nep-sea New Economics Papers
on South East Asia
Issue of 2014‒03‒01
nineteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Market structure, financial intermediation and riskiness of banks:Evidence from Asia Pacific By Wahyoe Soedarmono; Amine Tarazi
  2. Firm-level impacts of natural disasters on production networks : evidence from a flood in Thailand By Hayakawa, Kazunobu; Matsuura, Toshiyuki; Okubo, Fumihiro
  3. Development Impacts of Seasonal and Temporary Migration: A Review of Evidence from the Pacific and Southeast Asia By John Gibson; David McKenzie; Halahingano Rohorua
  4. The Role of China in Asia's Evolution to Global Economic Prominence By Dilip K Das
  5. Assessment of FDI impact on Thailand's production sectors : implications for investment promotion activities By Pisit, Puapan
  6. Growth in Densely Populated Asia: Implications for Primary Product Exporters By Kym Anderson; Anna Strutt
  7. Food Security in Asia and the Pacific: The Rapidly Changing Role of Rice By Peter Timmer
  8. Technical Efficiency of Takaful Industry- A Comparative Study of Malaysia and GCC Countries By Hela Miniaoui; Anissa Chaibi
  9. Biodiversity Conservation in Asia By Dale Squires
  10. Reconstructing the Savings Glut: The Global Implications of Asian Excess Saving By Vipin Arora; Rod Tyers; Ying Zhang
  11. Reflections on Energy Security in the Asia Pacific By Ian Cronshaw; Quentin Grafton
  12. Electoral accountability and local government spending in Indonesia By Skoufias, Emmanuel; Narayan, Ambar; Dasgupta, Basab; Kaiser, Kai
  13. The Role of Mineral Fertilizers in Transforming Philippine Agriculture By Briones, Roehlano M.
  14. Health Policy in Asia and the Pacific: Navigating Local Needs and Global Challenges By Kelley Lee
  15. Coalition Politics and Reform Dynamics in Thailand By Veerayooth Kanchoochat
  16. Economic Growth Elasticity of Structural Changes: Case of Thailand By durongkaveroj, wannaphong
  17. Disclosure, ownership structure and bank risk: Evidence from Asia By Bowo Setiyono; Amine Tarazi
  18. Adjustment of the Vietnamese Labour Market in Time of Economic fluctuations and Structural Changes By Xavier Oudin; Laure Pasquier-Doumer; Thai Pham Minh; Laure Pasquier-Doumer; Dat Vu Hoang
  19. Pro-Girl Bias in Intrahousehold Allocation in the Rural Philippines: Revisiting the ‘adult goods’ approach By Fuwa, Nobuhiko

  1. By: Wahyoe Soedarmono (Universitas Siswa Bangsa Internasional, Faculty of Business / Sampoerna School of Business - un); Amine Tarazi (LAPE - Laboratoire d'Analyse et de Prospective Economique - Université de Limoges : EA1088 - Institut Sciences de l'Homme et de la Société)
    Abstract: From a sample of commercial banks in Asia Pacific over the 1994-2009 period, this study highlights that banks in less competitive markets exhibit lower loan growth and higher instability. Such instability is further followed by a decline in deposit growth, suggesting that Asian banks are also subject to indirect market discipline mechanisms through bank market structure. This study therefore sheds light on the importance of enhancing bank competition to overcome bank risk and strengthen financial intermediation. This study also advocates greater reliance on market discipline to promote bank stability.
    Keywords: Bank competition; loan growth; risk; market discipline; Asia Pacific
    Date: 2014
  2. By: Hayakawa, Kazunobu; Matsuura, Toshiyuki; Okubo, Fumihiro
    Abstract: In this paper, we explore the firm-level impacts of flooding in Thailand in 2011, specifically those on the procurement patterns at Japanese affiliates in Thailand. Our findings are as follow. First, the damaged small firms are more likely to lower their local procurement share, particularly the share of procurement from other Japanese-owned firms in Thailand. Second, damaged young firms and damaged old firms are more likely to raise the shares of imports from Japan and China, respectively. Third, there are no impacts on imports from ASEAN and other countries. These findings are useful for uncovering how multinational firms adjust their production networks before and after natural disasters.
    Keywords: Thailand, Japan, Foreign affiliated firm, International business enterprises, Industrial management, Risk management, Flood damage, Disasters, Natural disasters, Flooding, Production networks
    JEL: F23 D22
    Date: 2014–02
  3. By: John Gibson; David McKenzie; Halahingano Rohorua
    Abstract: Seasonal and temporary migration programs are widely used around the world, yet there is scant evidence as to their development impacts. Absent such evidence, it is difficult to evaluate whether the proliferation of temporary worker programs in recent years is a useful development. This article reviews studies that attempt to measure impacts of seasonal and temporary migration with a particular focus on evidence from the Pacific and Southeast Asia.
    Keywords: cultural migration; development impacts, evaluation, seasonal migration, temporary migration
  4. By: Dilip K Das
    Abstract: The objective of this article is to show how China's rapid growth was instrumental in integrating Asian economies with each other and mutually supporting rise of a dynamic Asia. It demonstrates the thorough structural transformations that the Chinese and Asian economies underwent over the last three decades. In a short span of three decades Chinese economy made a sizeable regional and global niche for itself. China's vertiginous growth became instrumental in integrating the real economies in the region. China and the neighbouring Asian economies influenced and shaped each other's economic evolution. Trade, foreign direct investment (FDI) and vertically integrated production networks were the principal channels of market-led integration. China's rise as a regional economic power, before becoming a global one, was a substantially significant economic event. A defining moment in China's economic relationship with its Asian neighbours was the outbreak of the regional financial crisis in 1997–98. Similarly when the global financial crisis (2007–09) struck, China's macroeconomic fundamentals were strong, and it helped propel regional growth. In several other important ways, China sways not only the regional economies but also the global economy.
    Keywords: China’s emergence; FDI; Integration; regional role; strategy; trade
  5. By: Pisit, Puapan
    Abstract: This paper examines the overall and sectoral economic impact of foreign direct investment (FDI) on the Thai economy using the economic data from 2005-2013. In assessing the overall economic impact, it is found that FDI has contributed positively to Thailand's economic growth. However, when analyzing the sectoral details, the empirical results indicate that FDI has a varying impact on the productive sectors in Thailand. Out of the 9 sub-sectors covered by this study, 5 sub-sectors (manufacturing, construction, financial, wholesale, retail trade, and agriculture) show strong statistically-significant positive effects of FDI on the relevant sector's value-added output. Based on these findings, it is suggested that policy-makers, including the Board of Investment, should aim to promote FDI with special consideration of the sectoral impact that would enable Thailand's FDI promotion policies to be more productive and beneficial for the Thai economy.
    Keywords: Thailand, Foreign investments, Foreign Direct Investment (FDI), Investment Promotion
    JEL: F21 F23
    Date: 2014–02
  6. By: Kym Anderson; Anna Strutt
    Abstract: Economic growth and integration in Asia is rapidly increasing the global economic importance of the region. To the extent that this growth continues and is strongest in natural resource-poor Asian economies, it will add to global demand for imports of primary products, to the benefit of (especially nearby) resource-abundant countries. How will global production, consumption and trade patterns change by 2030 in the course of such economic developments and structural changes? We address this question using the GTAP model and Version 8.1 of the 2007 GTAP database, together with supplementary data from a range of sources, to support projections of the global economy from 2007 to 2030 under various scenarios. Factor endowments and real gross domestic product are assumed to grow at exogenous rates, and trade-related policies are kept unchanged to generate a core baseline, which is compared with an alternative slower growth scenario. We also consider the impact of several policy changes aimed at increasing China's agricultural self-sufficiency relative to the 2030 baseline. Policy implications for countries of the Asia-Pacific region are drawn out in the final section.
    Keywords: Asian economic growth; global economic-wide model projections; booming sector economics; food security; bilateral trade
  7. By: Peter Timmer
    Abstract: Food security in Asia and the Pacific presents a frustrating paradox. At one level, huge progress has been made in the past half century in bringing most of the population out of poverty and hunger. Measured by the key determinants of food security—improved availability, access, utilisation and stability—food security has never been at higher levels. Large pockets of food-insecure populations remain in the region, especially in South Asia, and continued efforts to reach these households are necessary. At the same time, food security strategies in Asia are mostly in disarray. Most countries are protecting their rice farmers and providing high price supports, but high rice prices hurt the vast majority of the poor. Continued efforts to stabilise rice prices are understandable politically and desirable economically, but much more open trade regimes for rice will help food security throughout the region.
    Keywords: food security; role of rice; Asia and the Pacific; price stablisation; behavioural political economy
  8. By: Hela Miniaoui; Anissa Chaibi
    Abstract: The present study empirically investigates the technical efficiency of takaful industry operations in Malaysia and the Gulf Cooperation Council (GCC) countries. Data Envelopment Analysis (DEA) was employed to estimate the technical efficiency of using Constant Returns to Scale (CRS) and Variable Return to Scale (VRS) during the period 2006- 2009. The study reveals that takaful companies operating in GCC countries are more efficient than Malaysian operators that are encouraged to have aggressive marketing and wider distribution channels to capture more demand.
    Keywords: Takaful Industry, DEA, Efficiency, Malaysia, GCC
    JEL: C7 D8
    Date: 2014–01–06
  9. By: Dale Squires
    Abstract: Asian's remarkable economic growth brought many benefits but also fuelled threats to its ecosystems and biodiversity. Economic growth brings biodiversity threats but also conservation opportunities. Continued biodiversity loss is inevitable, but the types, areas and rates of biodiversity loss are not. Prioritising biodiversity conservation, tempered by what is tractable, remains a high priority. Policy and market distortions and failures significantly underprice biodiversity, undermine ecosystems and create perverse incentives, leading to over-consumption and under-conservation. Properly priced biodiversity creates price signals and incentives that account for all contributions from biodiversity and ecosystems. Habitat conservation remains the centrepiece of biodiversity conservation. The next steps forward include selected command-and-control measures and economic policies that eliminate perverse incentives and creating positive ones along with improved enforcement.
    Keywords: Asia; biodiversity conservation; policy; sustainable growth; economic incentives
  10. By: Vipin Arora; Rod Tyers; Ying Zhang
    Abstract: East Asian, and primarily Chinese and Japanese, excess saving has been comparatively large and controversial since the 1980s. That it has contributed to the decline in the global “natural” rate of interest is consistent with Bernanke‟s much debated “savings glut” hypothesis for the decade after 1998, empirical explorations of which have proved unconvincing. In this paper it is argued that the comparatively integrated global market for long bonds is suggestive of trends in the “world” natural rate and that the longer term evidence supports a leading role for Asia‟s contribution to the expansion of ex ante global saving in explaining the declining trend in real long yields. Evidence is presented that trends in US 10 year bond yields are indeed representative of those in the “world” natural rate. The relationship between these yields and excess saving in China and Japan is then explored using a VECM that accounts for US monetary policy. The results support a negative long term relationship between 10-year yields and the current account surpluses of China and Japan. Projections using the same model then suggest that a feasible range of future pathways for those current accounts could cause the path of long rates to deviate by 330 basis points over the next decade.
    Keywords: China, International finance
    JEL: F42 F43 F47
    Date: 2014–02
  11. By: Ian Cronshaw; Quentin Grafton
    Abstract: This article reviews key past trends in energy security from the perspective of both International Energy Agency members and the Asia Pacific over the past 30 years, and assesses future energy risks. Developments in energy efficiency, unconventional oil and gas, and stationary renewable energy sources are highlighted. Lessons learned from past policy successes and failures provide the basis for 10 reflections to promote energy security in the region.
    Keywords: energy security; energy demand; Asia Pacific; China; India
  12. By: Skoufias, Emmanuel; Narayan, Ambar; Dasgupta, Basab; Kaiser, Kai
    Abstract: This paper takes advantage of the exogenous phasing of direct elections in districts and applies the double-difference estimator to measure impacts on (i) human development outcomes and (ii) the pattern of public spending and revenue generation at the district level. The analysis reveals that four years after the switch to direct elections, there have been no significant effects on human development outcomes. However, the estimates of the impact of Pilkada on health expenditures at the district level suggest that directly elected district officials may have become more responsive to local needs at least in the area of health. The composition of district expenditures changes considerably during the year and sometimes the year before the elections, shifting toward expenditure categories that allow incumbent district heads running as candidates in the direct elections to"buy"voter support. Electoral reforms did not lead to higher revenue generation from own sources and had no effect on the budget surplus of districts with directly elected heads.
    Keywords: Subnational Economic Development,Parliamentary Government,E-Government,Public Sector Expenditure Policy,Debt Markets
    Date: 2014–02–01
  13. By: Briones, Roehlano M.
    Abstract: Fertilizer policy in the country has evolved from pervasive interventionism in the 1970s to today`s market-oriented regime. Government has abandoned price policies and subsidies, focusing rather on standard setting, quality regulation, and training. Over the same period domestic demand for fertilizer has continually been increasing, though recently resurgent fertilizer prices have reduced total utilization. Evidence suggests that farmers are under-applying fertilizer, thereby forfeiting efficiency gains at the margin. On the supply side, imports have in the past few decades emerged, as the main source of fertilizer as domestic production has dwindled. With deregulation, numerous private sector players have taken over the distribution of fertilizers; analysis of the supply chain points to low marketing margins. Integration analysis fails to find systematic arbitrage opportunities between the domestic and world markets. Within the domestic market, however, there remain large disparities in prices across regions. Priorities for research and policy are therefore understanding the behavior of farmers in terms of fertilizer application and addressing internal price disparities, perhaps by improved transport infrastructure and logistics.
    Keywords: competition, Philippines, market integration, fertilizer policy, fertilizer demand
    Date: 2014
  14. By: Kelley Lee
    Abstract: Asia and the Pacific is undergoing a remarkable economic transformation, which is occurring at an exceptional pace. There is clear evidence of an equally rapid epidemiological transition in the region. This article sets out the policy challenges of building healthy societies in the context of rapid economic change. The region's location at the crossroads of contemporary globalisation, resulting in intensified population mobility, large-scale trade and investment, and pressures to take collective action on shared problems, adds to the complexity of this task. The article argues that health is integral to building stable and sustainable societies, and that there are opportunities to develop more holistic approaches that bring together hitherto separate policy spheres.
    Keywords: health policy; globalization; epidemiological transition; global governance; health care reform
  15. By: Veerayooth Kanchoochat (National Graduate Institute for Policy Studies)
    Abstract: This article provides an explanation for Thailand’s long-term policymaking patterns from 1980 to 2011, with particular reference to macroeconomic and industrial policies. It develops a typology of reform orientations in Thailand, conditioned by government type (strong or fragmented) and ruling-coalition type (unelected or elected elites). When under strong leadership, reform was substantively implemented; its orientation was forged into fiscal tightening and “exclusive industrial policy” when ruled by unelected elites (Prem, Anand, and Surayud), but into an expansionary budget and “inclusive industrial policy” when ruled by elected elites (Chatichai and Thaksin). In contrast, when under multi-party governments, political leaders were less capable of pursuing meaningful reform and ended up with either internationally dominant discourses (Chuan and Abhisit) or pork-barrel projects (Banharn and Chavalit). It is further argued that government type hinges upon constitutional design while the two-elite struggle has resulted from the political turmoil of the prior decade. The assessment of reform outcomes requires a rethinking of the relationship between inflation, macroeconomic stability, and growth; and of institutional prerequisites for industrial policymaking. Policy suggestions entail constitutional redesign and the redressing of macroeconomic and industrial balance.
    Date: 2014–02
  16. By: durongkaveroj, wannaphong
    Abstract: Thailand's economic base was gradually shifted from agricultural-based to industrial and service country for the last 30 years. The purpose of this study was to investigate the effect of those structural changes on economic performance using Cochrane - Orcutt and Newey-West Model. For the result, an incremental employment in agricultural sector yielded the negative effect on economy. Also, an increase in employment in service sector was better than industrial sector in supporting economic growth. Thus, government of Thailand should no longer support agricultural sector but service-based economy instead.
    Keywords: economy, structural changes,economic growth
    JEL: O13 O14 P2 P27 P51
    Date: 2014–02–16
  17. By: Bowo Setiyono (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)
    Abstract: We investigate the impact of the interaction of disclosure and ownership structure on bank risk. Using a sample of 209 commercial banks from Asia during the 2004-2010 period, we find that disclosure is negatively associated with income volatility and that such an impact is stronger in the presence of block holders and institutional ownership and weaker with insider or government ownership. Our results also provide evidence that better disclosure ensures greater stability as measured by individual bank default risk. Furthermore, a deeper investigation shows that disclosure on income statement, loans, other earning assets, deposits, and memo lines plays a stronger role in limiting risk than disclosure on non-deposit liabilities.
    Keywords: Bank risk; disclosure index; bank ownership
    Date: 2014–02–13
  18. By: Xavier Oudin (IRD, UMR DIAL, PSL, Université Paris-Dauphine); Laure Pasquier-Doumer (IRD, UMR DIAL, PSL, Université Paris-Dauphine); Thai Pham Minh (VASS-CAF); Laure Pasquier-Doumer (DIAL, IRD, Paris); Dat Vu Hoang (VASS-CAF)
    Abstract: In this paper, we consider how labour market adjusts to economic fluctuations, considering structural transformation at work as well as short term changes. We utilise series calculated from population censuses and data published in the statistical yearbooks of GSO for long term series, and Labour Force Surveys from 2007 to 2012 for short term data. The paper highlights the deep transformation of the labour market in the last decades. The labour force has doubled in 25 years and the share of agriculture has declined below 50%. Labour supply absorption was thus one of the main challenges for the Vietnamese economy. The household sector has been the main job provider over the years, in agriculture as well as in non-farm activities. The labour market has adjusted to the recent economic slowdown through different channels. If unemployment does not rise, some people withdraw from the labour force and the number of non-active people has grown. The quantity of labour is also affected by a significant reduction of hours worked. While the non-farm sector generates more jobs for skilled workers, there is a shift of unskilled labour towards agriculture. Due to demographic factors, labour supply absorption and creation of new jobs become a less acute problem. As Vietnam benefits of the demographic dividend, the situation on the labour market should be favourable during the present decade to implement structural policies. _________________________________ Dans cet article, nous examinons les ajustements du marché du travail aux fluctuations économiques, compte tenu des transformations structurelles en cours ainsi que des changements à court terme. Nous utilisons pour cela des données des recensements de la population ou publiées dans les annuaires statistiques de l’Office Général de la Statistique pour les séries à long terme, et les enquêtes emploi conduites entre 2007 à 2012 pour les données à court terme. Cet article souligne la profonde transformation du marché du travail au cours des dernières décennies. La population active a doublé en 25 ans et la part de l'agriculture est passée en dessous du seuil de 50 %. L’absorption de l'offre de travail a donc été l'un des principaux défis pour l'économie vietnamienne sur cette période. Le secteur des entreprises familiales agricoles et non-agricoles a été le principal pourvoyeur d'emplois au cours de ces années. Le marché du travail s'est adapté au récent ralentissement économique à travers différents canaux. Le chômage est resté stable mais le nombre de personnes inactives a augmenté. La quantité de travail a également été affectée par une réduction significative du nombre d'heures travaillées. Alors que le secteur non agricole a généré plus d'emplois pour les travailleurs qualifiés, un flux de travailleurs non-qualifiés vers l’agriculture a été observé. En raison de facteurs démographiques, l'absorption de l'offre de travail et la création de nouveaux emplois ne sont plus le principal problème. En revanche, l’évolution récente du marché du travail appelle à la mise en oeuvre de politiques structurelles en vue d’améliorer les conditions de travail, la période étant particulièrement favorable pour mener ces politiques puisque le Vietnam profite actuellement du dividende démographique.
    Keywords: Labour Market– Long term and Short term Adjustment – Employment - Vietnam
    JEL: J11 J21 J81
    Date: 2014–02
  19. By: Fuwa, Nobuhiko
    Abstract: This paper detects pro-girl (age 5-15) bias in intrahousehold allocation of consumption budget in the rural Philippines using Deaton’s “adult goods” method. Based on additional checks (including those for endogeneity), the results appear to be robust. The paper also finds that a larger share of girls among household members is positively associated with a larger budget share on transportation, suggesting that parents pay more for girls’ transportation, possibly due to safety concerns. The results also suggest that, despite some earlier results in the literature, the adult goods method is capable of detecting gender bias, although alcohol and tobacco may not be suitable for detecting gender bias.
    Keywords: gender disparity; intrahousehold resource allocation; demand analysis; Engel curve; consumption expenditure; Philippines
    JEL: D1 D12 D13 J16 O12 O15
    Date: 2014–02–17

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