nep-sea New Economics Papers
on South East Asia
Issue of 2011‒11‒28
twenty-one papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Management of Exchange Rate Regimes in Emerging Asia By Rajan, Ramkishen
  2. Impact of US Quantitative Easing Policy on Emerging Asia By Morgan, Peter J.
  3. Remittances, Growth and Poverty: New Evidence from Asian Countries By Katsushi Imai; Raghav Gaiha; Abdilahi Ali; Nidhi Kaicker
  4. Production networks in the Asia-Pacific region : facts and policy implications By Hiratsuka, Daisuke
  6. Growth strategies in a greener world By Nabeshima, Kaoru
  7. Remittances, Growth and Poverty: New Evidence from Asian Countries By Katsushi S. Imai; Raghav Gaiha; Abdilahi Ali; Nidhi Kaicker
  8. Crisis and transformation of corporate governance models in Asia (In French) By Ji-Yong LEE (GREThA, CNRS, UMR 5113 & ESC Bretagne Brest)
  10. Do Policy-Related Shocks Affect Real Exchange Rates? An Empirical Analysis Using Sign Restrictions and a Penalty-Function Approach By Taya Dumrongrittikul
  12. Towards a Measure of Core Inflation using Singular Spectrum Analysis By Franz Ruch; Dirk Bester
  13. Risk Sharing and Financial Contagion in Asia: An Asset Price Perspective By Phurichai Rungcharoenkitkul
  14. Impact of the Global Economic Crisis on Taipei,China’s Industrial Structure and Firm Activity By Hou, Jack W.
  15. USERS’ PERCEPTIONS ON THE USEFULNESS OF THE SMES’ ACCOUNTING INFORMATION: MALAYSIAN CASE By Dr. Nahariah Jaffar; Zarehan Selamat; Norhazlin Ismail; Hamsatulazura Hamzah
  16. Financial Integration and Rebalancing in Asia By Runchana Pongsaparn; Olaf Unteroberdoerster
  17. Long Term Patterns of International Merchandise Trade By Roman Stöllinger; Beate Muck
  18. Climate Change and Development: Trade Opportunities of Climate Smart Goods and Technologies in Asia By Dinda, Soumyananda
  20. Conditional Correlations and Volatility Spillovers Between Crude Oil and Stock Index Returns By Chia-Lin Chang; Michael McAleer; Roengchai Tansuchat
  21. Existence of competitive equilibrium in an optimal growth model with heterogeneous agents and endogenous leisure By Aditya Goenka; Cuong Le Van; Manh-Hung Nguyen

  1. By: Rajan, Ramkishen (Asian Development Bank Institute)
    Abstract: This paper revisits the issue of exchange rate regimes in emerging Asia. It is divided into two main parts. The first part compares de jure and de facto exchange rate regimes in Asia over the decade 1999–2009. The second part focuses on the sustained stockpiling of reserves in developing and emerging Asian economies since 2000 (interrupted only briefly by the global financial crisis). The paper concludes with some observations on the management of Asian currencies in light of the global financial crisis and concerns about global imbalances.
    Keywords: exchange rate regimes; exchange rate management; emerging asia; global financial crisis; global imbalances
    JEL: F14 F31 F41
    Date: 2011–11–18
  2. By: Morgan, Peter J. (Asian Development Bank Institute)
    Abstract: The adoption of quantitative easing (QE) policy by the United States (US) Federal Reserve Bank since early 2009 has aroused widespread concerns in Asia and elsewhere regarding its possible impact in terms of the weakening of the US dollar and stimulating capital outflows to emerging economies that might increase inflationary pressures in them. This report investigates possible impacts of US quantitative easing policy on Asian economies and financial markets.
    Keywords: quantitative easing; federal reserve bank; asian economies; emerging asia; financial markets
    JEL: E43 E52 E58 F31 F32
    Date: 2011–11–18
  3. By: Katsushi Imai; Raghav Gaiha; Abdilahi Ali; Nidhi Kaicker
    Date: 2011
  4. By: Hiratsuka, Daisuke
    Abstract: Production networks have been extensively developed in the Asia-Pacific region. This paper employs two micro-level approaches, case studies and econometric analysis, using JETRO's firm surveys which investigate Japanese affiliates operating in Southeast Asia. These two approaches found that production networks have extended, involving suppliers, across various nations in the Asia-Pacific region, and that production bases in host and home countries have different roles. A home country serves as a headquarters with services such as R&D, international marketing, and financing. A high tariff policy in a host country may foster domestic industries through the expansion of procurement from domestic suppliers, either indigenous or foreign, but it may discourage a country from becoming an export platform.
    Keywords: Southeast Asia, Japan, Foreign affiliated firm, Industrial management, Production management, International economic relations, Skilled differentiation, High tariff policy, Export-platform FDI
    JEL: F14 F15 F23 L23
    Date: 2011–11
  5. By: Dr. Wan Fauziah Wan Yusoff (Faculty of Technology Management and Business, Universiti Tun Hussein Onn Malaysia); Prof. Dr. Anona Amrstrong (Victoria Law School, Faculty of Business and Law, Victoria University, Australia)
    Abstract: Directors’ competencies are seeing to be of importance to corporate governance. As this issue has not yet being studied extensively in Malaysia, this study determines the key competencies of Malaysian company’s directors using qualitative approach involving two stages of Delphi Technique. In the first stage all information pertaining to directors’ competences in the literature had been reviewed. In the second stage, the key competencies identified in stage one were the criteria for developing a semi structured questionnaire. Participants were asked to rank the competencies in term of their importance for directors’ performance. Based on personel interviews with 41 participants eight types of competencies were found to be essential for Malaysian companies’ directors. Financial competencies received the highest responses, followed by corporate planning, business forecasting, legal, risk management, marketing, human resource and international business. This paper provides important evidence to support the conclusions drawn from the study about the importance of relevant directors’ competencies for board and corporate effectiveness
    Keywords: Competencies, company directors, board effectiveness, corporate governance
    JEL: M0
    Date: 2011–10
  6. By: Nabeshima, Kaoru
    Abstract: Two new developments in the global landscape - growing concerns towards global warming and the rising prices of commodities – require countries to craft new growth strategies. These recent developments in the global market offer fresh industrial opportunities as well as difficulties for developing countries embarking on industrialization. In this paper, we examine current developments in global market that would affect industrialization prospects in East Asia and explores development strategies that are suitable for development based on export oriented manufacturing industries in a green world.
    Keywords: East Asia, Southeast Asia, Industrialization, Climatic change, Economic development, Development plans, Green growth, Environment and trade
    JEL: F18 O14 Q01
    Date: 2011–11
  7. By: Katsushi S. Imai (Department of Economics, School of Social Sciences, University of Manchester, UK); Raghav Gaiha (Faculty of Management Studies, University of Delhi, India); Abdilahi Ali (School of Social Sciences, University of Manchester, UK); Nidhi Kaicker (Faculty of Management Studies, University of Delhi, India)
    Abstract: The present study re-examines the effects of remittances on growth of GDP per capita using annual panel data for 24 Asia and Pacific countries. The results generally confirm that remittance flows have been beneficial to economic growth. However, our analysis also shows that the volatility of capital inflows such as remittances and FDI is harmful to economic growth. This means that, while remittances contribute to better economic performance, they are also a source of output shocks. Finally, remittances contribute to poverty reduction – especially through their direct effects. Migration and remittances are thus potentially a valuable complement to broad-based development efforts.
    Keywords: remittance, economic growth, volatility, poverty, Asia
    JEL: C23 F24 I32 O15 O47 O53
    Date: 2011–11
  8. By: Ji-Yong LEE (GREThA, CNRS, UMR 5113 & ESC Bretagne Brest)
    Abstract: The objective of this paper is to present the transformations of corporate governance in Asia\r\nsince the crisis of 1997. The analysis deals with 14 Asian countries during the period of 1997-\r\n2006. The important changes include the development of stocks markets, the new role of\r\nbanks and the rise of institutional investors. There is a incessant increase in the market\r\ncapitalization and the number of listed companies on the stock markets. Banks adjust to the new financial environment through diversification of their activities. The capital structure of listed companies is slowly diluted. The significant increase in the participation of institutional investors suggests a possible convergence to a model characterized by dispersed ownership. However, we will show the variety of ownership structure forms in this region.
    Keywords: Corporate governance; Transformation of Asian corporate governance; Institutional investors; Asian Crisis.
    JEL: G20 G34 N25
    Date: 2011
  9. By: Nadzri Ab Ghani (Curtin Graduate School of Business, Curtin University, Perth, Australia); Jeremy Galbreath; Robert Evans
    Abstract: The function of whistle-blowing as an effective internal control mechanism has long been accepted around the globe. Several individual factors have been considered as predictive variables of whistle-blowing intention. However, findings are still inconclusive. Using the theory of planned behaviour as a framework, this study examines the relationship between the selected predictive variables (internal locus of control, work experience and ethics training) and whistle-blowing intention. Data were collected randomly from 311 supervisors within large manufacturing companies in Malaysia. Applying multiple regression analysis, results indicated that work experience and ethics training are significantly related to whistle-blowing intention. On the other hand, there is no significant relationship between internal locus of control and whistle-blowing intention. Implications for theory and practice from the findings are discussed
    Keywords: whistle-blowing intention, theory of planned behaviour, internal locus of control, work experience, ethics training, Malaysia
    JEL: M0
    Date: 2011–10
  10. By: Taya Dumrongrittikul
    Abstract: We examine the response of real exchange rates to shocks in real exchange rate determinants, a monetary policy shock, and a fiscal policy shock in 30 countries over the period 1970-2008. The country set is divided into 4 groups - European, developed-country, Asian developing-country, and non Asian developing-country groups. We propose and apply a new approach, i.e. we employ a panel Bayesian structural vector error correction model, and we impose sign restrictions with a penalty-function approach to identify the shocks. We find that most of our impulse response analysis is in line with economic theories. Specifically, there is strong evidence that trade liberalization generates a real depreciation and an increase in government spending leads to a real appreciation over the long run. We also find that a contractionary monetary policy shock has only short-run impacts on real exchange rates, corresponding to the long-run neutrality of monetary policy. The responses to a productivity shock are interesting, i.e. productivity growth in traded sectors has no effect on the real exchange rate of the Asian developing-country group, and it leads to a long-run real appreciation in the non Asian developing-country group. In contrast, this shock causes a real depreciation in the European country group over the long run. Variance decomposition suggests that international trade policy contributes the most to real exchange rate movements in most country groups, with the exception of the non Asian developing-country group, for which fiscal policy via government spending seems to be the most important.
    Keywords: Real exchange rate, Vector error correction model, Monetary policy shocks, Sign restriction, Penalty function, Identification
    JEL: C33 C51 E52 F31
    Date: 2011–11–10
  11. By: Shahrin Saad (College of Business, Universiti Utara Malaysia, 06010, Sintok Kedah, Malaysia); Khulida Kirana Yahya; Faizuniah Pangil
    Abstract: Since hotel industry is major contributor to the growth of Tourism Industry in Malaysia, it is vital to take into consideration of issues that are being carried by the industry. For example the high turnover of employee in hotel due to poor strategy conducted by hotels’ management. This paper explores the new strategy measurement which is the integrated business strategy dimensions in fitting the hotel industry due to the scarce of hospitality strategy at present. The new strategy is developed from the integration of four business strategy scholars. The new strategy dimensions have been renamed and items of the strategies have been tested through a pilot study. In the pilot study, a questionnaire of 29 items to measure integrated business strategy were formed. It is hoped that this measurement tool will contribute to the setting of a foundation to future hospitality strategy development and management of hotels in Malaysia
    Keywords: Hospitality strategy, business strategy, integrated business strategy and hotel
    JEL: M0
    Date: 2011–10
  12. By: Franz Ruch; Dirk Bester
    Abstract: This paper studies volatility comovement in world equity markets between 1994 and 2008. Global volatility factors are extracted from a panel of monthly volatility proxies relating to 25 developed and 20 emerging stock markets. A dynamic factor model (FM) is estimated using two-year rolling window regressions. The FMÂ’s time-varying variance shares of global factors map variations in volatility comovement over time and across countries. The results indicate that global volatility linkages are particularly strong during Â…nancial crises in Asia (1997-8), Russia (1998), and the United States (2007-8). Emerging markets are less syncrhonised with world volatility than are developed markets. In particular, we observe decoupling between emerging and world volatilities between 2001 and 2007. Recoupling occurs during 2008, thus identifying emerging market investments as a temporary hedge against volatility spillovers from the US subprime crisis.
    Keywords: Singular Spectrum Analysis, Core Inflation, Non-parametric estimation
    JEL: C41 C14 E31 E37 N17
    Date: 2011
  13. By: Phurichai Rungcharoenkitkul
    Abstract: This paper assesses financial integration in Asia in terms of risk-sharing benefit versus financial-contagion cost. We construct a new measure of risk sharing based on a term structure model, which allows identification of realized stochastic discount factors. Risk sharing is low in Asia, and varies across time and countries, whereas contagion risks are more significant intra-regionally, and relatively stable over the past decade. An overall tradeoff exists between risk sharing and contagion, but the terms of tradeoffs vary across countries, depending on relative economic fluctuations and inflation differentials. Asia, therefore, can potentially enhance risk sharing without raising contagion risk.
    Keywords: Asia , Risk management , Asset prices , Interest rates , Bonds , Economic integration ,
    Date: 2011–10–20
  14. By: Hou, Jack W. (Asian Development Bank Institute)
    Abstract: Given the dominance of small and medium-sized enterprises (SMEs) in Taipei,China (97.6% of business establishments, and 77.1% of employment), it is of vital importance to develop ways to aid SMEs in surviving the current global economic crisis. Indeed, the government can utilize this crisis to reform and strengthen SMEs so they can continue to be the backbone of Taipei,China’s economy. This paper discusses the strengths and weaknesses of SMEs in Taipei,China. Policy recommendations are presented to address the weaknesses of SMEs, including short-run and long-run approaches.
    Keywords: sme; global economic crisis; industrial organization
    JEL: F14 G10 O53
    Date: 2011–11–22
  15. By: Dr. Nahariah Jaffar (Faculty of Management, Multimedia University, Cyberjaya, Malaysia); Zarehan Selamat; Norhazlin Ismail; Hamsatulazura Hamzah
    Abstract: This study investigates the perceived usefulness of selected accounting information presented in the SMEs’ financial statements. Mailed questionnnaires were sent to SMEs’ owner and loan officers in Malaysia. The findings showed that the SMEs’ owners and loan officers have substantially similar views on the usefulness of the accounting information. In addition, this study found that type of business organisation, academic qualification, time spend in reading the financial statement, level of understanding of the financial statements and awareness about financial reporting regulation do not have significant relationship with the SMEs’ owners’ perceptions on the usefulness of the accounting information. On the other hand, for the loan officers, experience in assessing SMEs’ financial statements was found to have a significant relationship with the loan officers’ perceptions on the usefulness of the accounting information, while accouting expertise, year in position, awareness about financial reporting regulation are not. The results of this study may provide awareness to the SMEs’ managers on the informational needs of the users of their financial statements
    Keywords: SMEs, financial reporting, usefulness, accounting information
    JEL: M0
    Date: 2011–10
  16. By: Runchana Pongsaparn; Olaf Unteroberdoerster
    Abstract: The paper shows that Asia’s degree of financial integration, both with the world and within the region remains low by various measures. The paper also provides empirical evidence that greater financial integration can support economic rebalancing in statistically meaningful ways. The implication is that in the debate on managing capital inflows the longer-term benefits of financial openness for broader-based growth should not be forgotten.
    Keywords: Asia , Economic integration , Capital inflows , Foreign investment , Exchange restrictions , Capital account liberalization , Economic growth ,
    Date: 2011–10–21
  17. By: Roman Stöllinger; Beate Muck
    Abstract: This FIW Special International Economics takes a long term perspective on international merchandise trade and tracks specialisation patterns of 19 world regions over the period 1980 to 2009. The data reveals that the path of trade specialisation is not predetermined: globalisation may intensify initial specialisations or may induce technological upgrading leading to new specialisation patterns. The emergence of the highly successful East Asian electronics cluster is easily discernible from our analysis as is the catch-up process of Eastern Europe. The experience of these dynamic regions contrasts with that of the African regions, West Asia and to some extent South America, whose primary role in the world economy is still that of oil and raw material suppliers. We also show that international trade in technology intensive industries has broadened geographically. High income countries in Europe, Japan and the US which dominated trade in high tech manufactures until the 1980s have suffered a considerable loss of market shares to the benefit of emerging East Asian countries causing a lot of concern about the EU’s export performance in high technology industries among European policy makers. R&D policy has become a major component of Europe’s industrial policy which is intended to support the continuous process of technological upgrading high income countries need to remain competitive in world markets. European high income regions have been successful in this respect in the sense that their export structures continue to shift towards more technology intensive industries despite the losses of global market shares which must be seen as a consequence of a broader participation in world trade. We read the major shifts in global world trade over the past decades and in particular the ‘rise of Asia’ as evidence that active trade and industrial policies can ignite and support the industrialisation process and technological upgrading within the manufacturing sector. At the same time Eastern Europe showed that a technological catch-up process can also be achieved by relying on foreign direct investment and deep trade integration with more advanced trading partners in the region. In contrast, the policies pursued by South American countries after the debt-crisis of the 1980s did not seem to have fostered significant technological upgrading. Given the undetermacy of trade specialisation over time and the multiple paths to technological upgrading we believe that international trade rules should ensure – more than they do now – that all countries have the required policy space to implement policies that foster structural changes in their economies.
    Keywords: export specialisation, structural change, technological upgrading, industrial policy
    JEL: F02 F13 L16 L52
    Date: 2011–11
  18. By: Dinda, Soumyananda
    Abstract: This study focuses on trade opportunities of climate smart goods and technologies (CSGT) in Asia. Paper mainly highlights the export gaps for climate smart goods and technologies (CSGT) in Asia and identifies the trade opportunities among trade partners in intraregional and interregional. Applying the gravity model we estimate the export gap for the CSGT as the difference between the actual bilateral export flow and the mean value predicted by the model. In other words, ‘export gap’ is the difference between the actual and predicted export value. There is a scope to increase the export of climate smart goods and technologies with trading partners when the actual trade is below the predicted value ( i.e., negative value of the export gap). This gap actually provides the opportunity to raise the trade and attracting investment in CSGT sector and thereby development takes place. This paper also identifies the export gaps in CSGT for each regional member in its trade with partners within the region, EU, and North America (i.e., the US and Canada). This study contributes to the empirical literature in terms of measuring and identifying the potential trade opportunity of CGST in Asia.
    Keywords: Climate Change; Business and Development; Bilateral trade flow; Climate Smart Goods and Technologies; Gravity model; Export gap; Potential Trade; China; India; Asia
    JEL: C13 F18 O53 Q56 C01 M21
    Date: 2011–08
  19. By: Dr. Guillermina C. Vizcarra (Doctor of Public Administration, Trinity University of Asia, Quezon City, Philippines)
    Abstract: This study assessed the human needs of employees in selected government financial institutions. Human needs were categorized into three areas such as existence needs, relatedness needs, and growth needs. Using a descriptive-quantitative approach, data were gathered through a researcher-made questionnaire. The survey was conducted among randomly selected employees of four (4) Government Financial Institutions (GFIs)
    Keywords: human needs, government financial institutions, compensation
    JEL: M0
    Date: 2011–10
  20. By: Chia-Lin Chang (Department of Applied Economics, Department of Finance, National Chung Hsing University Taichung, Taiwan); Michael McAleer (Econometrisch Instituut (Econometric Institute), Faculteit der Economische Wetenschappen (Erasmus School of Economics), Erasmus Universiteit, Tinbergen Instituut (Tinbergen Institute).; Division of Marketing and International Business, Nanyang Technological University, Singapore.); Roengchai Tansuchat (Faculty of Economics Maejo University Chiang Mai, Thailand)
    Abstract: This paper investigates the conditional correlations and volatility spillovers between the crude oil and financial markets, based on crude oil returns and stock index returns. Daily returns from 2 January 1998 to 4 November 2009 of the crude oil spot, forward and futures prices from the WTI and Brent markets, and the FTSE100, NYSE, Dow Jones and S&P500 stock index returns, are analysed using the CCC model of Bollerslev (1990), VARMA-GARCH model of Ling and McAleer (2003), VARMA-AGARCH model of McAleer, Hoti and Chan (2008), and DCC model of Engle (2002). Based on the CCC model, the estimates of conditional correlations for returns across markets are very low, and some are not statistically significant, which means the conditional shocks are correlated only in the same market and not across markets. However, the DCC estimates of the conditional correlations are always significant. This result makes it clear that the assumption of constant conditional correlations is not supported empirically. Surprisingly, the empirical results from the VARMA-GARCH and VARMA-AGARCH models provide little evidence of volatility spillovers between the crude oil and financial markets. The evidence of asymmetric effects of negative and positive shocks of equal magnitude on the conditional variances suggests that VARMA-AGARCH is superior to VARMA-GARCH and CCC. The estimation and analysis of the volatility and conditional correlations between crude oil returns and stock index returns can provide useful information for investors, oil traders and government agencies that are concerned with the crude oil and stock markets, especially regarding optimal hedging across the two markets.
    Keywords: Multivariate GARCH, volatility spillovers, conditional correlations, crude oil prices, spot, forward and futures prices, stock indexes.
    JEL: C22 C32 G32
    Date: 2011
  21. By: Aditya Goenka (National University of Singapore - National University of Singapore (NUS)); Cuong Le Van (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, University of Exeter Business School - University of Exeter Business School, VCREME - VanXuan Center of Research in Economics, Management and Environment - VanXuan Center of Research in Economics, Management and Environment, Hanoi WRU - Department of Economics); Manh-Hung Nguyen (VCREME - VanXuan Center of Research in Economics, Management and Environment - VanXuan Center of Research in Economics, Management and Environment, LERNA-INRA - Toulouse School of Economics, Toulouse School of Economics - ToulouseSchool of Economic)
    Abstract: This paper proves the existence of competitive equilibrium in a single-sector dynamic economy with heterogeneous agents, elastic labor supply and complete assets markets. The method of proof relies on some recent results concerning the existence of Lagrange multipliers in in nite dimensional spaces and their representation as a summable sequence and a direct application of the inward boundary fixed point theorem.
    Keywords: Optimal growth model, Lagrange multipliers, Competitive equilib- rium, Individually Rational Pareto Optimum, Elastic labor supply.
    Date: 2011–11

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