nep-sea New Economics Papers
on South East Asia
Issue of 2013‒03‒16
23 papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Impact of the ASEAN Economic Community on ASEAN Production Networks By Kornkarun Cheewatrakoolpong; Chayodom Sabhasri; Nath Bunditwattanawong
  2. Production Networks, Profits, and Innovative Activity : Evidence from Malaysia and Thailand By Ganeshan Wignaraja; Jens Krüger; Anna Mae Tuazon
  3. Inadequate Regional Financial Safety Nets Reflect Complacency By Azis, Iwan J.
  4. Does Micro Finance Institution Improve Welfare? A Double Difference Analysis of Indonesian Community-level Data By Heriyaldi; Arief Anshory Yusuf
  5. Determinants of the Establishment of Islamic Micro Finance Institutions: The Case of Baitul Maal wa Tamwil (BMT) in Indonesia By Alfiah Hasanah; Arief Anshory Yusuf
  6. Understanding Innovation in Production Networks in East Asia By Wignaraja, Ganeshan
  7. Determinants of the Adoption of System of Rice Intesification in Tasikmalaya District, West Java Indonesia By Satya Laksana; Arie Damayanti
  8. Foreign Direct Investment in East Asia By THORBECKE, Willem; Nimesh SALIKE
  9. The Governance of Knowledge By Evers, Hans-Dieter
  10. Navigating a Changing World Economy : ASEAN, the People’s Republic of China, and India By Peter A. Petri; Fan Zhai
  11. Preferential and Non-Preferential Approaches to Trade Liberalization in East Asia: What Differences Do Utilization Rates and Reciprocity Make? By Menon, Jayant
  12. Can Global Value Chains Effectively Serve Regional Economic Development in Asia? By Brunner, Hans-Peter
  13. Financing Development Cooperation in Northeast Asia By Masahiro Kawai
  14. Tobacco Economic of Indonesia: Poor Households' Spending Pattern, Tax Regressivity and Economic Wide Impact of Cigarette Excise Tax Simplification By Rus'an Nasrudin; Ledi Trialdi; Djoni Hartono; Abdillah Ahsan
  15. Group Violence, Ethnic Diversity and Citizen Participation: Evidence from Indonesia By Christophe Muller; Marc Vothknecht
  16. Cross-Regional Comparison of Trade Integration: The Case of Services By Hamanaka, Shintaro
  17. Enhancing the Effectiveness of CMIM and AMRO : Selected Immediate Challenges and Tasks By Reza Siregar; Akkharaphol Chabchitrchaidol
  18. From a Centralized to a Decentralized Global Economic Architecture : An Overview By Pradumna B. Rana
  19. The structure and the determinants of the trade of SME products By Sawako Maruyama
  20. Service outsourcing and its effects on knowledge By Richtnér, Anders; Rognes, Jon
  21. How the 1978 changes to the foreign domestic workers law in Singapore increased the female labour supply By Freire, Tiago
  22. Re-thinking of "Chintanakan Mai" (new thinking) : new perspective for understanding Lao PDR By Yamada, Norihiko
  23. Improving the Government Debt Market Quality by Determining the Optimal Structure of Government Debt Portfolio By Ahmad Danu Prasetyo; Naoyuki Yoshino

  1. By: Kornkarun Cheewatrakoolpong (Asian Development Bank Institute (ADBI)); Chayodom Sabhasri; Nath Bunditwattanawong
    Abstract: Empirical evidence suggests that the emergence of international production networks in East Asia results from market-driven forces such as vertical specialization and higher production costs in the home countries and institutional-led reasons such as free trade agreements. The growth in trade in parts and components since the 1990s, especially with the People’s Republic of China (PRC), one of the important major assembly bases, confirms the existence of international production sharing in the region. Also, a decline in the share of parts and components trade in several members of the Association of Southeast Asian Nations (ASEAN) such as Indonesia and Thailand indicates the increasing importance of the ASEAN countries as assembly bases for Japanese multinational enterprises (MNEs). This paper examines two industries—autos and auto parts, and hard disk drives (HDDs)—to understand international production networks. The study examines the structure of vertical intra-industry trade among East Asian countries, especially members of the Association of Southeast Asian Nations, depicts international production sharing in the selected industries, namely HDD, and automobiles and automotive parts, in the region. The study also points out the importance of the People’s Republic of China and Thailand as assembly bases. It concludes that investment promotion policies contributed more to the emergence of international production networks than free trade agreements.
    Keywords: Production Networks, East Asia, vertical specialization, trade in parts and components, ASEAN, China, MNEs, autos and auto parts, Hard Disk Drive industry, intra-dindustry
    JEL: F14
    Date: 2013–02
  2. By: Ganeshan Wignaraja (Asian Development Bank Institute (ADBI)); Jens Krüger; Anna Mae Tuazon
    Abstract: Cross-border production networks have been playing an increasingly important role in the Association of Southeast Asian Nations (ASEAN) countries’ trade in recent years, but micro-level studies are rare. This paper uses firm-level data from the two most active ASEAN countries in production networks (Thailand and Malaysia) and examines the effect of participating in production networks on profits and technological capabilities of firms. The empirical results show that participating in production networks raises profits. The evidence further suggests that participation in production networks is also positively correlated with technology upgrading, measured by a technological capabilities index.
    Keywords: Production Networks, cross-border, ASEAN, Malaysia, Thailand, manufacturing firms, profit, Technological Capability
    JEL: F10 F23 O14
    Date: 2013–02
  3. By: Azis, Iwan J. (Asian Development Bank Institute)
    Abstract: To the extent that financial contagion from the United States and the euro area crisis has occurred in Asia, this paper focuses on the importance of strengthening the regional financial safety nets. By conjecturing that efforts to prevent and manage a crisis are the essence of providing such safety nets, the author argues that efforts made by Association of Southeast Asian Nations (ASEAN)+3 officials, especially in the provision of liquidity support during a crisis, are far from adequate. Even with improved financial conditions and stronger regulations in ASEAN+3 member countries, contagion can and will strike. Making the Chiang Mai Initiative Multilateralization more effective is therefore urgent and critical.
    Keywords: financial safety nets; asia; financial contagion; euro area crisis; asean+3; global financial market; chiang mai initiative; cmim
    JEL: F15 F32 F33
    Date: 2013–03–07
  4. By: Heriyaldi (Department of Economics, Padjadjaran University); Arief Anshory Yusuf (Department of Economics, Padjadjaran University)
    Abstract: Using a longitudinal community-level data of Indonesia, we test whether a presence of 5 different microfinance institutions (MFI) within a community has contributed to the improvement in the welfare (as measured by per capita expenditure) of the community's population. Applying the Difference-in-Difference analysis to this data, we find that direct access to MFI through its presence in the community has an impact only in rural areas. We find no evidences that direct access to MFI in urban area improves household welfare. Moreover, among the 5 different MFI in rural areas,we find evidence of an impact only for two micro finance institutions namely Bank Rakyat Indonesia (BRI) and Bank Perkreditan Rakyat (BPR). This finding suggests that BRI, as the largest and most successful state-owned micro finance institution in Indonesia, should maintain its orientation in rural banking services.
    Keywords: Micro Finance Institutions, Difference-in-Difference, IFLS, Indonesia
    JEL: G21
    Date: 2013–03
  5. By: Alfiah Hasanah (Department of Economics, Padjadjaran University); Arief Anshory Yusuf (Department of Economics, Padjadjaran University)
    Abstract: As a country with the largest number of muslim population in the world, Islamic micro finance institutions have a large potential to playa greater role in the country's aspiration to poverty reduction. However, the determinants of theestablishment of Islamic Micro Finance Institutions, particularly in Indonesia, has not been extensively studied. This paper attempts to explore the determinants of the establishment ofBaitul Maal wa Tamwil (BMT), one of the main Islamic microfinance institutions in Indonesia. A probit model of BMT establishment is estimated using an Indonesian village-level data. The result suggests that the extent of economic activities particularly in agriculture sector, and high accessibility to market are strong determinants of BMT establishmentin Indonesian villages. It is also found that villages that experienced recent calamities particularly drought are more likely to have BMT established. This may indicate the role of BMT as a provider of financial service in the midst of hardship. Religion is among the strongest determinant of BMT establishment. Villages with Islam as the dominant religion is more likely of having BMT established. However, this effect is strong only in rural areas.In urban areas, this effect is weak.
    Keywords: Micro Finance Institution, Baitul Maal wa Tamwil, Indonesia, Islamic banking
    JEL: P49 G21
    Date: 2013–03
  6. By: Wignaraja, Ganeshan (Asian Development Bank Institute)
    Abstract: This paper explores the “black box” of innovation in the electronics production network in East Asia through a mapping exercise of technological capabilities and an econometric analysis of exporting in the People’s Republic of China (PRC), Thailand, and the Philippines. Technology-based approaches to trade offer a plausible explanation for firm-level exporting behavior and complement the literature on production networks. The econometric results confirm the importance of foreign ownership and innovation in increasing the probability of exporting in electronics. Higher levels of skills, managers’ education, and capital also matter in the PRC as well as accumulated experience in Thailand. Furthermore, a technology index composed of technical functions performed by firms (to represent technological capabilities) emerges as a more robust indicator of innovation than the research and development (R&D) to sales ratio. Accordingly, technological effort in electronics in these countries mostly focuses on assimilating and using imported technologies rather than formal R&D by specialized engineers.
    Keywords: production networks; foreign direct investment; innovation; technological capabilities; r&d; exports; east asia; prc; thailand; philippines
    JEL: F23 L63 O31 O32 O57
    Date: 2013–03–03
  7. By: Satya Laksana (Department of Agriculture Tasikmalaya); Arie Damayanti (University of Indonesia)
    Abstract: The System of Rice Intensification (SRI) has been claimed to be more productive and sustainable than conventional methods in rice production. However, in some countries like Indonesia, its adoption rate remains low. This paper explores the factors that may affect SRI adoption in Indonesia, choosing Tasikmalaya district in West Java as a case study. By using a farm-level data, this study estimates the Cobb–Douglas production function and carries out a stochastic frontier analysis to assess whether SRI is technically efficient. It is found that technical efficiency (TE) of SRI and non-SRI is 82% and 64%, respectively, and the summation of factor production coefficient in rice production function is 1.1 indicating a Constant Return to Scale (CRS) technology. Furthermore, using a Probit model, it is found that the most important determinants of SRI adoption are irrigation infrastructure availability and participation in SRI training. Policy implications are discussed.
    Keywords: System of Rice Intesification, Cobb-Douglas production function, Stochastic Frontier analysis, Probit Model, Tasikmalaya Indonesia
    JEL: Q16
    Date: 2013–03
  8. By: THORBECKE, Willem; Nimesh SALIKE
    Abstract: This paper surveys research on foreign direct investment (FDI) in East Asia. The pattern of FDI in the region has changed over time. Outward FDI from Asia began in earnest when Japanese multinational corporations (MNCs) shifted production to other Asian economies following the 60% appreciation of the yen that started in 1985. The major destinations for Japanese FDI initially were South Korea and Taiwan. However, as labor cost in these economies rose, Japanese FDI shifted to Association of Southeast Asian Nations (ASEAN) economies. MNCs from South Korea and Taiwan responded to the increase in labor costs by also investing in other Asian economies. Following the 1997-98 Asian financial crisis, China became a favored destination for FDI. As Kojima (1973) noted, one of the striking features of East Asian FDI is its complementary relationship with trade. The complementary nature of trade and FDI in Asia is partly due to the rise of regional production networks. Parts and components rather than final products are traded between fragmented production blocks. To understand the slicing up of the value chain, it is helpful to compare the production cost saving arising from fragmentation with the service cost of linking geographically separated production modules (Kimura and Ando, 2005). This has been called "networked FDI" by Baldwin and Okubo (2012). It is a complex form of FDI in which horizontal, vertical, and export platform FDI take place to differing degrees at the same time. The fragmentation strategy adopted especially by Japanese MNCs is to allocate production blocks across countries based on differences in factor endowments and other locational advantages. The paradigm example of this type of production fragmentation is the electronics sector, where parts and components are small and light and can easily be shipped from country to country for processing and assembly. In this sector, the quality of a country's infrastructure plays an important role in its ability to attract FDI.
    Date: 2013–03
  9. By: Evers, Hans-Dieter
    Abstract: Knowledge has been defined as a major resource for development. Especially countries without natural resources have found this idea attractive and have embarked on development strategies to develop a knowledge-based economy. In doing so they may fall into a “knowledge trap”. The paper postulates an “epistemic backlash”, because an increase of knowledge leads to an even greater increase of ignorance, which is accompanied by an increase of risk and an increase of necessary research funds for the next stage of development. A shortage of high-level manpower is likely to occur, which will reduce the chances for further knowledge-based development. A careful governance of knowledge is needed to avoid the “knowledge trap”. Five knowledge strategies are discussed: developing an ICT infrastructure, creating knowledge-clusters, creating knowledge-hubs and centres of excellence and creating comparative advantages through the use of local knowledge. Examples are drawn and data presented from Brunei Darussalam, Indonesia, Malaysia and Singapore.
    Keywords: knowlegde governance, knowledge and development, knowledge management, develoment, policy, Brunei, Malaysia, Indonesia, Singapore
    JEL: O1 O2 Z1 Z13
    Date: 2013–02–06
  10. By: Peter A. Petri (Asian Development Bank Institute (ADBI)); Fan Zhai
    Abstract: Most projections envision continued rapid growth in the members of the Association of Southeast Asian Nations (ASEAN), the People’s Republic of China (PRC), and India (collectively, ACI) over the next two decades. By 2030, they could quadruple their output, virtually eliminate extreme poverty, and dramatically transform the lives of their more than 3 billion citizens. The impact will be felt across the world. This study—a background paper to an Asian Development Bank report—used a Computable General Equilibrium model to examine the likely effects of the region's growth on trade, resources and the environment, as well as the implications of the many risks the region's growth path faces from its internal and external environment.
    Keywords: ASEAN, China, India, computable general equilibrium, economic growth
    JEL: F02 F13 F33 F53
    Date: 2013–01
  11. By: Menon, Jayant (Asian Development Bank)
    Abstract: Previous studies on the impacts of free trade agreements (FTAs) in East Asia have assumed full utilization of preferences. The evidence suggests that this assumption is seriously in error, with the estimated uptake particularly low in East Asia. In this paper, we assume a more realistic utilization rate in estimating impacts. We find that actual utilization rates significantly diminish the benefits from preferential liberalization, but in a non-linear way. Reciprocity is an important motivation for pursuing FTAs over unilateral actions, although the Doha Round could deliver the same outcome if only it could be concluded. We isolate the impact of reciprocity, but find that the additional benefits also depend on utilization rates. Furthermore, the potential for trade deflection combined with possible retaliatory actions could negatively affect members and non-members. In the absence of Doha, the multilateralization of preferences, even without reciprocity, is the practical route that is most likely to deliver the greatest benefits to members. Global liberalization, while difficult to attain, would maximize world welfare while posing no risk in its realization.
    Keywords: Unilateralism; multilateralism; regionalism; FTA; reciprocity; utilization rates; CGE models
    JEL: F13 F14 F17
    Date: 2013–03–01
  12. By: Brunner, Hans-Peter (Asian Development Bank)
    Abstract: Regional economic integration through logistics, information network and connectivity improvement can increase the 'virtual size' of an economy as trade with neighboring countries increases. This leads to substantial benefits from scale, network, coordination and agglomeration economies. As is shown, especially in small economies and LDCs, regional economic integration induces the necessary rebalancing needed for integration of the regional portions of Global Value Chains (GVCs) to the global portions of GVCs. This paper demonstrates this with South Asian case studies in GVC development and with the related mapping methodology. This methodology traces a product through an entire channel across a region, from the point of product conception to the point of consumption. As an appropriate set of investment and policy measures is undertaken across a region, it can as we show in the paper, lead to a substantially ‗rebalanced‘ way of income growth.
    Keywords: Rebalancing; spatial distribution of growth; regional economic integration; South Asia; value chains
    JEL: C15 F12 F15 O18 R12
    Date: 2013–03–01
  13. By: Masahiro Kawai (Asian Development Bank Institute (ADBI))
    Abstract: This paper examines financing mechanisms to support infrastructure development and connectivity in Northeast Asia—comprising the Northeastern People’s Republic of China, Japan, the Democratic People’s Republic of Korea (DPRK), the Republic of Korea, Mongolia, and the Russian Far East. Although this subregion has developed the Greater Tumen Initiative, the extent of intergovernmental cooperation for cross-border infrastructure investment is not as strong as in other subregional cooperation programs in Asia, such as the Greater Mekong Subregion Program and the Central Asia Regional Economic Cooperation Program. Using various previously published estimates, this paper finds that the total infrastructure investment needs for the subregion excluding Japan and the Republic of Korea (in transport, energy, information and communication technology, and the environment) could be in the order of $63 billion per year over the next 10 years, and of this total governments in the subregion will have to mobilize external funding of $13 billion a year, focusing on national infrastructure projects in the DPRK and Mongolia and high-priority cross-border projects in Northeast Asia. The paper considers three options as a cooperative financing mechanism for the subregion : special and/or trust funds set up in the existing multilateral development banks (MDBs), a structured infrastructure investment fund supported by MDB(s), and a new subregional multilateral development bank. Then it suggests that the Northeast Asian governments may begin with setting up special and/or trust funds at the existing MDBs and move to creating an infrastructure investment fund, following the good example of the Association of Southeast Asian Nations Infrastructure Fund, once sufficient confidence and trust is built and the DPRK returns to the international community. The paper recommends against the establishment of a new development bank in the subregion.
    Keywords: Infrastructure Development, regional cooperation, Northeast Asia, infrastructure connectivity, infrastructure investment, infrastructure fund
    JEL: F15 F36 F55 O19 Q01
    Date: 2013–02
  14. By: Rus'an Nasrudin (Department of Economics, Faculty of Economics, University of Indonesia); Ledi Trialdi (Department of Economics, Faculty of Economics, University of Indonesia); Djoni Hartono (Graduate Program in Economics, Faculty of Economics, University of Indonesia); Abdillah Ahsan (The Demographic Institute, Faculty of Economics, University of Indonesia)
    Abstract: Policy to reduce cigarette consumption is needed because of the harm to both smokers and the surrounding healthy. In narrow sense, the harm of cigarette consumption for poor households needs to be taken into account into policy consideration as it expected to sacrifies essential spending for the poor. In general, any policy related to any influential sector in the economy, including tobacco sector, needs an economic wide impact consideration. This study aims to justify the policy on three grounds: analysis on poor household with smoker in terms of their spending pattern, an assessment of the cigarette excise tax burden's regressivity and and economic wide impact analysis of a cigarette excise tax simplification. This study find that there is tendency of lower spending on essential good (health and food) of poor household with smoker than without smoker. Secondly, indeed, the tax burden of Indonesia's excise tax is regressive so that it put burden more to the poor than the richer. Lastly, a cigarette tax increase will reduce national output with considerably small impact but moderately increase government revenue to boost the economy through infrastructure spending as the optimum opt.
    Keywords: Cigarette, Consumption Pattern, Excise Tax, Regressivity, Computable General Equilibrium
    JEL: I18 D58
    Date: 2013–03
  15. By: Christophe Muller (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM)); Marc Vothknecht (DIW Berlin - German Institute for Economic Research)
    Abstract: We study the impact of violent conflict on social capital, as measured by citizen participation in community groups, defined by four activity types: governance, social service, infrastructure development and risk-sharing. Combining household panel data from Indonesia with conflict event information, we find an overall decrease in citizen contributions in districts affected by group violence in the early post-Suharto transition period. However, participation in communities with a high degree of ethnic polarization is less affected, and is even stimulated for local governance and risk-sharing activities. Moreover, individual engagement appears to depend on the involvement of other members from the same ethnic group, which points toward building of intra-ethnic social networks in the presence of violence. Finally, our results show the danger of generalization when dealing with citizen participation in community activities. We find a large variety of responses depending on the activity and its economic and social functions. We also find large observed and unobserved individual heterogeneities of the effect of violence on participation. Once an appropriate nomenclature of activities is used and controls for heterogeneity are applied, we find that the ethnic and social configuration of society is central in understanding citizen participation.
    Keywords: Violent Conflict; Citizen Participation; Local Public Goods
    Date: 2013–02
  16. By: Hamanaka, Shintaro (Asian Development Bank)
    Abstract: In this paper, we will examine the level of services trade integration in Asia in comparison with Europe and North America. The main empirical findings of this paper are that (i) the regional bias of services trade in Asia is as high or higher than in Europe and North America; (ii) in Asia, the regional bias of services trade is higher than that of goods trade, which is in sharp contrast to Europe and North America, where the regional bias of goods trade is higher than that of services trade; and (iii) while Asia’s regional bias of goods trade shows a declining trend, that of services trade remains high, although in the future its decline is expected. Asia’s relatively high-level of regional bias of services trade can be explained by the following factors: (i) a relatively high prevalence of a shared language (Chinese), which is essential to services trade, but not to goods trade; and (ii) the archipelagic nature of the region, which inhibits goods trade more than services trade. In contrast, for example, major European countries share land borders with their neighbors and they speak different languages. In order to deepen Asia’s services trade integration, two policies are necessary. First, effective regional services agreements are critical to enhancing the level of integration. Second, policies to increase the trade of crisis-resilient services, such as professional services and insurance, as opposed to crisis-vulnerable services, such as transport and travel, are necessary.
    Keywords: Services trade; regional integration; trade integration; determinants of trade; regional bias; regional trade agreement (RTA)
    JEL: F15
    Date: 2013–03–01
  17. By: Reza Siregar (Asian Development Bank Institute (ADBI)); Akkharaphol Chabchitrchaidol
    Abstract: The Chiang Mai Initiative Multilateralisation (CMIM) and the ASEAN+3 Macroeconomic Research Office (AMRO), established in March 2010 and May 2011, respectively, have made substantial headway. But despite the rapid progress, a series of fundamental questions have been raised, particularly about the size of the CMIM facility. Although CMIM funding was doubled to $240 billion, effective since May 2012, the swap amount has frequently been criticized as insufficient. Another fundamental issue that still needs to be agreed upon is the CMIM’s role and how it fits in among existing regional and global financing facilities. AMRO’s surveillance work is seen as vital to the overall success of the CMIM in regional financial cooperation. As other multilateral institutions involved in surveillance work have experienced, effective surveillance to support regional financial cooperation is a complicated task, strewn with obstacles. The primary task of this paper is to suggest possible areas in which the effectiveness of the CMIM and AMRO may be increased, despite constraints and limitations.
    Keywords: CMIM, AMRO, Chiang Mai Initiative Multilateralization, ASEAN+3, regional financial cooperation
    JEL: E61 F15 F33
    Date: 2013–01
  18. By: Pradumna B. Rana (Asian Development Bank Institute (ADBI))
    Abstract: This paper argues that calls for a New Bretton Woods system in the aftermath of the global economic crisis—similar to the remarkable 1944 Bretton Woods conference that led to the establishment of various international economic institutions—are unlikely to be answered. The likely scenario is that the centralized architecture from before the global economic crisis will evolve toward a more decentralized and multilayered global architecture where regional institutions are linked together to a “senior†global organization in a complementary manner by rules and regulations. The paper also highlights the new regional institutions that Asia needs to establish to contribute to this evolving global economic architecture.
    Keywords: Global Economic Crisis, regional institutions, Asia, G20, G7, G8, Global economic architecture
    JEL: F02 F13 F33 F53
    Date: 2013–01
  19. By: Sawako Maruyama (Graduate School of Economics, Kobe University)
    Abstract: This paper aims to investigate the structure and the determinants of the trade of products manufactured by small- and medium-sized enterprises. For this purpose, trade database for selected SME-based industries is prepared. Analyzing this database, the following three findings are obtained. First, firms in SME-based industries are facing a large inflow of imported goods, while the volume of their export is relatively small. Secondly, the share of Asian countries in the trade of SME products is larger than overall trade. Thirdly, the gravity model can be applied for the trade of SME products. In some cases, distance and difference of income level tend to be more sensitive for SME products than overall trade. These results are consistent with the labor-intensive characteristics of SME products.
    Keywords: Trade; Gravity model; Small and Medium-sized Enterprises(SMEs); Manufacturing
    Date: 2013–03
  20. By: Richtnér, Anders (Dept. of Business Administration, Stockholm School of Economics); Rognes, Jon (Dept. of Business Administration, Stockholm School of Economics)
    Abstract: Purpose <p> The purpose of the paper is to identify changes in different types of knowledge in a service outsourcing relationship as knowledge is transferred from the client to the provider, which correspond to the research question that guides the paper: ‘What are the effects on knowledge types when parts of service production are outsourced to a third party and knowledge is transferred?’. To answer this question we explored changes in both tacit and explicit knowledge taking place in several service outsourcing relationships. <p> Design/methodology/approach <p> A case study approach is chosen, as data is obtained from multiple levels. We studied four service outsourcing relationships, with outsourcing providers and outsourcing clients based in Europe and South-east Asia. <p> Findings <p> It is possible to identify two major changes as service outsourcing is conducted. (1) There is a change of relative importance of knowledge types; there is an increased emphasis on explicit knowledge as opposed to tacit knowledge. This is (2) caused partly due to the transfer situation and partly due to a focus on efficient mass production and a standardisation and industrialisation of the service. The focus on explicit knowledge leads to a loss of tacit knowledge. <p> Research limitations/implications <p> Our research is limited in two ways. First, we examined two countries. Thus, there are opportunities for expansion into more settings. Second, our findings can be tested by survey-type research thereby increasing the sample. <p> Practical implications <p> In a service outsourcing relationship the emphasis is most often on explicit knowledge. This is beneficial in a transaction cost relationship with standardized tasks being transferred. However, the more complex tasks being transferred the more difficult it is to clearly specify what is going to be transferred as the knowledge becomes more tacit, calling for more long-term relationships with other mechanisms for knowledge transfer of tacit knowledge in place. As a manager one need to be able to distinguish which type of relationship is wanted. <p> Originality/value <p> This paper helps to clarify what happens in a transfer situation when outsourcing is conducted. Particularly we emphasize the importance of tacit knowledge – a dimension often neglected in research – opposed to solely emphasizing explicit knowledge.
    Keywords: Service outsourcing; BPO; knowledge; knowledge transfer; service management
    Date: 2013–02–21
  21. By: Freire, Tiago
    Abstract: In 1978, Singapore was the first country to introduce legislation allowing foreign domestic workers (e.g. maids) to work in the country with special visas. Singapore, with its liberal wage policy (no minimum wage), is also the best quasi-natural experiment in determining how a reduction in the cost of domestic work increases the supply of highly skilled female workers. Though Singapore is often cited in the literature as a success story, there are no studies that try to quantify the impact of this legislation. In this paper, we use data from the census conducted between 1957 and 1990, and Singapore's Yearbook of Manpower Statistics between 1974 and 1985, to evaluate the impact of the 1978 legislation in terms of increasing the labour supply of Singaporean women. We compare the female labour supply before and after 1978, for young and older women, high and low-skilled women, and Singaporean-Malay versus Singaporean-Chinese women. We find that the labour supply of women affected by this policy increased by between 2.7% and 12.7%, consistent with previous findings.
    Keywords: Gender; Labour Supply; Quasi-Natural Experiment; Singapore
    JEL: J16 J21 J61
    Date: 2013–02–19
  22. By: Yamada, Norihiko
    Abstract: To date, many previous studies have viewed "Chintanakan Mai" (New Thinking), which was introduced in 1986, as one of the most important factors required for understanding present-day Laos. They tend to see the year 1986 as a watershed in Lao history and divide the history after 1975 into two periods before and after 1986: a period of socialism and a period of reform or market economy, respectively. Therefore, they are likely to see the current changes in Laos as the result or achievement of the reform started in 1986. The year 1986 is always a starting point for understanding Laos today. However, I suggest a different perspective and attempt to re-examine "Chintanakan Mai." "Chintanakan Mai" is not a watershed in Lao history, but rather a temporary slogan to advance postwar reconstruction. In this paper, I try to establish a new perspective for understanding Laos today.
    Keywords: Laos, Transition to market economy, Socialism, Economic policy, Chintanakan Mai, New Thinking, Lao PDR, Transition
    JEL: P20 P21 P30
    Date: 2013–03
  23. By: Ahmad Danu Prasetyo (Graduate School of Economics, Keio University); Naoyuki Yoshino (Graduate School of Economics, Keio University)
    Abstract: Recently, there is anupward tendency for switching external debts to domestic borrowings in many developing countries. While the domestic government bonds market development could reduce the sovereign exposure to currency risk, there are also potential risks faced by the government; namely: higher domestic interest rates, maturity mismatch, and crowding out effect to the private issuers. In this paper we develop a simple general equilibrium model to determine the optimal share for domestic and external government bonds in a sovereign country. We emphasize the important role of the demand side in forming the optimal structure of government bonds. We found that, at ceteris paribus, domestic government bond correlates negatively to external government bond at a constant rate. In addition, the back testing simulation results that the government has to reduce the level of its external debt. Through a dynamic recursive simulation, it is suggested that, in the long run, the Indonesian government must not hold any external debt while the Debt-to-GDP ratio shall be maintained at 16%-17% level.
    Date: 2013–03

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