nep-sea New Economics Papers
on South East Asia
Issue of 2013‒12‒15
27 papers chosen by
Kavita Iyengar
Asian Development Bank

  1. What Are the Opportunities and Challenges for ASEAN? By Mitsuyo ANDO; Fukunari KIMURA
  2. Energy Market Integration and Energy Poverty in ASEAN By Navarro, Adoracion M.; Sambodo, Maxensius Tri; Todoc, Jessie L.
  3. Regional Comprehensive Economic Partnership: Reform Challenges and Key Tasks for the Philippines By Llanto, Gilberto M.; Ortiz, Ma. Kristina P.
  4. Changing Military Dynamics in East Asia: Australia’s Evolving Grand Strategy By SHEARER, Andrew
  5. Southeast Asian Approaches to Military Technology and Defense S&T By BITZINGER, Richard A.
  6. Trade in Value Added: An East Asian Perspective By Inomata, Satoshi
  7. Development and Restructuring of Regional Production/Distribution Networks in East Asia By Mitsuyo ANDO
  8. Explaining Varying Asian Responses to China: Strategic Evolution in the Cases of Japan, Korea, and Thailand By FEI, John
  9. FTA and Export Platform Foreign Direct Investment: Evidence from Japanese firm level data By ITO Tadashi
  10. The United States’ Grand Strategy in the Asia-Pacific Region By MAHNKEN, Thomas G.
  11. Standards Harmonisation in ASEAN: Progress, Challenges and Moving Beyond 2015 By Simon PEETMAN
  12. Toward Informed Regulatory Conversations and Improved Regulatory Regime in the Philippines: Logistics Sector and Trade Facilitation By Llanto, Gilberto M.; Navarro, Adoracion M.; Detros, Keith C.; Ortiz, Ma. Kristina P.
  13. Estimates of Fundamental Equilibrium Exchange Rates, November 2013 By William R. Cline
  14. Why Have Bank Interest Margins Been so High in Indonesia Since the 1997/1998 Financial Crisis? By Irwan Trinugroho; Agusman Agusman; Amine Tarazi
  15. Foreign Direct Investment, Human Capital and Economic Growth in Malaysia By Gulam Hassan, Mohamed Aslam; Abou Sakar, Sameer
  16. Stimulating Innovation in ASEAN Institutional Support, R&D Activity and Intellectual Property Rights By Rajah RASIAH
  17. Impact of 2011 Floods, and Flood Management in Thailand By Nipon POAPONSAKORN; Pitsom MEETHOM
  18. Who Disseminates Technology to Whom, How, and Why: Evidence from Buyer-Seller Business Networks By Tomohiro MACHIKITA; Yasushi UEKI
  19. Expanding Beyond Borders: The Yen and the Yuan By Subacchi, Paola
  20. Toward an inclusive and a little bit ethical world trading system : listening to the voices of the people in LDCs By Sato, Kan Hiroshi; Sato, Hiroshi
  21. After Five Years of Pantawid, What Next? By Orbeta, Aniceto Jr. C.; Paqueo, Vicente B.; Castaneda, Tarsicio; Spohr, Chris
  22. Buying or Leasing of Election Machines by COMELEC By Quimba, Francis Mark A.
  23. Medical Tourism in the Philippines: Market Profile, Benchmarking Exercise, and S.W.O.T. Analysis By Picazo, Oscar F.
  24. Incentives Matter: Reflections on the Role of Incentives in Scientific Productivity By Fabella, Raul V.
  25. Feasibility of Mortgage-Backed Securitization for the Underserved Housing Market in the Philippines By Ballesteros, Marife M.; Dulay, Daisy
  26. Political Connections, Bank Deposits, and Formal Deposit Insurance: Evidence from an Emerging Economy By Emmanuelle Nys; Amine Tarazi; Irwan Trinugroho
  27. The Relationship between Population Dynamics and Investments for Energy and Telecommunication Infrastructures in the Philippines By Busilac, Aileen Jean; Deluna, Roperto Jr

  1. By: Mitsuyo ANDO (Keio University); Fukunari KIMURA (Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: This paper attempts to investigate the features of development and restructuring patterns of regional production/distribution networks, mainly in machinery sectors, using finely disaggregated international trade data. More specifically, the paper first studies the developing patterns of machinery trade for the East Asian countries, then examines those patterns in terms of the extensive margin in order to investigate the extent and depth of the networks, and demonstrate how the networks and industrial shape are being restructured. The paper also presents some evidences on the expanding connectivity of production networks in East Asia from regional to global by shedding lights on the link between East Asia and Europe via CEE countries and concludes with policy implications on challenges in taking advantages of the mechanics of the 2nd unbundling for each ASEAN member state and ASEAN as a whole.
    Keywords: international production networks, machinery trade, East Asia, the extensive margin
    JEL: F14 F23 L23
    Date: 2013–11
  2. By: Navarro, Adoracion M.; Sambodo, Maxensius Tri; Todoc, Jessie L.
    Abstract: Based on available statistics, between 127 and 130 million people in Southeast Asia lack access to electricity. At least 228 million still rely on traditional biomass for cooking and lack access to clean and modern cooking facilities, with dire consequences for their quality of life and human development. Discussions for an integrated Association of Southeast Asian Nations (ASEAN) energy market cannot overlook this energy poverty situation in the region. In fact, the overall goal of ASEAN Energy Market Integration (AEMI) to achieve balanced and equitable economic growth and development for all countries in the region cannot be realized while people continue to suffer from energy poverty. This study maps the energy poverty situation in the region, and reviews the links between energy access and economic and human development. It also draws a connection between AEMI and the eradication of energy poverty, or attaining universal energy access, in terms of benefits and strategies, particularly with regard to mapping investment requirements and taking inventory of financing options. The study concludes with some recommendations for near-term actions.
    Keywords: ASEAN, energy market integration, energy poverty, electrification, universal access
    Date: 2013
  3. By: Llanto, Gilberto M.; Ortiz, Ma. Kristina P.
    Abstract: The ASEAN+6 countries are currently engaged in negotiation for a Regional Comprehensive Economic Partnership (RCEP). If successfully negotiated, RCEP will result into the world`s biggest trading bloc, 40 percent of world trade, that offers significant benefits to participating countries. The first round of negotiations was held in Brunei in May 2013. The second round was recently held in Brisbane, Australia in September 2013. Negotiations are expected to conclude in 2015. The focus of the RCEP negotiations will be on the following eight key areas: trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement, and other issues. The paper discusses some of the challenges facing the Philippines during the difficult period of negotiation and the necessary structural and institutional reforms that it has to take to ensure that it will benefit from RCEP. The paper calls the attention of policymakers to address critical constraints affecting the effective utilization of free trade agreements, growth, trade facilitation and customs administration, services liberalization, and investment incentives.
    Keywords: Philippines, rules of origin, customs administration, trade facilitation, services liberalization, Asian free trade agreements, Regional Comprehensive Economic Partnership, utilization rate of FTAs, investment incentive packages
    Date: 2013
  4. By: SHEARER, Andrew
    Abstract: Australia’s geographic isolation, small population, and European roots have led it to make allies of distant yet powerful nations like the United States and the United Kingdom. As power shifts in the Asia-Pacific, Australia’s grand strategy must shift as well to keep it balanced between Western interests and the rise of China and India as major powers.
    Keywords: Social and Behavioral Sciences, Australia, East Asia, security, major power politics, strategy
    Date: 2012–01–01
  5. By: BITZINGER, Richard A.
    Abstract: Key drivers of change in defense technology in Southeast Asia are regional insecurities and, more recently, the rise of China. Most countries in the region harbor some animosities toward each other that, while not manifesting themselves in a full-blown arms race, at least contribute to an “arms competition†within the community. This results in “tit-for-tat†arms acquisitions inconsistent with mere modernization. China’s recent actions in the South China Sea add to the regional insecurities that seem to rationalize the qualitative arms buildup for the countries involved. While the number of advanced systems remains small, these upgrades have the potential to make conflict much more devastating should it occur.
    Keywords: Social and Behavioral Sciences, Southeast Asia, defense, military technology, arms competition
    Date: 2012–01–01
  6. By: Inomata, Satoshi (Asian Development Bank Institute)
    Abstract: This paper aims to provide a non-technical explanation of the concept of trade in value added, with particular reference to East Asia. The trade in value added approach allows us to redefine the relationship between countries of origin and destination in international trade, and thereby addresses an important issue of measuring international trade in the face of growing production sharing among different countries. In contrast to the orthodox concept of trade balances based on foreign trade statistics, it focuses on the value added contents of a traded product, and considers each country’s contribution to the value added generation in a production process.
    Keywords: trade in value-added; input-output tables; factory asia; foreign trade statistics
    JEL: C67 F14 F15
    Date: 2013–12–11
  7. By: Mitsuyo ANDO (Keio University)
    Abstract: This paper attempts to investigate the features of development and restructuring patterns of production/distribution networks in East Asia, mainly in machinery sectors, using international trade data at the most disaggregated level, to discuss their resilient nature, and to provide policy implications for the regional production networks and the economic development in the region. Although the negative impacts of the Global Financial Crisis (GFC) in 2008 were initially transmitted through the networks, the production/distribution networks in East Asia rather revealed their resilient nature. Our empirical analysis demonstrates that intra-regional machinery trade has been enhanced and contributed as a source of quick recovery from the GFC, and that the restructuring of regional production/distribution networks has been accelerated with the GFC as a trigger. Our study on trade patterns in terms of extensive margins also demonstrates clearly how the extent and depth of regional production networks have been changing, particularly after the GFC. Based on our empirical investigation, we discuss challenges and policy implication for the further development of the production networks and economic development and integration in the region.
    Keywords: The extent and depth of regional production networks, East Asia, Extensive margins, Regional integration
    JEL: F14 F23
    Date: 2013–11
  8. By: FEI, John
    Abstract: Domestic strategic preferences among state elites to prioritize economic and technological facets of national security have played a significant role in shaping the foreign policies of many Asian nations. This paper considers the role that elite preferences for economic and technological strength—preferences which are embedded and institutionalized in domestic political structures—played in shaping the security and economic policy responses of Japan, Korea, and Thailand towards China between 1992 and 2008. In all three countries, prioritization of national security in economic terms led elites to perceive threats through economic and/or development lenses. Domestic strategic evolution caused preferences to change over time, leading elites to confront China’s rising military and economic power in different ways.
    Keywords: Social and Behavioral Sciences, strategic evolution, China, Korea, Japan, Thailand, national security
    Date: 2012–01–01
  9. By: ITO Tadashi
    Abstract: This paper examines the choice of foreign direct investment (FDI) among four types—traditional horizontal FDI, traditional vertical FDI, export-platform horizontal FDI, and export-platform vertical FDI—focusing in particular on the recent phenomena of the export-platform type FDI. The theoretical discussion shows a prediction of the effect of free trade agreements (FTAs) on the FDI type chosen. The empirical discussion provides descriptive statistics which point to the growing importance of export-platform type FDI. It then shows supportive evidence for the model's prediction, using Japan's firm-level FDI data. More specifically, it is shown that regional trade agreements (RTAs), such as the Association of Southeast Asian Nations (ASEAN) or the North America Free Trade Agreement (NAFTA), drives horizontal export-platform-type FDI, whereas bilateral FTAs (Japan's economic partnership agreement in the context of the data used in this paper) in some cases induce vertical export-platform type FDI. The findings suggest some policy implications for FDI recipient countries. First, the obvious positive effect of an RTA on horizontal export-platform type FDI is an encouraging finding for countries forming them in that it leads to a reduction in production costs and a concomitant rise in production/consumption. Even more importantly, the finding is a testament to a rarely mentioned benefit of smaller countries joining RTAs. Second, the positive effect of a bilateral FTA between Japan and Malaysia on the vertical export-platform type FDI is also reassuring in the same reason of cost reduction and production/consumption increase.
    Date: 2013–12
  10. By: MAHNKEN, Thomas G.
    Abstract: The United States has at least since World War II pursued a consistent set of aims in Asia. The United States faces a broad array of threats to its interests, including a protracted conflict with al-Qaeda and its affiliates, the threat posed by regional rogueswho will increasingly possess nuclear weapons, and the challenge posed by the rise of China. These threats will continue despite increasingly sharp limits on the resources the United States is willing to devote to defense. Because cutting back commitments is easier said than done, the United States is likely to face a growing gap between its aims and its ability to meet them.
    Keywords: Social and Behavioral Sciences, East Asia, military dynamics, strategy, security
    Date: 2012–01–01
  11. By: Simon PEETMAN (Europian Advisory Services (EAS), Asia Office, Singapore)
    Abstract: Addressing technical barriers to trade is a key priority of ASEAN as part of trade facilitation in achieving the Single Market and Production Base under the ASEAN Economic Community in 2015 and building an effective and competitive Economic Community beyond 2015. Standards and conformance assessment measures, while seeking to ensure quality and safety of products for consumers should not become technical barriers to trade across the region as ASEAN liberalises its trading regime. A delicate balance needs to be achieved between the two to build a thriving economic region. The region has been undertaking efforts towards standards harmonisation in the ASEAN priority sectors of integration and in bringing about regulatory convergence taking into account the diversities that exist in the ten Member States. More needs to be done in this area for the region to stay competitive and enhance intra-ASEAN trade as well as external trade. This paper looks at how the regional grouping is addressing technical barriers to trade as part of ASEAN's trade integration agenda and what it should do going beyond 2015.
    Keywords: ASEAN, economic integration, technical barriers to trade, standards, conformance, conformity assessment, harmonisation, free trade area, trade facilitation, regulation, mutual recognition agreement, industry association, ACCSQ, PFPWG, EU, European Commission
    JEL: F10 F13 F15
    Date: 2013–11
  12. By: Llanto, Gilberto M.; Navarro, Adoracion M.; Detros, Keith C.; Ortiz, Ma. Kristina P.
    Abstract: This study articulates the results of the research team`s conversations with regulators and desk review of policies in the sectors affecting logistics and trade facilitation in the Philippines. The study covers air transport, land transport, maritime transport, logistics services, and customs services. Successes in regulatory reforms as well as the remaining restrictions to better logistics and trade facilitation surfaced from the conversations with regulators and the analysis of existing rules and regulations. Many of the remaining restrictions need to be addressed through amendments to existing laws and even enactment of new laws. This is the case in the following restrictions: limit on foreign equity participation, moving international government cargoes only through flag carriers, cabotage restriction, and the port regulator acting as an operator. Other remaining restrictions can be addressed through investments, which is the case in capacity-constrained airports and congested Metro Manila roads, and through improvements in operations, which is the case in customs administration.
    Keywords: maritime transport, customs, regulation, trade facilitation, logistics, ASEAN Economic Community (AEC), air transport, land transport
    Date: 2013
  13. By: William R. Cline (Peterson Institute for International Economics)
    Abstract: Since the previous estimates of fundamental equilibrium exchange rates (FEERs) in May 2013, numerous exchange rates have moved substantially in response to the US Federal Reserve's announcement that it would likely begin to "taper" its quantitative easing. Despite widespread concern that this "taper shock" has wreaked havoc in international capital and currency markets, exchange rate misalignments have tended to narrow in the past six months. Overvalued currencies have corrected downward in Turkey, South Africa, India, Indonesia, and even Australia. Medium-term surplus estimates have moderated in Taiwan, Sweden, Switzerland, and Japan, narrowing the extent of their undervaluations. Cases of large misalignments persist, however, with Singapore once again undervalued by 21 percent, New Zealand again overvalued by nearly 18 percent, and Turkey still overvalued by 18 percent despite some correction. The overvaluation of the dollar and undervaluation of the Chinese renminbi remain modest and no longer constitute the severe imbalances of 2006–07.
    Date: 2013–12
  14. By: Irwan Trinugroho (LAPE - Laboratoire d'Analyse et de Prospective Economique - Université de Limoges : EA1088 - Institut Sciences de l'Homme et de la Société); Agusman Agusman (bank indonesia - bank indonesia); Amine Tarazi (LAPE - Laboratoire d'Analyse et de Prospective Economique - Université de Limoges : EA1088 - Institut Sciences de l'Homme et de la Société)
    Abstract: We investigate the determinants of net interest margins of Indonesian banks after the 1997/1998 financial crisis. Using data for 93 Indonesian banks over the 2001-2009 period, we estimate an econometric model using a pooled regression as well as static and dynamic panel regressions. Our results confirm that the structure of loan portfolios matters in the determination of interest margins. Operating costs, market power, risk aversion and liquidity risk have positive impacts on interest margins, while credit risk and cost to income ratio are negatively associated with margins. Our results also corroborate the loss leader hypothesis on cross-subsidization between traditional interest activities and non-interest activities. State- owned banks set higher interest margins than other banks, while margins are lower for large banks and for foreign banks.
    Date: 2012
  15. By: Gulam Hassan, Mohamed Aslam; Abou Sakar, Sameer
    Abstract: The international markets have been the major influence spurring economic growth and development in the Malaysian economy even until today. There were two sources of growth, namely foreign capital and exports of commodities. The government particularly beginning in 1971 moved to develop human capital stock by investing a large amount of public capital in the education sector. However, the growth of human capital did not become a significant catalyst for economic growth. Public and private expenditures for research and development (R&D) remained low compared to neighboring countries such as South Korea and Singapore. This paper examines the effects of Foreign Direct Investment (FDI) and Human Capital (HC) development on economic growth in Malaysia. This paper will also discuss the contribution of these two factors to Malaysia’s economic growth for the period of 1980 - 2010 from three angles: Gross Domestic Products (GDP) growth, GDP per capita growth and technological change.
    Keywords: Economic growth, Human Capital, Foreign Direct Investment, Education, Malaysia.
    JEL: O4 O47 O5 O53
    Date: 2013–11–23
  16. By: Rajah RASIAH (Faculty of Economics and Administration Building, University of Malaya)
    Abstract: Using a stylized framework of technological capability development through pursuing Keynesian-Kaleckian style demand management strategies, this paper discusses initiatives that poorer member governments should take to stimulate technological upgrading of firms at the bottom with a focus on innovation, as well as, discussed the governance framework of intellectual property rights (IPRs) in ASEAN. Typologies of taxonomies and trajectories were used to evolve a policy framework to coordinate the relationship between macroinstitutions, meso-organizations and micro-agents (firms) for ASEAN members upgrade to transform from developing nations to join Singapore as developed nations. Recognizing the varying capacities of ASEAN members, the paper recommends that a common platform of IPRs be developed with the more developed members assisting the LDC members to quicken the development of a technologically more egalitarian region.
    Keywords: Innovation, intellectual Property Rights, ASEAN, Institutions, R&D
    JEL: O31 O32 O38 O43
    Date: 2013–11
  17. By: Nipon POAPONSAKORN (Thailand Development Research Institute); Pitsom MEETHOM (Thailand Development Research Institute)
    Abstract: This paper first describes the causes of the major flooding in Thailand in 2011, which include natural events, unregulated land-use patterns and flood mismanagement. It discusses the government’s quick response in drafting a flood management master plan and allocating USD 11,290 million for assistance and compensation for flood victims, restoration of damaged property, and implementation of the master plan. The weakness of the master plan is also pointed out. The study goes on to develop the “difference-in-difference” method to estimate the impact of the flooding on household income and expenditure in 26 flooded provinces. It matches the addresses of flooded households taken from the 2011 Socio-economic Survey, which did not have questions regarding the impact of floods, with the flooded areas from satellite radar images. Quantile regressions are employed to quantify the differential impact of the flood on households with different income levels. The results show that the flooding reduced total household expenditures by 5.7% to 14%. These findings are consistent with the reported negative national GDP growth of 8.9 % in the fourth quarter of 2011 when Thailand was flooded. One interesting finding is that the 2011 floods had a significantly negative impact on the income and expenditure of middle and high income households, but that its impact on poor households was not statistically significant. The study also finds that the 2011 floods had a negative impact on the money and wage incomes of some middle income households living in the flooded areas. All estimated coefficients in the business income regression are not statistically significant. Comparing farmers’ income in the 2011 Socio-economic Survey with that in 2009, the study also finds that the 2011 flooding had a large negative impact on the farm profits of some middle income households in the flooded provinces. Finally, the study discusses some policy implications, particularly weaknesses in the current information system for flood management.
    Keywords: Flood, flood management master plan, impact on household income, expenditures and farm profit, quantile regression, radar satellite images.
    JEL: Q54 Q52 Q12 C21 O53
    Date: 2013–11
  18. By: Tomohiro MACHIKITA (Institute of Developing Economies and Stanford University); Yasushi UEKI (Institute of Developing Economies)
    Abstract: This paper investigates the relationship between firm-level upgrading and buyer-seller business networks in order to better understand how and to whom technology transfer occurs. Using firm’s self-reported buyer and supplier network data from business–to–business (B2B) markets in Southeast Asia, this paper finds the following results: (1) Firms are more likely to achieve product and process innovation if they invest in inhouse R&D and transfer technology from their production partners; (2) product and process innovation varies considerably across different types of buyers and suppliers; (3) negative impacts of local suppliers suggest the importance of input quality for product and process innovation; and (4) large differences in product and process innovations among firms with similar buyers and suppliers can be explained by differences in embodied technology transfer even within narrowly defined production partners’ ownership. Data from technology transfer in buyer-seller business networks provide the basis for detecting the key drivers of industrial upgrading in the context of B2B markets in emerging economies.
    Keywords: embodied technology transfer; linked manufacturer–supplier analysis.
    JEL: O12 O14 O32 L14 F14
    Date: 2013–11
  19. By: Subacchi, Paola (Asian Development Bank Institute)
    Abstract: As all eyes are on the strategy and policy measures of the People’s Republic of China (PRC) to push the international use of the yuan, this paper turns to the internationalization of the Japanese yen and compares it with what the PRC is doing. There are some fundamental differences in the regional context and in the pattern of regional integration, and these distinguish the PRC’s current strategy from the Japanese experience in the 1980s. The yen’s development as an international currency, and the comparison with the PRC’s strategy, highlight the importance of regional integration as a way to overcome network externalities and market inertia. Using an analytical framework that assesses both the range of different roles (the scope) and geographical scale (the domain) of a currency in the global market, the paper suggests that economic fundamentals alone, albeit essential, are not sufficient to warrant a fully fledged scope and global domain of the currency. The paper concludes by suggesting that in the next decade the PRC yuan will become Asia’s leading currency due to the PRC’s deep economic integration in the region, and that the Japanese yen’s function as an international asset and store of value can be further enhanced if Tokyo’s competitiveness as a leading international financial center is improved.
    Keywords: yuan; japanese yen; internationalization; network externalities; regional integration
    JEL: E42 E44 F33
    Date: 2013–12–05
  20. By: Sato, Kan Hiroshi; Sato, Hiroshi
    Abstract: Many specialists in international trade have started saying that the era of a mega FTA is approaching. If the three poles of the global economy, namely East Asia, EU and the United States, form mega FTAs, most of the volume of global trade will be covered. That may be fine, but there will be many countries left out of the mega FTA, most of which will be the least developed countries (LDCs). Since the inception of the Doha Development Agenda (DDA) negotiations in 2001, the WTO and its member countries have tried to include LDCs in the world trading system through various means, including DFQF and AfT. Although these means have some positive impact on the economic development of LDCs, most of the LDCs will never feel comfortable with the current world trading system. To overcome the stalemate in the DDA and to create an inclusive world trading system, we need more commitment from both LDCs and non-LDCs. To surmount the prolonged stalemate in the DDA, we should understand how ordinary people in LDCs feel and think about the current world trading system. Those voices have seldom been listened to, even by the decision makers of their own countries. So as to understand the situation of the people in LDCs, IDE-JETRO carried out several research projects using macro, meso and micro approaches. For the micro level, we collected and analyzed statements from ordinary people concerning their opinions about the world trading system. The interviewees are ordinary people such as street vendors, farmers and factory workers. We asked about where they buy and sell daily necessities, their perception of imported goods, export promotion and free trade at large, etc. These ‘voices of the people’ surveys were conducted in Madagascar and Cambodia during 2013. Based on this research, and especially the findings from the ‘voices of the people’ surveys, we propose a ‘DDA-MDGs hybrid’ strategy to conclude DDA negotiations and develop a more inclusive and a little bit more ethical world trading system. Our proposal may be summarized in the following three points. (1) Aid for Trade (AfT) ver. 2 Currently AfT is mainly focused on coordinating several aid projects related to LDCs’ capacity building. However, this is inadequate; for the proposed ‘DDA-MDGs hybrid’, a super AfT is needed. The WTO, other development agencies and LDC governments will not only coordinate but also plan together aid projects for trade capacity building. AfT ver. 2 includes infrastructure projects either gran aid, ODA loans and private investment. This is in accordance with the post-MDGs argument which emphasizes the role of the private sector. (2) Ethical Attitude Reciprocity is a principle of multilateral agreement, and it has been a core promise since GATT. However, for designing an inclusive system, special and differential treatment (S&D) is still needed for disadvantaged members. To compromise full reciprocity and less than full reciprocity, an ethical attitude on the part of every member is needed in which every member refrains from insisting on the full rights and demands of its own country. As used herein, the term ‘ethical’ implies more consideration for LDCs, and it is almost identical to S&D but with a more positive attitude from developed countries (super S&D). (3) Collect Voices of the People In order to grasp the real situation of the people, the voices of the people on free trade will continue to be collected in other LDCs, and the findings and leanings will be fed back to the WTO negotiation space.
    Keywords: Developing countries, International trade, Trade policy, WTO, Special and differential treatment, Development
    JEL: F13 K33 O19
    Date: 2013–12
  21. By: Orbeta, Aniceto Jr. C.; Paqueo, Vicente B.; Castaneda, Tarsicio; Spohr, Chris
    Abstract: When the Pantawid Pamilyang Pilipino Program was designed, the government publicly promised to limit to five years the giving of the education and health grants. This five-year limit is almost over for the first set of beneficiaries by 2013. The natural policy question then is: Would it be wise to keep the promise or would an extension be better? This paper presents five arguments and evidence why the extension of the program is better than keeping the promise to limit it to five years. The five arguments include: (a) the problems that the Pantawid had been designed to address continue to be high priority issues; (b) Pantawid remains credible as an effective and valuable instrument for poverty alleviation in the short run and for reducing the transmission of intergenerational poverty in the long run; (c) the extension could provide great opportunities to produce a much greater positive impact on the welfare of the poor; (d) the extension could buy much-needed time for developing and implementing an adequate and workable transition promotion strategy to help beneficiaries outgrow their need for CCT assistance and, therefore, facilitate its termination; and (e) secondary education enrollment and completion produces high returns in terms of increased earning and is achievable with a moderate amount of subsidy. The paper ends with cautionary notes including articulating that Pantawid remains a bridging program; the need for a careful study to ensure affordability and maximize its cost effectiveness; the need to continue to generate better estimates of key parameters such as income elasticities; and possible phasing for affordability and recognition of possible supply-side constraints.
    Keywords: poverty alleviation, Philippines, Pantawid Pamilyang Pilipino Program (4Ps), conditional cash transfer (CCT)
    Date: 2013
  22. By: Quimba, Francis Mark A.
    Abstract: This research paper looks into the automated election experiences of different countries and compares them with the Philippine case. It also attempts to provide an economic basis for the Philippines' choice between purchasing the precinct count optical scan (PCOS) machines or leasing them from the service provider, SMARTMATIC-TIM. The review of the experience of US states and other countries in conducting their own automated elections showed that each system has its set of advantages and criticisms. Analyzing the experience of the Philippines and comparing it with that of some US states and of other countries, this paper finds that the Commission on Elections used the best available technology (in terms of usability and cost) for the 2010 elections relative to the DRE, Levers or Punch Cards used in other countries. It also finds that compared to other automated election attempts, the cost per voter during the 2010 National Elections is higher than that of the 2004 National Elections or the 1996-1998 ARMM pilot test, but it is still below the cost in the 2008 ARMM elections that was estimated at PHP 86.69 per voter. In terms of cost per machine, the 2010 National Elections registered the lowest per unit cost for the PCOS at about PHP 60,000 per machine relative to other attempts in the country to conduct automated elections. The use of paper-based technology increased the usability of the technology. Analysis of different types of technology has also shown that paper ballots have good usability. Between buying the PCOS machines or leasing them, the paper finds that the latter is a more viable option for the Philippines because of the fast turnover of technology resulting to a high possibility of obsolescence. Leasing the machines passes the burden of obsolescence to the leasing company and reduces the risk of having to own electoral machines that do not work as anticipated or expected. Calculations using data from the 2010 elections show that leasing voting technology for four lease payments or less makes leasing more economical than outright purchase of the equipment.
    Keywords: Philippines, automated elections
    Date: 2013
  23. By: Picazo, Oscar F.
    Abstract: This report reviews the medical tourism industry in the Philippines. It discusses the global market for medical tourism, analyzes the demand and supply aspects of the local industry, and identifies its drivers of growth. It performs an industry benchmarking exercise by looking at benchmarks associated with strategy setting, organization and management, service quality, care, travel and accommodation, and financing. It also conducts an analysis of the strengths, weaknesses, opportunities, and threats of the industry.
    Keywords: Philippines, medical tourism, industry benchmarks, market profile, demand for medical tourists, supply of services and facilities for medical tourism
    Date: 2013
  24. By: Fabella, Raul V.
    Abstract: Depicting the Philippines as a prescientific society, this paper discusses how the environment plays a significant role in shaping the culture of research and scientific productivity. Such conducive environment includes having an adequate think space, a supportive and engaging critical mass, and most importantly, an efficient incentives system. The paper cites several examples of research institutions in the Philippines which highlighted the importance of collaborative efforts, research networks, strong leadership, and generous rewards in attaining success in their endeavor. It also mentions detriments to productivity such as implicit publication costs, the politics of fairness of equality, and the bias for quantity over quality.
    Keywords: Philippines, research culture, research incentives, research institutions
    Date: 2013
  25. By: Ballesteros, Marife M.; Dulay, Daisy
    Abstract: This paper draws lessons from international practices to determine the feasibility of developing mortgage-backed securitization (MBS) to expand housing finance to the underserved market in the country. Despite the risks of securitization, as evidenced by the recent US subprime crisis, the huge beneficial effects of opening up the capital market to individual investors and to borrowers that were previously out of reach is well-acknowledged in literature. Several countries developed MBS to facilitate and promote housing finance. The international best practices show that efficient securitization can be established based on: (1) clear regulatory framework; (2) prudent underwriting and valuation process; (3) reliable credit rating companies to mitigate moral hazards and adverse selection risks; and (4) the need for originators to have adequate capital so that warranties and representations can be taken seriously. In particular, the US subprime crisis highlights a major lesson that needs to be avoided, that is, the use of securitization as a tool for balance sheet arbitrage instead of funding and investments in the real economy. In the country, the National Home Mortgage Corporation (NHMFC) was established with the same intent as the US Fannie Mae and Freddie Mac. However, after three decades of existence, it was only in 2007 that NHMFC laid the building blocks to operate as a secondary mortgage institution (SMI). The corporation`s initial securitization issuances were successful and twice oversubscribed. However, to enable NHMFC to efficiently function as an SMI, government needs to undertake the following: (1) strengthen the housing finance industry and rationalize the role of HGC, HDMF, and NHMFC; (2) support NHMFC to improve its balance sheet and strengthen its organizational capabilities; (3) develop standardized housing loan documents and quality underwriting through mortgage insurance; (4) integrate/create credit information data base for all housing loan borrowers; (5) provide incentives to securitization through tax exemptions, reactivation of NHMFC limited sovereign guarantee, recognition of MBS bonds and NHMFC issuances as compliance to statutory liquidity requirements of financial institutions, etc; and (6) automation of MBS servicing and reporting.
    Keywords: housing finance, Philippines, mortgage-backed securitization
    Date: 2013
  26. By: Emmanuelle Nys (LAPE - Laboratoire d'Analyse et de Prospective Economique - Université de Limoges : EA1088 - Institut Sciences de l'Homme et de la Société); Amine Tarazi (LAPE - Laboratoire d'Analyse et de Prospective Economique - Université de Limoges : EA1088 - Institut Sciences de l'Homme et de la Société); Irwan Trinugroho (LAPE - Laboratoire d'Analyse et de Prospective Economique - Université de Limoges : EA1088 - Institut Sciences de l'Homme et de la Société)
    Abstract: This paper investigates the impact of banks' political connections on their ability to collect deposits under two different deposit insurance regimes (blanket guarantee and limited guarantee). We estimate a simultaneous equations model of supply and demand for funds using quarterly data for Indonesian banks from 2002 to 2008. We find that, regardless of their type (state-owned or private entities), politically connected banks are able to attract deposits more easily than their non-connected counterparts. We also show that this effect is more pronounced after the implementation of formal deposit insurance with limited coverage. Our findings have various policy implications. Formal deposit insurance might have improved market discipline, as highlighted by earlier studies, but it has also exacerbated the issue of political connections in the banking sector.
    Date: 2013
  27. By: Busilac, Aileen Jean; Deluna, Roperto Jr
    Abstract: The study examined the relationship between population dynamics and investments for energy and telecommunication infrastructures in the Philippines from 1990-2011. Ordinary Least Squares (OLS) and Two-Stage Least Squares (2SLS-IV) were explored to estimates the coefficients of the models. However, Hausman Specification test rejected the hypothesis of simultaneity problem in the models. Therefore, results of the OLS estimation is preferred than the results of 2SLS-IV. Results revealed that investment for energy and telecommunication is negatively affected by total population but positively affected by the level of population below 15 years old and above 65 years old. Urban agglomeration has significantly increased investments for telecommunication. In general, level of population and its dynamics significantly affects the aggregate infrastructure investments.
    Keywords: Population Dynamics, 2SLS-IV, Investment
    JEL: C36 H54 J11
    Date: 2013–04–01

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