nep-sea New Economics Papers
on South East Asia
Issue of 2011‒11‒07
twenty papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Location choice in low-income countries : evidence from Japanese investments in East Asia By Hayakawa, Kazunobu; Tsubota, Kenmei
  2. The Impact of Oil Price Fluctuations on Stock Markets in Developed and Emerging Economies By Thai-Ha LE; Youngho CHANG
  3. Enter the Dragon: Interactions between Chinese, US and Asia-Pacific Equity Markets, 1995-2010 By RICHARD C. K. BURDEKIN; PIERRE L. SIKLOS
  4. Global Crises, Fiscal Imbalances and Global Instability: Interests and Reactions of Asian Economies By Richard Pomfret
  5. Innovation networks in China, Japan, and Korea : further evidence from U.S. patent data By Nabeshima, Kaoru; Tanaka, Kiyoyasu
  6. Innovation networks in China, Japan, and Korea : evidence from Japanese patent data By Kuroiwa, Ikuo; Nabeshima, Kaoru; Tanaka, Kiyoyasu
  7. The Determinants and Long-term Projections of Saving Rates in Developing Asia By Charles Yuji Horioka; Akiko Terada-Hagiwara
  8. Comparative fund flows for Malaysian Islamic and conventional domestic managed equity funds By Ainulashikin Marzuki; Andrew C Worthington
  9. Market discipline by depositors : impact of deposit insurance on the Indonesian banking sector By Hamada, Miki
  10. Impact Analysis of Changes in The Price of Water Resources in China and Beijing By Masaru Ichihashi; Shinji Kaneko
  11. Food Demand Analysis of Indonesian Households with Particular Attention to the Poorest By Pangaribowo, Evita Hanie; Tsegai, Daniel W.
  12. Wages in Kind and Economic Development: Historical and Contemporary Evidence from Asia By Kurosaki, Takashi
  13. Does accounting for inefficiency affect the time-varying short and long-run returns to scale? By Shaik, Saleem
  14. Unilateral trade reform, Market Access and Foreign Competition: the Patterns of Multi-Product Exporters By Maria Bas; Pamela Bombarda
  15. Is the anti-trafficking framework really for the 'victims'? : reflections on Burmese victims of human trafficking and non-trafficked migrants in Thailand By Yamada, Miwa
  16. Oil and Gold Prices: Correlation or Causation? By Thai-Ha LE; Youngho CHANG
  17. Dynamics Between Strategic Commodities and Financial Variables By Thai-Ha LE; Youngho CHANG
  18. Fulfilling Australia's international climate finance commitments: Which sources of financing are promising and how much could they raise? By Frank Jotzo; Jonathan Pickering; Peter J. Wood
  19. Cost overruns in Swedish transport projects By Lundberg, Mattias; Jenpanitsub, Anchalee
  20. Testing for Common Trends in Semiparametric Panel Data Models with Fixed Effects By Yonghui Zhang; Liangjun Su; Peter C.B. Phillips

  1. By: Hayakawa, Kazunobu; Tsubota, Kenmei
    Abstract: Unlike most existing studies, this paper examines the location choices of MNEs in developing countries. Specifically, we investigate the location choices of Japanese MNEs among East Asian developing countries by estimating a four-stage nested logit model at the province level. Noteworthy results of location elements are as follows. As is consistent with the mechanics of cheap labor-seeking FDI, Japanese MNEs are more likely to invest in locations with low income and low tariff rates on products from Japan. Also, accessibility to other locations and/or ports matters in attracting Japanese MNEs because it is crucial in importing materials and exporting their products. In addition, WTO membership and bilateral investment treaties are important because these contribute to the settlement of trade and investment disputes, which is more likely to be necessary in developing countries.
    Keywords: Southeast Asia, China, Japan, Malaysia, Indonesia, Cambodia, Laos, Myanmar, Vietnam, Thailand, Philippines, Foreign investments, Industrial management, Location Choice, Multinational Firms, Nested-logit Model
    JEL: F15 F21 F23
    Date: 2011–07
  2. By: Thai-Ha LE (Division of Economics, Nanyang Technological University, Singapore 639798, Singapore); Youngho CHANG (Division of Economics, Nanyang Technological University, Singapore 639798, 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: 2011–03
    Abstract: This paper applies a variety of short-run and long-run time series techniques to data on a broad group of Asia-Pacific stock markets and the United States extending to 2010. Our empirical work confirms the importance of crises in affecting the persistence of equity returns in the Asia-Pacific region and offers some support for contagion effects. Post-Asian financial crisis quantile regressions yield substantial evidence of long-run linkages between the Shanghai market, the US market and many regional exchanges. Cointegration is particularly prevalent at the higher end of the distribution. Our results suggest that the enormous growth of the Shanghai market in the new millennium has been accompanied by a meaningful level of integration with other regional and world markets in spite of ongoing capital controls.
    JEL: G15
    Date: 2011–10
  4. By: Richard Pomfret (School of Economics, University of Adelaide)
    Keywords: financial crises
    JEL: O53 F40
    Date: 2011–09
  5. By: Nabeshima, Kaoru; Tanaka, Kiyoyasu
    Abstract: The growing importance of innovation in economic growth has encouraged the development of innovation capabilities in East Asia, within which China, Japan, and Korea are most important in terms of technological capabilities. Using U.S. patent data, we examine how knowledge networks have developed among these countries. We find that Japan's technological specialization saw gradual changes, but those of Korea and China changed rapidly since 1970s. By the year 2009, technology specialization has become similar across three countries in the sense that the common fields of prominent technology are electronics and semiconductors. Patent citations suggest that technology flows were largest in the electronics technology, pointing to the deepening of innovation networks in these countries. Together with our prior work, the Japanese and U.S. data produce similar conclusions about innovation networks.
    Keywords: East Asia, China, South Korea, Japan, United States, Industrial technology, Technological innovations, Patents, Electronics, Innovation Network, Patent Statistics, Korea
    JEL: O31 O33 L6
    Date: 2011–04
  6. By: Kuroiwa, Ikuo; Nabeshima, Kaoru; Tanaka, Kiyoyasu
    Abstract: The growing importance of innovation in economic growth has encouraged the development of innovation capabilities in East Asia, within which China, Japan, and Korea are most important in terms of technological capabilities. Using Japanese patent data, we examine how knowledge networks have developed among these countries. We find that Japan's technological specialization saw little change, but those of Korea and China changed rapidly since 1970s. By the year 2009, technology specialization has become similar across three countries in the sense that the common field of prominent technology is "electronic circuits and communication technologies". Patent citations suggest that technology flows were largest in the electronic technology, pointing to the deepening of innovation networks in these countries.
    Keywords: East Asia, China, South Korea, Japan, Technological innovations, Industrial technology, Patents, Technology transfer, Electronics, Telecommunication, Innovation network, Patent statistics
    JEL: L6 L63 O31 O33
    Date: 2011–03
  7. By: Charles Yuji Horioka; Akiko Terada-Hagiwara
    Abstract: In this paper, we present data on trends over time in domestic saving rates in twelve economies in developing Asia during the 1966-2007 period and analyze the determinants of these trends. We find that domestic saving rates in developing Asia have, in general, been high and rising but that there have been substantial differences from economy to economy and that the main determinants of these trends appear to have been the age structure of the population (especially the aged dependency ratio), income levels, and the level of financial sector development. We then project future trends in domestic saving rates in developing Asia for the 2011-2030 period based on our estimation results and find that the domestic saving rate in developing Asia as a whole will remain roughly constant during the next two decades despite rapid population aging in some economies in developing Asia because population aging will occur much later in other economies and because the negative impact of population aging on the domestic saving rate will be largely offset by the positive impact of higher income levels.
    Date: 2011–10
  8. By: Ainulashikin Marzuki; Andrew C Worthington
    Keywords: Islamic finance, mutual funds, fund flows, fund performance
    JEL: C23 G11 G20 M14
    Date: 2011
  9. By: Hamada, Miki
    Abstract: This paper investigates market discipline by depositors in the Indonesian banking sector. Does depositor discipline fulfill its role in Indonesia? Does deposit insurance affect depositor behavior thereby imposing discipline on banks? These questions are empirically examined using panel data on Indonesian commercial banks from 1998 to 2009. In Indonesia deposit insurance was introduced in 2005. Depositor discipline is examined by two measures: change in the amount of deposits and interest rate. The empirical results show that depositors pay attention to bank soundness and riskiness and select banks based on the bank's condition with particular attention paid to equity ratio. It is found that depositors impose discipline on banks, but it varies according to regulatory and economic circumstances.
    Keywords: Indonesia, Banks, Insurance, Deposit insurance, Market discipline, Depositor discipline
    JEL: G21 G28 G30
    Date: 2011–03
  10. By: Masaru Ichihashi; Shinji Kaneko (Graduate School for International Development and Cooperation, Hiroshima University)
    Abstract: This paper aims to analyze the impact of changes in resource prices on intra-region goods supply and on extra-region changes in prices, as well as possible impacts on the demand side, using China and Beijing as examples for analysis. Results of the analysis with Input-Output model and CGE model demonstrate that changes in the price of water supply do not have as significant an impact as is the case with energy goods such as electrical power or oil and mining. Also, another result with International IO model shows that an increase in the price of water resources in China would first induce changes in the prices of some domestic goods (education and research, chemical fertilizers, etc.); the effect on other countries would be relatively large in countries including Malaysia, Thailand, Singapore, and South Korea, and in the industries of flour milling, heavy electrical equipment, knitting, non-ferrous metals, and apparel. However, all of these impacts would be minimal.
    Keywords: water resources; energy price rising effect; International Input-Output; CGE model.
    JEL: F18 O13 Q56
    Date: 2011–11
  11. By: Pangaribowo, Evita Hanie; Tsegai, Daniel W.
    Abstract: The purpose of this study is to analyze the demand responses of Indonesian households to food prices, income changes and other socioeconomic factors. The underlying assumption here is that inadequate information on household food expenditure patterns which vary across income groups and regions may have its contribution to the persistence of food insecurity. We use the Indonesian Family Life Survey data and methodologically we employ an extended form of the Quadratic Almost Ideal Demand System model which includes demographic and regional factors. Results reveal the well known pattern that food demand behavior varies significantly between urban and rural households as well as income groups. The poorest households consume relatively more staple food as well as alcohol and tobacco goods while the richest households consume relatively more meat, snack and dried food. It is shown that the poorest householdsâ expenditure elasticity on alcohol and tobacco is high implying that the poorest households transfer their extra resources on alcohol and tobacco goods instead of more nutritious food items. Results also show that price and expenditure elasticities have changed across time (1997-2007). Own price elasticities have increased for most food items implying that people have become more responsive to changes in prices. In contrast, the expenditure elasticity has declined for most food items (except for âalcohol and tobacco goodsâ) which would imply welfare improvement since the 1997 crisis.
    Keywords: food demand, QUAIDS, Indonesia, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, D11, D12,
    Date: 2011–08
  12. By: Kurosaki, Takashi
    Abstract: This paper investigates the function of various modes of wage payment, focusing on the role of in-kind wages in enhancing household food security when markets are underdeveloped. Historical records from Asian countries, including pre-war Japan and colonial India, demonstrate the importance of in-kind wage payment in the initial phase of economic development. However, there is a paucity of theoretical explanations of in-kind wages in terms of their function and rationale in existing literature. This paper therefore develops a theoretical model that explains labor supply under different labor contracts, by incorporating considerations of food security as the main explanation for in-kind wages. The model predicts that when food security considerations are important for workers, owing to poverty and thin food markets, they tend to work more under contracts where wages are paid in kind (food) than under contracts where wages are paid in cash. This prediction is supported by empirical evidence from rural Myanmar. Estimation results of the reduced-form determinants of labor supply show that workers supply more labor for work paid in kind when the share of staple food in the workers’ household budget is higher and the farmlands on which they produce food themselves are smaller.
    Keywords: agrarian contract, in-kind wages, incentive, food security, Myanmar
    JEL: J33 Q12 O12
    Date: 2011–03
  13. By: Shaik, Saleem
    Abstract: The returns to scale for nineteen South Asian countries are estimated using window and cumulative rolling stochastic frontier regression analysis. The stochastic frontier analysis accounts for technical inefficiency of Hicks non-neutral technology production function in the estimation of the returns to scale. The window rolling regression and cumulative rolling regression allows the estimation of short and long run time-varying returns to scale, respectively. Empirical application to Asian agriculture sector using Food and Agricultural Organization data from 1961-2008 indicates returns to scale are under (over) estimated by the traditional panel models in the short (long) run time-varying estimation. The time-varying estimates of returns to scale indicate decreasing trend in the short run compared to long run analysis. --
    Keywords: Asian agriculture sector,stochastic frontier analysis,window and cumulative time-varying input elasticities and returns to scale,one-way fixed effect,1961-2008
    Date: 2011
  14. By: Maria Bas; Pamela Bombarda
    Abstract: Recent findings in international trade using detailed firm level surveys emphasize the microeconomic effects of trade liberalization episodes. A unilateral trade reform has two opposite effects on firms’ export patterns: (i) expansion of export opportunities for foreign firms exporting to that destination and (ii) intensification of foreign competition in the liberalized market. The main contribution of this paper is to investigate this trade-off between market access growth and tougher competitive pressures in the export market. Using detailed firm-product-destination data for French firms (1999-2005), we explore how the margins of French exports react to unilateral trade liberalization of Asian countries, with particular attention given to China. We exploit the exogenous variation in Chinese import tariff cuts relative to tariff changes in other Asian countries. Our findings suggest that French firms expanded the range of their exported products and the volume of exports to China relative to other Asian destinations after Chinese tariff liberalization. These results are robust when we explicitly account for foreign competition of third countries in the liberalized market. Quantitatively, a 7 percent declined of Chinese tariff on average during the period 1999-2005, results in almost 6 log points expansion of a firm’s export product scope and 14 log points of firms’ export sales.
    Keywords: MARKET ACCESS, Unilateral trade liberalization, foreign competition, export margins, Multi-product exporters
    JEL: F12 F13 L11
    Date: 2011–07
  15. By: Yamada, Miwa
    Abstract: Since the year 2000 when the Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children, human trafficking has been regarded as one of the egregious violations of human rights, and global efforts have been made to eradicate it. The anti-trafficking framework has multiple dimensions, and the way the anti-trafficking framework is constructed influences its impact on the victims and non-trafficked migrants. This paper will analyze the impact of the anti-trafficking framework on the experiences of Burmese victims and non-trafficked migrants in Thailand. I will question the conventional framework of anti-trafficking, and seek to construct a framework more appropriate for addressing victims' actual needs. In conclusion, the anti-trafficking framework should serve the best interest of the victim; still, it should not be one which might adversely affect the interest of the would-be victim who is not identified as a victim according to the law.
    Keywords: Myanmar, Thailand, International crime, Legal system, Human rights, Migration, Human trafficking, Anti-trafficking, Framework, Law
    Date: 2011
  16. By: Thai-Ha LE (Division of Economics, Nanyang Technological University, Singapore 639798, Singapore); Youngho CHANG (Division of Economics, Nanyang Technological University, Singapore 639798, Singapore)
    Abstract: This paper uses the monthly data spanning from Jan-1986 to April-2011 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 use different oil price proxies in our investigation and find that the impact of oil price on gold price is not asymmetric but non-linear. Our results show that there is a long-run relationship existing between the prices of oil and gold. Our findings imply that the oil price can be used to predict the gold price.
    Keywords: oil price, gold price, inflation, US dollar index, cointegration
    JEL: E3
    Date: 2011–02
  17. By: Thai-Ha LE (Division of Economics, Nanyang Technological University, Singapore 639798, Singapore); Youngho CHANG (Division of Economics, Nanyang Technological University, Singapore 639798, Singapore)
    Abstract: This study employs the bounds testing approach to cointegration to investigate the relationships between the prices of two strategic commodities (oil and gold) and the financial variables (interest rates, exchange rates and stock prices) of Japan – a major oil-consuming and goldholding country. Our results suggest that the prices of gold and stock can help form expectations of higher inflation over time. In the short run, only gold prices impact the interest rate in Japan. Overall the findings of this study could help the Japanese monetary authority in conducting monetary policy and investors of Japanese yen in building their optimal portfolios. Specifically our findings suggest that the optimal choice in the long term for those who invest in yendenominated assets would be to include gold in their portfolios.
    Keywords: strategic commodities, financial variables, bounds test to cointegration
    JEL: C32 E4 F31
    Date: 2011–04
  18. By: Frank Jotzo (Crawford School of Economics & Government, Australian National University, Canberra, ACT, Australia); Jonathan Pickering (Centre for Applied Philosophy and Public Ethics, The Australian National University); Peter J. Wood (Resource Management in Asia-Pacific Program, Crawford School of Economics and Government, The Australian National University)
    Abstract: Developed countries have pledged to mobilise $100 billion per year by 2020 for climate change action in developing countries. Progress on financing is necessary to ensure broader progress on climate change cooperation. Supporting the global commitment is in Australia's interests, since climate finance can harness low-cost mitigation opportunities and help vulnerable countries in the Asia-Pacific region adapt to climate change. Based on Australia's wealth and emissions, we find that a fair share for Australia may be around 2.4 per cent, or $2.4 billion a year by 2020. We analyse possible sources of finance in Australia. Carbon markets could provide large financial flows but their short-term prospects are uncertain, and additional public finance is needed in any event. While Australia currently draws its climate finance from a growing aid budget, a large scale-up of climate change aid could raise concerns that aid is being diverted from existing development priorities. A carbon levy on international transport could provide considerable revenue and could be implemented unilaterally ahead of a global scheme. Reducing tax breaks for fossil fuel using and producing activities could raise revenue well in excess of Australia's total climate finance commitment, while improving economic efficiency and cutting carbon emissions. Further, Australia's exports of coal and other resources provide a very large tax base which could be tapped to a greater extent.
    JEL: H20 F35 Q54
    Date: 2011–10
  19. By: Lundberg, Mattias (CTS); Jenpanitsub, Anchalee (Mass Rapid Transit Authority of Thailand)
    Abstract: Cost overrun of transport projects is one of the most important problems in transport planning. It also makes the result of the cost-benefit analyses uncertain, thus decreasing their usefulness for decision making. In recent years more emphasis has been put on improving cost calculations and reducing cost overruns, in Sweden and internationally. Still cost overruns have not decreased. We find that the average cost overrun in Swedish road projects is similar to other countries, while it is lower than in other countries for rail. Small projects (< 100 million SEK) have much higher cost overruns than large projects and constitute a large share of total overruns. A project type with large overruns, both in absolute and relative terms, is new rail tracks on existing lines. To improve cost estimates in Sweden, the Successive Calculation method has recently been applied. We find that the variance is significantly lower in these than in actual outcomes, and that the difference is surprisingly small between projects in different planning stages. Another method, Reference Class Forecasting, is demonstrated in two case studies. It results in higher required uplifts. An interesting way forward would be to develop risk-based estimating, based on principal component analysis. To do that, a database needs to be collected, which in turn demands better follow-up procedures.
    Keywords: Cost overrun; cost estimates; actual costs; successive calculation; reference class forecasting
    JEL: R40 R42
    Date: 2011–11–02
  20. By: Yonghui Zhang (School of Economics, Singapore Management University); Liangjun Su (School of Economics, Singapore Management University); Peter C.B. Phillips (Cowles Foundation, Yale University)
    Abstract: This paper proposes a nonparametric test for common trends in semiparametric panel data models with fixed effects based on a measure of nonparametric goodness-of-fit (R^2). We first estimate the model under the null hypothesis of common trends by the method of profile least squares, and obtain the augmented residual which consistently estimates the sum of the fixed effect and the disturbance under the null. Then we run a local linear regression of the augmented residuals on a time trend and calculate the nonparametric R^2 for each cross section unit. The proposed test statistic is obtained by averaging all cross sectional nonparametric R^2's, which is close to zero under the null and deviates from zero under the alternative. We show that after appropriate standardization the test statistic is asymptotically normally distributed under both the null hypothesis and a sequence of Pitman local alternatives. We prove test consistency and propose a bootstrap procedure to obtain p-values. Monte Carlo simulations indicate that the test performs well in finite samples. Empirical applications are conducted exploring the commonality of spatial trends in UK climate change data and idiosyncratic trends in OECD real GDP growth data. Both applications reveal the fragility of the widely adopted common trends assumption.
    Keywords: Common trends, Local polynomial estimation, Nonparametric goodness-of-fit, Panel data, Profile least squares
    JEL: C12 C14 C23
    Date: 2011–10

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