nep-sea New Economics Papers
on South East Asia
Issue of 2013‒11‒16
thirty-six papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Regional Trade Agreements and Enterprises in Southeast Asia By Ganeshan Wignaraja
  2. Economic growth and balance of payments constraint in Vietnam By Rieber, Arsène; Bagnai, Alberto; Tran, Thi Anh-Dao
  3. The ASEAN Economic Community : Progress, Challenges, and Prospects By Siow Yue Chia
  4. On the relationship between exchange rates and external imbalances: East and Southeast Asia By Juan Carlos Cuestas; Paulo José Regis
  5. Empirical Determinants and Patterns of Research and Development Investment in Asia By Debuque-Gonzales, Margarita
  6. ASEAN 2030: Challenges of Building a Mature Political and Security Community By Acharya, Amitav
  7. Rice Trade and Price Volatility: Implications on ASEAN and Global Food Security By Clarete, Ramon; Adriano, Lourdes; Esteban, Amelia
  8. EU Policy toward Asia and the Pacific: A View from Japan By Takako Ueta
  9. Agriculture and Structural Transformation in Developing Asia: Review and Outlook By Briones, Roehlano; Felipe, Jesus
  10. Exchange Rate Policy and Regional Trade Agreements : A Case of Conflicted Interests? By Richard Pomfret; Victor Pontines
  11. The Information Technology and Business Process Outsourcing Industry: Diversity and Challenges in Asia By Mitra, Raja Mikael
  12. Unexpected and Growing Interest in Land Investments? The Asian Case By Maria Bruna Zolin; Lucia Luzi
  13. Corporate Cash Holding in Asia By Horioka, Charles Yuji; Terada-Hagiwara, Akiko
  14. Intensive Commercial Agriculture in Fragile Uplands of Vietnam: How to Harness its Poverty Reduction Potential while Ensuring Environmental Sustainability? By Keil, Alwin; Saint-Macary, Camille; Zeller, Manfred
  15. Examining the Determinants of Food Prices in Developing Asia By Huh , Hyeon-seung; Park, Cyn-Young
  16. Safety Nets and Food Programs in Asia: A Comparative Perspective By Jha, Shikha; Kotwal, Ashok; Ramaswami, Bharat
  17. Globalization, Labor Market Regulation, and Firm Behavior By Meyer, Moritz; Vandenberg, Paul
  18. Risk preferences and development revisited: A field experiment in Vietnam By Vieider, Ferdinand M.; Truong, Nghi; Martinsson, Peter; Pham Khanh Nam; Martinsson, Peter
  19. Overcoming Critical Constraints to Sustaining Productivity Growth in Key Commodities of Asia and the Pacific By Sombilla, Mercedita; Mapa, Dennis; Piza, Sharon
  20. Econometric Analysis of Profitability of Microfinance Institutions in Selected Asian Countries By Janda, Karel; Turbat, Batbayar
  21. Special Study on Sustainable Fisheries Management and International Trade in the Southeast Asia and Pacific Region By Masayuki Komatsu
  22. Moving out of Agriculture: Structural Change in Vietnam By Brian McCaig; Nina Pavcnik
  23. Resource booms, growth and poverty in Laos : What can we learn from other countries and policy simulations? By Phouphet Kyophilavong; Chanthachone Senesouphap; Somnack Yawdhacksa
  24. The impact of FDI on the production networks between China and East Asia and the role of the U.S. and ROW as final markets By Zhou, Jing; Latorre, María C.
  25. Leveraging Service Sector Growth in the Philippines By Mitra, Raja Mikael
  26. Sudden Changes in Volatility in European Stock Markets By Khaled Guesmi; Frédéric Teulon; Zied Ftiti
  27. ICT-enabled innovation for learning in Europe and Asia. Exploring conditions for sustainability, scalability and impact at system level. By Panagiotis Kampylis; Nancy Law; Yves Punie; Stefania Bocconi; Barbara Bre?ko; Seungyeon Han; Chee-Kit Looi; Naomi Miyake
  28. Livelihood assessment: A participatory tool for natural resource dependent communities By Lax, Jutta; Krug, Joachim
  29. Plurilateral Agreements : A Viable Alternative to the World Trade Organization? By Michitaka Nakatomi
  30. Industry-Level Competitiveness, Productivity, and Effective Exchange Rates in East Asia By ITO Keiko; SHIMIZU Junko
  31. Unilateral facilitation does not raise international labor migration from the Philippines By Beam, Emily; McKenzie, David; Yang, Dean
  32. Modern Currency Wars : The United States versus Japan By Ronald McKinnon; Zhao Liu
  33. International Transmission of Food Prices and Volatilities: A Panel Analysis By Lee , Hyun-Hoon; Park, Cyn-Young
  34. Bilateral Trade and Food Security By Brooks, Douglas; Ferrarini, Benno; Go, Eugenia
  35. Racial Cues and Attitudes toward Redistribution: A Comparative Experimental Approach By Shanto Iyengar
  36. How Do Exporters Respond to Antidumping Investigations? By Yi Lu; Zhigang Tao; Yan Zhang

  1. By: Ganeshan Wignaraja (Asian Development Bank Institute (ADBI))
    Abstract: The spread of regional trade agreements (RTAs) in Southeast Asia has ignited a debate about their impact on business, and ways to avoid raising the business costs from the Asian ‘noodle bowl’ effect. This paper undertakes a comparative and firm-level analysis of the impact of RTAs in Indonesia, Malaysia, and the Philippines including : a descriptive analysis of patterns of RTA use at the firm level and econometric analysis of factors affecting firm-level RTA use. The paper finds that firm-heterogeneity matters in RTA use. Acquiring knowledge about RTAs through in-house efforts and actively forging links with RTA support institutions, building technological capabilities, and membership of industrial clusters show up as significant factors affecting the likelihood of firm-level RTA use. A lack of information about RTAs and the absence of RTAs with major trading partners are the main reasons for non-use of RTAs. Key policy implications include the need to improve business support for RTAs, to conclude RTAs with major trading partners, and to create a database on preference use in RTAs.
    Keywords: Regional Trade Agreements, Southeast Asia, the business costs of RTA, firm-level RTA use
    JEL: F13 F14 F15 O31 O32
    Date: 2013–10
  2. By: Rieber, Arsène; Bagnai, Alberto; Tran, Thi Anh-Dao
    Abstract: Our paper examines the long run relationship between economic growth and the current account balance equilibrium by relying on the BoP constrained growth model. We find that Vietnam grew less than the rate predicted when the period 1985 to 2010 as a whole is considered, but with different behavior for the 1998-2010 sub-period. The relative price effect is neutral, allowing the volume effects to dominate in setting the BoP constraint. The high income elasticities of exports enable growth in the advanced countries to have a multiplier effect on the Vietnamese economy. However, this effect is hindered by a high ‘appetite’ for imports coming from Asia. We also assess the impact of the current crisis on Vietnam’s growth for the period 2011 to 2017.
    Keywords: Economic growth; BoP constrained growth model; Multi country model; Asia; Vietnam;
    JEL: E12 F43 O11 O53
    Date: 2013–06
  3. By: Siow Yue Chia (Asian Development Bank Institute (ADBI))
    Abstract: Serious efforts at economic integration among the Association of Southeast Asian Nations (ASEAN) members started only in 1992. Initial obstacles included the widespread pursuit of import substitution policies of industrialization, the small extent of intra-ASEAN trade, and the wide differences in economic size, development level, and industrial competence giving rise to widely divergent perceptions of benefits and costs of integration. The switch to outward-looking development strategies and external pressures (such as the formation of the European Union Single Market and the North American Free Trade Area) pressured ASEAN to form a free trade area (FTA) in 1992. The challenges of globalization, slow recovery from the Asian financial crisis, and the economic rise of the People’s Republic of China (PRC) and India further pressured ASEAN into deep integration in 2003 with the formation of the ASEAN Economic Community (AEC). The AEC has objectives of a single market and production base, a competitive economic region, equitable economic development, and integration into the global economy. It involves liberalization and facilitation of trade in goods, services, and investment, as well as protection and promotion of investment; narrowing the development gap; and free flow of skilled labor and freer flow of capital. The AEC Blueprint outlines actions and measures and time lines for completion by the 2015 deadline. However, by end-2011 only an implementation rate of 67.5% had been achieved. While tariff elimination had largely been on schedule, there were difficulties with removal of non-tariff barriers (NTBs) and services and investment liberalization. In summary, the AEC has come a long way, but it has fallen short of the high standard and time frame it has set for itself. ASEAN has to find the political will and management capability to fulfill all goals in the AEC Blueprint and embark on further liberalization, rationalization, and integration to seize the opportunities and successfully meet the economic challenges of the 21st century.
    Keywords: ASEAN, intra-ASEAN trade, ASEAN Economic Community (AEC).
    JEL: F13 F15 O19 O24
    Date: 2013–10
  4. By: Juan Carlos Cuestas (University of Sheffield); Paulo José Regis (Xi'an Jiaotong-Liverpool University)
    Abstract: The role the real exchange rate plays in determining current account balances has gathered momentum as East and Southeast Asian countries have seen increasingly positive current account balances. This paper analyses the evolution of current accounts in the region. A cointegrating relationship between the real effective exchange rate and the ratio of the current account balance of the GDP is tested, based on both linear and nonlinear models. The half-life of current account imbalances is relatively short, implying high capital mobility. Results poin to the existence of a long-run relationship, and in most cases the causality runs from the exchange rate to the current account.
    Keywords: emerging markets, current account, half-life, East and Southeast Asia
    JEL: C22 E32 F15
    Date: 2013–10
  5. By: Debuque-Gonzales, Margarita (University of the Philippines)
    Abstract: This paper investigates the financial determinants of research and development (R&D) investment in Asia, where innovation is naturally seen as the key driver of future (high) economic growth. We sample listed nonfinancial firms from eight economies in region (the People’s Republic of China; Hong Kong, China; India; Indonesia; the Republic of Korea; Malaysia; the Philippines; and Singapore) for the period 2002–2011 using the Oriana database. Panel data regressions show sensitivity of R&D investment to changes in cash flow, indicating reliance on internal financing of R&D and financially constrained firms, and a greater role of debt, rather than equity, as a source of external financing. In terms of alternative uses of funds, dividend payments by firms seem to divert from their spending on R&D, but investments in financial assets do not. In terms of ownership structure, empirical results show that both higher domestic ownership concentration and higher foreign ownership tend to lower cash flow sensitivity of R&D investment, suggesting more stable funding of innovation. Overall, there does not seem to be an extreme preference of firm shareholders for short-term returns at the expense of long-term productivity. However, there is clearly a gain for firms as well as economies they are in with better access to external financing of R&D.
    Keywords: R&D investment; financing innovation; cash flow; R&D financing constraints; Asia
    JEL: D92 G30 O30 O40
    Date: 2013–08–16
  6. By: Acharya, Amitav (Asian Development Bank Institute)
    Abstract: The paper examines ASEAN’s political and security challenges and prospects in the coming two decades. The challenges facing ASEAN could be classified into six broad categories: (1) the shifting balance of power in the Asia Pacific; (2) the persistence of intra-ASEAN territorial conflicts; (3) the territorial dispute in the South China Sea, (4) the programs of military modernizations undertaken by ASEAN states and the resulting prospects for an intra-ASEAN arms race, (5) uncertainty and strife caused by demands for domestic political change, and (6) the dangers posed by transnational (non-traditional) security threats. The conditions for ASEAN to build a mature political-security community are also discussed.
    Keywords: asean 2030; political security; community security; balance of power; territorial conflict; non-traditional security; asean-prc relations
    JEL: F50 F51 F53 F55
    Date: 2013–11–05
  7. By: Clarete, Ramon (University of the Philippines); Adriano, Lourdes (Asian Development Bank); Esteban, Amelia (University of British Columbia)
    Abstract: This paper highlights the thinness of rice trade relative to wheat and maize, and the contrasting price volatility and tradability relations for wheat and maize, which display a positive correlation, and for rice, which show an inverse relation. The paper focuses on Southeast Asia, which hosts the world’s biggest rice exporters and rice importers. Using the Granger causality tests to determine correlation, the analysis concludes that very low global trading activity in rice that tends to self-perpetuate its dampening effect on trade does not cause extreme rice price volatility in the region, but the other way around. Rice-importing countries appear to resort to self-sufficiency measures as insurance to compensate for the high risks of unreliable rice supply and unaffordable rice prices. What would it take for countries to regain their confidence in external rice trade? The Association of Southeast Asian Nations Integrated Food Security Program provides a menu of policies for reducing and managing the chances of excessive rice price volatility.
    Keywords: ASEAN cereal trade; ASEAN food security; ASEAN rice trade; rice price volatility; rice self-sufficiency programs; rice trade
    JEL: F13 F14 Q17 Q18
    Date: 2013–09–02
  8. By: Takako Ueta
    Abstract: This paper explains the changing feature of EU policy toward Asia and the Pacific from the viewpoint of Japan. In the era of global power shift, and because of the impressive economic growth in Asia, the EU’s interest in this region is growing. This paper describes competitive trade liberalisation projects as well as “defunct†regional security frameworks and dialogues in view of the rise of China, and EU relations with ASEAN, Japan and China. In response to this evolution, this paper analyses an EU policy document, its new Guidelines of Foreign and Security Policy in East Asia and a ground-breaking joint statement of the EU and US on cooperation in this region. Finally, this paper suggests several policy proposals on the EU’s constructive role in Asia and the Pacific.
    Date: 2013–03–27
  9. By: Briones, Roehlano (Philippine Institute for Development Studies); Felipe, Jesus (Asian Development Bank)
    Abstract: Relative to other developing regions, developing Asia has experienced a slower decline in employment share in agriculture, compared to its output share; a rapid growth in labor and land productivity; and a shift from agricultural output from traditional to high-value products. The most successful Asian economies have pursued an agricultural development-led industrialization pathway. Nevertheless, agriculture remains the largest employer in many large Asian countries, hence future structural transformation must take into account agricultural transformation. Extrapolating from past trends, and taking to account emerging conditions, many countries of developing Asia will be expected to move on to the next phase of agricultural development; however even in the long term, agriculture’s employment share will continue to be sizable relative with the output share. To expedite transformation, many Asian countries will still need to promote long term productivity growth in agriculture and facilitate upgrading of their farms and agroenterprises within the global value chain.
    Keywords: economic growth; structural transformation; agricultural development; agricultural productivity; global value chain
    JEL: O13 Q19
    Date: 2013–08–09
  10. By: Richard Pomfret (Asian Development Bank Institute (ADBI)); Victor Pontines
    Abstract: The results highlight the conflicting interests of countries — to stabilize exchange rates or to keep the option of exchange rate depreciation in order to maintain competitiveness of domestic tradable producers. With deepening integration in East Asia, however, the desire for exchange rate stability will eventually outweigh the desire to maintain a protectionist tool. How extensive the pressures will be in East Asia will depend not only on how many countries seriously desire to be in the more integrated economic area in which Factory Asia operates, but also on their institutional and political readiness to commit in such schemes at the cost of renouncing an important policy instrument.
    Keywords: Regional Trade Agreements, exchange rate policy, East Asia, exchange rate stability, domestic tradeable producers
    JEL: F13 F14 F15 F42
    Date: 2013–10
  11. By: Mitra, Raja Mikael (Asian Development Bank)
    Abstract: Some countries and regions have been more successful than others in developing information technology-business process outsourcing (IT-BPO) services industries. India and the Philippines in particular have offered educated human resources at low cost, attractive fiscal incentives, and industrial parks although these factors alone do not explain the rapid growth of the industry there as other countries also had these strengths but failed to develop industries as rapidly. A wide range of factors driving and constraining industry development must be taken into account, namely human resources; financial, infrastructure, technology, legal, and regulatory developments; the roles of foreign companies, diasporas, and of indigenous entrepreneurs; the government; industry associations; civil society; production, trade, and knowledge networks; and the interplay of all these factors locally, nationally, and internationally. This analysis of IT-BPO industry developments in Asia points to continued expansion in domestic, regional, and global demand and supply. There is a need for timely, concerted efforts by key stakeholders to define strategies, programs, and projects to respond to opportunities and challenges at all levels. Experiences from Asian economies can offer lessons, but each situation has its own peculiarities. There is no single approach to developing an IT-BPO industry.
    Keywords: information technology; business process outsourcing; software industry; offshoring; services; knowledge economy; India; ASEAN; Asia
    JEL: O14
    Date: 2013–08–20
  12. By: Maria Bruna Zolin (Department of Economics, University Of Venice Cà Foscari); Lucia Luzi (Department of Economics, Boston University)
    Abstract: The aim of this paper is to provide an Asian perspective on land investments with particular reference to the European position in terms of land acquisition. At first, the paper recalls the relevance that land holds as a distinct factor of production and consumption. Then, it investigates the different ways employed to define the recent phenomenon of land-grabbing in the increasing literature review. In order to contribute to the discussion on the issue, the second part of the paper is devoted to the examination of the Asian case. Furthermore, it analyses both the direct and the indirect role played by the European Union in influencing and enhancing the phenomenon of land-grabbing in Asia. The paper concludes with observations and proposals on the impact of land-grabbing.
    Keywords: Land, Natural resources, Asia, EU, Food security, Energy security, Environment, Public policies.
    JEL: Q15 Q24 Q42 O13 O53 P28
    Date: 2013
  13. By: Horioka, Charles Yuji (University of the Philippines); Terada-Hagiwara, Akiko (Asian Development Bank)
    Abstract: In this paper, we analyze the determinants of corporate saving in the form of changes in the stock of cash for 11 Asian economies using firm-level data from the Oriana Database for the 2002–2011 period. We find some evidence that cash flow has a positive impact on the change in the stock of cash, which suggests that Asian firms are borrowing constrained and that they save more when their cash flow increases so that they will be able to finance future investments. Moreover, we find in the developed economy sample that, as expected, cash flow has a positive impact on the change in the stock of cash only in the case of the smallest firms, which are more likely to be borrowing constrained, and find in the developing economy sample that, as expected, the positive impact of cash flow on the change in the stock of cash declines with firm size. In addition, we find that the cash flow sensitivity of cash declined after the global financial crisis. Finally, we find some evidence that Tobin’s q has a positive impact on the change in the stock of cash.
    Keywords: corporate saving; corporate investment; borrowing constraints; liquidity constraints; cash flow; cash holdings; cash flow sensitivity of cash; Tobin’s q; firm size; productivity shocks; Asia; Oriana Database; financial sector development; global financial crisis
    JEL: D92 E21 E22 G11 O53
    Date: 2013–10–22
  14. By: Keil, Alwin; Saint-Macary, Camille; Zeller, Manfred
    Abstract: Markets for high-value agricultural commodities are growing and can contribute to reducing rural poverty. However, the poor may be unable to participate in such markets, and adverse environmental impacts may counterbalance short-term benefits. Hence, policies are needed that help reducing poverty while protecting the environment. We address this challenge using the case of commercial maize production for animal feed purposes in a marginal upland area of Vietnam. We identify determinants of farmers’ degree of participation in maize production using regression analysis and assess farmers’ awareness of soil erosion and their conservation practices. The poorest are particularly specialized in maize but depend on disadvantageous input supply and marketing arrangements to offset infrastructural and institutional deficiencies. High awareness of soil erosion is contrasted by lacking conservation practices due to high opportunity costs. Policies should foster the integration of livestock in the maize-based farming system and promote soil conservation technologies that produce feed.
    Keywords: Commercial agriculture; rural poverty; land degradation; tobit regression; Vietnam;
    JEL: O13 Q56
    Date: 2013
  15. By: Huh , Hyeon-seung (Yonsei University); Park, Cyn-Young (Asian Development Bank)
    Abstract: How the price of food is determined has become a critical issue, given the drastic surges in prices in recent years and the prevailing expectation of further increases. Along this line, this paper examines the sources of food price fluctuations in 11 developing Asian countries. The working model is a block vector autoregression (VAR), and 10 variables are classified into three blocks—world, region, and country—depending on their origin and nature. Empirical evidence shows that the regional shock plays a pivotal role in explaining the variations of domestic food prices, particularly at medium- to long-term horizons. Contrary to conventional belief, the world food price shock contributes little to the dynamics of domestic food prices in developing Asia. The findings suggest Asian food markets are more integrated regionally than with the world market. The short-run movements of domestic food prices are accounted for largely by the country’s own shock. Taken together, our findings suggest that promoting food price stability would require efforts at the regional level as well as at the domestic level, reflecting the influence of region-specific factors. Extensions to the developing countries in other regions produce similar findings on the determination of food prices.
    Keywords: food price; developing Asia; Shocks; block VAR
    JEL: C32 F15 Q11
    Date: 2013–09–03
  16. By: Jha, Shikha (Asian Development Bank); Kotwal, Ashok (University of British Columbia); Ramaswami, Bharat (Indian Statistical Institute)
    Abstract: Many countries adopted safety net programs to deal with the food crisis of 2008. However, such programs are often beset with targeting errors, inefficiencies, and fraud. Despite this, there is no systematic comparative analysis of safety nets. The objective of this paper is to identify generic issues germane to safety net design and their role in determining success. We examine the performance of safety net programs in Bangladesh, India, Indonesia, and the Philippines in terms of people covered, food distributed, and income support provided. These countries spend 1%–3% of their gross domestic product on safety nets—small in relation to developing and industrial economies. We find an across-the-board failure of targeting in the four countries. The reasons range from elite capture, incorrect identification of the poor, their lack of access, barriers to participation, and regional allocation biases. Even if perfect targeting could cover the entire target group and eliminate leakage to nontarget groups, the target groups may not receive the full subsidy due to illegal diversions, operational inefficiencies, and excess costs of public agencies. The success of the safety nets will depend on increasing the participation of the poor and minimizing program waste. Computerization of supply chains to track grain supplies can reduce diversion, and switching from in-kind to cash transfers can cut administrative and other costs of physical handling. The mix of tools would depend upon the economic, political, cultural, and social backgrounds of the country, and its administrative and fiscal capabilities to provide safety net programs.
    Keywords: Conditional and unconditional cash transfers; in-kind transfers; social safety nets; Bangladesh; India; Indonesia; and Philippines
    JEL: D60 I38
    Date: 2013–08–29
  17. By: Meyer, Moritz (World Bank); Vandenberg, Paul (Asian Development Bank)
    Abstract: The paper analyzes the link between firm characteristics and labor market regulation in five Asian economies—Bangladesh, Indonesia, Pakistan, the Philippines, and Viet Nam. Labor market policies and labor standards do not only affects workers, but also influence firms’ investment and employment decisions. The empirical analysis uses information from enterprise surveys. Empirical results describe systematic differences in the perceived level of labor market regulation. Controlling for a wide set of firm characteristics, the perceived level of labor market regulation is found to vary between firms that participate in global trade as against those supplying the domestic market. The in-country location of a firm is also a significant determinant. The level of labor intensity explains variation in the reported level of labor market regulation between firms. Findings support a better understanding of the types of firms that find labor market regulation to be an obstacle to their operations, and can be used to design targeted policy interventions.
    Keywords: labor market institutions (regulation); trade and labor markets; developing countries
    JEL: D22 F16 J23
    Date: 2013–08–13
  18. By: Vieider, Ferdinand M.; Truong, Nghi; Martinsson, Peter; Pham Khanh Nam; Martinsson, Peter
    Abstract: We obtain rich measures of risk preferences of poor farmers in Vietnam, and estimate structural models that capture risk preferences over different probability levels and across different domains (gains and losses). The results break radically with the previous literature on risk preferences, in developed and developing countries alike. Far from being particularly risk averse, our Vietnamese farmers are on average risk neutral. At the same time, we find our preference measures to perform well at predicting behavior, from the purchase of lottery tickets to risk management on the farm. We also find strong direct evidence of a risk-income paradox. While risk aversion is strongly decreasing in income within our farmer subject population, our Vietnamese farmers are significantly less risk averse than subjects in Western countries according to measurements obtained using the same decision tasks and procedures. --
    Keywords: risk preferences,development,external validity
    JEL: C93 D03 D80 O12
    Date: 2013
  19. By: Sombilla, Mercedita (National Economic and Development Authority); Mapa, Dennis (University of the Philippines); Piza, Sharon (Asian Development Bank)
    Abstract: Two trends on yields have been observed for rice, wheat, and even edible oils in Asia. The deceleration of yield growth is one of these trends. The other relates to the differential yield increases across countries in the region. This study provides explanations for both trends and relates these to the exhaustion of the yield potential of current technology, emerging threats posed by climate change and other disturbances, varying levels of development across countries and hence the development of infrastructure, among others. Total factor productivity (TFP) estimates for these commodities indicate the potential to overcome these constraints, however. Key determinants of TFP growth were identified and discussed. While the influence of these determinants on the TFP estimates was not tested empirically in this study because of data limitations, evidence of the relationship was clear and strong in numerous TFP studies done for the agriculture sector as a whole, and for rice and wheat in various countries including Asian countries. Long-term growth will have to come from great advances in interventions being undertaken, three of which include (i) major breakthroughs in new varieties and farming systems in both fertile and unfertile lands; (ii) the restructuring of small farms into more efficient, mechanized large-scale operations, especially in production areas with good infrastructure for market access and irrigation; and (iii) the development of market mechanisms to enhance the comparative advantage of domestic production and explore the value-adding potential of commodities, particularly edible oil. Three policy recommendations are also forwarded to achieve these great advances: (i) sustained investment in agriculture; (ii) getting the mix of institutions right; and (iii) gearing up for globalization. The role of development partners as well as the private sector in effecting sustainable growth is briefly discussed as a concluding section.
    Keywords: TFP; constraints; Asia Pacific; rice; wheat; edible oil; investment; institutions; globalization; private sector; development partners
    JEL: D24 D57 O13 Q11 Q18
    Date: 2013–09–09
  20. By: Janda, Karel; Turbat, Batbayar
    Abstract: This paper evaluates the effectiveness of some of the microfinance lending methodologies using the approach comparing these institutions among themselves in terms of how different lending methodologies influence their performance indicators. The results of this study with respect to different tested hypotheses are somewhat mixed but the general outcome is that rural lending and targeting women borrowers seem to have accomplished the goal whereas the effectiveness of group lending, in contrast to the initial expectation, was not confirmed.
    Keywords: microfinance, Asia, profitability
    JEL: G21 O16 P34
    Date: 2013–11–13
  21. By: Masayuki Komatsu (Asian Development Bank Institute (ADBI))
    Abstract: This paper analyzes the current status of fisheries and aquaculture in Southeast Asia and international trade. Analysis concludes that a policy of sustainable management for both capture fisheries and aquaculture is of greatest importance, but such a policy has been neither planned nor implemented with a holistic and long-term perspective. Current policy reflects a short-term view and the immediate needs of each nation. Therefore, capacity building of human resources and organizations, including governments, is needed for the formulation of holistic national policies to seek long-term and fundamental remedies for the sustainable management of fisheries resources and intensified and extensive aquaculture. Such holistic national policies should include science-based management, monitoring, enforcement, coordination of capture fisheries and aquaculture, and international trade policies. It may include the effects of climate change and oil price increases, as well as international market trends and regulations or barriers. Moreover, international trade will be promoted based on the sustainability of capture fisheries and aquaculture. ADB members and governments are urged to provide official development assistance for policy implementation, in particular to the private sectors that may not otherwise receive any, and to small and community-related businesses. Recommendations focus on building capacity for the long run, among others, for which facilitation should be provided.
    Keywords: Sustainable Fisheries Management, international trade in fishery and aquaculture, the sustainability of capture fisheries and aquaculture
    JEL: Q22 O13
    Date: 2013–10
  22. By: Brian McCaig; Nina Pavcnik
    Abstract: We examine the role of structural change in the economic development of Vietnam from 1990 to 2008. Structural change accounted for a third of the growth in aggregate labor productivity during this period, which averaged 5.1 percent per annum. We discuss the role of reforms in agriculture, enterprises, and international integration in this process. In addition to the drastic move of employment away from agriculture toward services and manufacturing, we also document the movement of workers away from household businesses toward firms in the enterprise sector, and the reallocation of workers from state owned firms toward private domestic and foreign owned firms. Manufacturing experienced particularly rapid growth in labor productivity and a large expansion of employment, as it grew from 8 to 14 percent of the workforce. Changes in trade policy, expansion of employment in foreign owned firms, and the declining role of state owned enterprises robustly contributed toward the changing structure of employment within manufacturing.
    JEL: F1 F16 O1 O53
    Date: 2013–11
  23. By: Phouphet Kyophilavong; Chanthachone Senesouphap; Somnack Yawdhacksa
    Abstract: Laos is a small, open, least-developed country (LDC) in Southeast Asia. However, it is a resource-rich economy with over 570 identified mineral deposits. As a result, Laos has experienced massive inflows of foreign direct investment (FDI) in the mining and hydroelectricity sectors since 2003. Despite the likelihood that resource booms will carry both positive and negative impacts on the Lao economy, this issue has been underresearched in Laos. This study thus lays out a framework to quantify the impacts of resource booms on the macro economy and on poverty in Laos using a computable general equilibrium (CGE) model. We find that the higher capital stock and productivity led to increased value added, production, exports and investment in the mining sector, resulting in higher real GDP, exports and investment. Unfortunately, the associated Dutch disease effects (particularly real exchange rate appreciation) negatively impact real production and value added in agriculture, industry and government services.
    Keywords: Resource boom, CGE model, Dutch disease, Laos
    JEL: D58 Q33
    Date: 2013
  24. By: Zhou, Jing; Latorre, María C.
    Abstract: This paper uses a 3 factor – 4 region – 15 sector computable general equilibrium model to study the impact of FDI accruing to China. We focus on the sectors of Electronics, Machinery and Textiles which account for 55.4% and 40% of Chinese overall exports and imports, respectively. Our data seem to confirm the existing empirical knowledge on the production networks between China and East Asia, and the role that the U.S. and ROW play as final markets for Chinese exports. Based on these differentiated geographical roles and on the contrasting production technologies of the three sectors, we offer an in-depth analysis of the effect of FDI inflows on production, prices and bilateral trade across China, East Asia, the U.S. and ROW. The magnitude of FDI inflows brings about proportional impacts on the increase in production and the fall in prices across the three sectors considered. However, the subsequent adjustment in bilateral trade differs. On the one hand, FDI leads to an increase of Chinese exports of Electronics and Machinery, crowding out production and exports in the rest of regions. On the other hand, the increase in FDI in Textiles still brings about increase in production which does not result in higher exports. The private consumption orientation of Textiles explains its contrasting trade pattern with respect to Electronics and Machinery. The fall in Chinese exports of Textiles in China underlies the increase on exports of Textiles across the rest of regions. However, world trade flows in Textiles are of smaller volume than the one in Electronics and Machinery. Therefore, the increase in Textiles of exports of the rest of regions does not compensate their big losses of exports in Machinery and Electronics.
    Keywords: Computable General Equilibirium; Intermediates; Multinationals; Triangular trade pattern; Production fragmentation; Value Chains
    JEL: C68 F14 F15 F17
    Date: 2013–11–11
  25. By: Mitra, Raja Mikael (Asian Development Bank)
    Abstract: The Philippines is often referred to as a country from which export of services rather than manufactured goods is the principal engine for economic growth, as the share of the service sector in gross domestic product has exceeded that of the industry sector since the mid-1980s. Three major opportunities for leveraging service sector growth stands out. One is expanding the scale and scope of the export and domestic markets for information technology-business process outsourcing and other modern services in urban areas. Second is expanding tourism to foster economic development across social groups and regions including poor and remote rural areas. Third is enhancing the domestic prospects for Filipino technical, managerial, and entrepreneurial talent so they will work in the Philippines rather than overseas. To take advantage of those opportunities, there is a need for concerted efforts to improve infrastructure; logistics; broadband connections; the power supply; and education, healthcare, financial, legal, and public administration services and more generally the overall business environment for foreign investors and local entrepreneurs.
    Keywords: services; growth; Philippines; Asia; business process outsourcing; information technology; migration; diaspora; tourism; innovation; knowledge economy
    JEL: F22 L80 O14
    Date: 2013–08–27
  26. By: Khaled Guesmi; Frédéric Teulon; Zied Ftiti
    Abstract: The question of volatility dynamics has always been the motivation of many researchers in the field of finance with objectives to ensure economic stability and to obtain higher rates of return for investors by portfolio diversification. Consequently, to financial crisis streaming, in the last few decades, a large literature has been focused on studying volatility. Hamao and al. (1991) found evidence of significant price-volatility spill over from US to London and Tokyo, and from London to Tokyo stock markets. Edwards and Naim (1998) observed a new style “Tequila Effect†of economic crises in Latin America. A similar crisis emerged, at the end of 1997, in Thailand which was far more severe and engulfed far more countries than its predecessor. It’s bad character has been manifested by its contagion on whole region, for that reason it has been called Asian Crisis. The emergence of East Asian currency crisis in 1997 raised doubt about the lessons learned from Mexico by national and international policy makers, and economic analysts (Edwards & Naim, 1998). Then, again in 2007, the world witnessed the worst crisis in history after the Great Depression of 1929. The crisis appeared in U.S.A due to a complicated interaction of different variables, consisting principally on: 1) lower interest rates, 2) abundance of mortgage loans, 3) weak or no controls at an institutional level and an authoritative level, 4) and the use of securitization. In all the cases mentioned above, we observe lower rates of return, higher volatility, and the propagation of crisis to other stock markets, around the world, during the periods of turbulence.
    Date: 2013–10–15
  27. By: Panagiotis Kampylis (JRC/IPTS); Nancy Law (University of Hong Kong, Hong Kong); Yves Punie (JRC/IPTS); Stefania Bocconi (Italian National Research Council, The Institute for Educational Technology); Barbara Bre?ko (JRC/IPTS); Seungyeon Han (Hanyang Cyber University, South Korea); Chee-Kit Looi (National Institute of Education, Singapore); Naomi Miyake (The University of Tokyo, Japan)
    Abstract: This report presents three cases of ICT-enabled innovation for learning from Europe (eTwinning, 1:1 Learning in Europe and Hellerup School in Denmark) and four cases from Asia (e-Learning Pilot Scheme in Hong Kong SAR, Knowledge Construction with Technology (CoREF) in Japan, Third Masterplan for ICT in Education (mp3) in Singapore and Digital Textbook project in South Korea), covering aspects such as the context, scale and nature of innovation, the intended learning outcomes, the role of technology, and implementation strategies. Based on desk research, case reports, consultation with education stakeholders from Europe and Asia, and in-depth expert interviews, the necessary conditions for sustainability, scalability and impact at system level are analysed. Thus, the report brings evidence to the debate about the mainstreaming of ICT-enabled innovation for learning in Europe and beyond, contributing to the Europe 2020 Strategy to modernize Education and Training across Europe.
    Keywords: ICT-enabled innovation for learning, Creative Classrooms, conditions for sustainability and scalability of educational innovation, ecological framework for mainstreaming educational innovation,
    JEL: I20 I21 I28 I29
    Date: 2013–10
  28. By: Lax, Jutta; Krug, Joachim
    Abstract: [Foreword] Globally, around 15 million hectares of forests - mainly tropical forests - are converted to other uses or lost through natural causes each year. Without forests mankind has no chance to survive. However, the poorest of the poor are directly dependent on forests as a resource of food, medicine, construction material and energy. Management, conservation, and sustainable development of forests are key issues of the international environmental and forest policy since the United Nations Conference on Environment and Development in Rio de Janeiro in the year 1992 to counteract the destruction of forests. In order to maintain tropical forests and to conserve their functions, structure and biodiversity as a collective good of humankind, forests need to be managed in a sustainable way. Conservation efforts are faced with the threefold task of incorporating ecological, economic and social sustainability aspects equally into development approaches. The relevance of livelihood issues to sustainable development has its basis in the United Nations Conference on Environment and Development 1992 and is at present an essential element in development approaches (e.g. MDGMillenium Development Goals). In line with Campbell the understanding of rural livelihoods is one of the keys to putting an end to global poverty. Though environmental resources can make up a considerable proportion of rural livelihoods it is necessary to evaluate this environmental dependency. This field manual introduces a participatory tool for the assessment of local livelihood situations of rural forest dependent communities. The assessment tool was initially implemented in a case study in Northern Vietnam. Vietnam, representative for many other tropical countries considered a developing country, where over 60 % of the populations livelihood strategy is based on agricultural and forest activities. --
    Date: 2013
  29. By: Michitaka Nakatomi (Asian Development Bank Institute (ADBI))
    Abstract: Looking back at the history of the World Trade Organization (WTO), major accords that have been reached under the multilateral framework to date are in substance issue-based “plurilateral†agreements. This paper looks at some specific examples of issue-based plurilateral agreements—such as the Information Technology Agreement (ITA), the Financial Services and Basic Telecommunication Services Agreements, and the Anti-Counterfeiting Trade Agreement (ACTA)—with the aim of pointing to the crucial role they can play in resolving the stalemate at the WTO and the Doha Round and the accelerating proliferation of free trade agreements (FTAs). Through analysis of their characteristics compared with the WTO and FTAs, the paper attempts to identify the potentials as well as legal and substantive constraints of issue-based plurilateral agreements. It also suggests possible areas where new plurilateral agreements—whether single or multiple issue-based—can be developed. The paper also highlights the importance of plurilateral agreements as a mechanism complementary to the WTO and FTAs in enhancing the governance of the global trade system, and outlines conditions that need to be fulfilled to address the needs of developing countries.
    Keywords: WTO, issue-based plurilateral agreements, the Information Technology Agreement (ITA), FTA, the Anti-Counterfeiting Trade Agreement (ACTA)
    JEL: F13
    Date: 2013–10
  30. By: ITO Keiko; SHIMIZU Junko
    Abstract: In this paper, we investigate export competitiveness based on unit labor costs (ULCs) and nominal effective exchange rates (NEERs) for Japan, China, and Korea for the 12 two-digit manufacturing industries for the period 2001-2009. Japan's ULCs either are relatively stable or declining in most industries, while that of Korea shows an upward trend in many industries, with the electrical and optical equipment industry being a major exception. China's ULCs are declining in most industries. Evaluating ULCs on a foreign currency basis, Japan's ULCs increased rapidly during the period of yen appreciation, suggesting that its cost reduction efforts were more than offset by the appreciation of the yen. The results of our empirical analysis suggest that both increases in ULCs and appreciation of the home currency reduce exports by raising the home country's relative prices. The negative impact of ULCs is largest for China, while it is negligible for Japan. However, the negative impact of NEERs is largest for Japan. Moreover, the negative impact of ULCs tends to be larger for machinery-related industries, suggesting that cost competitiveness is particularly important in these industries.
    Date: 2013–11
  31. By: Beam, Emily; McKenzie, David; Yang, Dean
    Abstract: Significant income gains from migrating from poorer to richer countries have motivated unilateral (source-country) policies facilitating labor emigration. However, their effectiveness is unknown. The authors conducted a large-scale randomized experiment in the Philippines testing the impact of unilaterally facilitating international labor migration. The most intensive treatment doubled the rate of job offers but had no identifiable effect on international labor migration. Even the highest overseas job-search rate that was induced (22 percent) falls far short of the share initially expressing interest in migrating (34 percent). The paper concludes that unilateral migration facilitation will at most induce a trickle, not a flood, of additional emigration.
    Keywords: Population Policies,Labor Markets,Labor Policies,Access to Finance,Voluntary and Involuntary Resettlement
    Date: 2013–11–01
  32. By: Ronald McKinnon (Asian Development Bank Institute (ADBI)); Zhao Liu
    Abstract: In the currency wars of the 1920s and 1930s, various nations fell off the gold standard and in so doing experienced deep devaluations. But under the postwar dollar standard, the central position of the US was key to maintaining the peace, until the Bretton Woods system of fixed dollar exchange parities fell apart after the so-called “Nixon Shock†of 1971. Now, without much fear of retaliation, the US can initiate more limited currency warfare—as with American “Japan bashing†from the late 1970s to mid-1990s to appreciate the yen, or “China bashing†since 2002 to appreciate the renminbi. Japan succumbed to this bashing, and the yen appreciated too much in 1985, with the result that Japan fell into a zero-interest liquidity trap and economic stagnation for almost two decades. However, in 2013, through massive quantitative easing by the Bank of Japan (BOJ), the yen depreciated about 25% against the dollar, stoking fears of a return to Japan bashing by the US. However, this sharp depreciation simply restored the purchasing power parity of the yen with the dollar so it should even out in the long run. In the short run, we show that yen depreciation could adversely affect the smaller East Asian economies. Since 2008, quantitative easing by the BOJ has been similar to that carried out by the US Federal Reserve, the Bank of England, and the European Central Bank. So the BOJ can only be faulted as a currency belligerent if there is a further significant yen depreciation. Led by the US, now all mature industrial countries are addicted to near-zero interest liquidity traps in both the short and long terms. These ultra low interest rates are causing lasting damage to the countries’ financial systems, and to those of emerging markets, which naturally have higher interest rates. But exiting from the trap creates a risk of chaos in long-term bond markets and is proving surprisingly difficult.
    Keywords: Currency wars, US, Japan, the Bretton Woods system, dollar standard, a zero-interest liquidity trap, ultra low interest rate
    JEL: F31 F32
    Date: 2013–10
  33. By: Lee , Hyun-Hoon (Kangwon National University); Park, Cyn-Young (Asian Development Bank)
    Abstract: High and volatile food prices pose a significant policy challenge around the world, and an understanding of the dynamics of food price inflation and volatility is essential in designing appropriate policy responses. Using the panel data for 72 countries from 2000 to 2011, the paper assesses the international transmission of food price inflation and volatilities as well as the effects of various internal and external factors on domestic food price inflation and volatility. The paper offers evidence in support of the international transmission of food price inflation and volatility. Specifically, the paper finds that the domestic food price inflation in Asia is strongly associated with the lagged value of global food price inflation (using the FAO food price index), while volatility spillovers from global to domestic food prices are rather contemporaneous. The paper also finds that both national food price inflation rates and volatilities are strongly associated with both intra- and extra- regional food price inflation rates and volatilities, respectively. The findings also suggest that higher economic growth rates, greater shares of food in merchandise imports, and smaller increases in the share of food in merchandise imports lead to lower domestic food price inflation. An appreciation of local currency, greater political stability, and higher income level are also found to lower domestic food price inflation. On the other hand, higher economic growth rates lead to lower volatilities of food prices.
    Keywords: Food price inflation; food price volatility; food price transmission; food security; food policy
    JEL: E31 F49 N50 N55 Q18
    Date: 2013–08–30
  34. By: Brooks, Douglas (Asian Development Bank); Ferrarini, Benno (Asian Development Bank); Go, Eugenia (Asian Development Bank)
    Abstract: We analyze the relationship between food security and trade, focusing on food importers’ exposure to sudden market failures from relying on a narrow range of international suppliers. We compute a bilateral import penetration index (BIPI), which gauges the degree to which a country depends on another for food imports. Food trade maps are drawn by the application of a force-directed algorithm that sorts through computed BIPIs and maps the nodes corresponding to the strength of bilateral ties between country pairs, thereby showing importers’ vulnerabilities to disruptions in bilateral channels. Results suggest that measures aimed at diversifying supply sources reduce vulnerability.
    Keywords: food security; trade; bilateral trade; agriculture; agriculture trade
    JEL: F13 Q17 Q18
    Date: 2013–08–29
  35. By: Shanto Iyengar
    Abstract: Support for welfare in the US is heavily influenced by citizens’ racial attitudes, especially citizens’ attitudes toward Blacks. Indeed, the fact that many Americans think of welfare recipients as poor Blacks (and especially poor Black women) is a common explanation for Americans’ comparatively low support for redistribution cross-nationally. In this study, we extend existing work on how racialized portrayals of recipients affect attitudes toward redistribution. The data for the analysis are drawn from a new and unique online survey experiment, implemented by YouGov with representative samples (n=1200) in each of the US, UK and Canada. Relying on a series of survey vignettes, we manipulate program type (welfare vs. unemployment insurance) as well as the ethno-racial background of recipients (through morphed photos and common ethnicized names). In doing so, we seek to make three specific contributions. First, we test whether support for a means-tested program like welfare is lower than support for contribution-based program like unemployment insurance. Second, we extend the American literature to explore whether there is an anti-Black bias in other countries. Third, we examine whether citizens respond to other minority groups (Asians and Southeast Asians) in a similar manner. Parallel survey designs allows for an unprecedented comparative analysis of the underlying political-psychological sources of support (or lack of support) for redistributive policies across Anglo-Saxon democracies. The paper concludes by considering the implications of this study in light of growing immigrant-driven diversity in North America and Europe.
    Keywords: public opinion
    Date: 2013–07–25
  36. By: Yi Lu (National University of Singapore); Zhigang Tao (The University of Hong Kong and Hong Kong Institute for Monetary Research); Yan Zhang (Shanghai University of Finance and Economics)
    Abstract: Using monthly transaction data covering all Chinese exporters over the 2000-2006 period, we investigate how Chinese exporters respond to U.S. antidumping investigations. We find that antidumping investigations cause a substantial decrease in the total export volume at the HS-6 digit product level, and that this trade-dampening effect is due to a significant decrease in the number of exporters, yet a modest decrease in the export volume per surviving exporter. We also find that the bulk of the decrease in the number of exporters is exerted by less productive exporters, by direct exporters as opposed to trade intermediaries, and by single-product direct exporters as opposed to their multi-product counterparts. Combined with the existing studies on the effects that antidumping investigations have on protected firms, our study helps piece together a complete picture of the effects of antidumping investigations.
    Keywords: Antidumping Investigations, Difference-In-Differences Estimation, Extensive and Intensive Margins, Trade Intermediaries, Single- Versus Multi-Product Exporters
    JEL: F13 D22 F14 L25
    Date: 2013–10

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