nep-sea New Economics Papers
on South East Asia
Issue of 2011‒09‒16
twenty papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Institutions for Economic and Financial Integration in Asia: Trends and Prospects By Capannelli, Giovanni
  2. Exports and Job Creation in Indonesia Before and After the Asian Financial Crisis By Haryo Aswicahyono; Chris Manning
  3. The impact of oil price fluctuations on stock markets in developed and emerging economies By Thai-Ha Le; Youngho Chang
  4. Links with East Asia for a recovery from the Great East Japan Earthquake: Geographical Simulation Analysis By Ikumo Isono; Fukunari Kimura
  5. Inflation Targeting and Inflation Persistence in Asia-Pacific By Stefan Gerlach; Peter Tillmann
  6. Why Does Population Aging Matter So Much for Asia? Population Aging, Economic Security and Economic Growth in Asia By Sang-Hyop LEE; Andrew MASON; Donghyun PARK
  7. Harmonizing Biodiesel Fuel Standards in East Asia: Current Status, Challenges and Way Forward By Xunpeng SHI; Shinichi GOTO
  8. "Central Banking in an Era of Quantitative Easing" By Andrew Sheng
  9. Ladies first ? firm-level evidence on the labor impacts of the East Asian crisis By Hallward-Driemeier, Mary; Rijkers, Bob; Waxman, Andrew
  10. Autocracies and Development in a Global Economy: A Tale of Two Elites By Akerman, Anders; Larsson, Anna; Naghavi, Alireza
  11. Australia-Thailand Trade: Has the FTA Made a Difference? By Prema-chandra Athukorala; Archanun Kohpaiboon
  12. The Chinese Impact on GDP Growth and Inflation in the Industrial Countries By Christian Dreger; Yanqun Zhang
  13. South-South Trade: An Asian Perspective By Prema-chandra Athukorala
  14. The Consequences of Child Market Work on the Growth of Human Capital By Armand A Sim; Daniel Suryadarma; Asep Suryahadi
  15. Trade Compatibility Between India And Asean Countries By Sarath Chandran, B.P.
  16. A simulation study of an ASEAN Monetary Union (Replaces CentER DP 2010-100) By Boldea, O.; Engwerda, J.C.; Michalak, T.; Plasmans, J.E.J.; Salmah, S.
  18. Search, Effort, and Locus of Control By McGee, Andrew; McGee, Peter
  19. Monetary and Fiscal Stimuli, Ownership Structure, and China's Housing Market By Deng, Yongheng; Morck, Randall; Wu, Jing; Yeung, Bernard
  20. Los católicos globales. El primer sondeo global del catolicismo mundial según el “World Values Survey” y el “European Social Survey” By Tausch, Arno; Ghymers, Christian

  1. By: Capannelli, Giovanni (Asian Development Bank Institute)
    Abstract: Asian economic regionalism has emerged from a bottom-up process, driven by market forces in the absence of a grand plan for regional integration. While the financial crisis of 1997–98 triggered new regional cooperation initiatives, more recently several Asian political leaders have formulated proposals for the creation of a regional economic community, suggesting the possible start of a top-down approach. Based on the results of a survey of Asia’s opinion leaders conducted by the Asian Development Bank (ADB) in 2010, this paper discusses how Asia’s institutional architecture for economic and financial integration is taking shape, suggesting the need to strengthen existing institutions that promote Asian regionalism and to create new ones.
    Keywords: chiang mai initiative; economic cooperation; regional integration
    JEL: F15 F36 H87 O53
    Date: 2011–09–07
  2. By: Haryo Aswicahyono; Chris Manning
    Abstract: Employment generation has been a challenge in Indonesia since the Asian Financial Crisis (AFC), especially in labor-intensive manufacturing. We examine the direct and indirect impact of exports on jobs, based on an analysis of input-output tables over the period 1985-2005, and compare these findings with the earlier pre-crisis period. The paper finds that fewer jobs were created through exports in manufacturing industries in after the AFC, because of slower growth in manufacturing exports and a shift away from light industry. However, there was an increase in service sector jobs, partly because of linkages with the main export industries in manufacturing and primary industry. Besides intensified competition from other lower-middle income Asian economies, the main constraints to job creation through exports appear to have been on the supply side; these include too poor infrastructure, an uncertain investment climate and tight labor regulations.
    Keywords: exports, employment creation, manufacturing growth, input-output analysis, Indonesia, Southeast Asia
    JEL: F16 J23 O14
    Date: 2011
  3. By: Thai-Ha Le (Division of Economics, Nanyang Technological University, Singapore); Youngho Chang (Division of Economics, Nanyang Technological University, Singapore)
    Abstract: This study examines the response of stock markets to oil price volatilities in Japan, Singapore, Korea and Malaysia by applying the generalized impulse response and variance decomposition analyses to the monthly data spanning 1986:01 – 2011:02. The results suggest that the reaction of stock markets to oil price shocks varies significantly across markets. Specifically, the stock market responds positively in Japan while negatively in Malaysia; the signal in Singapore and South Korea is unclear. We find that the stock market inefficiency, among others, appeared to have slowed the responses of the stock market to aggregate shocks such as oil price surges.
    Keywords: oil price fluctuation, stock return, exchange rate, emerging market, VAR model.
    JEL: Q43 F3 G14 G15
    Date: 2011
  4. By: Ikumo Isono (Ikumo Isono, Economist, Economic Research Institute for ASEAN and East Asia); Fukunari Kimura (Fukunari Kimura, Chief Economist, Economic Research Institute for ASEAN and East Asia)
    Abstract: Japan is now struggling for a recovery from the devastating earthquake and tsunami of March 11, 2011. Although trunk logistic infrastructure has quickly been restored, some local infrastructure is likely to take a longer time to re-establish. The theory of new economic geography suggests that temporary interruption of infrastructure services may generate long-term negative effects on the Tohoku region and Japan as a whole because some of the economic activities may move away. We argue that strengthening links with East Asia is a key supplementary policy for achieving a full economic recovery. Our Geographical Simulation Model assesses economic effects of several policy scenarios.
    Date: 2011–08–01
  5. By: Stefan Gerlach (Institute for Monetary and Financial Stability and Goethe-University Frankfurt and Hong Kong Institute for Monetary Research); Peter Tillmann (Justus-Liebig-University Giessen and Institute for Monetary and Financial Stability and Hong Kong Institute for Monetary Research)
    Abstract: Following the Asian financial crisis in 1997-98, a number of Asian central banks adopted inflation targeting. While it is possible for the average inflation rate to be close to target, deviations of inflation could nevertheless be large and protracted. We therefore explore how successful this framework has been by looking at the persistence of inflation, as measured by the sum of the coefficients in an autoregressive model for inflation, using a median unbiased estimator and bootstrapped confidence bands. We find a significant reduction in inflation persistence following the adoption of inflation targeting. The speed by which persistence falls varies across countries. Interestingly, the economies not adopting inflation targeting do not show a decline in persistence. Measuring the performance of monetary policy strategies in terms of inflation persistence rather than the level of inflation shows that inflation targeting performs better than alternative strategies.
    Keywords: Inflation Targeting, Asia, Inflation Persistence, Monetary Policy Strategy
    JEL: C22 E31 E5
    Date: 2011–08
  6. By: Sang-Hyop LEE (Sang-Hyop LEE East West Center and University of Hawaii at Manoa, USA); Andrew MASON (Andrew MASON East West Center and University of Hawaii at Manoa, USA); Donghyun PARK (Donghyun PARK Economics and Research Department, Asian Development Bank, Philippines)
    Abstract: Asia as a whole is experiencing a rapid demographic transition toward older population structures. Within this broader region-wide trend, there is considerable heterogeneity, with different countries at different stages of the demographic transition. In this paper, we document Asia’s population aging, describe the region’s old-age support systems, and draw out the regional socioeconomic implications of population aging and old-age support systems. Population aging gives rise to two fundamental challenges for the region – (1) developing socioeconomic systems that can provide economic security to the growing number of elderly and (2) sustaining strong growth in the face of aging over the next few decades. Successfully addressing those two challenges will be vital for ensuring Asia’s continued economic success in the medium and long term.
    Date: 2011–08–01
  7. By: Xunpeng SHI (Xunpeng SHI Economic Research Institute for ASEAN and East Asia (ERIA), Indonesia); Shinichi GOTO (Shinichi GOTO Research Center for New Fuels and Vehicle Technology (NFV), National Institute of Advanced Industrial Science and Technology (AIST), Japan)
    Abstract: Abstract: This paper discusses the development of and policy towards biodiesel fuel (BDF) in the East Asia Summit (EAS) Region (hereafter East Asia), with a focus on activities related to harmonizing BDF standards. It finds that the EAS countries have actively promoted the development of BDF for a variety of reasons. To minimize problems with engines arising from the use of BDF, most EAS countries have established their national BDF standards. However, these diverse standards cause barriers for BDF trade and act against the regional interest in maximizing benefits from BDF production and utilization. Therefore, the EAS policy makers decided to harmonize BDF standards, and a regional benchmark standard has been published. Through a comparative review of existing national standards against the benchmark, it finds that the harmonization is beneficial economically and environmentally, and is technically feasible but practically stalled due to the lack of political determination. Therefore, among a few policy implications, the key message to deliver is a call for political determination to implement the harmonization in the EAS region. Since harmonization of BDF standards has been tried in other regions, the findings of this paper may supplement the literature, enhance understanding of the EAS case, and provide lessons and implications that may be helpful in advancing similar harmonization elsewhere.
    Date: 2011–05–01
  8. By: Andrew Sheng
    Abstract: This paper reviews the key insights of Hyman P. Minsky in arguing why finance cannot be left to free markets, drawing on the East Asian development experience. The paper suggests that Minsky's more complete stock-flow consistent analytical framework, by putting finance at the center of analysis of economic and financial system stability, is much more pragmatic and realistic compared to the prevailing neoclassical analysis. Drawing upon the East Asian experience, the paper finds that Minsky's analysis has a system-wide slant and correctly identifies Big Government and investment as driving employment and profits, respectively. Specifically, his two-price system can aid policymakers in correcting the systemic vulnerability posed by asset bubbles. By concentrating on cash-flow analysis and funding behaviors, Minsky's analysis provides the link between cash flows and changes in balance sheets, and therefore can help identify unsustainable Ponzi processes. Overall, his multidimensional analytical framework is found to be more relevant than ever in understanding the Asian crisis, the 2008 global financial crisis, and policymaking in the postcrisis world.
    Keywords: Financial Economics; Keynes; Keynesian; Post-Keynesian; Government Policy and Regulation
    JEL: E12 G28
    Date: 2011–09
  9. By: Hallward-Driemeier, Mary; Rijkers, Bob; Waxman, Andrew
    Abstract: In a crisis, do employers place the burden of adjustment disproportionately on female employees? Relying on household and labor force data, existing studies of the distributional impact of crises have not been able to address this question. This paper uses Indonesia's census of manufacturing firms to analyze employer responses and to identify mechanisms by which gender differences in impact may arise, notably differential treatment of men and women within firms as well as gender sorting across firms that varied in their exposure to the crisis. On average, women experienced higher job losses than their male colleagues within the same firm. However, the aggregate adverse effect of such differential treatment was more than offset by women being disproportionately employed in firms hit relatively less hard by the crisis. The null hypothesis that there were no gender differences in wage adjustment is not rejected. Analyzing how employer characteristics impact labor market adjustment patterns contributes to the understanding of who is vulnerable in volatile times.
    Keywords: Labor Markets,Gender and Development,Labor Policies,Population Policies,Gender and Law
    Date: 2011–09–01
  10. By: Akerman, Anders (Dept. of Economics, Stockholm University); Larsson, Anna (Dept. of Economics, Stockholm University); Naghavi, Alireza (University of Bologna and FEEM)
    Abstract: Data on the growth performances of countries with similar comparative (dis)advantage and political institutions reveal a striking variation across world regions. While some former autocracies such as the East Asian growth miracles have done remarkably well, others such as the Latin American economies have grown at much lower rates. In this paper, we propose a political economy explanation of these diverging paths of development by addressing the preferences of the country's political elite. We build a theoretical framework where factors of production owned by the political elites differ across countries. In each country, the incumbent autocrat will cater to the preferences of the elites when setting trade policy and the property rights regime. We show how stronger property rights may lead to capital accumulation and labor reallocation to the manufacturing sector. This, in turn, can lead to a shift in the comparative advantage, a decision to open up to trade and an inflow of more productive foreign capital. Consistent with a set of stylised facts on East Asia and Latin America, we argue that strong property rights are crucial for success upon globalization.
    Keywords: Autocracy; Growth; Political Elites; Landowners; Capitalists; Growth Miracles; Trade; Comparative Advantage; Capital Mobility; Property Rights
    JEL: F10 F20 O10 O24 P14 P16
    Date: 2011–06–01
  11. By: Prema-chandra Athukorala; Archanun Kohpaiboon
    Abstract: This paper examines the impact of the Australia-Thailand free trade agreement (TAFTA) on bilateral trade between the two countries, paying attention to the implications of rules of origins (RoO) and the utilization of tariff preferences. It is found that trade has expanded faster following TAFTA came into effect, but the impact has heavily concentrated in a few product lines in Australian imports from Thailand, reflecting the influence of commodity specific, supply-side factors which have a bearing on the rate of preference utilization. The findings, inter alia, suggest that the use of officially announced preference rates in trade flow modeling is likely to exaggerate trade flow effects of FTAs.
    Keywords: free trade agreement, rules of origin, production fragmentation, Thailand, Australia
    JEL: F13 F14 F15 F53
    Date: 2011
  12. By: Christian Dreger; Yanqun Zhang
    Abstract: The integration of China into the global economy is one of the most spectacular events in economic history. This paper investigates to what extent this process affects output growth and inflation in the advanced countries. A GVAR model is specified to explore interdependencies between business cycles in China and industrial countries, including the US, the euro area and Japan. For robustness, the results are compared to those obtained from leading structural models, such as NiGEM and OEF. Evidence is based on the responses to a Chinese demand shock arising from the recent fiscal stimulus program. The results show that the impact on output growth in the advanced economies can be quite substantial, especially for the Asian region. The expansionary effects in the US and the euro area responses are lower, as trade linkages are less intensive. The multipliers are also reduced by a sizeable effect on inflation, as Chinese firms participate in international production chains.
    Keywords: GVAR, Chinese economy, shock transmission
    JEL: E32 F15 C51
    Date: 2011
  13. By: Prema-chandra Athukorala
    JEL: F21 F23 O33 O53
    Date: 2011
  14. By: Armand A Sim; Daniel Suryadarma; Asep Suryahadi
    Abstract: Child labor is a phenomenon that has attracted a great amount of attention and research. Theoretical propositions suggest that child labor is inefficient if it adversely affects future earning ability. This paper contributes to the literature on the effects of child market work on human capital by focusing on the long-term growth in human capital, which is widely known to significantly affect earning ability. The paper also uses better measures of human capital by focusing on the output of the human capital production function: numeracy skills, cognitive skills, and pulmonary function. Using a rich longitudinal dataset on Indonesia, we find strong negative effects of child labor on the growth of both numeracy and cognitive skills in the next seven years. In addition, we find a strong and negative effect on pulmonary function as measured through lung capacity. Comparing the effects by gender and type of work, we find that female child workers suffer more adverse effects on mathematical skills growth, while male child workers experience much smaller growth in pulmonary function. We also find that child workers who work for pay outside the family bore worse effects compared to child workers who work in the family business.
    Keywords: child labor, human capital, skills, health, Indonesia
    JEL: I12 I21 J13 J22 O15
    Date: 2011
  15. By: Sarath Chandran, B.P.
    Abstract: The post WTO world trading system is witnessing proliferation of large number of Regional Trade Agreements (RTAs). The slow pace of multilateral negotiations and lack of consensus among members on major trade issues is undermining the role of WTO and hastening the regionalism process. Realising the importance of East Asia in the emerging global economic order, India signed a FTA with ASEAN which will come in to force from 1st January 2010. For any Regional Trade Agreement (RTA) to be successful, it is imperative on partner countries to have favourable trade structure between them. In this context, the paper looked in to the trade structure of India and ASEAN countries to identify complementary sectors and product groups for enhanced trade cooperation. Trade indices such as Trade Intensity Index (TII) and Revealed Comparative Index (RCA) are constructed at product group, HS-2 and HS-4 levels to get trade complementarity and Similarity. From the analysis it is revealed that there are complementary sectors and products available between India and ASEAN for greater cooperation.
    Keywords: Regional Trade Agreement; Revealed Comparative Advantage; India; ASEAN
    JEL: F15 F10 F14
    Date: 2010–12–07
  16. By: Boldea, O.; Engwerda, J.C.; Michalak, T.; Plasmans, J.E.J.; Salmah, S. (Tilburg University, Center for Economic Research)
    Abstract: This paper analyzes some pros and cons of a monetary union for the ASEAN1 countries, excluding Myanmar. We estimate a stylized open-economy dynamic general equilibrium model for the ASEAN countries. Using the framework of linear quadratic differential games, we contrast the potential gains or losses for these countries due to economic shocks, in case they maintain their status-quo, they coordinate their monetary and/or fiscal policies, or form a monetary union. Assuming for all players open-loop information, we conclude that there are substantial gains from cooperation of monetary authorities. We also find that whether a monetary union improves upon monetary cooperation depends on the type of shocks and the extent of fiscal policy cooperation. Results are based both on a theoretical study of the structure of the estimated model and a simulation study.
    Keywords: ASEAN economic integration;monetary union;linear quadratic differential games;open-loop information structure.
    JEL: C61 C71 C72 C73 E17 E52 E61 F15 F42 F47
    Date: 2011
  17. By: Thai-Ha Le (Division of Economics, Nanyang Technological University, Singapore); Youngho Chang (Division of Economics, Nanyang Technological University, Singapore)
    Abstract: This study using the monthly data spanning 1986:01-2011:04 to investigate the relationship between the prices of two strategic commodities: gold and oil. We examine this relationship through the inflation channel and their interaction with the index of the US dollar. We used different oil price proxies for our investigation and found that the impact of oil price on the gold price is not asymmetric but non-linear. Further, results show that there is a long-run relationship existing between the prices of oil and gold. The findings imply that the oil price can be used to predict the gold price.
    Keywords: oil price fluctuation, gold price, inflation, US dollar index, cointegration.
    JEL: E3
    Date: 2011
  18. By: McGee, Andrew (Simon Fraser University); McGee, Peter (National University of Singapore)
    Abstract: We test the hypothesis that locus of control – one's perception of control over events in life – influences search by affecting beliefs about the efficacy of search effort in a laboratory experiment. We find that reservation offers and effort are increasing in the belief that one's efforts influence outcomes when subjects exert effort without knowing how effort influences the generation of offers but are unrelated to locus of control beliefs when subjects are informed about the relationship between effort and offers. These effects cannot be explained by locus of control's correlation with unmeasured human capital, personality traits, and the costs of search – alternative explanations for the relationships between locus of control and search behavior that cannot be ruled out using survey data – as the search task does not vary across treatments, which leads us to conclude that locus of control influences search through beliefs about the efficacy of search effort. Our findings provide evidence that locus of control measures can be used to identify job seekers at risk of becoming "discouraged" and abandoning search.
    Keywords: locus of control, reservation wages, labor market search, experiment
    JEL: J64 D83 C91
    Date: 2011–08
  19. By: Deng, Yongheng (National University of Singapore); Morck, Randall (University of Alberta and NBER); Wu, Jing (National University of Singapore and Tsinghua University); Yeung, Bernard (National University of Singapore)
    Abstract: In the recent financial crisis, macroeconomic stimuli produced mixed results across developed economies. In contrast, China's stimulus boosted real GDP growth from an annualized 6.2% in the first quarter of 2009 trough to 11.9% in the first quarter of 2010. Amidst this phenomenal response, land auction and house prices in major cities soared. We argue that the speed and efficacy of China's stimulus derives from state control over its banking system and corporate sector. Beijing ordered state-owned banks to lend, and they lent. Beijing ordered centrally-controlled state-owned enterprises (SOEs) to invest, and they invested. However, our data show that much of this investment was highly leveraged purchases of real estate. Residential land auction prices in eight major cities rose about 100% in 2009, controlling for quality variation. Moreover, higher price rises occur these SOEs are more active buyers. We argue that these centrally-controlled SOEs overbid substantially, fueling a real estate bubble; and that China's seemingly highly effective macroeconomic stimulus package may well have induced costly resource misallocation.
    Keywords: Monetary stimuli; Fiscal Stimuli; Ownership Structure; Housing Market; China
    JEL: E52 G21 G38 P27 P34
    Date: 2011–09–05
  20. By: Tausch, Arno; Ghymers, Christian
    Abstract: This empirical study about global Catholicism, based on the data of the World Values Survey and the European Social Survey, starts with a philosophical introduction by Christian Ghymers (Brussels) on the Roman Catholic Church and Enlightenment. The essence of Ghymers’ proposal to democratize the Roman Catholic Church – the ultima ratio of this book - , is based on the ideas of the precursor of the emancipation of Latin America, Francisco de Miranda. According to figures from the World Values Survey, a total of 8.4% of Catholics are prepared to even sacrifice their life for their religion, and 11.1% of global Catholics also attend Mass more than once a week, while 31.4% attend Mass at least once a week and another 15.7% attend Mass at least once a month. The most devout Catholic communities are to be found in India, Nigeria and Tanzania. The lowest religious service attendance rates are found in France, Latvia and Uruguay. Yes, there is a Catholic Church in which high-income people are much more represented among those who attend mass on Sunday at least once a month than in the average of society, and these national Catholic churches are found in Bosnia - Herzegovina (2001), Singapore (2002), Germany (1999), and Britain (1999), while there is also a Catholic Church of the poor (people with low incomes), who are (much) more represented among the regular religious service participants than among the total population (in descending order): Latvia (1999), Czech Republic (1999), Lithuania (1999), Spain (2000), and Slovenia (1999). We then demonstrate empirically that liberation theology as a phenomenon of left-wing Catholicism is now virtually disappearing worldwide, and that liberation theology ends with the end of the social movement that has represented it. We then estimate that practicing global Catholics amount to a milieu of some 340 million human who want to severely restrict or prohibit migration, 298 million human beings who reject gay neighbors, 292 million who do not accept a single mother and 170 million people who in one way or another favor the use of violence for political ends. Our empirical research shows that from the point of view of the sociology of religion, there are four types and extremes of Catholicism, all anti-democratic, but in conflict with each other, and self-contradictory: • anti-democratic forces and the xenophobic plebeian low income and education segment. • a Catholic left, which is not xenophobic, but which is extremely susceptible to the temptations of anti-democratic attitudes and has no real roots in the poorest strata of the population, but among the lower middle class of Catholic skilled workers. • The strongly xenophobic upper strata, which are highly educated, and who practice every Sunday, but who completely distrust the Church as an institution and also complete distrust the armed forces, which in most Catholic countries nowadays solidly support the new democratic institutions after the military regimes of the 60, 70 and 80, and finally • the old classical Catholic right-wing upper class, which prefers Army rule, but at least it is not susceptible of xenophobia In addition, in South Africa (2001), Slovenia (1999), the Czech Republic (1991), and many other countries, Catholics had a stronger tendency to be anti-Semitic than overall society. We also analyzed the size and the weight of the different phobias among the global practicing Catholics (practicing at least on a monthly basis) by applying factor analysis. Islamophobia comes first, in close relation to racism and rejection of immigrants. Our macro-quantitative multiple regression model of the determinants of Catholic anti-Semitism with World Values Survey data shows that the relative degree of anti-Semitism among practicing Catholics compared to society as a whole seems to suggest that there are two variables that contribute to and in a way trigger excessively this phenomenon. Predictor number 1 is the societal homicide rate as an indicator of the crime situation. Predictor number 2 is the monetary freedom indicator, developed by the Heritage Foundation in the United States. This is a clear indicator of neo-liberal economic policies. These two variables trigger almost 2/5 of the specific catholic-ness of anti-Semitism. Why? It appears that the culture of Catholicism practiced in the world today is looking anew for "scapegoats" for the current ills of modern society, crime and financial insecurity, the latter caused by the liberalization of financial markets in the 1980s and 1990s. We also try to develop in this book an index of liberal Catholicism, compatible with the Enlightenment, again using results for practicing Catholics from the polls from the World Values Survey at the national level. According to our figures, the most enlightened Catholicisms of the world are to be found in the following 10 countries: Italy; Austria; Croatia; Germany; Albania; Switzerland; United States; Spain; Malta; and Ireland. One of the most surprising results of our comparison in European countries with available data from the European Social Survey is that the percentage of people, who have little or no confidence in the democratic system, is larger among practicing Catholics than among European Muslims. In Slovenia, this difference is more than 10%, in Belgium and Switzerland this percentage is between 5 and 10% higher than among the resident Muslims; and also in Spain, Austria, United Kingdom and the Netherlands distrust in democracy is higher among practicing Catholics than among resident Muslims. We also present the first empirical comparison in world social science literature about the global rejection of democracy by religious denomination, religious practice and political orientation. Our results inmply a critique of the political practice of radical Catholics both on the extreme right and the extreme left in recent years. Finally, we also constructed an index of the adaptation of all the practitioners of all religions towards the secular, modern and democratic, constitutional state. Despite the fact that most Muslim countries are poorer than most Catholic countries, Catholicism and Islam practiced worldwide are almost indistinguishable on our secular modern democratic value scale. Harvard economist Professor Robert Barro investigated in recent years the close relationship between religious believe structures and economic growth. In our chapter on Catholicism and world development, we continue research in this tradition and we tried to establish empirical relationships between empirically observable structures of Catholicism and world development. We present our multiple regression results in a language that is understandable also for non-economists. Current research in the theory of global economic growth and development determines the size of the effect of independent variables ("drivers of economic growth", "drivers of inequality") on the rate of long-term growth / rate of economic inequality, etc., by investigating not only the explanatory power of economic variables and policies, but also institutions, the climate, the penetration of a country by foreign capital, the rate of military personnel per population, religious structures and so on. Many explanatory variables enter then into a regression of a "kitchen sink" type (this term was used, among others by the econometrician Durlauf, 2008) of all possible explanations of economic growth and economic performance, and not all variables, which went ‘down the sink’, have a significant effect. Only the ones weeded out by the ‘filter’ of statistical significance. We start with one of the most interesting results: while health expenditures per capita in a society significantly determine if a country has a liberal Catholic environment, is committed to democracy, it is also clear that Catholic elitism, characteristic of a society where practicing Catholics enjoy a much higher level of education than the society around them, is one of the main reasons for the lack of a Catholic liberal and democratic political and intellectual climate. Besides, it is quite clear that the density of Cardinals as a reasonably reliable sign of the close axis between the local Church and the Rome center prevents the development of liberal Catholicism, while the goal number 1 of existing political feminism around the globe, i.e. equating female earnings to male earnings, also has a negative effect on the development of liberal Catholicism. Tthat is feminism greatly polarizes Catholic structures, especially in the more developed world. Our results on the determinants of the rate of long-term economic growth are well supported by the research results of the neo-liberal quantitative German sociologist Erich Weede, and they also corroborate or rather qualify recent results by Robert Barro. The rate of religious practice on Sunday and the rate of military personnel per capita have a positive effect on the rate of economic growth, stressing the factors of trust in religious institutions (Sunday Mass) and the modernization and identification of youth with the country and the armed forces (military personnel rate) for economic growth. Besides, it is worth mentioning that a very strong Catholic left is absolutely incompatible with very rapid capitalist development, especially because its values of immediate justice, etc. are irreconcilable with a "Calvinist" long-term accumulation of savings, the accumulation of capital and general trust in the institutions of property. Apart from that, some socio-liberal theories of growth (Tausch/Prager, 1993) received support - the female activity rate has a significant and positive effect on the rate of economic growth. We ultimately believe that a key to understanding the dangers of a return of the Catholic Church towards pre-Vatican II structures is the total misunderstanding of the historic contribution of Free Masonry to the liberal political culture of the countries of the world.
    Keywords: Keywords: C43 - Index Numbers and Aggregation; F5 - International Relations and International Political Economy; Z12 – Religion; D73 - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    JEL: D73 Z12 F50 C43 C42 D72
    Date: 2011–09–07

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