nep-sea New Economics Papers
on South East Asia
Issue of 2013‒06‒04
sixteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. The Middle-Income Trap: Issues for Members of the Association of Southeast Asian Nations By Tho, Tran Van
  2. Managing International Labor Migration in ASEAN : Themes from a Six-Country Study By Aniceto Orbeta, Jr.; Kathrina Gonzales
  3. Creating an Association of Southeast Asian Nations Payment System: Policy and Regulatory Issues By Khiaonarong, Tanai
  4. The Evolution Of Education And Health Poverty During Economic Development:The Case Of Indonesia, 1991–2007 By Andy Sumner
  5. Social Protection for the Informal Sector and the Informally Employed in Vietnam: Literature and data review By Nguyen Thi Lan Huong; Luu Quan Tuan; Meissner, Matthias; Bui Sy Tuan; Dang Do Quyen; Nguyen Hai Yen
  6. Adjusting Biofuel Policies to Meet Social and Rural Development Needs: Analysing the Experiences of Brazil, India and Indonesia By Mairon G. Bastos Lima
  7. Aspirations and Challenges for Economic and Social Development in the Philippines Toward 2030 By Josef T. Yap; Ruperto P. Majuca
  8. How Low-Carbon Green Growth Can Reduce Inequalities By Anbumozhi, Venkatachalam; Bauer, Armin
  9. Universal Coverage on a Budget: Impacts on Health Care Utilization and Out-Of-Pocket Expenditures in Thailand By Supon Limwattananon; Sven Neelsen; Owen O'Donnell; Phusit Prakongsai; Viroj Tangcharoensathien; Eddy van Doorslaer
  10. Social Interaction and Public Goods Provision: A Case of Waste Management in Bandung, Indonesia By Martin Daniel Siyaranamual
  11. International technology transfer between China and the rest of the world. By Giuditta De Prato; Daniel Nepelski
  12. Getting Ready for the ASEAN Economic Community 2015 : Philippine Investment Liberalization and Facilitation By Rafaelita M. Aldaba
  13. Recent Developments in Financial Economics and Econometrics: An Overview By Chang, C.L.; Allen, D.; McAleer, M.J.
  14. Philippines-Japan Economic Partnership Agreement (PJEPA) : An Initial Ex-post Review By Erlinda M. Medalla; Veredigna M. Ledda
  15. Eliciting illegal migration rates through list randomization By McKenzie, David; Siegel, Melissa
  16. Split Decisions: Family Finance When a Policy Discontinuity Allocates Overseas Work By Michael Clemens and Erwin Tiongson

  1. By: Tho, Tran Van (Asian Development Bank Institute)
    Abstract: The problem faced by many of the economies making up the Association of Southeast Asian Nations (ASEAN) is whether they can avoid the middle-income trap and advance to the high-income level. What is needed for them to avoid the middle-income trap? This paper attempts to answer this question by building an analytical framework based on the factors that determine each development stage of an economy, and by comparing the current situation of four ASEAN middle-income countries with the experience of the Republic of Korea, a country that managed to overcome the middle-income trap and reach the high-income level in the late 1990s.
    Keywords: asean; middle-income trap; republic of korea; viet nam; indonesia; malaysia; philippines; thailand
    JEL: O10 O11 O40 O43 O53
    Date: 2013–05–16
  2. By: Aniceto Orbeta, Jr. (Philippine Institute for Development Studies (PIDS)); Kathrina Gonzales
    Abstract: The study presents a summary of the six-country study on managing international labor migration in the Association of Southeast Asian Nations (ASEAN)3. The countries are grouped into sending (Cambodia, Indonesia, Philippines) and receiving (Malaysia, Singapore, Thailand). The objective was to share international migration management issues from the perspective of a sending or a receiving country. The country research teams were asked to identify and study a specific migration management issue that is deemed current and reflective of the primary migration management experience of the country. For sending countries, the Cambodia research team studied the high frequency cross-border crossings into Thailand that is dominated by irregular migrants. The Indonesian research team looked at the role of local governments in migration management as the country embarked into substantial decentralization process. The Philippines research team look at the management of massive deployment flows spanning thirty years with special attention to the most vulnerable group – the household service workers. For receiving countries, the Malaysian research team looked at their experience in the continuing running battle with irregular migrants. The Singaporean research team look at the close interaction between the needs of the economy for migrant workers and their desire not to be too dependent on them. The Thai research team described the experience at the crossroad of being both a receiving and still a sending country. The studies have highlighted seven important themes on international labor migration management in ASEAN, namely : (a) the importance of integrating international migration into national and regional development efforts; (b) the importance of both bilateral and multilateral agreements; (c) the importance of recognizing differences in labor market policies in sending and receiving countries in designing protection for migrant workers; (d) the need to consider general administrative capacities in designing migration regulatory efforts; (e) the importance of involving sub-national bodies in migration management; (f) the need to broaden cooperation in handling irregular migration; and (g) the recognition that the protection envisioned by the state need not be the one “desired†by the migrant, hence, the need to check often to find out the effectiveness of protection measures.
    Keywords: International Labor Migration, ASEAN, Cambodia, Indonesia, Philippines, Malaysia, Singapore, Thailand
    JEL: F22 J61
    Date: 2013–05
  3. By: Khiaonarong, Tanai (Asian Development Bank Institute)
    Abstract: The Association of Southeast Asian Nations (ASEAN) is expected to benefit from the significant growth in the Asia-Pacific payments market. Growth in economic activity would increase the size, scale, and scope of payment transactions. Enabling the scale and scope of payments would in turn increase economic activity. This would also require national payment systems to be regionalized and operate with cross-border and multi-currency capabilities. As existing regional payment arrangements have illustrated how they can be successfully established, ASEAN can itself leverage on its current cooperative forums in creating a more regionalized payment system. This paper assesses the challenges ASEAN faces in doing so.
    Keywords: asean; payment system; asia-pacific payments market; national payment systems
    JEL: E42 E58 G28
    Date: 2013–05–20
  4. By: Andy Sumner (King's International Development Institute, King's College London)
    Abstract: This paper discusses the evolution of education and health poverty in Indonesia during a period of substantial economic development. The paper reviews the existing empirical research and provides new estimates of the evolution of education and health poverty using the Demographic and Health Survey. The case of Indonesia suggests that poverty may urbanize but remains largely rural in nature, concentrated among those in households with heads with no or incomplete primary education and in households with heads not in work or employed in agriculture suggesting public policy priorities for the poor remain agriculture support, primary education expansion and employment generation.
    Keywords: Indonesia, poverty, education, health, inequality, economic development
    JEL: I32 D63
    Date: 2013–05
  5. By: Nguyen Thi Lan Huong (Institute of Labour Science and Social Affairs (ILSSA), Hanoi, Vietnam); Luu Quan Tuan (Institute of Labour Science and Social Affairs (ILSSA), Hanoi, Vietnam); Meissner, Matthias; Bui Sy Tuan; Dang Do Quyen; Nguyen Hai Yen
    Abstract: In the last 20 years, Vietnam has been one of the fastest growing economies in Asia. But the coverage of social insurance is still low. Only around one in five workers is covered by the public social insurance scheme. Expanding the coverage of social insurance for informal sector workers and the informally employed is a key policy area as the role of traditional and informal security systems tends to get weaker. This paper provides a comprehensive literature and data review regarding informal sector research in Vietnam. Furthermore, it reflects the international understanding of the terms social protection, informal sector und informal employment. The impact of the informal sector on social protection and socio-economic development in Vietnam is evident. Nevertheless, in research, literature and data the picture is rather fragmented which indicates the necessity for further efforts.
    Keywords: Social protection; Social security; Social insurance; Informal sector; Informal economy; Literature review; Labour market; Social development; Vietnam
    Date: 2013
  6. By: Mairon G. Bastos Lima (Institute for Environmental Studies)
    Abstract: This brief examines the social dimensions of the rapid expansion of biofuels as a key element of ?green economies? in the making. It compares three different contexts (Brazil, India and Indonesia) in the developing world, where biofuels have been often promoted under the arguments of poverty alleviation, social inclusion and rural development. The assessment reveals a general mismatch between the social discourse and the biofuel policy instruments adopted. Benefits to poor people in rural areas have been very limited, and far too often they have been left worse off after being incorporated in biofuel production chains under disadvantageous conditions. Better outcomes depend crucially on: (i) building on traditional livelihoods, rather than attempting to replace them; (ii) involving social movements in policy- and decision-making to ensure due consideration of the needs and interests of poor people in rural areas; and (iii) inserting provisions that allow smallholders to climb up the value chain, thus addressing the inequality structures that keep poor people poor. (?)
    Keywords: Adjusting Biofuel Policies to Meet Social and Rural Development Needs: Analysing the Experiences of Brazil, India and Indonesia
    Date: 2013–03
  7. By: Josef T. Yap (Philippine Institute for Development Studies (PIDS)); Ruperto P. Majuca
    Abstract: The Philippines continues to demonstrate a development puzzle. Despite abundant natural and human resources, its development record pales in comparison with its neighbors in East Asia. This study presents a SWOT analysis to explain the economic development of the Philippines. To overcome the threats and weaknesses, the Philippines should aspire for BRISK development : balanced, rapid, inclusive, sustainable and capital-intensive economic growth. Policy recommendations include standard reforms related to expanding fiscal space and improving infrastructure. However, Philippine history requires that special attention be given to strengthening institutions and weakening the grip of oligarchs. The rapid rise of China and India and the establishment of the ASEAN Economic Community provide an opportunity to attract more foreign direct investment, diversify the productions base, and expand the role of small and medium sized enterprises.
    Keywords: Development puzzle; SWOT analysis; critical development constraints; ASEAN Economic Community; balanced, rapid, Sustainable, inclusive and capital-intensive economic growth, The Philippines
    Date: 2013–05
  8. By: Anbumozhi, Venkatachalam (Asian Development Bank Institute); Bauer, Armin (Asian Development Bank Institute)
    Abstract: Half of the world’s population—3 billion people—lives below the poverty line, and Asia has the largest share. In pursuit of sustainable economic development and poverty alleviation, there is great potential among low-income households for green consumption, production, innovation, and entrepreneurial activity. This paper shows how an inclusive green growth model can uplift the poor through entrepreneurship and fiscal policy reforms.
    Keywords: low-carbon growth; green growth. inequalities; sustainable economic development; poverty alleviation; green consumption; entrepreneurship; fiscal policy reforms
    JEL: E62 H61 Q20 Q30 Q40
    Date: 2013–05–15
  9. By: Supon Limwattananon (International Health Policy Program, Ministry of Public Health, Thailand); Sven Neelsen (Institute of Health Policy and Management, Erasmus University Rotterdam); Owen O'Donnell (Erasmus University Rotterdam); Phusit Prakongsai (International Health Policy Program, Ministry of Public Health, Thailand); Viroj Tangcharoensathien (International Health Policy Program, Ministry of Public Health, Thailand); Eddy van Doorslaer (Erasmus University Rotterdam)
    Abstract: We estimate the impact on health care utilization and out-of-pocket (OOP) expenditures of a major reform in Thailand that extended health insurance to one-quarter of the population to achieve universal coverage while keeping health spending below 4% of GDP. Identification is through comparison of changes in outcomes of groups to whom coverage was extended with those of public sector employees and their dependents whose coverage was not affected. The reform is estimated to have reduced the probability that a sick person goes without formal treatment by 3.2 percentage points (11%). It increased the probability of receiving public ambulatory care by 2.7 ppt (5%) and of admission to a public hospital by 1 ppt (18%). OOP expenditures were reduced by one-third on average, as was the probability of spending more than 10% of the household budget on health care, while spending at the very top of the OOP distribution was reduced by one-half representing substantial reductio ns in exposure to medical expenditure risk. Supply-side measures implemented with the coverage extension are likely to have helped realize these effects from an increased, but still very tight, budget.
    Keywords: Health Insurance, Health Care, Medical Expenditures, Universal Coverage, Thailand
    JEL: H42 H51 I18
    Date: 2013–05–16
  10. By: Martin Daniel Siyaranamual (Department of Economics, Padjadjaran University)
    Abstract: Successful minimisation of the gap between hypothetical and actual be-haviours requires to consider the dimension of individual social interaction in the decision process. While this dimension has been acknowledged to play an important role in the construction of private good preferences, however, in the context of public good, the role of social interaction has not been adequately examined. Therefore, to shed a light on the role of social interaction in shaping preferences toward public good, I conduct a contingent valuation (CV) study in which the respondents are enabled to have social interactions prior their willingness to pay (WTP) elicitation question. And in order to do this, I construct a sampling design where respondents are divided into three different groups, namely treated, untreated, and control groups. The respondents in the treated and untreated groups were allowed to interact/discuss with each other, within and across groups, prior to the WTP elicitation question. I find that treated and untreated respon-dents with social interactions have higher and significant likelihood to purchase the public good relatively to control respondents. While those who did not have interaction have a lower WTP for the improvement of waste management.
    Keywords: Social interactions, Contingent valuation, Bandung, Solid waste manage-ment
    JEL: Q51 R11 R22
    Date: 2013–05
  11. By: Giuditta De Prato (European Commission – JRC - IPTS); Daniel Nepelski (European Commission – JRC - IPTS)
    Abstract: We study the patterns and drivers of international technology transfer to and from China and the rest of the world. Our analysis makes use of patent-based measures of cross-border ownership of inventions. To quantify these technology flows, we a patent database providing a worldwide coverage of patents. We use a gravity model to explain the drivers of the international technology transfer. Although China exhibits a large deficit in international technology transfer, the flow of technology from abroad to China intensifies as its absorptive capacity grows. Excluding Taiwan, the US and China relationship dominates the technology transfer between China and the rest of the world. This is even more emphasised by the relatively weak position of Japan and other Asian countries in the process of technology exchange with China. This is result is not affected by the fact that the US acts mainly as an acquirer of Chinese technology.
    Keywords: international technology transfer, cross-border ownership of inventions, patent analysis, China
    JEL: D8 F23 O14 O30 O57
    Date: 2012–07
  12. By: Rafaelita M. Aldaba (Philippine Institute for Development Studies (PIDS))
    Abstract: The paper examines the state of investment liberalization and facilitation in the Philippines and suggests policy measures to enable the country to comply with its AEC commitments. Based on interviews and surveys; the results indicated that investment incentives, low tax rates and time/cost of starting a business are critical factors affecting firms’ decision to invest in the Philippines. The respondents noted significant improvements in political stability and level of corruption. A great majority of the firms also indicated future expansion of their operations and the ASEAN market as a significant factor in their investment decision. In evaluating the quality, servicing, policy, and strategy of investment promotion agencies (IPAs), the Philippines obtained a quite respectable score of 71%. The firms rated government agencies’ investment facilitation and promotion activities as satisfactory. They cited bureaucracy and slow processing of permits as most problematic issues affecting their operations. They also pointed out the lack of transparency in guidelines and procedures, corruption, and the non-uniformity of investment incentives given by the major IPAs. Meanwhile, according to IPAs, the most problematic procedures that investors face in establishing business are permits from Local Government Units (LGUs), environmental compliance certificate from the DENR-Mines and Geosciences Bureau, and visa from the Bureau of Immigration. To reduce the gap between policy and implementation and boost the country’s competitiveness, the paper suggests the unification and centralization of the investment promotion and facilitation efforts by all IPAs under one agency. It is also necessary to strengthen the current efforts of the Philippine Investment Promotion Plan (PIPP) interagency committee to coordinate the various IPAs’ actions and plans. To improve the operational environment and investment climate, IPAs should closely collaborate with national agencies and local government units particularly in the automation and streamlining of business procedures. Currently, the DTI and the DILG are intensifying their efforts to improve the business permit and licensing system. PEZA’s experience in effectively streamlining its procedures is also worth emulating. To face the challenges and take advantage of the opportunities arising from AEC 2015, the reforms suggested above must be accompanied by substantial increases in infrastructure investment particularly in power and logistics to reduce the cost of doing business in the country. Modern and efficient air, land, and sea infrastructure should be built fast enough. A comprehensive review of the Constitutional limitations on foreign equity particularly the 60-40 rule should also be pursued.
    Keywords: APEC, investment facilitation, promotion and liberalization, investment promotion agencies (IPAs), Philippines
    Date: 2013–05
  13. By: Chang, C.L.; Allen, D.; McAleer, M.J.
    Abstract: Research papers in empirical finance and financial econometrics are among the most widely cited, downloaded and viewed articles in the discipline of Finance. The special issue presents several papers by leading scholars in the field on “Recent Developments in Financial Economics and Econometricsâ€. The breadth of coverage is substantial, and includes original research and comprehensive review papers on theoretical, empirical and numerical topics in Financial Economics and Econometrics by leading researchers in finance, financial economics, financial econometrics and financial statistics. The purpose of this special issue on “Recent Developments in Financial Economics and Econometrics†is to highlight several novel and significant developments in financial economics and financial econometrics, specifically dynamic price integration in the global gold market, a conditional single index model with local covariates for detecting and evaluating active management, whether the Basel Accord has improved risk management during the global financial crisis, the role of banking regulation in an economy under credit risk and liquidity shock, separating information maximum likelihood estimation of the integrated volatility and covariance with micro-market noise, stress testing correlation matrices for risk management, whether bank relationship matters for corporate risk taking, with evidence from listed firms in Taiwan, pricing options on stocks denominated in different currencies, with theory and illustrations, EVT and tail-risk modelling, with evidence from market indices and volatility series, the economics of data using simple model free volatility in a high frequency world, arbitrage-free implied volatility surfaces for options on single stock futures, the non-uniform pricing effect of employee stock options using quantile regression, nonlinear dynamics and recurrence plots for detecting financial crisis, how news sentiment impacts asset volatility, with evidence from long memory and regime-switching approaches, quantitative evaluation of contingent capital and its applications, high quantiles estimation with Quasi-PORT and DPOT, with an application to value-at-risk for financial variables, evaluating inflation targeting based on the distribution of inflation and inflation volatility, the size effects of volatility spillovers for firm performance and exchange rates in tourism, forecasting volatility with the realized range in the presence of noise and non-trading, using CARRX models to study factors affecting the volatilities of Asian equity markets, deciphering the Libor and Euribor spreads during the subprime crisis, information transmission between sovereign debt CDS and other financial factors for Latin America, time-varying mixture GARCH models and asymmetric volatility, and diagnostic checking for non-stationary ARMA models with an application to financial data.
    Keywords: exchange rates;options;risk management;value-at-risk;credit risk;volatility;mixture models;asymmetry;inflation targeting;global financial crisis;quantiles;realized range;size effects;contingent capital;corporate risk taking;diagnostic checking;dynamic price integration;equity markets;liquidity shock;micro-market noise;local covariates;news sentiment;sovereign debt CDS;sub-prime crisis
    Date: 2013–01–01
  14. By: Erlinda M. Medalla (Philippine Institute for Development Studies (PIDS)); Veredigna M. Ledda
    Abstract: While it is too early to undertake rigorous quantitative analysis on the impact of the Philippines-Japan Economic Partnership Agreement (PJEPA) on the Philippines, this initial ex-post study concludes that based on several key indicators the country has not suffered major adjustment costs because of the PJEPA. There is also evidence to show that the Philippines was able to secure concessions comparable to other partner countries of Japan in similar EPAs. The study echoes earlier research that indicated the short-run impact of the PJEPA on GDP would be small but the dynamic benefits could be very significant. On the whole, indicators are positive, although more could be done especially in terms of labor protection, attracting Japanese investments and taking advantage of the cooperation elements of the agreement.
    Date: 2013–05
  15. By: McKenzie, David (World Bank, CEPR, and IZA); Siegel, Melissa (UNU-MERIT/MGSoG, Maastricht University)
    Abstract: Most migration surveys do not ask about the legal status of migrants due to concerns about the sensitivity of this question. List randomization is a technique that has been used in a number of other social science applications to elicit sensitive information. We trial this technique by adding it to surveys conducted in Ethiopia, Mexico, Morocco and the Philippines. We show how, in principle, this can be used to both give an estimate of the overall rate of illegal migration in the population being surveyed, as well as to determine illegal migration rates for subgroups such as more or less educated households. Our results suggest that there is some indication in this method: we find higher rates of illegal migration in countries where illegal migration is thought to be more prevalent and households who say they have a migrant are more likely to report having an illegal migrant. Nevertheless, some of our other findings also suggest some possible inconsistencies or noise in the conclusions obtained using this method, so we suggest directions for future attempts to implement this approach in migration surveys.
    Keywords: migration, illegal migration, research methods, list randomization, item count method, survey techniques, surveys
    JEL: F22 C83 J61 K42
    Date: 2013
  16. By: Michael Clemens and Erwin Tiongson
    Abstract: Labor markets are increasingly global. Overseas work can enrich households but also split them geographically, with ambiguous net effects on decisions about work, investment, and education. These net effects, and their mechanisms, are poorly understood. We study a policy discontinuity in the Philippines that resulted in quasi-random assignment of temporary, partial-household migration to high-wage jobs in Korea. This allows unusually reliable measurement of the reduced-form effect of these overseas jobs on migrant households. A purpose-built survey allows nonexperimental tests of different theoretical mechanisms for the reduced-form effect. We also explore how reliably the reduced-form effect could be measured with standard observational estimators. We find large effects on spending, borrowing, and human capital investment, but no effects on saving or entrepreneurship. Remittances appear to overwhelm household splitting as a causal mechanism.
    JEL: J61 O15 R23
    Date: 2013–05

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