nep-sea New Economics Papers
on South East Asia
Issue of 2013‒01‒07
eighteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Why do firms issue abroad? Lessons from onshore and offshore corporate bond finance in Asian emerging markets By Paul Mizen; Frank Packer; Eli M Remolona; Serafeim Tsoukas
  2. Impact of Production Linkages on Industrial Upgrading in ASEAN, the People’s Republic of China, and India : Organizational Evidence of a Global Supply Chain By Tomohiro Machikita; Yasushi Ueki
  3. Spatial Dimensions of Expenditure Inequality and the Role of Education in Indonesia: An Analysis of the 2008-2010 Susenas Panel Data By Mitsuhiro Hayashi; Mitsuhiko Kataoka; Takahiro Akita
  4. Job satisfaction and confidence of Asian managers in Japanese MNCs By Yoshitaka Yamazaki
  5. Economic Growth, Energy Consumption, Financial Development, International Trade and CO2 Emissions in Indonesia By Muhammad, Shahbaz; Qazi Muhammad, Adnan Hye; Aviral Kumar, Tiwari
  6. South East Asian Monetary Integration By Gilles de Truchis; Benjamin Keddad;
  7. Accounting for Unrepresentative Products and Urban-Rural Price Differences in International Comparisons of Real Income: An Application to the Asia-Pacific Region By Robert J. Hill; Iqbal A. Syed
  8. Could inward FDI offset the substitution effect of outward FDI on domestic investment? evidence from Malaysia By goh, sookhoon
  9. Environmental and economic efficiencies in the Asia-Pacific region By Honma, Satoshi
  10. Wealth Effects and Consumption in Thailand By Phurichai Rungcharoenkitkul
  11. The AMU Deviation Indicators Based on the Purchasing Power Parity and Adjusted by the Balassa-Samuelson Effect By OGAWA Eiji; Zhiqian WANG
  12. Urbanization and access to labour market in Vietnam: Weight and characteristics of the informal sector. By Roubaud, François; Razafindrakoto, Mireille; Nguyễn, Hữu Chí; Cling, Jean-Pierre
  13. Do Natural Disasters Affect the Poor Disproportionately? The Case of Typhoon Milenyo in the Rural Philippines. By Sakai, Yoko; Estudillo, Jonna P.; Fuwa, Nobuhiko; Higuchi, Yuki; Sawada, Yasuyuki
  14. The Trinity Growth Theory: A Theory of Wealth and Poverty By LIM Chong Yah
  15. Investment Financing and Financial Development: Firm Level Evidence from Vietnam By Conor O'Toole; Carol Newman
  16. Historical Sources of Institutional Trajectories in Economic Development : China, Japan, and Korea Compared By Masahiko Aoki
  17. Understanding responsible innovation in small producers’ clusters in Northern Vietnam: A grounded theory approach to globalization and poverty alleviation. By Voeten, J.J.
  18. The emergence of profit and interest in the monetary circuit By Kakarot-Handtke, Egmont

  1. By: Paul Mizen; Frank Packer; Eli M Remolona; Serafeim Tsoukas
    Abstract: Corporate bond issuers in emerging economies in Asia have often had a choice between an onshore market and an offshore one. Since 1998, however, many of these issuers have increasingly turned to the onshore market. This paper investigates systematically what factors have influenced this choice between markets for issuers in eight emerging economies - China, Hong Kong SAR, Indonesia, Korea, Malaysia, the Philippines, Singapore and Thailand. For variables measuring market depth and liquidity, the availability of hedging instruments, and the size of the investor base, we rely on BIS statistics that have not been used in this literature before. We combine these market-level data with firm-level data in an unbalanced panel for the eight countries covering the period 1995 to 2007. We control for variables representing agency, static trade-off and risk management theories of the capital structure. Our results show that the choice between domestic and foreign markets has changed over time in large part because of the increased depth of the onshore market. The firms that benefit from such market development tend to be the unseasoned issuers rather than the seasoned ones.
    Keywords: bond financing, offshore markets, derivatives, capital structure, emerging markets, market depth, Asian bond markets
    Date: 2012–12
  2. By: Tomohiro Machikita (Asian Development Bank Institute (ADBI)); Yasushi Ueki
    Abstract: This paper presents a simple model of industrial upgrading as a result of backward and forward information linkages between upstream and downstream relations. It also serves as an empirical investigation of the impact of mutual knowledge exchange on the knowledge production function using data on firms' self-reported customers and suppliers. Evidence from interconnected firms in Indonesia, Thailand, Philippines, and Viet Nam suggests that there are strong spillover effects between downstream and upstream firms in terms of international standard certification. The degree of product and process innovation is quite diverse across manufacturing firms within a local supply chain and within a global supply chain. Firms are likely to achieve product innovation if they have customers in foreign countries. Customers in Japan and the People's Republic of China play an important product innovation role for firms in Association of Southeast Asian Nations (ASEAN) economies, and customers in the United States or Europe play an important industrial upgrading role in connecting ASEAN firms with the global market.
    Keywords: production linkages, industrial upgrading, ASEAN, PRC, India, global supply chains, upstream and downstream relations, backward and forward linkages, product and process innovation
    JEL: O31 O32 R12
    Date: 2012–11
  3. By: Mitsuhiro Hayashi; Mitsuhiko Kataoka; Takahiro Akita
    Abstract: Based on 2008-2010 Susenas panel data, this study analyzes expenditure inequality in Indonesia from spatial perspectives by using several inequality decomposition methods: decomposition of the Theil indices by population subgroups; decomposition of the Gini coefficient by expenditure components; and the Blinder-Oaxaca decomposition. In the Theil decomposition, this study employs not only the conventional approach but also an alternative approach proposed by Elbers and others (2008). Our results show that a substantial portion of expenditure inequality is attributed to inequalities within urban and rural sectors. According to the alternative approach, however, the contribution of between-sector inequality increases conspicuously, suggesting that there are notable differences in the distribution of per capita household expenditures between the urban and rural sectors. Educational differences appear to have played an important role in urban inequality as well as urban-rural disparity. For both urban and rural households, expenditures on non-food items, including expenditure on education, serve to have increased total inequality.
    Keywords: Indonesia, spatial inequality, decomposition of Theil indices and Gini coefficient, Blinder
    Date: 2012–12
  4. By: Yoshitaka Yamazaki (International University of Japan)
    Abstract: The present study aims to examine how job satisfaction rests on confidence in Asia. A total of 914 employees who participated in this study consisted of Japanese, Chinese, Hong Kong's, Malaysian, and Thai managers who work as parent or host country nationals for a Japanese multinational corporation expanding Asian markets. This study initially confirmed that a level of each key variable: job satisfaction and confidence, significantly differed in those countries. As the entire managerial group, by controlling age, gender, tenure, past work experience, and management positions, results of regression analysis showed that confidence powerfully increased job satisfaction. Further, with regard to five different area groups, results also illustrated the strong effect of confidence on job satisfaction in each country. Consequently, the study results have led to a conclusion that this relational aspect between the two psychological variables tends to be universalistic rather than a culturally contextual specific phenomenon. Theoretical and practical implications will be discussed.
    Keywords: Job satisfaction, confidence, dispositional approaches, Asian managers, Japanese multinationals
    Date: 2012–12
  5. By: Muhammad, Shahbaz; Qazi Muhammad, Adnan Hye; Aviral Kumar, Tiwari
    Abstract: This study examines the linkages among economic growth, energy consumption, financial development, trade openness and CO2 emissions over the period of 1975Q1-2011Q4 in the case of Indonesia. The stationary analysis is performed by using Zivot-Andrews structural break unit root test and the ARDL bounds testing approach for a long run relationship between the series in the presence of structural breaks. The causal relation between the concerned variable is examined by the VECM Granger causality technique and robustness of causal analysis is tested by innovative accounting approach (IAA). Our results confirm that the variables are cointegrated; it means that the long run relationship exists in the presence of structural break stemming in the series. The empirical findings indicate that economic growth and energy consumption increases CO2 emissions, while financial development and trade openness compact it. The VECM causality analysis has shown the feedback hypothesis between energy consumption and CO2 emissions. Economic growth and CO2 emissions are also interrelated i.e. bidirectional causality. Financial development Granger causes CO2 emissions. The study opens up a new policy insights to control the environment from degradation by using energy efficient technologies. Financial development and trade openness can also play their role in improving the environmental quality.
    Keywords: Growth; Energy; Financial Development; CO2 Emissions
    JEL: Q4
    Date: 2012–12–10
  6. By: Gilles de Truchis; Benjamin Keddad (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS);
    Abstract: We study the long-run relationship of real exchanges rates (RERs) among the ASEAN-5 countries by testing the theory of Generalized Purchasing Power Parity (G-PPP) from the new perspective of fractional cointegration. The long-run co-movements of the RERs are examined by applying a recent estimator of fractional cointegration that consists of a frequency Whittle approximation of the cointegrating system’s likelihood function. The contribution of the fractional cointegration study is justified by identifying several weak fractional cointegration relationships that signal that deviations of RERs from their long-run equilibrium are highly persistent. These findings contrast with all previous studies that restrict their investigation to the traditional I(1)/I(0) cointegration. Our results support further monetary integration among different sub-groups of the ASEAN-5 countries as they share long-run comovements with each others. However, a full-fledged monetary union embracing all ASEAN-5 members is still limited from the perspective of the G-PPP theory.
    Keywords: Monetary Union, Fractional Cointegration, Generalized purchasing power parity, ASEAN.
    JEL: F31 F33
    Date: 2012–11–05
  7. By: Robert J. Hill (Karl-Franzens University of Graz); Iqbal A. Syed (University of New South Wales)
    Abstract: The International Comparisons Program (ICP) run by the World Bank compares the purchasing power of currencies and real income across countries. Using a unique data set consisting of over 600,000 ICP price quotes drawn from nine countries in the Asia-Pacific region, we consider a number of ways of improving the basic heading price indexes that form the building blocks of ICP. In particular, we show how the results can be adjusted to take account of unrepresentative products, urban-rural price differences and differing outlet-type mixes across countries. We also consider the plausibility of the most striking result that emerged from ICP 2005 – that China came out 40 percent smaller than previously thought. Our results suggest that part of this discrepancy can be attributed to excessive sampling in China of unrepresentative products in urban locations.
    Keywords: International Comparisons Program; Country-Product-Dummy Method; Price Index; Rural-Urban Price Differences; Representative and Unrepresentative Products; Shopping Outlet; China
    JEL: C43 E01 E31 O47 O53
    Date: 2012–12
  8. By: goh, sookhoon
    Abstract: It is well documented in the literature that Malaysia has become an emerging source of outward foreign direct investment (OFDI) in the region. The drastic increase in her OFDI has raised concerns as to whether the outbound direct investment activities from the country would detract domestic investment activities which have been sluggish since the aftermath of the Asian Currency Crisis. Using the autoregressive distrusted lag (ARDL) modeling approach to cointegration, the findings show that there is a long-run equilibrium relationship involving the four variables i.e., between domestic investment and its determinants, viz, FDI outflows, FDI inflows and domestic savings. Moreover, this study reveals that the effect on domestic investment by FDI outflows is substitutional and inelastic, while that by FDI inflows is complementary and elastic, implying that the latter can overcome the substitution effect caused by the former if the Malaysian government could formulate pragmatic policies in attracting FDI inflows.
    Keywords: Outward FDI; inward FDI; domestic investment; multinationals; Malaysia
    JEL: F21
    Date: 2012–08
  9. By: Honma, Satoshi
    Abstract: This study computes and analyzes the environmental and economic efficiencies of 31 Asia-Pacific countries and regions in 2007, using the slack-based measurement (SBM) data envelopment analysis (DEA) approach. Four economies, Brunei, Macao, Samoa, and Singapore, are found to be environmentally efficient. Of this group, only Brunei and Samoa are found to be economically efficient. We subsequently examined an environmental Kuznets curve type relationship between the environmental efficiency and per capita income. The empirical results show that a U-shaped relationship exists and the turning point per capita income is 4,239 US dollar.
    Keywords: Data envelopment analysis; environmental efficiency; environmental Kuznets curve
    JEL: Q54 O4
    Date: 2012–11–30
  10. By: Phurichai Rungcharoenkitkul (Bank of Thailand)
    Abstract: The effects of changes in wealth on consumption in Thailand are estimated, using a cross-sectional household survey conducted in 2010. It is found that consumption, after conditioning for income and household characteristics, is increasing in wealth, whether measured in terms of net worth or gross asset values. The estimated elasticity of consumption with respect to wealth is 0.06, while the estimated income elasticity is 0.60. The corresponding marginal propensity to consume out of wealth is estimated to be around 0.02-0.03. Physical assets, such as housing, matter for consumption more than financial assets, with the elasticity being about five-fold larger. Durable goods consumption is found to be much more sensitive to wealth than consumption of non-durable goods. The paper also discusses evidence that wealth eects may vary across households, and can be explained by the levels of existing wealth and certain household characteristics.
    Keywords: consumption, wealth effects
    JEL: E21 C21 D91
    Date: 2011–03–10
  11. By: OGAWA Eiji; Zhiqian WANG
    Abstract: This paper investigates how the Asian Monetary Unit (AMU) Deviation Indicators for surveillance measurements among East Asian currencies are improved by changing their benchmark rates from the constant rates in 2000-2001 to time-varying rates based on their purchasing power parities (PPPs). The consumer price indexes (CPIs) are used to calculate their PPPs as a time-varying benchmark for the AMU Deviation Indicators. Because the CPIs include prices of non-tradable goods, the PPPs based on the CPIs have a problem related with the Balassa-Samuelson effect. For this reason, the PPPs adjusted by the Balassa-Samuelson effect should be used to calculate when the CPIs are used as price data. This paper compares the PPP-based AMU Deviation Indicator with the PPP-based AMU Deviation Indicator adjusted by the Balassa-Samuelson effect. We conclude that both indicators are also useful in making surveillance of overvaluation or undervaluation of the intra-regional exchange rates of East Asian currencies.
    Date: 2012–12
  12. By: Roubaud, François; Razafindrakoto, Mireille; Nguyễn, Hữu Chí; Cling, Jean-Pierre
    Keywords: Économie souterraine; Marché du travail; Main-d'oeuvre; Périurbanisation; Croissance urbaine;
    JEL: O53 O18 O17 J40 J21
    Date: 2012
  13. By: Sakai, Yoko; Estudillo, Jonna P.; Fuwa, Nobuhiko; Higuchi, Yuki; Sawada, Yasuyuki
    Abstract: This paper illustrates the sharp contrast in welfare impacts between the rich and the poor caused by typhoon Milenyo in a Philippine village. Fish price dropped sharply after a large volume of cultured fish was set loose due to the damage caused to fish pens near the village, leading to positive net welfare gains among the wealthy. Among the poor, however, the negative effects of food (other than fish) price increase outweighed the positive benefit of the fish price decrease, and the poor non-agricultural households (who receive their income by cash rather than by rice) were the most severely hit.
    Date: 2012–11
  14. By: LIM Chong Yah (Division of Economics, Nanyang Technological University, Singapore 637332, Singapore)
    Abstract: A presentation of the Trinity Growth Theory, decomposed into its three parts, is made: the EGOIN Theory, the Triple C Theory and the S Curve Theory. Professor Lim Chong Yah uses the Trinity Growth Theory to explain why growth levels and why growth rates differ among nations, why these two important world economic phenomena also exist among different provinces and cities within a nation, and why the world economy, viewed against world economic history, has grown so unprecedentedly in the last 60 years after World War II.
    Keywords: Growth theory
    JEL: O40
    Date: 2012–03
  15. By: Conor O'Toole (Department of Economics, Trinity College Dublin; Department of Agricultural Economics and Farm Surveys, Teagasc; Economic Analysis Division, Economic and Social Research Institute, Ireland); Carol Newman (Department of Economics and Institute for International Integration Studies, Trinity College Dublin)
    Abstract: We explore whether financial development reduces external investment financing constraints for firms. Within-country provincial measures of financial development are linked to investment usingdata from the Vietnamese enterprise survey (VES). We focus on three main aspects of financialdevelopment: financial sector depth, state interventionism in finance, and the degree of marketdriven financing in the economy. We find that financial development reduces investment financing constraints. Constraints are decreasing in credit to the private sector, increasing in the use of finance by state-owned enterprises and decreasing in the degree to which finance is allocated on commercial market terms.
    Keywords: Financial development, Financing constraints, Investment
    JEL: G31 G32 O16
    Date: 2012–10
  16. By: Masahiko Aoki (Asian Development Bank Institute (ADBI))
    Abstract: This essay provides a game-theoretic, endogenous view of institutions, and then applies the idea to identify the sources of institutional trajectories of economic development in China, Japan, and Korea. It stylizes the Malthusian-phase of East Asian economies as peasant-based economies in which small families allocated their working time between farming on small plots— leased or owned—and handcrafting for personal consumption and markets. It then compares institutional arrangements across these economies that sustained otherwise similar economies. It characterizes the varied nature of the political states of Qing China, Tokugawa Japan, and Yi Korea by focusing on the way in which agricultural taxes were enforced. It also identifies different patterns of social norms of trust that were institutional complements to, or substitutes for, political states. Finally, it traces the path-dependent transformations of these state-norm combinations along subsequent transitions to post-Malthusian phases of economic growth in the respective economies.
    Keywords: economic development, institutions, China, Japan, Korea, political states, social norms, institutional complements and substitutes
    JEL: O43 O53 P51
    Date: 2012–11
  17. By: Voeten, J.J. (Tilburg University)
    Abstract: Abstract: The PhD thesis explores new economic dynamics within poor small producers’ clusters in craft villages in northern Vietnam; a country in full economic swing after market economy reforms and opening up to the world. The central research question of the thesis - positioned in current debates about poverty alleviation, small business, globalization and sustainable development - reads: How to understand responsible innovation within poor small producers’ clusters in Vietnam following the country’s integration into the global economy? The question is addressed in four subsequent published articles that draw on empirical studies involving grounded theory. The first article advances an operational definition of innovation for informally organized small producers’ clusters in Vietnam, enabling the identification of a number of cases of cluster-level innovation. The second article discusses the responsible innovation concept in the context of developing economies, arguing that it should be combined with current notions of poverty alleviation and sustainable development. The article concludes that it is problematic to evaluate responsible innovation on the basis of outcomes. This conclusion lays the basis for the third article which articulates an alternative approach that models responsible innovation as a societal process in which innovators acknowledge responsibility in resolving societal conflict as a result of harmful outcomes. The fourth article explores the dynamics of this societal process through Actor-Network Theory (ANT) in which all human actors and materiality are allowed and enrolled into a network. The PhD thesis concludes with ideas for further theory development and the policy implications of the findings of this thesis.
    Date: 2012
  18. By: Kakarot-Handtke, Egmont
    Abstract: Efficient progress of the monetary theory of production (MTP) is hampered by an unsatisfactory account of how profit and interest emerge in the monetary circuit. As matter of fact, this question puzzled already the classics. It seems evident that it cannot be answered by applying the usual tools. The present paper’s purpose is to overcome the deadlock. This is done by setting the circulation approach on general structural axiomatic foundations.
    Keywords: new framework of concepts; structure-centric; axiom set; monetary circuit; quantity of money; transaction money; profit; distributed profit; rate of interest; profit ratio equalization; profit and interest puzzle
    JEL: E19 B59 E40 B41
    Date: 2012–02–11

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