nep-sea New Economics Papers
on South East Asia
Issue of 2012‒11‒03
fourteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Purchasing power parity theory in three East Asian economies: New evidence By Ahmad, Mahyudin; Marwan, Nur Fakhzan
  2. Comparative Study on the Different Free Trade Agreements Entered Into by Japan with other Asian Countries By Gatdula, Jeremy; Habacon, George; Pimentel, John Vincent; Din, Mary Jaselle
  3. Food Security Program in the Time of Economic Crisis: a lesson to learn from Indonesia By Pangaribowo, Evita Hanie
  4. Assessing the Resilience of ASEAN Banking Systems: the Case of the Philippines By Albert, Jose Ramon G.; Ng, Thiam Hee
  5. The ASEAN Economic Community Blueprint: Implementation and Effectiveness Assessment for Philippine Agriculture By Israel, Danilo C.; Briones, Roehlano M.
  6. Regional Cooperation in Education: Issues for Developing Countries in the Asia-Pacific By Yap, Josef T.
  7. AGRICULTURAL TRADE AND ITS IMPACT ON THE ENVIRONMENT By Schmitz, Christoph; Lotze-Campen, Hermann
  8. Duration dependence test for rational speculative bubble: the strength and weakness By Ahmad, Mahyudin
  9. The role of sectoral growth patterns in labor market development By Arias-Vazquez , Francisco Javier; Lee, Jean N.; Newhouse, David
  10. Measuring Gross Output, Value Added, Employment and Labor Productivity of the Chinese Economy at Industry Level, 1987-2008 — An Introduction to the CIP Database (Round 1.0) By Harry WU
  11. Global and Regional Trends in Production, Trade and Consumption of Food Legume Crops By Akibode, Sitou; Maredia, Mywish K.
  12. The Relationship between Internal Satisfaction and External Satisfaction amongst Hotel Customers in Malaysia By Yunus, NKY
  13. Organization Commitment of Public Primary School Senior Head Teachers By Ahmad, AR; Yunus, NKY; Norwani, NM; Musa, K
  14. On the Sources of Risk Preferences in Rural Vietnam By Anh Duc Dang

  1. By: Ahmad, Mahyudin; Marwan, Nur Fakhzan
    Abstract: To an otherwise extensive literature with yet mixed findings on the long run Purchasing Power Parity (PPP) theory, this paper extends the evidence against the PPP hypothesis in three East Asian economies namely Indonesia, Malaysia, and Thailand based on quarterly data spanning forty years (1968:Q1-2008:Q1). The testing of PPP hypothesis in this study employs two methods namely Engle-Granger procedure and Johansen multivariate cointegration method.
    Keywords: Purchasing power parity; East Asian countries; Johansen multivariate cointegration test
    JEL: E29 C22
    Date: 2012–08–14
  2. By: Gatdula, Jeremy; Habacon, George; Pimentel, John Vincent; Din, Mary Jaselle
    Abstract: A general review of the Philippine-Japan Economic Partnership Agreement (PJEPA or the Agreement) was originally scheduled in December 2011. Accordingly, it was deemed that an assessment on how the Agreement affected the Philippine economy after three years of implementation would be helpful not only for the immediate purposes of the review but also for future negotiating processes. Part of the assessment would be to review Japanese bilateral agreements with other Asian countries to compare the concessions that each country got in relation to that provided for in the Agreement. This is for the Philippines to assess whether to propose revisions to the Agreement in cases where conceivably better concessions were obtained by the other countries. The main objective of this paper is to compare the provisions of the free trade agreements (FTAs) on trade in goods, trade in services, investment, and sanitary and phytosanitary measures that Japan has with other select Asian countries. Those countries are Brunei, India, Indonesia, Malaysia, Singapore, Thailand, and Viet Nam. The results of the comparison will be further compared with the provisions of the PJEPA. The output of the project is a comparative study, including data on the differences and similarities of the provisions of these FTAs, taking into consideration the economic and political environment as rationale for these variations.
    Keywords: Philippines, trade institutions, trade policy, free trade agreements, Philippines-Japan Economic Partnership Agreement (PJEPA), Japan Economic Partnership Agreements (JEPAs), bilateral trade agreements, comparative textual difference, trade negotiations
    Date: 2012
  3. By: Pangaribowo, Evita Hanie
    Abstract: This study evaluates the impact of food security program – an almost universal program of Indonesian Social Safety Net Program in the time of economic crisis. Food security program aimed to protect poor households from the negative effects of economic crisis by means of highly subsidized rice. To assess the impact of the program, this study utilizes matching estimator approach combined with difference in difference method. The rich longitudinal dataset used in this study enables matching estimator and difference in difference approach to provide accurate estimate of the program’s impact on its beneficiaries. Results indicate the positive impact of the food security program on the expenditures of richer nutrient food which include meat, fish and dairy products. The program has also substantial impact on health expenditure. In addition, this study finds fly-paper effects where food security program has increased rice and staple food expenditures in the short period. Aid-fungibility is also evident since the program has positive effect on adult goods expenditure. The implication is that improved targeting or applying conditionality might mitigate the unintended effects resulting from the program.
    Keywords: Impact evaluation, food security, Indonesia, Food Security and Poverty,
    Date: 2012
  4. By: Albert, Jose Ramon G.; Ng, Thiam Hee
    Abstract: Since the global financial crisis in 2008/09 there has been heightened concern about the resilience of banking systems in Southeast Asia. This paper proposes a methodology that uses a macroprudential perspective to assess the resilience of banking systems in member countries of the Association of Southeast Asian Nations. It then proceeds to apply this methodology to examine the resilience of the Philippine banking system. Data on financial soundness in the Philippine banking system are utilized in a vector autoregression model to study the dynamic relationships that exist among financial and macroeconomic indicators. Using impulse response functions, a simulation of financial ratios in the banking system is conducted by assuming unlikely but plausible stress scenarios to determine whether banking system credit and capital could withstand the impact of such circumstances. In the stress scenarios, the estimated impact of macroeconomic shocks on nonperforming loan and capital adequacy ratios is generally minimal. The results, however, do suggest that the Philippine banking system has some vulnerability to interest rate and stock market shocks. The results of such stress testing provide a better understanding of the level of preparedness required for managing risks in the financial system, especially in the wake of continuing global economic uncertainty.
    Keywords: banking system, Philippines, macroprudential, stress testing, panel VAR
    Date: 2012
  5. By: Israel, Danilo C.; Briones, Roehlano M.
    Abstract: <p>The ASEAN Economic Community (AEC) Blueprint states the plan of ASEAN countries to unify into a single market and production base. A priority focus for integration is enhancement of trade among ASEAN member countries and long-term competitiveness of food and agriculture products produced within ASEAN. Based on key person interviews, this study identifies the specific gaps in the implementation of the blueprint for the case of Philippine agriculture, and makes appropriate recommendations.</p><p>The widest gaps in AEC blueprint implementation appears to be in cooperation areas related to private sector linkages, agricultural cooperatives, R&D, and technology transfer. For the private sector, a key factor accounting for the gap is preference for own networking and business arrangement. Development of producer cooperatives is at a nascent phase within the country. Considerable progress has been made in GAP, GAHP, GHP, and GMP; in general harmonization is most advanced where foreign markets have imposed stringent standards, i.e., the case of HACCP.</p><p>The following measures are recommended: First, to re-examine objectives and targets for cooperation with the private sector, agriculture cooperatives, R&D, and technology transfer. Trade standard harmonization is relatively easily justified; however, the collective rationale for cooperation in the other areas need to be better articulated. Second, within trade standard harmonization, a couple of action items are: i) expedite completion of the ASEAN GAqP; and ii) highlight the issue of small producer inclusion. ASEAN-wide mechanisms toward inclusion of small producers hold a long-term potential for uplifting livelihoods of millions of small farmers and fishers in Southeast Asia; however, this cannot follow the same modality as standards certification for large exporting companies. The blueprint objectives for cooperatives, including other types of producer associations, should be re-examined toward more collective approaches to gain approval and certification.</p>
    Keywords: Philippines, market integration, trade harmonization, product standards, producer linkages
    Date: 2012
  6. By: Yap, Josef T.
    Abstract: Human capital development is important for economic growth. The main channel by which human capital can be enhanced is education, which is characterized by the issues of availability, access, and quality. Domestic reforms can be complemented by regional cooperation in education. The main mechanisms for regional cooperation are: People Exchange, Transnational Education, Information Exchange, Regulatory Reform, and Development Partnerships. The main argument in this paper is that the relevant mechanism for a particular economy--including what should be prioritized--depends on its position in the development ladder and history with regard to education attainment. The experience of Malaysia and the Philippines with regard to these mechanisms and education in general are compared with the expectation that other developing countries can draw lessons from this comparison. Malaysia`s high economic growth in the past three decades has enabled it to implement an effective program in transnational education while the Philippines has failed to exploit its competency in the English language largely due to its poor record with regard to infrastructure development. What would be useful for the Philippines is to harness regional cooperation in order to effect regulatory reform. In particular, accreditation of colleges and universities in the Philippines is still voluntary while Malaysia has opened its universities to international standards. A long-run goal would be a regional agreement on education standards somewhat akin to a Free Trade Agreement. Meanwhile, developing countries can benefit from existing institutions like the ASEAN Universities Network and the ASEAN Quality Assurance Network in order to improve the quality of their education systems.
    Keywords: education, human capital, regional cooperation, regulatory reform, transnational education, accreditation
    Date: 2012
  7. By: Schmitz, Christoph; Lotze-Campen, Hermann
    Abstract: International trade in agricultural goods has increased tremendously throughout the past decades, thereby affecting environment and climate. Since this trend in agricultural trade is likely to be continued in the future, questions regarding global and local environmental impacts arise. We analyse linkages between trade liberalisation and environmental outcomes using a spatially explicit economic land-use model coupled to a biophysical vegetation model. Our reference case assumes constant trade patterns, whereas the two trade scenarios consider a path of increasing trade liberalisation and differ according to their assumed carbon price policy. Results indicate that increased trade liberalisation leads to further deforestation in Amazonia due to comparative advantages of agriculture in South America. In contrast, less deforestation takes place in Pacific countries, like Malaysia and Indonesia. Globally, around 40 million ha of forest would be cleared additionally due to trade liberalisation, causing around 26 Gt additional CO2 emissions until 2050. On the other hand, water scarcity decreases with increasing liberalization, foremost in South-, South-East Asia, and the Middle East. Although the inclusion of a carbon prices would increase water scarcity in some regions, it would lead to a considerable reduction in tropical deforestation. In general, additional demand from developed and transition countries through trade should be compensated by investments in technological change and more international efforts to protect natural resources.
    Keywords: land use modelling, international trade, land use change, GHG emissions, water scarcity, International Relations/Trade, Land Economics/Use,
    Date: 2012
  8. By: Ahmad, Mahyudin
    Abstract: This review highlights the strength and weakness of duration dependence test used by Mokhtar, Nassir and Hassan (2006) to detect the rational speculative bubble in the Malaysian stock market. It is found that despite the test’s strength over the other tests, it is however sensitive to different specifications and therefore may produce contrasting results.
    Keywords: Rational Speculative Bubble; Duration Dependence Test; Stock market; Asian Financial Crisis
    JEL: G14
    Date: 2012–08–12
  9. By: Arias-Vazquez , Francisco Javier; Lee, Jean N.; Newhouse, David
    Abstract: This paper investigates the relationship between sectoral growth patterns and employment outcomes. A broad cross-country analysis reveals that in middle-income countries, employment responds more to growth in less productive and more labor-intensive sectors. Employment in middle-income countries is susceptible to a resource curse, and grows rapidly in response to manufacturing and export manufacturing growth. Within Brazil, Indonesia, and Mexico, the effects of different sectoral growth patterns are context dependent, but differences in sectoral growth effects on employment and wages are substantially reduced in states or provinces with higher measured labor mobility. Consistent with this, aggregate employment and wage effects of growth by sector are close to uniform when examined over longer time horizons, after labor has an opportunity to adjust across sectors. The results reinforce the importance of growth in more labor-intensive sectors, and suggest that job mobility may be an important mechanism to diffuse the benefits of capital-intensive growth.
    Keywords: Labor Policies,Labor Markets,Economic Theory&Research,Achieving Shared Growth,Banks&Banking Reform
    Date: 2012–10–01
  10. By: Harry WU
    Abstract: This paper introduces the preliminary version of the China Industrial Productivity Database (CIP Round 1.0), a first of its kind covering the period 1987-2008, including data problems and the construction procedures to deal with the problems. It also discusses the outstanding methodological and data issues aiming to invite constructive comments and suggestions for further improvement of the database. Finally, using the CIP data, this paper provides a preliminary measure of China's labor productivity at industry level and individual industries' contributions to and labor reallocation effect on the aggregate labor productivity growth of the economy. Our preliminary findings show that there was nearly a fourfold growth (383%) in the labor productivity of the Chinese economy over the period 1987-2008, or an increase of 6.6% per annum. The top two performers were post-and-telecommunication service and transportation equipment manufacturing, experiencing an annual growth of labor productivity by 16.3% and 15.1%, respectively. However, that health care (11.0% p.a.) and government service (9.7% p.a.) also fell in the "super labor-productivity-growth club" raises a serious question about potential data problems because the labor productivity growth of these sectors is typically low or close to zero by international experiences. China gained from the labor reallocation effect alongside the state sector reform beginning in the early 1990s. But the effect turned into negative following the Asian financial crisis in 1997-98 and maintained that status in the aftermath deflationary macroeconomic environment (1998-2001). The labor reallocation effect became positive again after China's entry into the World Trade Organization (WTO) (2002-08).
    Date: 2012–10
  11. By: Akibode, Sitou; Maredia, Mywish K.
    Abstract: Food legumes play an important and diverse role in the farming systems and in the diets of poor people around the world. They are ideal crops for simultaneously achieving three developmental goals in targeted population—reducing poverty, improving human health and nutrition, and enhancing ecosystem resilience. This report provides global and regional trend analysis and sheds light on the pulse crop production, price, trade, and consumption patterns observed in the developing world, developed countries and globally from mid-1990s to 2008. The study is conducted through a review of secondary data and published research and analysis reports, and presents data and analysis for cereals to compare and contextualize the trends, patterns and outlook for pulses. Globally, the harvested area under pulse crops is about one-tenth the harvested area under all cereal crops and a high proportion of pulse area harvested is under rainfed-low input systems compared to cereal crops. Thus, in 2008, the average global yields of pulse crops (0.86 t/ha) was only about one-fourth the average yields of cereal crops (3.54 t/ha). On the bright side, over the past 14 years, the overall pulse production has increased at a rate higher than the growth rate in population both in developing and developed countries. Over this time period, SSA has led the developing world in terms of contribution to production growth through growth in yield (but with a low base). A major share of the pulse production growth rate in developed countries has been area expansion, especially in countries like Canada. In terms of production growth rate among major pulse crops, cowpeas and soybean in West Africa have shown the biggest increase, which are followed by pigeon peas and dry beans. However the overall picture for faba beans, chickpeas and lentils over the last 14 years has not been so favorable with small positive growth rate for faba beans and an overall negative growth rate for lentils due to decline in area. Farm-gate prices for pulses have fluctuated during the past 14 years due to supply and demand mismatch, and have experienced an upward pressure recently. This pressure is expected to continue in the near future but may be reversed in the medium and long term. Over the past 14 years, developing countries on aggregate have increasingly met their growing pulse requirements through increased imports and have now become net importers of pulses. Trade in pulses grew more rapidly between 1994 and 2008 than output. The expansion in international trade of pulses has provided a good opportunity for several developing and developed countries to expand their exports. China, Myanmar and Argentina, among developing countries, and Canada, U.S. and Australia among developed countries have emerged as major exporters of pulses. However, despite this rapid growth in exports and imports, pulse trade remains a relatively thin market, especially when compared to other food commodities, such as cereals and oil crops. On the demand side, over the past 14 years, a stable and modest positive trend in per capita consumption is observed within the context of a declining overall historical trend. This declining historical trend in per capita consumption of pulses is expected to continue into the future. Dietary patterns are changing all over the world and the share of non-cereal foods in the total calorie and protein consumption is increasing. However, at least over the past 14 years, pulses have not seen a dramatic decline in the total calorie and protein contribution as seen by the cereal crops. Household level survey data from India show the continuing importance of pulses as a source of protein in poor people’s diet, despite the overall changing dietary pattern, rising income and declining per capita consumption of pulses.
    Keywords: Grain legumes, Pulse crops, Production, Trade, Consumption, Developing countries, Agricultural development, Agricultural and Food Policy, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, International Development, International Relations/Trade, Production Economics, Productivity Analysis, Research and Development/Tech Change/Emerging Technologies, Q11, Q16, Q18,
    Date: 2012–10–15
  12. By: Yunus, NKY
    Abstract: This paper is focused on hotel customers' internal and external satisfaction. Some previous studies had only focused on the customers' external satisfaction and only a few studies had managed to link between the two variables. The study also looked into factors which may act as internal variables such as the employer-employee relationship, employee relationship as well as employee- customer relationship. As for the external variables, these may involve looking into other aspects of satisfaction, such as customer satisfaction towards the service and facilities provided by the hotel. The main focus of the study was to view the relationship between the customers' intrinsic satisfaction with the customers' external satisfaction and the factors which may influence the customers. The data had been randomly gathered from 120 samples by questionnaire distribution among hotel guests and employees in Kuala Lumpur, Port Dickson, Penang, Trengganu and Kota Kinabalu. Overall, this study had managed to uncover the factors which influenced customers' internal and external satisfaction and also discovered possible relationship between the two types of satisfaction.
    Keywords: Employee Satisfaction; Customer Satisfaction; Service Quality; Service; Hotel Industry; Internal Factors; External Factors
    JEL: M31
    Date: 2012
  13. By: Ahmad, AR; Yunus, NKY; Norwani, NM; Musa, K
    Abstract: Commitment to organization is important and plays key role in the formation of an integrated human effort in an organization. The importance of organizational commitment has attracted consideration over recent years and has been reflected in many management studies. Specifically, the objective of this study was to identify the significant difference between the selected demographic variables and organizational commitment. A quantitative cross sectional research design with purposive sampling was employed in collecting data. The cross sectional survey design was used to determine the demographic variables of gender and ethnicity. The questionnaires for Organizational Commitment was originated by Mowday et al., (2003). The respondents for this study were senior public primary school head teachers who attended the three years intensive program of Bachelor Degree in Education Management. Two cohorts comprised of 107 students were chosen from 600 students who enrolled for the Head Teacher Degree Program. They were purposively selected because they represented almost equal numbers of respondents based on gender and ethnicity of the ratio of people in Malaysia. The results of the analysis revealed that organizational commitment showed no significant different between male and female. There was significant difference for organizational commitment related to ethnic of Malay, Chinese and Indian. In conclusion, the degree of commitment of the organization among senior teacher has shown the differences between the ethnics but no different between the gender. Therefore, organization need to build up the necessary efforts to encourage and enable the different ethnics to strive their strong commitment to the organization. This will enable the organization to meet future challenges and at the same time maintain employee’s attachment to the organization.
    Keywords: Public school; commitment; organizational commitment; ethnicity
    JEL: I21
    Date: 2012
  14. By: Anh Duc Dang
    Abstract: In this paper, I provide new empirical evidence that the natural environment can shape individual risk preferences. By combining historical data on weather variation and contemporary survey questions on risk aversion, I find that risk aversion is significantly different for people who live in areas that have suffered high frequency of natural disasters. In particular, households highly affected by weather volatility show a longterm risk aversion and are more willing to buy insurance to protect crop losses. The finding also supports the hypothesis that when people are used to live in a risky environment, an incremental increase in risk affects their risk preferences less.
    JEL: D03 Q54 O53
    Date: 2012–10

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