nep-sea New Economics Papers
on South East Asia
Issue of 2014‒02‒15
twelve papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Reducing disparity through a regions-focused development: A modeling approach of assessing the Indonesian MP3EI By Arief Anshory Yusuf; Mark Horridge; Edimon Ginting; Priasto Aji
  2. Governance and Development Outcomes in Asia By Sen, Kunal
  3. Information Technology and Competitiveness: Evidence from Micro, Small and Medium Enterprise Survey in Cimahi District, Indonesia By Maman Setiawan; Rina Indiastuti; Peggie Destevanie
  4. The Effect of Drought on Health Outcomes and Health Expenditures in Rural Vietnam By Tobias Lechtenfeld; Steffen Lohmann
  5. Philippine Export Efficiency and Potential: An Application of Stochastic Frontier Gravity Model By Deluna, Roperto Jr; Cruz, Edgardo
  6. Regional Settlement Infrastructure and Currency Internationalization: The Case of Asia and the Renminbi By Rhee, Changyong; Sumulong, Lea
  7. Economic Growth and Health Indicator in Thailand By durongkaveroj, wannaphong
  8. Real Conditions and Themes of Gender Diversity in Management in Japan, China, and South Korea: 605 results from the "Corporate Survey of Human Resource Utilization (China and Korea)" (Japanese) By ISHIZUKA Hiromi
  9. دور أدوات الحوكمة في تنظيم الرقابة الشرعية و تطويرها By Elasrag, Hussein
  10. Emerging Economies' Supply Shocks and Japan's Price Deflation: International Transmissions in a Three-Country DSGE Model By Hirakata, Naohisa; Iwasaki, Yuto; Kawai, Masahiro
  11. Determinants of the Trilemma Policy Combination By Ito, Hiro; Kawai, Masahiro
  12. High fluoride and low pH level have been detected in popular flavoured beverages in Malaysia By Rahim, Zubaidah HA; Bakri, Marina M; Zakir, HM; Ahmed, IA; Zulkifli, NA

  1. By: Arief Anshory Yusuf (Department of Economics, Padjadjaran University); Mark Horridge (Monash University); Edimon Ginting (Asian Development Bank); Priasto Aji (Asian Development Bank)
    Abstract: For the last 10 years, Indonesian economy suffers from a triple setback. First, it experiences a slowing-down in economic growth. Second, the rate of poverty reduction is also slowed down, and third, there has been no improvement in the inter-regional economic disparity. In 2011, Indonesian government set a new strategy by launching a master plan for the acceleration and expansion of economic development (MP3EI) in response to these challenges. The strategy divides Indonesia into 6 economic corridors with two aims: (1) to accelerate investment in each corridor focusing on sectors with high comparative advantage; (2) to accelerate infrastructure investment in each corridor. Using a multi-sectors and multi-regions computable general equilibrium model of the Indonesian economy, this paper evaluates the extent to which these strategies can reduce Indonesia's inter-regional disparity. The result of the analysis suggests that the direction of the MP3EI strategy is in line with its mission to reduce regional disparity as it can accelerate the growth of regions outside Java and Sumatera, particularly eastern regions (Maluku and Papua). However, it can be made more progressive by broadening the sectoral base of the investment target. The current strategy relies on sectors with high comparative advantage particularly capital-intensive resource-based sectors. A broad-based sectoral approach can generate more employment particularly in the least-developed regions and ensuring more progressive acceleration in the poverty reduction.
    Keywords: Regional development, MP3EI, Indonesia, Computable General Equilibrium
    JEL: R10 R11 R13
    Date: 2014–02
  2. By: Sen, Kunal (University of Manchester)
    Abstract: The relationship between governance and economic development is one of the most important areas of research in international development. Much of the previous literature has focused on whether better governance leads to higher levels of income. In this paper, we examine the relationship between governance and broader development outcomes, with a specific focus on developing Asia. In our empirical analysis, we use disaggregated measures of governance to capture different dimensions of governance, and to allow for the possibility that different dimensions of governance such as administrative capacity, legal infrastructure, and state accountability can affect development indicators differentially. We find a clear role for governance in affecting most development outcomes except levels of schooling. This is particularly evident for state administrative capacity and legal infrastructure, and less evident for state accountability. However, we find that the benign relationship between governance and development is weaker for Asian countries for several of the development indicators. We also find that the key mechanism by which governance affects development is by increasing the mobilization of domestic resources and by increasing the effectiveness with which these resources are spent on social sectors. Along with the fact that governance quality is lower in Asia than other regions of the world (except sub-Saharan Africa), this suggests that improvements in governance along with the strengthening of the mechanisms by which governance affects social development can deliver clear gains in development outcomes in developing Asia.
    Keywords: governance; development outcomes; Asia
    JEL: I30 O11 O53
    Date: 2013–10–29
  3. By: Maman Setiawan (Faculty of Economics and Business, University of Padjadjaran); Rina Indiastuti (Faculty of Economics and Business, University of Padjadjaran); Peggie Destevanie (Faculty of Economics and Business, University of Padjadjaran)
    Abstract: This paper investigates the role of information technology in its contribution toward the competitiveness of micro, small and medium enterprises. The data used in the analysis is based on a survey of micro, small and medium enterprises in Cimahi District, West Java Province, Indonesia. Variables to measure the degree of adoption of information technology, competitiveness, and other control latent variables are constructed by Factor Analysis using various relevant indicators. Path Analysis is also undertaken to investigate the effect of the adoption of information technology on competitiveness. It found that there is a lack of use of information technologies among the micro, small and medium enterprises surveyed. The information technologies are used for some purposes such as administration, marketing, production, and other activities related to the business. We also found the adoption of information technology has a positive contribution to competitiveness.
    Keywords: competitiveness; micro, small and medium enterprises; information technology; path analysis; factor analysis
    JEL: O0
    Date: 2014–02
  4. By: Tobias Lechtenfeld (The World Bank Group); Steffen Lohmann (Georg-August-University Göttingen)
    Abstract: This paper studies the impact of droughts on health outcomes and health expenditures in rural Vietnam. Given the increasing frequency of extreme weather events in Vietnam and many developing countries, it is crucial for policy makers to be aware of the economic impact of such shocks at the micro level. Using local rainfall data, the analysis directly links the incidence of drought to health shocks and health-related expenditures from a multiple-wave panel of rural Vietnamese households. Overall, the results suggest that individuals affected by drought display a deterioration of health conditions and have significantly higher health expenditures. The effect is found to prevail among households with a high degree of agricultural dependency and limited access to coping mechanisms such as selling assets or tapping off-farm income sources. The preferred estimates using an IV strategy reveal that drought-related health shocks can cause non-negligible additional financial burden for many households vulnerable to poverty in rural Vietnam. This paper quantifies the immediate impact of drought on health conditions and contributes to the existing literature which has mostly focused on the long-term consequences.
    Keywords: climate shocks; drought; health; Vietnam
    JEL: I15 O15 Q54
    Date: 2014–02–06
  5. By: Deluna, Roperto Jr; Cruz, Edgardo
    Abstract: This study was conducted to investigate the issue of what Philippine merchandise trade flows would be if countries operated at the frontier using gravity model. The study sought to estimate the coefficients of the gravity equation. The estimated coefficients were used to estimate merchandise export potentials and technical efficiency of each country in the sample and these were also aggregated to measure impact of country groups. Result of the estimated coefficients of the gravity equation shows that merchandise export flows of the Philippines to trading partners is significantly positively affected by income and market size of the importing partner. The income elasticity of merchandise exports is 0.69%. A 1% increase in market size increases export flow by 0.24%. Distance was estimated to reduce export flow by 1.22% in every 1% increase in distance. The technical efficiency for all sample countries is not so high; it ranged from 38 to 42% with standard deviation of 30. The most efficient countries in the sample which recorded more than 80% efficiency were Singapore (100%), New Zealand (97%), HongKong (97%), USA (96%), Australia (96%), Canada (96%), UK (93%), Denmark (93%), Japan (87%), Malaysia (85%) and S. Korea (81%). Countries with larger markets emerge as high export potentials such as USA, China and Japan with potential ranging from 10 to 30 Trillion US dollars. These potential has been changing within the period. Result of technical inefficiency model reveals that these potential is increased by membership of the Philippines to ASEAN, APEC and WTO. Reduction of corruption and freer labor market in the importing country enhances export potential of Philippine merchandise exports. Commonality of language also enhances these potential.
    Keywords: Merchandise exports, Gravity, Stochastic frontier, Philippine export potential
    JEL: C1 C13 F00 F1 F13 F14 F15
    Date: 2014–02
  6. By: Rhee, Changyong (Asian Development Bank Institute); Sumulong, Lea (Asian Development Bank Institute)
    Abstract: The squeeze in United States dollar liquidity that emerged with the global financial crisis highlighted the risks inherent in the current global financial system. Asia was adversely affected by the crisis not only because of its dependence on trade, but also because of its heavy reliance on the US dollar for regional and international transactions. As Asia’s role in the global economy continues to expand, its dependence on the US dollar is bound to increase, raising further its vulnerability to future liquidity shocks. The use of regional currencies for bilateral trade settlement could reduce such vulnerability. As demonstrated by the renminbi trade settlement scheme piloted between the People’s Republic of China; Hong Kong, China; and Macao, China, the existence of appropriate financial infrastructure could reduce the relatively larger costs of bilateral currency transactions compared with triangular transactions through the United States dollar. As most central banks are securities depositories of government bonds, combining trade settlement with government bond securities settlement could also have large synergy effects without substantial extra costs. This proposal does not require full liberalization of the capital account or full deregulation of capital markets, and is more politically feasible in transition. As such, extending the trade settlement scheme to the rest of Asia and appending a government bond payment and securities settlement system could be a practical solution to international monetary system reform and the diversification of settlement currencies.
    Keywords: global financial crisis; international monetary system; renminbi internationalization; renminbi trade settlement; government bond payment and settlement
    JEL: F33 F34 F42
    Date: 2014–02–05
  7. By: durongkaveroj, wannaphong
    Abstract: This study aimed at estimating the relationship between economic growth measured by per capita Gross National Income (GNI) and health indicators including life expectancy and mortality rate under 5 in Thailand between 1980 - 2011 using Cochrane - Orcutt Model.The results from revealed that only mortality rate under 5 has a strong relationship with an economic growth. Thus, the reform in medical and sanitation system in Thailand will be able to stimulate the economic prosperity and lead to development further.
    Keywords: health indicator, economic growth, cochrane orcutt model
    JEL: I15 I18 O1
    Date: 2014–02–06
  8. By: ISHIZUKA Hiromi
    Abstract: Japan, China, and South Korea, as neighboring countries in northeast Asia, have a Confucian-rooted orientation toward the separation of labor among women and men, and they share the perception of having gender disparities in the workplace. Hereafter, their various roles in serving the world economy will increase, as will corporate expansion and employee movements. The purpose of this paper is to use the company survey data of the three countries to compare the real conditions of gender diversity in management, and to aid the causes of female-male human resource utilization and economic revitalization. The main results are as follows. 1) The female labor participation rate in Japan is not low, but large fluctuations in working conditions are a problem. Promotions to the position of chief of a subsection in one's late 30s are considered as a "late promotion," but many women resign before that point. 2) In the companies located in China's urban areas, the ratio of women among the employee, management, and administration layers are higher than that of Japan or Korea. The system has almost no special provisions protective of women, work hours are not excessive, and continuous employment are common. However, a mandatory retirement policy that treats men and women differently and the one-child policy have created a unique backdrop. 3) The female labor participation rate in Korea is low, and work interruptions and resignations among women are more common in Korea than in Japan. On the other hand, women are promoted earlier in their careers. After the introduction of the Affirmative Action system, the rate of female employment increased.
    Date: 2014–02
  9. By: Elasrag, Hussein
    Abstract: At present in line with shariah principles several Islamic financial institutions are engaged in product development activities globally to cater the needs of a wide range of parties. However, considering the essentiality for these institutions to innovate and operate within the ambits of shariah, need of the shariah supervision cannot be over stated. This research is focused on the topic of Governance Shariah supervisory system. Among the main issues surround corporate governance in Islamic financial institutions is the role of the Sharia Supervisory). The main role of the Shariah supervisory system is to ensure the compliance of Sharia law along the entire business process. The Shariah supervisory system therefore plays a vital harmonizing role in Islamic banking, particularly with its function as the Sharia-compliance gatekeeper. The paper attempts to discuss these functions in detail and tries to shed a little light on established laws in Malaysia regarding regulations of the Shariah supervisory system and operations of Islamic financial institutions.
    Keywords: Corporate governance, Sharia Governance, Sharia Supervisory, Islamic banking, Islamic finance
    JEL: E5 E58 G0 G02 G18 G3 G30
    Date: 2014–02
  10. By: Hirakata, Naohisa (Asian Development Bank Institute); Iwasaki, Yuto (Asian Development Bank Institute); Kawai, Masahiro (Asian Development Bank Institute)
    Abstract: This paper examines the international transmission effects that a positive supply shock in emerging economies may have on inflation in developed economies. A three-country dynamic stochastic general equilibrium (DSGE) model is constructed to analyze the impact of a supply shock in an emerging economy, the People's Republic of China (PRC), on inflation rates in two developed economies, Japan and the United States (US). The assumed asymmetric trade structures among the three countries and the PRC's choice of exchange rate regime appear to influence the international transmission of a supply shock in the PRC. Specifically, Japan is under a greater deflationary pressure than the US because of its vertical trade specialization vis-à-vis the PRC and the PRC's US-dollar-pegged regime. This outcome suggests that, even though Japan and the US may face common positive supply shocks from emerging economies, the deflationary impact of the shock is greater for Japan.
    Keywords: supply shocks; emerging economies; trade structure; exchange rate regimes; three-country DSGE model
    JEL: F32 F41 F44 F47
    Date: 2014–02–07
  11. By: Ito, Hiro (Asian Development Bank Institute); Kawai, Masahiro (Asian Development Bank Institute)
    Abstract: This paper presents a theoretical framework for policy making based on the “impossible trinity” or the “trilemma” hypothesis. A simple optimization model shows that placing more weight in terms of preference for each of the three open macroeconomic policies—exchange rate stability, financial market openness, and monetary policy independence—contributes to a higher level of achievement in that particular policy. The paper goes on to develop the first empirical framework in the literature to investigate the joint determination of the triad open macroeconomic policies based on the trilemma hypothesis. Results from applying the seemingly unrelated regression estimation method and employing other robustness checks show that simple economic and structural fundamentals determine the trilemma policy combinations. Finally, the paper examines how deviations from the “optimal” trilemma policy combinations evolve around the time of a financial crisis.
    Keywords: trilemma hypothesis; macroeconomic policy; exchange rate stability; financial market openness; monetary policy independence; financial crisis; policy combination
    JEL: F15 F21 F31 F36 F41 O24
    Date: 2014–01–30
  12. By: Rahim, Zubaidah HA; Bakri, Marina M; Zakir, HM; Ahmed, IA; Zulkifli, NA
    Abstract: Objective: In children, excessive ingestion of fluoride from different sources including bottled drinking water and flavoured beverages or soft drinks can lead to the development of dental fluorosis. In addition, the pH level of beverages is important. Low pH can cause dental erosion. In this study we explore the fluoride content and pH level of certain popular beverages available in Malaysian supermarkets and hawkers’ stalls. Methods: Bottled drinking water and selected popular flavoured packet drinks were purchased from a supermarket and the corresponding flavoured hawkers’ drinks, from a hawker’s stall in Kuala Lumpur. Fluoride and pH of the beverages were determined using digital fluoride meter and digital pH meter respectively. Results: It was found that fluoride content and pH level vary among the beverages. The mean fluoride content in both packet and hawkers’ drinks (7.64±1.88 mg/L, 7.51±1.60 mg/L, respectively) was approximately 7 times higher than the bottled drinking water (1.05±0.35 mg/L). Among the beverages, the tea packet drink was found to contain the highest amount of fluoride (13.02±0.23 mg/L). The mean pH of bottled-drinking water was near neutral (6.96±0.17), but acidic for both supermarket (4.78.00±0.49) and hawkers’ drinks (5.73±0.24). The lychee packet drink had the lowest pH level (2.97±0.03). Conclusions: Due to the wide variation of the fluoride content and pH level of the drinks tested in this study, it is recommended that steps should be taken to control the fluoride concentration and pH level in beverages if dental fluorosis and erosion are to be prevented.
    Keywords: Beverages, Dental Erosion, Dental Fluorosis, Fluoride, pH
    JEL: I00 I1
    Date: 2014

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