nep-sea New Economics Papers
on South East Asia
Issue of 2012‒07‒29
fourteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Catastrophic Medical Expenditure Risk By Gabriela Flores; Owen O'Donnell
  2. Can Mistargeting Destroy Social Capital and Stimulate Crime? Evidence from a Cash Transfer Program in Indonesia By Cameron, Lisa A.; Shah, Manisha
  4. Does the minimum wage affect employment ? evidence from the manufacturing sector in Indonesia By Del Carpio, Ximena; Nguyen, Ha; Wang, Liang Choon
  5. Family Ownership and Regional Economic Development in Asia and Europe By Andreas Hˆgberg
  6. The role of creative industries in regional development of East Asian cities By Ho Yeon KIM
  7. Assessing decentralised policy implementation in Vietnam : The case of land recovery and resettlement in the Vung Ang Economic Zone By Wit, J.W. de; Luong Viet Sang; Le Van Chien; Luong Thu Hien; Ha Viet Hung; Dang Thi Anh Tuyet; Dao Ngoc Bau; Quang Hoa; Mai Thi Thanh Tam
  8. Trade in Value Added and the Valued Added in Trade By Robert Stehrer
  9. Flexible Strategy for Small and Medium-sized Multinationals in Asia By Giuseppe Tattara
  10. Counting happiness from the individual level to the group level By Beja Jr, Edsel; Yap, David
  11. A network model of financial system resilience By Anand, Kartik; Gai, Prasanna; Kapadia, Sujit; Brennan, Simon; Willison, Matthew
  12. Evaluating the impact of a targeted land distribution program: Evidence from Vietnam By Dwayne Benjamin; Loren Brandt; Brian McCaig; Nguyen Le Hoa
  13. The impacts of public hospital autonomization : evidence from a quasi-natural experiment By Wagstaff, Adam; Bales, Sarah
  14. Looking for European Union in the World-System: a multigraph approach By Laurent Beauguitte

  1. By: Gabriela Flores (Institute of Health Economics and Management, University of Lausanne, and Institute of Health Policy and Management, Erasmus University Rotterdam); Owen O'Donnell (Erasmus School of Economics, Erasmus University Rotterdam, and University of Macedonia, Greece)
    Abstract: Medical expenditure risk can pose a major threat to living standards. We derive decomposable measures of catastrophic medical expenditure risk from reference-dependent utility with loss aversion. We propose a quantile regression based method of estimating risk exposure from cross-section data containing information on the means of financing health payments. We estimate medical expenditure risk in seven Asian countries and find it is highest in Laos and China, and is lowest in Malaysia. Exposure to risk is generally higher for households that have less recourse to self-insurance, lower incomes, wealth and education, and suffer from chronic illness.
    Keywords: medical expenditures; catastrophic payments; downside risk; reference-dependent utility; Asia
    JEL: D12 D31 D80 I15
    Date: 2012–07–24
  2. By: Cameron, Lisa A. (Monash University); Shah, Manisha (University of California, Irvine)
    Abstract: Cash transfer programs can provide important financial support for poor households in developing countries and are becoming increasingly common. However the potential for mistargeting of program funds is high. This paper focuses on the social consequences arising from misallocation of resources in close knit communities. We find that the mistargeting of a cash transfer program in Indonesia is significantly associated with increases in crime and declines in social capital within communities. Hence poorly administered transfer programs have a potentially large negative downside that extends beyond the pure financial costs that have been the focus of the literature to date.
    Keywords: cash transfer programs, crime, mistargeting, social capital
    JEL: O12 O15 I38
    Date: 2012–07
  3. By: Ziad Esa Yazid; Joriah Mohamad; Henk Folmer
    Abstract: This paper investigates the relationship between economic growth and religion, particularly whether growth leads to desecularization. The secularization hypothesis (which is the opposite to the desecularization hypothesis (Casanova 1994); Berger 1999) ) postulates that economic growth is correlated with a decline in church membership and related practices, such as church attendance and paying church taxes. Empirical evidence for the secularization hypothesis is provided by among others, (Harskamp 2005; Kennedy 2005). However, (Gorski 2000; Alvey 2003) question the secularization hypothesis and postulate that religious movements remain strong despite economic development. So far, the secularization hypothesis has been mainly tested for Christians in developed countries. For instance, (Becker 2005) finds for the Netherlands that Church membership has been decreasing year after year while SCP (year) predicts that the secularization process will continue for the coming decades. The proposed paper revisits the secularization hypothesis for Muslims in Malaysia. Secularization is measured as individual contribution to Zakat which is a donation to those who are less fortunate. It is obligatory for a Muslim to donate 2.5% of her or his wealth each year to. In Malaysia Zakat is not imposed by the government; hence, it is voluntary. Therefore, it can be considered as an indicator of one's attitude to religion and its institutions, i.e as an indicator of (de)secularization. On the basis of a nationwide data set for the year 2005 we test an individual's Zakat contribution as a function of income controlling for various regional and socio-economic characteristics. Malaysia is an important and interesting case to test the secularization hypothesis because it is a rapidly developing country. Moreover, it is predominantly Muslim with a relatively well-developed education system which does not only focus on conventional fields but also on religion which has increased Malaysians' awareness of their religion. To our best knowledge, the proposed study is the first relating to a Muslim country. Keywords: secularization, religiosity, economic development, Malaysia
    Date: 2011–09
  4. By: Del Carpio, Ximena; Nguyen, Ha; Wang, Liang Choon
    Abstract: Using survey data from the Indonesian manufacturing industry, this paper investigates the impact of minimum wage on employment and wages offered by Indonesian manufacturing firms from 1993 to 2006. It shows that the estimated effects of minimum wage on employment are positive within a province (i.e., with province fixed effects), but negative within a firm (i.e., with firm fixed effects), indicating the importance of using firm panel data to reduce the endogeneity bias in estimates. It finds significant heterogeneous effects of minimum-wage changes on employment. The employment effects of minimum wages are significant and negative among small firms and less educated workers, but not among large firms and workers with high school education and above. The negative employment impact is more severe for non-production workers than for production workers. The analysis also shows that the minimum wage disproportionally affects women: most of the non-production job losses are experienced by female workers. Lastly, the paper finds that the minimum wage is more correlated with the average wage of small firms than that of large firms, suggesting that minimum wages are more binding in small firms.
    Keywords: Labor Markets,Labor Policies,Microfinance,Corporate Social Responsibility,Tertiary Education
    Date: 2012–07–01
  5. By: Andreas Hˆgberg
    Abstract: The current literature on firm ownership around the world shows that concentrated ownership with only one or a few controlling owners is common, especially in many European and Asian countries. The dispersed ownership has proven to be uncommon and even countries with supposed dispersed ownership has also shown signs of ownership concentration. Commonly, the controlling ownership is held by an individual, or a group of individuals, usually with family ties. Family ownership is the most common type of concentrated owner around the world, with pyramidal ownership structures of firms and state ownership are prevalent features of ownership concentration often observed also. The effects on the governance of the firm, the relation between shareholders and management and furthermore the level of investment performance of the firm is all ultimately affecting the economic development around the world. While most previous studies within the ownership literature has been done on publicly traded firms, this paper, however, studies the effect of ownership type and control on firm performance and governance in a large sample of both public and private European and Asian firms.
    Date: 2011–09
  6. By: Ho Yeon KIM
    Abstract: Recently, the so-called creative industry is gaining attention as a new engine of regional economic growth. Using this new industrial classification, many countries are starting to promote the cultural creation activities with the purpose of seeking out new directions in regional development. The synergy effects can also be attained by promoting the traditional sectors to the creative industry. This concept is useful not only for mega cities like Tokyo, Seoul, Beijing and Shanghai, but also for smaller local cities such as Kitakyushu, Fukuoka, Busan, Incheon, Tianjin, and Yantai. Since capital and human resources are rather limited in these local cities, applying the said concept can exert newfound energy for urban development. Although there is an old industrial culture of manufacturing embedded in Kitakyushu City, for example, the facilities and institutes of some other cultures and sports have been promoted separately. In order to reap the full benefit, it is needed to tear down the barriers between them, and combine the existing industries, facilities, and support organizations in a more systematic way. In this paper, we will explore these aspects by using census data as a general guide and interviews with selected cultural and sports organizations as well as entrepreneurs as a case study. Specifically, we will investigate the city planning practice and growth policy regarding cultivation of creative industry, and investigate possible cooperation among the cities in Pan Yellow-Sea region based on cultural or sports activities. Regarding general study, we recount the industrial classification of existing census data according to the definition of the creative industry by the UK (see London’s Creative Sector: 2004 Update and Creative Industries Economic Estimates Statistical Bulletin), adding the tourism industry. Based on this definition, we can clarify the trends of creative industry at the country level and city level of Japan, China and South Korea after 1990. It would reveal the true potential of the creative industry as a long-term facilitator of the regional economy.
    Date: 2011–09
  7. By: Wit, J.W. de; Luong Viet Sang; Le Van Chien; Luong Thu Hien; Ha Viet Hung; Dang Thi Anh Tuyet; Dao Ngoc Bau; Quang Hoa; Mai Thi Thanh Tam
    Abstract: From 2006 plans were implemented to create a deep-sea water port linked to an Economic Zone in the coastal Province of Ha Tinh, located in north central Vietnam. The multi-purpose Zone entitled ‘Vung Ang’, was to attract foreign investors, while the port would provide a link to nearby Laos and Thailand. The project obviously had large implications for the administrations at various levels of governance from Hanoi to the coastal communes and villages, but even more serious impacts on the people living in the affected areas. A large area of about 23,000 hectares was to be cleared, affecting the people of 9 communes, in some of which all inhabitants had to leave their houses and homesteads, to be relocated to completely new settlements about 10 miles inland. These tightly knit communities were not too happy with the prospect to leave their homes and land, the burial places of their ancestors, and the long term comforts of community support networks. While initial decision making process started at the highest levels of Vietnam Governance, the implementation of port and industrial park construction and the related relocation policy was delegated to Ha Tinh province, which is consistent with current decentralisation policies in Vietnam. Actual implementation was carried out by the affected District and Commune level officials – with support from the Communist Party led Mass Organisations – who were in charge of the planning and implementation of the relocation process. This entailed a complex and sensitive series of steps to inform affected households, prepare relocation areas and allocate compensation and alternative housing. This paper describes the implementation dynamics of relocation by depicting and assessing the roles of all stakeholders involved, including the impacts - for better or for worse – of the relocated households. It brings out the way local authorities dealt with affected people, including efforts linked to the ideal of grass-roots democracy. Key areas of contestation are uncovered, such as inadequate infrastructure and low compensation rates. The paper has a second objective to assess the degree to which decentralisation in Vietnam has been actually implemented, and how this affects policy making processes such as the Vung Ang port/industrial zone project. The paper concludes that the relocation policy was implemented in a fairly efficient and harmonious way – with a very intensive engagement of the entire provincial administrative machinery, but that it is too early to assess the livelihood opportunities of the relocated households.
    Keywords: Vietnam;livelihoods;decentralisation;land acquisition and compensation policy
    Date: 2012–07–16
  8. By: Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: This paper discussed two measures of value added flows between countries ‘Trade in value added’ accounts for value added of one country directly and indirectly embodied in final consumption of another country. ‘Value added in trade’ measures the value added embodied in gross trade flows. The paper shows that both measures result in the same overall net trade of a country which equals its trade balance in gross terms which however does not hold for bilateral relations. These value added flows can further be broken down by various production factors including capital and labour income by educational attainment categories. Using the recently compiled World Input-Output Database (WIOD) selected results comparing the EU-27, the USA, Japan and China based on both concepts regarding value added flows across countries are presented. For example, the US trade deficit with China is reduced by about 25% but would increase with respect to the EU-27 by about 20%. These imbalances are further broken down by factor incomes.
    Keywords: value added trade, factor content of trade, trade integration, vertical specialization, production networks
    JEL: F1 F15 F19
    Date: 2012–06
  9. By: Giuseppe Tattara (Department of Economics, University Of Venice Cà Foscari)
    Abstract: Italian firms have recently engaged in direct investment abroad through the establishment of production facilities in China and India. Using data gathered from interviews conducted in those countries in 2009 with 16 Italian predominantly small and medium-sized firms, this article explores: the motivations behind Italian parent companies’ decisions to create subsidiaries in Asia; relations between the newly established production facilities and their local suppliers and markets; any subsequent organizational adaptations; and the cultural and administrative difficulties the enterprises have encountered. The article provides a novel perspective on how predominantly small and medium-sized manufacturing firms achieve cost and differentiation advantages by leveraging their dynamic capabilities.
    Keywords: Strategic management of multinational firms, Value chains, Capability-based strategies.
    JEL: F23 F14 L25
    Date: 2012
  10. By: Beja Jr, Edsel; Yap, David
    Abstract: The development of a reliable procedure for the aggregation of individual level happiness leads to a proper understanding of group level happiness. Such a procedure is indispensable for a more responsive public policy-making. However, individual self-reports on happiness must meet the dual requirements of cardinality and relative interpersonal comparability in order that aggregation is not problematic and the resulting measure not only makes sense but also useful for group level interventions. The paper demonstrates the procedure for obtaining group level happiness using data from the Philippines.
    Keywords: Cardinality; relative interpersonal comparability; aggregation; individual level happiness; group level happiness
    JEL: I30 C40 I00 D60 C80
    Date: 2012–07–22
  11. By: Anand, Kartik (Technische Universitat Berlin); Gai, Prasanna (Department of Economics, University of Auckland and National University of Singapore, Risk Management Institute); Kapadia, Sujit (Bank of England); Brennan, Simon (Bank of England); Willison, Matthew (Bank of England)
    Abstract: We examine the role of macroeconomic fluctuations, asset market liquidity, and network structure in determining contagion and aggregate losses in a stylised financial system. Systemic instability is explored in a financial network comprising three distinct, but interconnected, sets of agents - domestic banks, overseas banks, and firms. Calibrating the model to advanced country banking sector data, this preliminary model generates broadly sensible aggregate loss distributions which are bimodal in nature. We demonstrate how systemic crises may occur and analyse how our results are influenced by fire-sale externalities and the feedback effects from curtailed lending in the macroeconomy. We also illustrate the resilience of our model financial system to stress scenarios with sharply rising corporate default rates and falling asset prices.
    Keywords: Contagion; financial crises; network models; systemic risk
    JEL: C63 G10 G17 G21
    Date: 2012–07–20
  12. By: Dwayne Benjamin; Loren Brandt; Brian McCaig; Nguyen Le Hoa
    Abstract: In this paper we estimate the impact of a land reform program in the Central Highlands of Vietnam. In 2002, Program 132 directed the transfer of farm land to ethnic minority households that had less than one hectare of land. Using the 2002 Vietnam Living Standards Survey as a baseline, in 2007 we resurveyed over one thousand households to provide a retrospective evaluation of the impact of their participation in Program 132. We supplemented the household-level panel with commune and district-level surveys as well as local interviews in order to better understand the details of program implementation. Contrary to official reports that the program was implemented as intended, our findings show that there was considerable deviation from the planned program parameters: Many eligible households did not receive land, while ineligible households often did. We estimate that beneficiaries of the program in the province of Kontum experienced increases of household income largely in line with what one would expect from a small plot of poor farm land. Outside Kontum, where participation rates were substantially lower, household incomes did not improve with program participation, though this could be explained by lags in the maturation of perennial crops. Overall, our results underscore the limitations of simple transfers of land as a mechanism for improving the living standards of ethnic minorities. Our results also show the significant gap that can exist between simple program design and decentralized implementation, the potential implications of which we discuss for program evaluation.
    Keywords: Land Reform; Vietnam; Ethnic Minorities; Program Evaluation
    JEL: Q15 I3 O12 O13
    Date: 2012–07–16
  13. By: Wagstaff, Adam; Bales, Sarah
    Abstract: This paper exploits the staggered rollout of Vietnam’s hospital autonomization policy to estimate its impacts on several key health sector outcomes including hospital efficiency, use of hospital care, and out-of-pocket spending. The authors use six years of panel data covering all Vietnam’s public hospitals, and three stacked cross-sections of household data. Autonomization probably led to more hospital admissions and outpatient department visits, although the effects are not large. It did not, however, affect bed stocks or bed-occupancy rates. Nor did it increase hospital efficiency. Oddly, despite the volume effects and the unchanged cost structure, the analysis does not find any evidence of autonomization leading to higher total costs. It does, however, find some evidence that autonomization led to higher out-of-pocket spending on hospital care, and higher spending per treatment episode; the effects vary in size depending on the data source and hospital type, but some are quite large -- around 20 percent. Autonomy did not apparently affect in-hospital death rates or complications, but in lower-level hospitals it did lead to more intensive style of care, with more lab tests and imaging per case.
    Keywords: Health Systems Development&Reform,Population Policies,Health Law,Health Monitoring&Evaluation,Disease Control&Prevention
    Date: 2012–07–01
  14. By: Laurent Beauguitte
    Abstract: The European Union (EU) is often considered (at least in Europe) as a key actor in a globalized world. The aim of this presentation is to check the relevance of this perception which sometimes seems too Eurocentric to be honest. We used methodological tools coming from “Social Network Analysis” (density, centrality measures, subgroups and regular equivalence) in order to produce a relevant partition of the contemporary world, and to check if an entity called “European Union” appears (or not). This multigraph analysis is based on two databases, one regarding world trade from 1967 until today (CHELEM database), the other one deals with United Nations General Assembly voting behaviour. The first step is to create blockmodels inside these valued matrices without any a priori regarding regional groups and to see if, when and how EU appears. The second step takes the EU existence for granted and compares linkage densities within this group compared to other regional groups like ASEAN or MERCOSUR. The last step is to integrate both partitions and to highlight the cores of the system. If an integrated European Union clearly appears from an economic point of view, the situation is much more contrasted from a political point of view. Despite this balanced conclusion, the relevance of these methodological tools clearly appear for both economic and political geography.
    Date: 2011–09

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