nep-sea New Economics Papers
on South East Asia
Issue of 2012‒03‒28
fourteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Estimating Price Effects in an Almost Ideal Demand Model of Outbound Thai Tourism to East Asia By Chia-Lin Chang; Thanchanok Khamkaew; Michael McAleer
  2. Indonesian Industrialization By Aswicahyono, Haryo; Narjok, Dionisius
  3. Determinants of Banking System Fragility: A Regional Perspective By Degryse, Hans; Elahi, Muhammad Ather; Penas, Maria Fabiana
  4. Services as a New Engine of Growth for ASEAN, the People’s Republic of China, and India By Shepherd, Ben; Pasadilla, Gloria
  5. Autonomy with equity and accountability : toward a more transparent, objective, predictable and simpler (TOPS) system of central financing of provincial-local expenditures in Indonesia By Shah, Anwar
  6. Innovative Delivery Mechanisms for Increased Aid Budgets By Clarke, Matthew
  7. Walkability Planning in Jakarta By Lo, Ria S. Hutabarat
  8. The law's majestic equality ? the distributive impact of litigating social and economic rights By Brinks, Daniel M.; Gauri, Varun
  9. Saving the Mekong River Basin By Houba, Harold; Pham Do, Kim Hang; Zhu, Xueqin
  10. Slave numeracy in the Cape Colony and comparative development in the eighteenth century By Jörg Baten; Johan Fourie
  11. A note on separability and intra-household resource allocation in a collective household model By Tomoki Fujii; Ryuichiro Ishikawa
  12. Seasonal Migration and Risk Aversion By Bryan, Gharad; Chowdhury, Shyamal; Mobarak, Ahmed Mushfiq
  13. Financial Repression and External Imbalances By Johansson, Anders C.; Wang, Xun
  14. Micro-finance competition: Motivated micro-lenders, double-dipping and default By Brishti Guha; Prabal Roy Chowdhury

  1. By: Chia-Lin Chang (Department of Applied Economics, Department of Finance, National Chung Hsing University Taichung, Taiwan); Thanchanok Khamkaew (Faculty of Economics, Maejo University, Thailand); Michael McAleer (Econometric Institute, Erasmus School of Economics, Erasmus University Rotterdam and Tinbergen Institute, The Netherlands, Department of Quantitative Economics, Complutense University of Madrid, and Institute of Economic Research, Kyoto University)
    Abstract: This paper analyzes the responsiveness of Thai outbound tourism to East Asian destinations, namely China, Hong Kong, Japan, Taiwan and Korea, to changes in effective relative price of tourism, total real total tourism expenditure, and one-off events. The nonlinear and linear Almost Ideal Demand (AID) models are estimated using monthly data to identify the price competitiveness and interdependencies of tourism demand for competing destinations in both long run (static) and short run error correction (dynamic) specifications. Homogeneity and symmetry are imposed in the long run and short run AID models to estimate the elasticities. The income and price elasticities provide useful information for public and private tourism agents at the various destinations to maintain and improve price competitiveness. The empirical results show that price competitiveness is important for tourism demand for Japan, Korea and Hong Kong in the long run, and for Hong Kong and Taiwan in the short run.
    Keywords: Almost Ideal Demand (AID) model, Tourism demand, Price competitiveness, Substitutes, Budget shares, Error correction.
    JEL: C3 C5 D12 L83
    Date: 2012
  2. By: Aswicahyono, Haryo; Narjok, Dionisius
    Abstract: This paper examines Indonesia.s industrialization performance and policies, including its latecomer status, its generally rapid growth since the mid-1960s, its pronounced policy and performance episodes, and its ambivalent embrace of globalization. Particular attention is accorded to the deep economic-political crisis of 1997.98 and its aftermath, with the benefit of a rich, firm level database. The crisis resulted in slower industrial growth, less industrial mobility, and sluggish formal sector employment growth. We also consider some of the general analytical and policy implications for developing country industrialization from the Indonesian experience.
    Keywords: Indonesia, industrialization, economic crises, jobless growth
    Date: 2011
  3. By: Degryse, Hans; Elahi, Muhammad Ather; Penas, Maria Fabiana
    Abstract: Banking systems are fragile not only within one country but also within and across regions. We study the role of regional banking system characteristics for regional banking system fragility. We find that regional banking system fragility reduces when banks in the region jointly hold more liquid assets, are better capitalized, and when regional banking systems are more competitive. For Asia and Latin-America, a greater presence of foreign banks also reduces regional banking fragility. We further investigate the possibility of contagion within and across regions. Within region banking contagion is important in all regions but it is substantially lower in the developed regions compared to emerging market regions. For cross-regional contagion, we find that the contagion effects of Europe and the US on Asia and Latin America are significantly higher compared to the effect of Asia and Latin America among themselves. Finally, the impact of cross-regional contagion is attenuated when the host region has a more liquid and more capitalized banking sector.
    Keywords: banking system stability; cross-regional contagion; financial integration
    JEL: G15 G20 G29
    Date: 2012–02
  4. By: Shepherd, Ben (Asian Development Bank Institute); Pasadilla, Gloria (Asian Development Bank Institute)
    Abstract: An increasing services orientation is likely to be a key feature of the economies of the Association of Southeast Asian Nations (ASEAN), the People’s Republic of China, and India (collectively referred to as “ACI”) over the medium-term. This paper aims to present a compendium of relevant data on the state of the services sector in the ACI countries, focusing on its contribution to overall economic activity, employment, and growth. To do this, it relies heavily on standard international sources, as well as national statistics in some cases. It also examines to the extent possible—given data restrictions—the services policy environment in the ACI countries, focusing on its implications for regional and international integration of services markets.
    Keywords: services sector; services markets; economic development; emerging markets; middle income trap
    JEL: O10 O44 O53 Q28 Q53 Q56 Q58
    Date: 2012–03–08
  5. By: Shah, Anwar
    Abstract: During the past decade, Indonesia has transformed itself from centralized governance to decentralized local governance. Local governments were given extensive expenditure responsibilities while keeping the tax system centralized. To finance decentralized provincial-local expenditures, Indonesia implemented a new system of intergovernmental finance. This paper provides a review of the equity and efficiency implications of the current system of central-provincial-local transfers. It finds that the system of intergovernmental finance represents one of the most complex systems ever implemented by any government in the world. The system is primarily focused on a gap-filling approach to provincial-local finance to ensure revenue adequacy and local autonomy but without accountability to local residents for service delivery performance. This is done through a great degree of academic rigor using highly complex procedures. The complexity leads to a lack of transparency, inequity and uncertainty in allocation as well as creating incentives for jurisdictional fragmentation and reducing own-tax effort. Simpler alternatives are available that have the potential to address equity objectives while also enhancing efficiency and citizen-based accountability. Such alternatives would represent a move away from complex gap filling and special allocation approaches to simple, output based transfers to finance operating expenditures. These would be complemented by capital grants to deal with infrastructure deficiencies, and fiscal capacity equalization as a residual program with an explicit standard to ensure that all local jurisdictions have adequate means to deliver reasonably comparable levels of public services at reasonably comparable levels of tax burdens across the country. The paper argues that such an alternative system of intergoveernmental finance would preserve autonomy, while enhancing equity, simplicity, objectivity, transparency and accountability.
    Keywords: Subnational Economic Development,Public Sector Economics,Municipal Financial Management,National Governance,Debt Markets
    Date: 2012–03–01
  6. By: Clarke, Matthew
    Abstract: The Australian government will double its Official Development Assistance by 2015 (over 2010 levels). Innovative delivery mechanisms will be required to ensure aid is spent efficiently. In addition to traditional delivery mechanisms.bilateral, multilateral.the Australian government has piloted a small partnership activity with churches in the Pacific. The Church Partnerships Programme is premised on the realization that in certain Pacific countries, the churches have existing, functioning and well-regarded national networks and close links with local communities that are suitable conduits for donor funding. In this sense they are ideal partners for the delivery of effective aid. This paper will consider this model and the benefit it brings. There are of course consequences for both the churches and their communities for this influx of aid money and changing activities and these will be briefly considered. Finally, extending this partnership model to non-Christian religious faiths in other countries, such as Islamic nationwide organizations in Indonesia, is also discussed.
    Keywords: development, religion, aid effectiveness, absorptive capacity, Papua New Guinea
    Date: 2011
  7. By: Lo, Ria S. Hutabarat
    Abstract: Walking is the main mode of transportation for many of the world’s people, particularly those in cities of the majority world. In the metropolitan region of Jakarta, walking in the public realm constitutes the main transportation mode for almost 40 percent of trips—a massive contribution to urban mobility. On the other hand, there is no comprehensive planning for pedestrians in an analogous manner to other modes of transportation. Pedestrian facilities are often dilapidated, damaged, dangerous, or missing completely. Additionally, there is no process for assessing the inventory of pedestrian facilities, planning pedestrian facilities at a region-wide level, or even identifying the location of vernacular pedestrian routes in low-income and informal areas. Provincial pedestrian planning focuses on piecemeal, symbolic spaces such as monumental plazas that serve the nation-building project, but overlooks the functional network of routes that address the daily needs of the city’s residents. This dissertation examines the issue of walkability planning in Jakarta by investigating what matters to pedestrians and how pedestrian space is produced. The research employs mixed methods, including pedestrian network groundtruthing, structured streetscape observations, multimodal traffic counts, pedestrian activity mapping, pedestrian surveys and interviews with policy-makers. Data is analyzed through a combination of in-depth qualitative analysis as well as quantitative and statistical analysis. Based on this research, six key elements of walkability planning are proposed for Jakarta: multidisciplinarity, ethnography, accessibility, legibility, integrated activity, and shared streets. A literature review of walkability metrics reveals that walking is a highly multidisciplinary activity, with very different metrics emerging from different fields. In order to effectively encourage pedestrian activity, new multidisciplinary metrics should integrate the perspectives of all of these related disciplines and pedestrian planning should occur through inter-agency coordination. In Jakarta, interviews with policy-makers suggested that pedestrian planning is hindered by the fact that there is no lead agency for pedestrian planning, and there is a lack of cooperation between the different agencies that plan and produce urban public space. Pedestrian planning is also hindered by a discursive framework that is both modally and geographically biased—favoring motorized, long-distance modes of transportation and employing method derived from a Western research and planning norms. In order to overcome this discursive bias, ethnography should become a standard part of urban research, planning and design. The need for ethnography and qualitative analysis was made visible by the mismatch between standard transportation terminology, and prevailing practices observed in pedestrian mapping exercises and raised by pedestrians in on-the street interviews. For example, standard survey categories do not account for informal or integrated activity patterns like mobile street vending. From surveys conducted with mobile street vendors, it was difficult to separate their pedestrian activities into categories of travel from home to work, business-related travel, and visiting friends and relatives. In fact, it was difficult to even separate their travel from their activities since many vendors carried out business as they made their way through the neighborhood. With a large portion of the population engaged in the informal sector, the discrepancy between assumed and actual behavior severely compromises the quality of transportation-related research that is conducted in Jakarta and many other majority world cities. Ethnographic and qualitative research methods may therefore assist in producing more context-sensitive planning data and outcomes. These context-sensitive methods could include new analytical methods that focus on integrated activity, rather than trip-based or activity-based analysis. In relation to pedestrian activity, context-sensitive planning encompasses new approaches to accessibility that combine the notion of transportation accessibility with disabled access and universal access standards. The need for such an approach was revealed during interviews with policy-makers, who described accessibility in terms of market goods rather than human rights. Within the market for urban public space, ordinary pedestrians were unable to compete with other modes of transportation; within the market for urban impressions, ordinary pedestrian spaces were outcompeted by prominent, symbolic spaces; and within the market for cultural capital, ordinary pedestrians were excluded from planning processes because even the discourse of pedestrian planning was inaccessible to regular residents. In response to this problem of exclusion, integrated accessibility may facilitate inclusion in both planning processes and urban spaces within the city. In particular, integrated accessibility would aim to provide comprehensive routes of travel for all pedestrians, rather than isolated pockets of so-called accessible (yet unreachable) facilities. More context sensitive planning would also be facilitated through greater legibility of fine-grained and vernacular pedestrian networks that were missing from standard planning maps. These fine-grained networks represent highly connected facilities that serve much of Jakarta’s pedestrian transportation task. While the current synoptic illegibility of these areas may conveniently allow some communities to avoid state intrusion, it also means that low-income populations are chronically under-served with respect to basic urban planning and services. Increased legibility therefore allows for improvement and maintenance of urban systems like safe, functional pedestrian networks, and it may also play a role in increasing tenure security for Jakarta’s significant floating population. In many of these vernacular spaces, new street design approaches would also benefit pedestrians, who tend to use the streets as shared spaces, rather than spaces that are rigidly segregated by mode. Pedestrian activity mapping revealed that only an overwhelming majority of pedestrians used streets as hybrid spaces, with activity types falling into the categories of surface sensitive, risk-averse, distance-minimizing and stationary pedestrians. More realistic shared street designs would therefore accommodate —rather than ignore—the types of activities that occur along Jakartan streets. Design standards for “great streets†in Jakarta would also emphasize the safe sharing of streets through self-enforcing approaches to speed limits, and the integration of various urban elements like drainage, mobility and public-private interaction. While walkability planning in Jakarta displays many “wicked problem†features, there is much that can be done to improve, if not resolve, conditions for pedestrians within the region. Recommended strategies for walkability planning in Jakarta include a regional walkability plan and environmental policy developed using participatory planning, reformed governance and institutional arrangements, and a constituency building approach. The strategies also include expansion of road designations and an integrated accessibility strategy that draws upon new data sources from a WikiPlaces network map, an integrated activity study and pedestrian network cost-benefit analysis. In addition to Jakarta specific proposals, a number of proposals are made to advance discourse on walkability more generally. These approaches include decentered analysis of integrated activity, informal economic activity analysis, vernacular placemaking and Asian shared street design. Pedestrians and pedestrian plans traverse diverse physical, administrative and disciplinary spaces in cities of the world. Integrated and multidisciplinary approaches are therefore required to understand and accommodate these key users of public space. In Jakarta, walkability planning has potential to improve urban transportation efficiency while contributing to traffic safety, economic vitality, environmental quality and democratic governance. Successful walkability planning in Jakarta may also provide a model for planning in other cities where Western models of planning are unrealistic, inequitable and inappropriate. Jakartan lessons on walkability planning are particularly relevant, and improvements in walkability are particularly powerful, for cities characterized by relatively low median incomes, high land use densities, a substantial informal sector, rapid urbanization and rapid motorization. By improving walkability planning in Jakarta and other cities of the majority world, policy-makers and planners can move toward more sustainable, socially equitable and efficient cities.
    Keywords: Urban Studies and Planning
    Date: 2011–09–01
  8. By: Brinks, Daniel M.; Gauri, Varun
    Abstract: Optimism about the use of laws, constitutions, and rights to achieve social change has never been higher among practitioners. But the academic literature is skeptical that courts can direct resources toward the poor. This paper develops a nuanced account in which not all courts are the same. Countries and policy areas characterized by judicial decisions with broader applicability tend to avoid the potential anti-poor bias of courts, whereas areas dominated by individual litigation and individualized effects are less likely to have pro-poor outcomes. Using data on social and economic rights cases in five countries, the authors estimate the potential distributive impact of litigation by examining whether the poor are over or under-represented among the beneficiaries of litigation, relative to their share of the population. They find that the impact of courts varies considerably across the cases, but is positive and pro-poor in two of the five countries (India and South Africa), distribution-neutral in two others (Indonesia and Brazil), and sharply anti-poor in Nigeria. Overall, the results of litigation are much more positive for the poor than conventional wisdom would suggest.
    Keywords: Health Monitoring&Evaluation,Judicial System Reform,Population Policies,Gender and Law,Labor Policies
    Date: 2012–03–01
  9. By: Houba, Harold; Pham Do, Kim Hang; Zhu, Xueqin
    Abstract: The Mekong River (MR) is shared by six countries: China, Myanmar, Thailand, Laos, Cambodia, and Vietnam. Over the years there have been both conflict and cooperation on managing the water resources to meet population growth, climate change and the desire for economic development. Currently, the MR Committee (MRC) has weak policy instruments. This paper exploits an axiomatic bargaining approach to examine how China and the MRC might negotiate effective joint management. We investigate what welfare improvements arise from strengthening the MRC and propose an alternative offering for the MR's joint management that is preferable to the status quo from the perspective of all nations. We show that there are little gains from cooperation unless international institutions provide a budget to promote cooperation with China. Alternatively, strengthening the MR Committee has the potential to achieve large welfare improvements.
    Keywords: transboundary river basin; Mekong River; optimization; Nash bargaining solution
    JEL: R58 C78 Q34 C71
    Date: 2011–06
  10. By: Jörg Baten; Johan Fourie
    Abstract: The lack of accurate measures of human capital formation often constrain investigations into the long-run determinants of growth and comparative economic development, especially in regions such as Africa. Using the reported age of criminals in the Courts of Justice records in the Cape Archive, this paper documents, for the first time, the levels of and trends in numeracy for inhabitants of the Cape Colony born between the seventeenth and early nineteenth centuries. Cape inhabitants included the native Khoe and San, European settlers, and imported slaves from other African regions and Asia. This hodgepodge of individuals allows a unique comparison between contemporaneous levels of 18th century development across three continents. By isolating those slaves born at the Cape, we also provide a glimpse into the dynamics of human capital transfer in colonial settings.
    Keywords: Education, Human Capital, South Africa, Whipple, Age-heaping, Africa, Asia
    JEL: N37 O15 I25
    Date: 2012
  11. By: Tomoki Fujii (School of Economics, Singapore Management Unversity); Ryuichiro Ishikawa (University of Tsukuba)
    Abstract: We consider a collective model of a household in which earn member has a utility function satisfying the weak separability condition. We show that the separability at the individual level carries over to the household level and that the allocation of private goods in any Pareto-efficient allocation can be supported as a Pareto-efficient allocation of the private sub-problem. We also provide the necessary and sufficient condition for the Pareto weight for the private sub-problem to move in the same direction as the household Pareto weight.
    Keywords: Collective model, Intro-household resource allocation, Bargaining, Separability
    JEL: C78 D01 D11
    Date: 2012–03
  12. By: Bryan, Gharad; Chowdhury, Shyamal; Mobarak, Ahmed Mushfiq
    Abstract: Pre-harvest lean seasons are widespread in the agrarian areas of Asia and Sub-Saharan Africa. Every year, these seasonal famines force millions of people to succumb to poverty and hunger. We randomly assign an $8.50 incentive to households in Bangladesh to out-migrate during the lean season, and document a set of striking facts. The incentive induces 22% of households to send a seasonal migrant, consumption at the origin increases by 30% (550-700 calories per person per day) for the family members of induced migrants, and follow-up data show that treated households continue to re-migrate at a higher rate after the incentive is removed. The migration rate is 10 percentage points higher in treatment areas a year later, and three years later it is still 8 percentage points higher. These facts can be explained by a model with three key elements: (a) experimenting with the new activity is risky, given uncertain prospects at the destination, (b) overcoming the risk requires individual-specific learning (e.g. resolving the uncertainty about matching to an employer), and (c) some migrants are close to subsistence and the risk of failure is very costly. We test a model with these features by examining heterogeneity in take-up and re-migration, and by conducting a new experiment with a migration insurance treatment. We document several pieces of evidence consistent with the model.
    Keywords: Bangladesh; Migration; Risk Aversion
    JEL: J61 O1 O15 R23
    Date: 2012–01
  13. By: Johansson, Anders C. (China Economic Research Center); Wang, Xun (China Economic Research Center)
    Abstract: This paper examines how repressive financial policies influence external balances. We argue that financial repression holds back financial development and distorts the process of structural transformation by constraining the service sector and promoting the manufacturing sector, thereby affecting external balances. Using a panel data set of a large number of countries, we find that financial repression has a significant and positive effect on the current account. This result holds for several additional robustness checks, including using medium-term determinants of the current account, alternative measures of external balances, and alternative measures of financial repression. We also show that financial repression mainly affects external balances through its effect on economic structure. When analyzing different repressive financial policies, we find that interest rate controls and capital account controls are the main policies contributing to external imbalances. Furthermore, financial repression has a larger effect on the current account in East Asia than the rest of the world.
    Keywords: External imbalances; Current account; Financial repression; Financial development; Institutional development
    JEL: F32 F41
    Date: 2012–03–19
  14. By: Brishti Guha (Singapore Management University); Prabal Roy Chowdhury (Indian Statistical Institute, New Delhi)
    Abstract: We develop a tractable model of competition among motivated MFIs. We find that equilibria may or may not involve double-dipping (and consequently default), with there being double-dipping whenever the MFIs are very profit-oriented. Moreover, in an equilibrium with double-dipping, borrowers who double-dip are actually worse off compared to those who do not. Further, for intermediate levels of motivation, there can be multiple equilibria, with a doubledipping equilibrium co-existing with a no default equilibrium. Interestingly, an increase in MFI competition can lower efficiency, as well as increase the extent of double-dipping and default. Further, the interest rates may go either way, with the interest rate likely to increase if the MFIs are very motivated.
    Keywords: Micro-finance competition; motivated MFIs; double-dipping
    JEL: C72 D40 D82 G21
    Date: 2012–01

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