Goh, SooKhoon
  10. Rice Trade Policies and Their Implications for Food Security By Durand-Morat, Alvaro; Wailes, Eric J.
  12. Impact of Climate Change on Poverty in Laos By Kyophilavong, Phouphet; Takamatsu, Shinya
  13. The ENSO Impact on Predicting World Cocoa Prices By Ubilava, David; Helmers, C. Gustav

  1. By: Pangaribowo, Evita Hanie
    Keywords: food demand, QUAIDS, Indonesia, Consumer/Household Economics, D11, D12,
    Date: 2011
  2. By: Yang, Min-Hsien; Blandford, David
    Abstract: We examine current rice policies in four major Asian countries (China, Japan, Korea, and Taiwan), their relationship to current WTO disciplines, and to those proposed under the Doha negotiations. WTO disciplines have prompted some changes in rice policies, but disciplines of domestic support are unlikely to impose serious constraints in the future. Using the example of Taiwan, we examine how existing support policies could be changed to reduce domestic distortions and satisfy WTO commitments. Changing from existing amber box payments to those that would likely qualify for inclusion under the blue or green boxes could allow greater market orientation in Taiwanâs rice market, while satisfying food security and farm income support objectives.
    Keywords: domestic support, rice, WTO, Taiwan, Asia, Agricultural and Food Policy, Food Security and Poverty, International Relations/Trade,
    Date: 2011–07–26
  3. By: Chang, Ching-Cheng; Hsu, Shih-Hsun
    Abstract: The sharp increase in global food prices during 2007â2008 has triggered the awareness of food insecurity problems and their impacts on the low income, foodâdeficit countries many of which are located in the East Asian countries. The foodâsecurity situation was good in relative terms given that the percentage of carbohydrates consumed is slightly lower than the world average while proteins and fats consumption are higher than that of other regions. The food security in East Asia is largely driven by domestic production performance, and despite the doubling of import volume during the last decade, Asia remains the least dependent of all regions on food imports. Nevertheless, the rising energy costs and grain prices induced by the increasing demand of grains for bioâfuel exacerbate the undernourishment of the poor households in the region. While most of the government interventions focus on shortâterm measures such as reducing domestic food prices through trade or price control, the risk of facing a longâterm food insecurity still exists which may render national action inadequate and require multilateral cooperation. Evidence has shown that agricultural production is rather vulnerable to climate change, in particular, temperature and precipitation changes. As Matthews et al. (1995) indicates, the impact of climate change on rice production in Asia is of particular policy interest considering that rice is the most important component in millions of Asiansâ diet. Seventeen south, southâeast, and east Asian countries produce 92% of the world total rice supply, among which 90% is consumed in these regions as well (Matthews et al., 1995). Riceâgrowing countries in Asia locate in different latitudes and the terrain conditions of the riceâgrowing areas vary as well. As such, climateâchange impact on rice production of the Asian countries is quite diversified and warrants a detailed assessment at regional level. Here, we present a summary report from a recent study by Lee and Chang (2010) regarding the impact of climate change on Asiaâs rice sector. Our study employs a multiâregion, multiâsector computable general equilibrium (CGE) modelâwhich also considers crop suitability and agroâecological characteristicsâto analyze the climateâchange impact on global rice market (supplyâside shock through crop yield change), with the consideration of changes in food demand due to population and 3 economic growth. In contrast to Mathews et al. (1995), our study places more emphasis on the economic side of food security issue regarding rice such as the effect on prices of rice and other competing food crops that is brought about by varied changes in rice yield across countries. We take into account changes in both the supply and demand sides to examine the impact of climate change by 2020 on the global rice market and food security for Asian countries should the world is developing as plotted in the IPCC SRES scenario A2. Among all these concerns, food price is the key. Thus, in addition to the physical impact of climate change, priceâinduced adjustments in food production, which would affect significantly the reallocation of agricultural land among uses, are also taken into account. By identifying crop suitability and agroâecological features of land, the economic model we used here can model more realistically the production responses of riceâgrowing countries to climate change, especially when diversity are found for the riceâgrowing countries in their vulnerability to climate change. Food security of countries located in tropical and subâtropical zones may be adversely affected by climate change and the fluctuations in global food prices thus induced. The results suggest that among Asian countries, India gets the hardest hit of climate change in its rice production, and a huge increase in the unit cost of rice production. Thus India has to rely heavily on imports from the world market to meet its domestic rice demand. To fill the gap being caused by climate change, China also has to increase rice imports, with a relatively bigger magnitude than the other Asian countries. India and China have been the worldâs top riceâgrowing countries, and most of their rice production is consumed domestically. Should negative effects of rice yield occur in these two major riceâconsuming countries, their raised demand for rice imports may push up global price of rice, and in turn affect regions that are very much reliant on foreign supply. Our major finding is that as agricultural trade intensifies, impact of climate change, be it positive or negative, occurring in one region will spill over into other regions, through the channels of trade. As such, policy measures aimed to effectively alleviate food security problem should also take into account the geographically diverse impact of climate change on crop yield along with the agricultural trade development related policies.
    Keywords: Food Security and Poverty,
    Date: 2011
  4. By: Pangaribowo, Evita Hanie
    Abstract: This study evaluates the impact of food security program â an almost universal program of Indonesian Social Safety Net Program in the time of economic crisis. Food security program aimed to protect poor households from the negative effects of economic crisis by means of highly subsidized rice. To assess the impact of the program, this study utilizes matching estimator approach combined with difference in difference method. The rich longitudinal dataset used in this study enables matching estimator and difference in difference approach to provide accurate estimate of the programâs impact on its beneficiaries. Results indicate the positive impact of the food security program on the expenditures of richer nutrient food which include meat, fish and dairy products. The program has also substantial impact on health expenditure. Nevertheless, this study also found that the program only has a limited impact to the neediest group. Improving targeting seems to be one of governmentâs tasks in order to increase program benefits, particularly to the poorest households.
    Keywords: Impact evaluation, food security, Indonesia, Agricultural and Food Policy, I38,
    Date: 2011
  5. By: Wilson Suzigan (DPCT-Unicamp); Márcia Siqueira Rapini (Cedeplar-UFMG); Eduardo da Motta e Albuquerque (Cedeplar-UFMG)
    Abstract: An international research on interactions between universities and firms is an opportunity to investigate this subject beyond the developed countries. This project involves 12 countries from three continents: Africa (South Africa, Nigeria and Uganda), Asia (South Korea, China, India, Thailand and Malaysia) and Latin America (Mexico, Costa Rica, Argentina and Brazil). This paper introduces a theoretical framework to deal with this broad set of countries, their different levels of NSI formation and their different levels of development. This framework may help public policies to understand the role of universities for a country search for an “active insertion in the international division of labor”.
    Keywords: interactions between firms and universities, National Innovation Systems, catch up processes.
    JEL: O30
    Date: 2011–05
  6. By: Yoko Oguro
    Abstract: This paper adds to the literature that suggests that exports become less sensitive to exchange rate movements under certain circumstances. Focusing on the industry-specific sensitivity of export quantities to exchange rates in the context of intra-industry trade (IIT), this paper theoretically and empirically investigates this relationship. The model presented shows that the extent of bilateral IIT is higher the lower the elasticity of substitution between differentiated products and/or the smaller the gap in production costs between two countries. The empirical analysis investigates cross-country industry-panels for the bilateral trade of eight East Asian countries, Japan, and the United States with the EU, Asia, Japan, and North America. The results confirm that the sensitivity of export quantities to exchange rates declines as the extent of IIT increases. The policy implication of the results is that exchange rate revaluations become a less powerful tool to redress trade imbalances when substantial IIT exists.
    Keywords: trade, exchange rates, intra-industry trade, product differentiation
    JEL: F00 F10 F14 F19
    Date: 2011–02
  7. By: Sanders, Daniel; Balagtas, Joseph; Gruere, Guillaume
    Abstract: The production, trade, and market share of palm oil has shown impressive growth in the last two decades. As a result of sustainability concerns over issues such as deforestation in Indonesia, the causes of the growth in the palm oil market have received considerable attention. The growth of the biofuels market is one potential culprit that has been notably discussed, but it is not the only possible driver of growth in the palm oil market. Restrictions on genetically-modified organisms may have played a role, especially as they relate to limits on oil produced from GMO soybeans. Additionally, increasing concerns over health issues such as trans-fats may have spurred substitution to the low trans-fats palm oil. This analysis details some of the changes in net imports, market shares, and world prices that the edible oil complex has undergone. Additionally, a vector-error correction model and Granger causality are applied to the prices of the edible oils. The differences in causality across the oils in the complex suggest that the drivers of change may be more multi-dimensional than expected.
    Keywords: palm oil, biofuels, edible oils, consumption, Demand and Price Analysis,
    Date: 2011
  8. By: Chawanote, Chayanee; Barrett, Christopher B.
    Abstract: This study explores occupational and earnings dynamics of rural non-farm economy (RNFE) in Thailand. Using occupational transition matrices, we finds significant occupational transitions in rural Thailand, mainly involving moving to non-farm employment, rather than starting businesses. Moreover, results from conditional micro mobility regressions show that transitions into the RNFE are associated with statistically significant earnings gains while transitions into farming are associated with earnings losses. The cumulative distribution of income indicates that non-farm employersâ earnings distribution stochastically dominates the others, signaling an occupational ladder. However, only a small number of individuals become non-farm employers, reflecting the difficulty involved in starting, expanding or even keeping a rural non-farm business.
    Keywords: earnings mobility, non-farm employment, non-farm business, occupational choice, Community/Rural/Urban Development, International Development, Labor and Human Capital,
    Date: 2011–05–04
  9. By: Lim, Ewe Ghee; Goh, SooKhoon
    Abstract: This paper examines Bank Negara Malaysia’s (BNM) monetary policy autonomy in 1991-2009, a period of volatile capital flows, during which BNM operated under several exchange regimes: managed floating; fixed exchange rates; and fixed exchange rates with selective capital controls. Using a modified version of the Brissimis, Gibson and Tsakalotos (2002) model, the paper’s empirical estimates show that the same-period offset coefficients are significantly less than unity under all regimes, indicating that the Malaysian central bank possesses some short-run control over monetary policy (even under fixed exchange rates). Although the long-run offset coefficient continues to be less than unity under managed floating, it is not significantly less than unity under fixed exchange rates. These results show that Malaysia is not exempted from the impossible trinity except in the very short-run. Perhaps one of the reasons Malaysia abandoned its US dollar exchange rate peg on 20 July 2005 to move back to managed floating is to increase its monetary policy independence. One implication of the Malaysian monetary policy experience is that managed floating with active sterilization may be a viable strategy for emerging market economies to deal with volatile capital flows.
    Keywords: Offset Coefficient; Sterilization Coefficient; Monetary Autonomy; Impossible Trinity
    JEL: F41
    Date: 2011–03
  10. By: Durand-Morat, Alvaro; Wailes, Eric J.
    Abstract: There is a strong linkage between the behavior of the rice market and the state of food security in many regions around the world, particularly in Asia, as made evident in the 2007-08 commodity crisis. Rice is a staple for the majority of the population in Asia, where roughly 60% of the close to one billion undernourished people live (FAO, 2010). As Timmer (2010) states, âit is impossible to improve food security in the short run or long run without providing adequate supplies of rice that are accessible to the poorâ (p. 2). The rice crisis of 2007-08 showed the crucial role of export and import policies on the behavior of the rice market and its consequences for price stability and food security. Market fundamentals could only explain a minimal part of the skyrocketing increase in rice prices observed (Dawe, 2010). The overarching objective of this study is to assess the impact of international rice trade policies on the patterns of production, consumption, trade, and prices, from an ex-post and ex-ante perspective, and analyze the implications of these policies from a food-security point of view. The RICEFLOW model (Durand-Morat and Wailes, 2010) is used for the assessment. RICEFLOW is a spatial partial equilibrium model of the global rice economy in which the behavior of producers and consumers are specified according to neoclassical economic theory (profit and utility maximizers, respectively). Domestic production and imports are specified as imperfect substitutes following Armington (1969). The model is calibrated to calendar year 2008, the latest available year for which the RICEFLOW database is available. The 2008 RICEFLOW database is disaggregated into 65 country/regions, including the largest producers and traders of rice, and 9 rice commodities defined on two dimensions, (1) milling degrees (paddy, brown, and milled), and (2) type (long grain, medium & short grain, and fragrant). Given the crucial importance of the Armington elasticities and the lack of good estimates on these parameters, systematic sensitivity analysis is conducted on the best available estimates to generate stochastic distributions of the endogenous variables with respect to these behavioral parameters. Results are decomposed in two dimensions, namely, (1) trade policy groups, and (2) countries, to obtain a better idea of the partial effect of policies and or countries applying them. Achieving food security implies guaranteeing access (physical availability and affordability) to safe and nutritious food to the entire population. Improving food security is the key goal of the World Food Summit of 1996 and the first Millennium Development Goal. Food security assessments have traditionally been done either at the macro level (market stability) or micro level (household access). Although the methodology used in this study constrains us to focus on the macro level, it can contribute to an improved understanding of trade policy for regional and global rice supply and, thus, for improved market stability.
    Keywords: rice, trade, policies, food security, Agricultural and Food Policy, Food Security and Poverty, International Relations/Trade, F13, Q17, Q18,
    Date: 2011
  11. By: Singh, Aaron; Karali, Berna; Ramirez, Octavio A.
    Abstract: We analyze time-varying volatility in crude oil, heating oil, and natural gas futures markets by incorporating changes in important macroeconomic variables and major political and weather-related events in conditional variance equations. We allow each market to respond to positive news different than to negative news by using the exponential GARCH model developed by Nelson (1991). It is shown that a leverage effect exists in each market with a larger response to negative news. Further, volatility in these markets is found to change in response to several major events such as the Asian financial crisis in 1997 and hurricane Katrina in 2005, as well as in response to changes in macroeconomic variables such as consumer price and industrial production indices. In addition, downward changes in these macro variables are found to have larger impact than upward changes do. Finally, volatility spillover from heating oil to natural gas futures markets is found.
    Keywords: Asymmetric shocks, energy markets, oil, spillover effects, volatility, Marketing, Resource /Energy Economics and Policy,
    Date: 2011
  12. By: Kyophilavong, Phouphet; Takamatsu, Shinya
    Abstract: The climate change is global problems. It is predicted to have more severe impact on developing country which most of population are poor. The main impact of climate change on poverty is changing crop productivity and commodity prices. However, there are few studies on the relationship between climate change and poverty. Therefore, this study will use Laos which has a high share of agriculture sector on GDP and high poverty rates as a case study to assess the impact the climate change on national wide-economy and climate change using CGE model. The preliminary result shows that climate change has serious impact of Lao economy in term of declining GDP. On the other hand, the micro-simulation indicates that the impact on poverty was negligible. This is because the households in Laos are autarky and not affected by the changes of prices and wages due to climate change.
    Keywords: Environmental Economics and Policy, Food Security and Poverty,
    Date: 2011
  13. By: Ubilava, David; Helmers, C. Gustav
    Abstract: Cocoa beans are produced in equatorial and sub-equatorial regions of West Africa, Southeast Asia and South America. These are also the regions most affected by El Nino Southern Oscillation (ENSO) -- a climatic anomaly affecting temperature and precipitation in many parts of the world. Thus, ENSO, has a potential of affecting cocoa production and, subsequently, prices on the world market. This study investigates the benefits of using a measure of ENSO variable in world cocoa price forecasting through the application of a smooth transition autoregression (STAR) modeling framework to monthly data to examine potentially nonlinear dynamics of ENSO and cocoa prices. The results indicate that the nonlinear models appear to outperform linear models in terms of out-of-sample forecasting accuracy. Furthermore, the results of this study indicate evidence of Granger causality between ENSO and cocoa prices.
    Keywords: Cocoa Prices, El Nino Southern Oscillation, Out-of-Sample Forecasting, Smooth Transition Autoregression, Demand and Price Analysis, Environmental Economics and Policy, Research Methods/ Statistical Methods, C32, Q11, Q54,
    Date: 2011

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