nep-sea New Economics Papers
on South East Asia
Issue of 2012‒09‒03
twelve papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Institutions for Asian Integration: Innovation and Reform By Capannelli, Giovanni; Tan, See Seng
  2. An Evaluation on Institution for Public Private Partnership (PPP) in Indonesia By Arief Bustaman; Arief Ramayandi
  3. Wage and Labor Union in Manufacturing Sector By Pipit Pitriyan; Adiatma Y.M Siregar
  4. Trade Dynamics in the East Asian Miracle: A Time Series Analysis of U.S.-East Asia Commodity Trade, 1962-1992 By Singh, Nirvikar; Mora, Jesse; Carolan, Terrie
  5. Financial Integration from a Time-Varying Cointegration Perspective By Xianguo Huang; Roberto Leon-Gonzalez; Somrasri Yupho
  6. Voluntary participation in community collaborative forest management: A case study of Central Java,Indonesia By Sri Lestari; Koji Kotani; Makoto Kakinaka
  7. Technical Efficiency of Thai Manufacturing SMEs: a Comparative Study of North-eastern Provinces By Teerawat Charoenrat; Charles Harvie
  8. Coordinating Healthcare and Pension Policies: An Exploratory Study By Bali, Azad Singh; Asher, Mukul G.
  9. Are Migrants in Large Cities Underpaid? Evidence from Vietnam By Nguyen, Viet Cuong; Pham, Minh Thai
  10. Trade Productivity Upgrading, Trade Fragmentation, and FDI in Manufacturing: The Asian Development Experience By Singh, Nirvikar; Mora, Jesse
  11. Ethnic Minorities in Northern Mountains of Vietnam: Poverty, Income and Assets By Nguyen Viet, Cuong
  12. It Takes Two to Tango: Entrepreneurship and Creativity in Troubled Times – Vietnam 2012 By Vu Dang Le Nguyen; Nancy K. Napier; Quan Hoang Vuong

  1. By: Capannelli, Giovanni (Asian Development Bank Institute); Tan, See Seng (Asian Development Bank Institute)
    Abstract: The formation of regional production networks in East Asia has occurred mainly through market forces, without much help from regional institutions in promoting the creation of a single Asian market. While this approach has served the region well in the past, the drastic changes experienced since the 2008–2009 financial crisis and the challenges Asian countries are facing—growing inequalities and competition, on the one hand, and enhanced threats to the environment and people’s health on the other—have rendered more urgent the need for intergovernmental cooperation at global and regional levels. Asia’s institutions for regionalism need strengthening through reform and innovation.
    Keywords: asian integration; asian institutions; regional production networks; east asia; single asian market; intergovernmental cooperation
    JEL: F15 F55 F59
    Date: 2012–08–21
  2. By: Arief Bustaman (Department of Economics, Padjadjaran University); Arief Ramayandi (Department of Economics, Padjadjaran University)
    Abstract: Infrastructure inadequacy is widely recognised as one of the main hindrance for further advancement of Indonesian economy. New development has been lacking for the past decade and maintaining existing facilities is no less a problem due to low government funding capacity. Public private partnership (PPP) schemes have been tapped to ease the problem since early 2000s. The progress, however, is unsatisfactory as the number of projects funded under such schemes to date is still very low. This paper argues that the problem is mainly due to drawbacks in the existing institution governing PPP schemes in Indonesia. It evaluates the existing institution, at national and subnational levels, for PPP in Indonesia and proposed viable policy recommendations to redesign the existing PPP’s institution to make it work better.
    Keywords: Public Private Partnership (PPP), institution, infrastructure
    JEL: H81 H54
    Date: 2012–08
  3. By: Pipit Pitriyan; Adiatma Y.M Siregar (Department of Economics, Padjadjaran University)
    Abstract: The presence of Labor Unions is expected to provide a higher bargaining power for its members so that the rights of workers can be better acknowledged. In Indonesia, presently, the role of unions is more highlighted in the determination of the minimum wage. This study aims to estimate the the role of labor union on wage determination of Indonesia’s labor intensive manufacturing sector and whether wage differentials occurs among labor union member/non-member of Indonesia’s labor intensive manufacturing sector. Using the SAKERNAS 2007 data, the wage equation concludes that being a labor union member, is associated with higher wage payment received and wage differential between union and union members occurs. Meanwhile, Oaxaca Blinder Decomposition results show us that the wage differential between union and non-union is not negligible, particularly in automotive sector.
    Keywords: Wage, labor union, manufacturing
    JEL: J3 J5
    Date: 2012–08
  4. By: Singh, Nirvikar; Mora, Jesse; Carolan, Terrie
    Abstract: We examine the composition of bilateral trade between the United States and eight Asian Pacific economies from 1962 to 1992. Two complementary time series analyses of individual commodities at the SITC four-digit level indicate that significant changes occurred in trade composition during this period. We use a measure of normalized trade balances, developed by Gagnon and Rose (1995). For the eight bilateral trade relationships, commodities representing from fifty to seventy percent of 1992 dollar trade have shown statistically significant changes in the magnitude and, in some cases, in the direction of normalized trade balances, over the thirty-year period. Results support the conclusion that changes in trade patterns in both low-tech industries, such as textiles and clothing, and more high-tech industries, such as electronic parts and electronic goods, were important in the development of the East Asian economies.
    Keywords: Economics, international trade flows, time series, ADF, KPSS, trends, economic development
    Date: 2012–02–15
  5. By: Xianguo Huang (National Graduate Institute for Policy Studies); Roberto Leon-Gonzalez (National Graduate Institute for Policy Studies); Somrasri Yupho (National Graduate Institute for Policy Studies)
    Abstract: This paper applies a time-varying cointegration (TVC) model to study regional financial integration, measured by the drifting cointegration coefficient of the long-term interest rates between Singapore and Malaysia. Conditioned on long-run exchange rate equilibrium, the evolving relation can be used to test the hypothesis of uncovered interest parity (UIP) in the strong and weak forms, and examine how the integration changes over time on the basis of the long-term interest rates measure. In the case of Singapore and Malaysia, the findings show that financial integration first decreased after the 1997 Asian Financial Crisis and then enhanced gradually from late 2001 onward. The shocks to Singapore, characterized by a higher level and a leading effect, are positively correlated with the ones to Malaysia.
    Date: 2012–08
  6. By: Sri Lestari (Forestry Research Institute, Ministry of Forestry, Indonesia); Koji Kotani (International University of University); Makoto Kakinaka (International University of University)
    Abstract: This paper examines voluntary participation in community forest management, and characterizes how more participation may be induced. We implemented a survey of 571 respondents and conducted a case study in Central Java, Indonesia. The study's novelty lies in categorizing the degrees of participation into three levels and in identifying how socio-economic factors affect people's participation at each level. The analysis finds heterogeneous responses across the three levels and also finds that publicly organized programs, such as information provision and benefit sharing, are highly effective. Overall, the results suggest a positive perspective and further corrective measures for the success of community forest management.
    Keywords: Voluntary participation, Community collaborative forest management, Participation level
    Date: 2012–08
  7. By: Teerawat Charoenrat (University of Wollongong); Charles Harvie (University of Wollongong)
    Abstract: A major motivation of this study is to examine factors that are most important in contributing to the relatively poor efficiency performance of Thai manufacturing SMEs. The results obtained will be significant in devising effective policies aimed at tackling this poor performance. This paper uses data on manufacturing SMEs in the North-eastern region of Thailand in 2007 as a case study, by applying a stochastic frontier analysis (SFA) and technical inefficiency effects model. The empirical results obtained indicate that the mean technical efficiency of all categories of manufacturing SMEs in the North-eastern region is 43 percent, implying that manufacturing SMEs have high levels of technical inefficiency in their production process. Manufacturing SMEs in the North-eastern region are particularly labour intensive. The empirical results of the technical inefficiency effects model suggest that skilled labour, municipal area and ownership characteristics are important firm-specific factors affecting technical efficiency. The paper argues that the government should play a more substantive role in developing manufacturing SMEs in the North-eastern provinces through: providing training programs for employees and employers, encouraging greater usage of capital and technology in the production process of SMEs, enhancing the efficiency of state owned enterprises, encouraging a wide range of ownership forms and improving information and communications infrastructure.
    Keywords: Technical Efficiency; Stochastic Frontier Analysis (SFA); Small and Medium sized Enterprises (SMEs); Manufacturing; North-eastern Region of Thailand
    JEL: C31 C87 D24 O12
    Date: 2012
  8. By: Bali, Azad Singh (Asian Development Bank Institute); Asher, Mukul G. (Asian Development Bank Institute)
    Abstract: Rapid ageing of the population globally represents an unprecedented historical trend. As pension and healthcare costs are positively correlated with rising incomes, ageing, urbanization, and a shift from communicable to life-style diseases, managing these costs is a major challenge. There are many linkages between healthcare and pension arrangements—in terms of costs, exposure to risks, and as they jointly impact on crucial policy decisions. This paper discusses the rationale for coordination between various programs to better manage the cost of ageing. The current difficult macroeconomic environment, including fiscal stringency conditions, strengthens the case for such coordination.
    Keywords: population ageing; pension policies; healthcare policies; urbanization
    JEL: J10 J40
    Date: 2012–08–16
  9. By: Nguyen, Viet Cuong; Pham, Minh Thai
    Abstract: This paper examine the difference in wages between migrants and non-migrants (native workers) in large cities in Vietnam. It is found that migrants receive substantially lower wages than non-migrants. The wage gap tends to be larger for older migrants. However, once observed demographic characteristics of workers are controlled, there is no difference in wages between migrants and non-migrants. The main difference in observed wages between migrants and non-migrants is explained by differences in age and education between migrants and non-migrants.
    Keywords: Migration; underpaid; decomposition; household survey; Vietnam
    JEL: E24 O15
    Date: 2012–05–16
  10. By: Singh, Nirvikar; Mora, Jesse
    Abstract: This paper examines the experience of 10 Asian countries with respect to growth, trade and FDI. It explores relationships between the nature of exports and imports and growth, as well as the relevance of FDI as a channel for these relationships. We find that FDI is often positively correlated with higher productivity levels in exports and imports. The effect for imports is particularly apparent for imported intermediate goods, reflecting the emergence of greater trade fragmentation. In turn, both imported intermediates and exports that are associated with higher productivity levels are positively correlated with per capita GDP. This paper therefore brings together empirical evidence that integrates discussions of FDI, trade fragmentation and improvements in the productivity of traded goods.
    Keywords: Economics, international trade, trade policy, product upgrading, trade fragmentation, vertical specialization, FDI, economic development
    Date: 2012–03–03
  11. By: Nguyen Viet, Cuong
    Abstract: This study examines the asset and income pattern of poor ethnic minorities in Northern Mountains of Vietnam using data from a 2010 Northern Mountain Baseline Survey (NMBS) of the Second Northern Mountains Poverty Reduction Project and Vietnam Household Living Standard Survey (VHLSS) 2010. The poor ethnic minorities in Northern Mountains have lower assets and income than ethnic minorities in other regions. Their income is mainly from crops and livestock. Compared with Kinh/Hoa and ethnic minorities in other regions, poor ethnic minorities in Northern Mountain have substantially lower income from wages and non-farm activities. The difference in the income gap between Northern Mountain ethnic minorities and other households is mainly explained by the gap in wages and non-farm income. Northern Mountain ethnic minorities spend less time on wages and non-farm employment. Compared with other households, their non-farm income per working hours and also farm income per working hours is substantially lower.
    Keywords: Ethnic minority; household income; poverty; decomposition; Vietnam
    JEL: I31 I32
    Date: 2012–02–20
  12. By: Vu Dang Le Nguyen; Nancy K. Napier; Quan Hoang Vuong
    Abstract: Strikingly, most literature suggests that market competition will push firms to take creativity/innovation seriously as matter of death or survival. Using the data, we examined creativity methods (Napier and Nilsson, 2008; Napier, 2010) in conjunction with three influential cultural values – namely risk tolerance, relationship, and dependence on resources – to assess how they influence decisions of entrepreneurs.The primary objective of this study focuses on perceived values of entrepreneurship and creativity in business conducted within a turbulent environment. Our initial hypothesis is that a typical entrepreneurial process carries with it “creativity-enabling elements.” In a normal situation, when businesses focus more on optimizing their resources for commercial gains, perceptions about values of entrepreneurial creativity are usually vague. However, in difficult times and harsh competition, the difference between survival and failure may be creativity. This paper also examines many previous findings on both entrepreneurship and creativity and suggests a highly possible “organic growth” of creativity in an entrepreneurial environment and reinforcing value of entrepreneurship when creativity power is present. In other words, we see each idea reinforcing the other. We use data from a survey of sample Vietnamese firms during the chaotic economic year 2012 to learn about the ‘entrepreneurshipcreativity nexus.’ A data set of 137 responses qualified for a statistical examination was obtained from an online survey, which started on February 16 and ended May 24, 2012, sent to local entrepreneurs and corporate managers using social networks. The authors employed categorical data analysis (Agresti, 2002; Azen & Walker, 2011). Statistical analyses confirm that for business operation, the creativity and entrepreneurial spirit could hardly be separate; and, this is not only correct with entrepreneurial firm, but also well established companies. The single most important factor before business startup and during early implementation in Vietnam is what we call “connection/relationship.” However, businesspeople are increasingly aware of the need of creativity/innovation. In fact, we suggest that creativity and entrepreneurial spirit cannot be separated in entrepreneurial firms as well as established companies.
    Keywords: Creativity; Entrepreneurship; Economic Transition; Vietnam
    JEL: C42 M13 O31 P27
    Date: 2012–08

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