nep-sea New Economics Papers
on South East Asia
Issue of 2012‒07‒08
thirteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Episodes of Large Exchange Rate Appreciations and Reserves Accumulations in Selected Asian Economies: Is Fear of Appreciation Justified? By Victor Pontines; Reza Siregar
  2. Rethinking Capital Flows for Emerging East Asia By Grenville, Stephen
  3. The OECD Regulatory Reform Review of Indonesia: Market Openness By Molly Lesher
  4. Prevention and Resolution of Foreign Exchange Crises in East Asia By Sussangkarn, Chalongphob
  5. Long-term Impacts of Rice Price and Production Seasonality on Human Capital: Evidence from Rural Indonesia By Yamauchi, Futoshi
  6. Determinants of Credit Growth and Interest Margins in the Philippines and Asia By Tatum Blaise Pua Tan
  7. A Multivariate Cointegration Analysis Of The Role Of Exports To Main Trading Partners In The Malaysian Macroeconomics By Ubaidillah, Nur Zaimah; Ab. Rahim, Rossazana
  8. Does Outward FDI Matter in International Trade? Evidence from Malaysia By Goh , Soo Khoon; Wong, Koi Nyen; Tham , Siew Yean
  9. On social and economic spheres: an observation of the “gantangan” Indonesian tradition By Situngkir, Hokky; Prasetyo, Yanu Endar
  10. Optimal International Agreement and Treatment of Domestic Subsidy By Gea Myoung Lee
  11. The effect of publishing hospital charges on healthcare costs: Evidence from Singapore By Parinduri, Rasyad
  12. Economic Impacts of ACIAR Funded Forestry Research on Indonesian Pulpwood Plantations By Lindner, Robert K.
  13. Random Dictatorship Domains By Shurojit Chatterji; Arunava Sen; Huaxia Zeng

  1. By: Victor Pontines; Reza Siregar
    Abstract: The objective of our paper is to provide an empirical platform to the debate on the macroeconomic consequences of large currency appreciations. Observing the experiences of six major Asian economies (the ASEAN-5 (Indonesia, Malaysia, Philippines, Thailand and Singapore) and Korea) during the past two decades, the primary aim of this study is to ascertain the consequences of strong currencies, on the one hand, and reserves accumulation, on the other, for a set of vital macroeconomic indicators, namely, exports, growth and price. We then deal squarely, in retrospect, with the question of whether there is any justification to the so-called fear of appreciation phenomenon among the policy makers of these Asian economies.
    JEL: F4 F31 F32
    Date: 2012–06
  2. By: Grenville, Stephen (Asian Development Bank Institute)
    Abstract: Since the 1980s, emerging countries have been urged to welcome foreign capital inflows. The result has often been a pattern of surges, where excessive inflows were followed by damaging “sudden stops” and reversals. What is needed is a strategy that makes use of the potential benefits of capital “flowing downhill” (that would require these countries to run current account deficits) while at the same time protecting them from both the excessive inflows and the reversals.
    Keywords: asian financial crisis; east asia; financial markets; capital flows; current account
    JEL: F21 F31 F32
    Date: 2012–06–25
  3. By: Molly Lesher
    Abstract: This paper focuses on the market openness aspects of regulatory reform in Indonesia to devise recommendations for improving the country’s regulatory processes. These recommendations involve institutionalising independent and objective evaluations of policies from an economy-wide perspective, as well as instituting a process by which broad public consultations are systematically required. Moreover, the findings in this paper suggest that the Indonesian economy would benefit from streamlining the licensing regime. The paper also identifies a need to ensure that new laws and regulations benefit Indonesia as a whole. Finally, the paper advocates for better co-ordination between the central government and the periphery. The implementation of these recommendations will help Indonesia achieve its goal of becoming one of the world’s ten major economies by 2025.
    Keywords: investment, trade, market openness, Indonesia, ASEAN, Regulatory Reform, Regulatory Process, APEC, INSW, INTR, Regional Autonomy, DNI, Investment Negative List
    Date: 2012–06–27
  4. By: Sussangkarn, Chalongphob (Asian Development Bank Institute)
    Abstract: This paper discusses mechanisms to prevent and resolve foreign exchange crises in East Asia. Policies and mechanisms at the country level as well as regional and global levels are discussed. Policies at the level of a particular country to prevent foreign exchange crises include the management of short-term foreign currency liabilities, the adequacy of reserves, and managing episodes of rapid short-term capital inflows. The author discusses the development of regional mechanisms for crisis prevention and resolution in conjunction with the global mechanisms, including the Chiang Mai Initiative (CMI) and the Chiang Mai Initiative Multilateralization (CMIM). The author then suggests how the CMIM can evolve into an integrated crisis prevention and resolution mechanism for East Asia.
    Keywords: foreign exchange crises; east asia; chiang mai initiative
    JEL: E02 E44 E58 E63 F33 F36 F55
    Date: 2012–06–27
  5. By: Yamauchi, Futoshi
    Abstract: This paper examines the impacts of prenatal conditions on child growth using recent data from Indonesia. There is seasonality in birthweight: This measure is significantly higher immediately after the main rice harvest in the country. The empirical results show that an increase in birthweight improves child growth outcomes as measured by the height and weight z-scores, as well as schooling performance as measured by age at start of schooling and number of grades repeated. The interactions of ecological variations affect early childhood human capital formation and can have long-term impacts on children’s outcomes.
    Keywords: Agricultural and Food Policy, Consumer/Household Economics, Crop Production/Industries, Demand and Price Analysis, Labor and Human Capital, Production Economics,
    Date: 2012–08
  6. By: Tatum Blaise Pua Tan
    Abstract: Despite robust deposit growth, credit growth has been sluggish in the Philippines. We attribute this to legacy weaknesses in bank balance sheets, consumption-led economic growth, and relatively high net interest margins. Bank-level analysis suggests that interest margins in the Philippines rise with bank size, bank capitalization, foreign ownership, overhead costs and tax rates. Using bank-level data for a number of Asian economies, we find that higher growth, lower inflation, higher reserve requirements, greater banking sector development, smaller stock market development and lower government deficits reduce net interest margins, informing the policy debate on strengthening financial intermediation in the Philippines.
    Keywords: Asia , Banking sector , Credit demand , Credit expansion , Interest rates , Private sector ,
    Date: 2012–05–14
  7. By: Ubaidillah, Nur Zaimah; Ab. Rahim, Rossazana
    Abstract: This paper investigates determinants of Malaysian export to the United States (US), Japan and Singapore using annual data from 1970 until 2010. Country specific determinants of trade include real gross domestic product, nominal effective exchange rate, inflation and inward foreign direct investment. The aim of this paper is to discern the dynamic causal chain among gross domestic product, foreign direct investment, real effective exchange rate and inflation in the context of Malaysian exports to the United States. The methodology employed applied Augmented Dickey Fuller test, Johansen and Juselius cointegration test and Vector Error Correction Model to capture the Granger-causal chain among the variables. The major findings ;(a) long-run equilibrium relationship(s) exists between Malaysian exports to its main trading partners and its macroeconomic variables, (b) Malaysia macroeconomic variables have significant influence on its exports to its main trading partners. Most specifically, real gross domestic product lead to expansion in exports performance.
    Keywords: Real gross domestic product; nominal effective exchange rate; inflation and inward foreign direct investment
    JEL: F10
    Date: 2012
  8. By: Goh , Soo Khoon; Wong, Koi Nyen; Tham , Siew Yean
    Abstract: Developing and transition economies are an increasingly important source of outward foreign direct investment (OFDI). The objective of this paper is to fill the gap in the literature regarding outward foreign direct investment by adopting the well known gravity model to examine the relationship between trade (export and import), inward and outward FDI using Malaysia as a case. This contributes to the literature as previous studies on OFDI in Malaysia have focused primarily on the determinants of these outward flows, and there are no studies examining the impact of OFDI on trade. Our findings reveal that inward foreign direct investment (IFDI) conforms to the observed pattern of a complementary relationship between FDI and trade while OFDI and trade linkages are not significant. The empirical results also indicate that Malaysia has yet to follow the trajectory of developed economies in its shift from being a net capital importer to a capital exporter due to the lack of trade linkages between OFDI and trade. This further implies that the country may not be able to reap the potential benefits of OFDI that accrue through efficiency gains from specialization and scale advantages that are generated through trade channels.
    Keywords: Outward FDI; trade; multinationals; Malaysia
    JEL: F23
    Date: 2012–05
  9. By: Situngkir, Hokky; Prasetyo, Yanu Endar
    Abstract: Indonesian traditional villagers have a tradition for the sake of their own social and economic security named “nyumbang”. There are wide variations of the traditions across the archipelago, and we revisit an observation to one in Subang, West Java, Indonesia. The paper discusses and employs the evolutionary game theoretic insights to see the process of “gantangan”, of the intertwining social cohesion and economic expectation of the participation within the traditional activities. The current development of the “gantangan” tradition is approached and generalized to propose a view between the economic and social sphere surrounding modern people. The interaction between social and economic sphere might be seen as a kind of Lokta-Volterra’s predator-prey-like interaction, where both are conflicting yet in a great necessity one another for the sustainability of the social life. While some explanations due to the current development of “gantangan” is drawn, some aspects related to traditional views complying the modern life with social and economic expectations is outlined.
    Keywords: social and economic sphere; traditional village ecology; evolutionary game theory; social security
    JEL: C78 I0 B52 H0 J0 A14
    Date: 2012–06–22
  10. By: Gea Myoung Lee (School of Economics, Singapore Management University)
    Abstract: We investigate how a domestic subsidy is treated in an international agreement, when a government, having incentive to use its domestic subsidy as a means of import protection, can disguise its protective use of subsidy as a legitimate intervention with which to address a market imperfection. We show that any optimal agreement, as opposed to the conventional message of the targeting principle, restricts the home government’s freedom to select its domestic subsidy in order to increase the market-access level for foreign exporters. Our finding suggests that a proper restriction on domestic subsidy is somewhere between GATT and WTO rules.
    Keywords: Treatment of domestic subsidy, International agreement, GATT/WTO rules
    JEL: F13
    Date: 2012–01
  11. By: Parinduri, Rasyad
    Abstract: This paper examines the effect of publishing hospital charges on healthcare costs. We compare hospital charges before and after Singapore's Ministry of Health started publishing the statistics of hospital charges on its website in the late 2003. We do not find evidence of a decrease in healthcare costs. However, we find some evidence of an increase in cost dispersion, a decrease in patients' length of stay at hospitals, and an increase in hospital care cost per day.
    Keywords: hospital charges publication; healthcare costs; cost dispersion; Singapore
    JEL: I11 L10 D83
    Date: 2012
  12. By: Lindner, Robert K.
    Abstract: Since 1987, ACIAR has invested in collaborative research projects between Australian and Indonesian scientists, with the aim of improving plantation forestry in both countries. This presentation is derived from report on a cost–benefit study to assess economic impacts from this investment. For more detail, see Lindner (2011). Based on conservative assumptions about uptake of outputs of the “Australian trees projects” by Indonesian pulpwood plantations, the present value of benefits could eventually be as high as A$11,148 million from an investment by ACIAR and partners of less than A$20 million.
    Keywords: Economic Impact, Plantation Forestry, Research, Indonesian, International Development, Research and Development/Tech Change/Emerging Technologies,
    Date: 2012
  13. By: Shurojit Chatterji (School of Economics, Singapore Management University); Arunava Sen (Indian Statistical Institute, New Delhi, India.); Huaxia Zeng (Singapore Management University, Singapore.)
    Abstract: A domain of preference orderings is a random dictatorship domain if every strategy- proof random social choice function satisfying unanimity dened on the domain, is a random dictatorship. Gibbard (1977) showed that the universal domain is a random dictatorship domain. We investigate the relationship between dictatorial and random dictatorship domains. We show that there exist dictatorial domains that are not ran- dom dictatorship domains. We provide stronger versions of the linked domain condition (introduced in Aswal et al. (2003)) that guarantee that a domain is a random dicta- torship domain. A key step in these arguments that is of independent interest, is a ramification result that shows that under certain assumptions, a domain that is a ran- dom dictatorship domain for two voters is also a random dictatorship domain for an arbitrary number of voters.
    Date: 2012–06

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