nep-sea New Economics Papers
on South East Asia
Issue of 2014‒05‒04
nineteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Implications for Indonesia of Asia's Rise in the Global Economy By Kym Anderson; Anna Strutt
  2. Formulating the Philippine Services Strategy for Inclusive Growth By Serafica, Ramonette B.
  3. Urbanization in Southeast Asia during the World War II Japanese Occupation and Its Aftermath By Gregg Huff; Gillian Huff
  4. A Survey of the Role of Fiscal Policy in Addressing Income Inequality, Poverty Reduction and Inclusive Growth By Heshmati, Almas; Kim, Jungsuk
  5. Corporate performance of privatized firms in Vietnam By Thi QuyVo; Duc Khuong Nguyen; Fredric WilliamSwierczek
  6. Room at the Top: An Overview of Fiscal Space, Fiscal Policy and Inclusive Growth in Developing Asia. By Roy, Rathin
  7. Governing Knowledge for Development: Knowledge Clusters in Brunei Darussalam and Malaysia By Ariff, Syamimi; Hans-Dieter, Evers; Anthony Banyouko, Ngah; Farah, Purwaningrum
  8. Who Collects Art? An International Empirical Assessment By Lasse Steiner; Bruno S. Frey; Magnus Resch
  9. Small Farmers in High Value Chains: Binding or Relaxing Constraints to Inclusive Growth? By Briones, Roehlano M.
  10. The Impact of Philippines’ Conditional Cash Transfer Program on Consumption By Melba V. Tutor
  11. Understanding the South China Sea: An Explorative Cultural Analysis By Evers, Hans-Dieter
  12. Slaves or Mercenaries: Milton Friedman and the Institution of the All-Volunteer Military By John D.Singleton
  13. Does Electrification Spur the Fertility Transition? Evidence from Indonesia By Grimm, Michael; Sparrow, Robert; Tasciotti, Luca
  14. External Balances, Trade Flows and Financial Conditions By Evans, Martin
  15. Climate Change and Natural Disasters: Responding to the Philippines’ Haiyan tragedy By K. C. Ratha; S. K. Mahapatra
  16. Managing Myanmar's Resource Boom to Lock in Reforms By Cullen S. Hendrix; Marcus Noland
  17. Why Do People Leave Bequests? For Love or Self-Interest? By Charles Yuji Horioka
  18. The rise of China in the international trade network: a community core detection approach By Zhen Zhu; Federica Cerina; Alessandro Chessa; Guido Caldarelli; Massimo Riccaboni
  19. Additive Nonparametric Regression in the Presence of Endogenous Regressors By Ozabaci, Deniz; Henderson, Daniel J.; Su, Liangjun

  1. By: Kym Anderson; Anna Strutt
    Abstract: This paper projects Indonesia's production and trade patterns to 2020 and 2030 in the course of global economic development under various growth and policy scenarios. We employ the GTAP model and Version 8.1 of the GTAP database, along with supplementary data from a range of sources to support projections of the global economy. The baseline projection assumes trade-related policies do not change in each region but that endowments and real GDP do change, at exogenously selected rates. This enables us to analyse how potential global changes may impact the Indonesian economy over this and the next decade. We then consider the impacts of three potential policy reforms by 2020: an increase in global rice exports, as might be associated with the opening of Myanmar; Indonesia's recently-imposed export taxes on unprocessed primary products; and implementation of Indonesia's new Food Law.
    Keywords: Global economy-wide model projections; Indonesian economic growth and structural change; Food policy; Export taxes
    JEL: D58 F13 F15 F17 Q17
    Date: 2014
  2. By: Serafica, Ramonette B.
    Abstract: The paper looks at the role of services in the economy and discusses why competitive services are necessary for achieving inclusive growth. An overview of Philippine services sectors is first presented highlighting their economic contribution as well as performance. This is followed by a discussion of the country`s record in services trade particularly in exports. It suggests that a comprehensive and high profile services export initiative is needed to establish the Philippines as the heart of services trade in the Asia-Pacific region. Restrictions on the supply of services are then examined to have a better understanding of the general environment under which services are provided. Because regulatory and nonregulatory measures undermine the efficient supply of services, it is recommended that a trade-related audit of the laws and regulations affecting services be conducted with the view of removing those laws and regulations whose policy objective is no longer relevant or could be achieved by a less restrictive measure. In addition to improving the trade and investment environment, other policy areas are also important and these are suggested in the concluding section which presents the elements of a strategic framework to harness services for inclusive growth.
    Keywords: services sector, Philippines, services trade, inclusive growth, services
    Date: 2014
  3. By: Gregg Huff; Gillian Huff
    Abstract: This working paper analyzes demographic change in Southeast Asia's main cities during and soon after the World War II Japanese occupation.� We argue that two main patterns of population movements are evident.� In food-deficient areas, a search for food security typically led to large net inflows to main urban centres.� By contrast, an urban exodus dominated in food surplus regions because the chief risk was to personal safety, especially from Japanese and Allied bombing.� Black markets were ubiquitous, and essential to sustaining livelihoods in cities with food-deficit hinterlands.� In Rangoon and Manila, wartime population fluctuations were enormous.� Famines in Java and northern Indochina severely impacted Jakarta and Hanoi through inflows of people from rural areas.� In most countries, the war's aftermath of refugees, revolution and political disruption generated major rural-urban population relocations.� Turmoil in the 1940s had the permanent consequences of augmenting the primacy of Southeast Asia's main cities and promoting squatter settlement.
    Keywords: urbanization, Southeast Asia, famine, World War II, entitlements, Japan
    JEL: N15 N90 N95 R11
    Date: 2014–04–24
  4. By: Heshmati, Almas (Jönköping University, Sogang University); Kim, Jungsuk (Sogang University)
    Abstract: A growing concern on widening income gap between the rich and the poor, the policy mismatch in tackling the relative poverty and income inequality have invited increasing volumes of research focusing on the nexus between equity and efficient growth. Developed countries have experienced the critical challenges and trade-off between their generous welfares provisions and economic growth. Developing countries on the other hand, especially countries in Asia are in the process of shifting their policy direction toward more inclusive growth where most members are transforming themselves from a low-income country into a middle income country (ADB, 2014). This has stimulated the need to understand causes of inequality and poverty for better formulate policies of fostering inclusive growth. Economic growth itself is an important source of welfare distribution in most developing Asian countries. Asian governments used many forms of fiscal policy to mitigate income gaps and poverty because they will substantially undermine the economic growth if left unchecked (ADB, 2014). The objective of this study is to review the previous studies, particularly literatures related with inclusive growth of advanced economies, and to offer an efficient policy options for Asian countries. Major determinant factors of growing inequality, poverty and a range of fiscal policy tools are evaluated from both country and cross-country perspectives. The initiated policy measures are based on experiences of advanced welfare economies and the lessons derived from them will be a meaningful guideline for Asian countries to achieve their goals of inclusive growth.
    Keywords: income inequality, poverty reduction, equity, inclusive growth, fiscal policy, developing Asia, advanced welfare economies
    JEL: D63 E62 I32 I38 J68 O47 P46
    Date: 2014–04
  5. By: Thi QuyVo; Duc Khuong Nguyen; Fredric WilliamSwierczek
    Abstract: We investigate the impacts of state shareholding, corporate culture and employee commitment on corporate perfor- mance of privatized firms in the Vietnamese context. Using data collected from a structured questionnaire as well as companies’ annual reports, we show that only organizational integration significantly affects the performance of privatized firms. Furthermore, employee and customer satisfactions are among the most important drivers of corpo- rate performance. Finally, there is evidence to suggest that privatized firms with less state ownership perform better than those with more state ownership.
    Date: 2014–04–28
  6. By: Roy, Rathin (National Institute of Public Finance and Policy)
    Date: 2014–04
  7. By: Ariff, Syamimi; Hans-Dieter, Evers; Anthony Banyouko, Ngah; Farah, Purwaningrum
    Abstract: With the dwindling of natural resources, like oil and gas, even resource-rich countries like Brunei Darussalam and Malaysia have to re-adjust their development strategies. Governing knowledge for development (K4D) is seen as a way out of the dilemma of reduced revenues from natural resources. This paper analyses the attempts to create knowledge clusters as a strategy to move Brunei and Malaysia towards knowledge-based economies. Our study shows that several knowledge clusters have already been established in Peninsular Malaysia and are starting to emerge in Brunei Darussalam. The paper is structured as follows: the first section explains the dangers of falling into a “knowledge trap” and the strategies a country may adopt to govern knowledge. The second section looks at the epistemic landscapes in Peninsular Malaysia. Two knowledge clusters are the focal points of analysis, namely the North Corridor-Penang Knowledge Cluster and the Multimedia Super Corridor (MSC-Cyberjaya) Knowledge Cluster. We then provide empirical evidence of knowledge cluster formation in Brunei Darussalam as an effort to build up knowledge institutions and to diversify its economy. The paper ends with recommendations how to build the basis for a move towards a knowledge-based economy.
    Keywords: knowledge governance, knowledge cluster, development strategies, knowledge economy, Malaysia, Brunei Darussalam
    JEL: L2 L8 L86 L88 O2 O3 O53 R1 Z13 Z18
    Date: 2014–03–10
  8. By: Lasse Steiner; Bruno S. Frey; Magnus Resch
    Abstract: A unique recent data set covering around 3,000 private art collections and collectors is used to identify their location and composition. The largest number of private collections is located in Europe, followed by North America and Asia. The largest number of private art collections is located in the United States. The United Kingdom, Germany and Spain have more collections per capita of population. Private collectors above all assemble works by artists from North America, followed by Asian, and only then European artists. The three artists most assembled by private collectors are Warhol, Picasso and Hirst. A considerable part of the differences in the number of private collections per head between countries can be attributed to per capita income. The collection of art is mainly undertaken by persons who can afford to build up wealth also in the form of collections of art.
    Keywords: Art; collections; home bias; investment; international finance
    JEL: Z11 F14 G15
    Date: 2014–02
  9. By: Briones, Roehlano M.
    Abstract: Linking small farmers to modern markets, whether domestically or for export, increasingly entails participation in modern supply chains coordinated by contract farming. Concerns have been raised regarding the possible disadvantages from contract farming facing small farmers. Most empirical work points to a positive correlation between participation in contract farming and net farm income. Such a correlation fails to correct for endogeneity of participation; few studies have performed multivariate analysis with such a correction. This case study, based on a survey of smallholders in the tobacco industry, seems to be the first such application for the Philippines. The study finds that, correcting for endogeneity, participation in contract farming causes a sizable increase in farm profitability; moreover, participation appears to be biased toward smaller farm sizes. The findings are robust to the econometric method used and even definition of participation. This is further evidence to confirm that supply chains linking agribusiness with small farmers via contract schemes are a viable model of value addition and inclusive growth in rural areas. Policies should be implemented to support an enabling environment for expansion of supply chains.
    Keywords: Philippines, supply chain, contract farming, smallholders, treatment effect, instrumental variable
    Date: 2014
  10. By: Melba V. Tutor (School of Economics, University of the Philippines Diliman)
    Abstract: Pantawid Pamilyang Pilipino Program provides cash grants to poor households conditional on pre-determined investments in human capital. This study analyzed its impact on consumption using the 2011 Annual Poverty Indicators Survey. Average treatment effect on the treated (ATT) is estimated through propensity score matching methodology. Heterogeneous impacts are examined among the bottom 20% of income distribution. The study finds that among the total sample, per capita total expenditures is not affected by the program. In per capita monthly terms, only carbohydrates and clothing significantly increased. As expenditure shares, education and clothing registered significant positive impact. No impact is observed on health spending, both in per capita terms and as a share of expenditure. The impact of Pantawid Pamilya on consumption is more pronounced among the poorest fifth of households. Results show that households have responded to program conditionalities but there is very little room to improve consumption of other basic needs. The recent program modification of increasing education grants to older children and covering up to secondary school completion will help households sustain induced behavioral changes over time. Stronger impact on the poorest fifth of households underscores the need to improve the targeting mechanism to address leakage issues.
    Keywords: consumption, CCT, impact evaluation, propensity score matching
    JEL: I38 D12
    Date: 2014–04
  11. By: Evers, Hans-Dieter
    Abstract: Evers, Hans-Dieter. 2014. "Understanding the South China Sea: An Explorative Cultural Analysis." International Journal of Asia Pacific Studies 10(1):80-95. The South China Sea has attracted considerable attention among politicians, journalists and scholars since it has become a contested maritime space. Most works concentrate on conflicts and negotiations to resolve the ensuing issues. In this paper, a cultural theory will be applied to stress the importance of conceptions of space found in different cultures. The South China Sea is defined as "Mediterranean." By comparing it to other maritime spaces, like the Baltic and the Mediterranean Sea, lessons will be drawn from the "longue durée" of history, as analysed by French historian Fernand Braudel and from concepts of the cultural theory of Oswald Spengler. The paper will look at the South China Sea from two perspectives. The political perspective will discuss various events that have happened due to political tensions because of territorial demarcations, fishing rights and access to natural resources. Comparing three "Mediterranean seas," I shall argue that Mediterranean seas share certain properties that give rise to tensions and even armed conflict, but also solutions to its problems. The second perspective uses macro-sociology and cultural anthropology to classify and understand actions of the general population as well as political leaders when they ascertain property rights to Mediterranean seas.
    Keywords: South China Sea, maritime economy, resources, cultural analysis,Mediterranean seas, ASEAN, China; South China Sea, cultural analysis, cultural theory, Mediterranean seas, ASEAN
    JEL: F5 F51 Q4 Q48 Z1 Z13
    Date: 2014–01–20
  12. By: John D.Singleton
    Abstract: Milton Friedman was the leading public proponent for an all-volunteer military. This chapter traces his influence upon the national debate over conscription, which culminated in Friedman’s service on the Gates Commission. Friedman’s argument relied on economic reasoning and appeal to cost-benefit analysis. Central was his conjecture that the social cost of the draft, which imposed an “implicit tax” on draftees, exceeded that of the all-volunteer military. This was supported by the work of Walter Oi. Friedman’s position attracted support both within the conservative movement and from across the political landscape, allowing Friedman to form coalitions with prominent individuals otherwise in disagreement with his politics. With the social context ripened by the draft and the Vietnam War, Friedman’s argument echoed in influential circles, reaching policymakers in Washington and Martin Anderson on the Nixon advising team. The successful institution of the all-volunteer armed force reflected Friedman’s intellectual entrepreneurship.
    Keywords: Military draft, conscription, all-volunteer armed force, Gates Commission, Vietnam War, implicit tax, Walter Oi, Martin Anderson
    JEL: B20 B31
    Date: 2014
  13. By: Grimm, Michael (University of Passau); Sparrow, Robert (Australian National University); Tasciotti, Luca (Erasmus University Rotterdam)
    Abstract: We analyse various pathways through which access to electricity affects fertility, using a pseudo-panel of Indonesian districts covering the period 1993-2010. Identification of causal effects relies on a district-fixed effects approach and controlling for local economic development. The electrification rate increased by about 65 percent over the study period and our results suggest that the subsequent effects on fertility account for about 18 to 24 percent of the overall decline in the fertility rate, depending on the specification. A key channel through which electrification affects fertility is increased exposure to TV, explaining about a quarter of the total fertility effect. Using in addition several waves of Demographic and Health Surveys, we find suggestive evidence that increased exposure to TV affects in particular fertility preferences and increases the effective use of contraception. Reduced child mortality seems to be another important pathway linking access to electricity and fertility. We find no evidence that changes to direct and indirect costs of children play a role. Overall, the results suggest that electrification contributes substantially to the fertility decline. In a context in which family planning policy still plays an important role this second order effect should be taken into account in cost benefit analyses of publicly funded grid expansion policies.
    Keywords: fertility, fertility transition, electrification, family planning, television, infrastructure, child mortality
    JEL: H43 H54 J13 J22 O18 Q40
    Date: 2014–04
  14. By: Evans, Martin
    Abstract: This paper studies how changing expectations concerning future trade and financial con- ditions are reflected in international external positions. In the absence of Ponzi schemes and arbitrage opportunities, the net foreign asset position of any country must, as a matter of theory, equal the expected present discounted value of future trade deficits, discounted at the cumulated world stochastic discount factor (SDF) that prices all freely traded financial assets. I study the forecasting implications of this theoretical link in 12 countries (Australia, Canada, China, France, Germany, India, Italy, Japan, South Korea, Thailand, The United States and The United Kingdom) between 1970 and 2011. I find that variations in the ex- ternal positions of most countries reflect changing expectations about trade conditions far into the future. I also find the changing forecasts for the future path of the world SDF is reflected in the dynamics of the U.S. external position.
    Keywords: Global Imbalances, Foreign Asset Positions, Current Accounts, Trade Flows, International Asset Pricing
    JEL: F3 F31 F32 F34
    Date: 2014–05–01
  15. By: K. C. Ratha; S. K. Mahapatra
    Abstract: The powerful typhoon Haiyan that swept across the Philippines is one of the strongest storms ever to make landfall, cut a path of destruction through several central islands, causing scores of people dead. The disaster's full impact is still revealing as the entire country has been caught in a state of shock and desperation. The devastation is really horrific with human tragedy. Responding to the disaster of such magnitude calls for both national and international hands to come forward for the affected people.
    JEL: Q54 Q56 Q58 Q59
    Date: 2014–04
  16. By: Cullen S. Hendrix (Peterson Institute for International Economics); Marcus Noland (Peterson Institute for International Economics)
    Abstract: Myanmar is in the midst of a long and difficult multifaceted transition, involving political liberalization, economic reform, and the resolution of multiple long-standing civil conflicts. The country has a history of ethno-religious conflict and separatism. Civil-military relations are muddy, and business-military-state relations are similarly opaque. An ongoing natural resource boom, and the blessings and curses that come with it, further complicates these developments. Given the country's evident institutional weaknesses, external policy anchors could play a critical role in this transition. Hendrix and Noland address the possible role for such international precommitment mechanisms—in particular, the Extractive Industries Transparency Initiative (EITI)—in Myanmar's growing extractive sector.
    Date: 2014–04
  17. By: Charles Yuji Horioka (School of Economics, University of the Philippines Diliman)
    Abstract: This paper presents a brief exposition of three theoretical models of household behavior and shows that these models have very different implications for bequest motives and bequest division, surveys previous empirical studies on bequest motives and bequest division, presents unique survey data on bequest motives and bequest division in four countries, shows that there are large inter-country differences in the degree of selfishness and altruism, with the Japanese and Chinese being predominantly selfish and Indians and Americans being predominantly altruistic, and argues that differences in religiosity appear to be the main cause of inter-country differences in the degree of selfishness and altruism.
    Keywords: Bequests, inheritances, estates, inter vivos transfers, intergenerational transfers, bequest motives, bequest division, equal division, altruism, selfishness, selfish life cycle model, altruism model, dynasty model, primogeniture, selfish exchange model, culture, religiosity, religion
    JEL: D12 D91 E21 Z12
    Date: 2014–04
  18. By: Zhen Zhu (IMT Lucca Institute for Advanced Studies); Federica Cerina (IMT Lucca Institute for Advanced Studies); Alessandro Chessa (IMT Lucca Institute for Advanced Studies); Guido Caldarelli (IMT Lucca Institute for Advanced Studies); Massimo Riccaboni (IMT Lucca Institute for Advanced Studies)
    Abstract: Theory of complex networks proved successful in the description of a variety of static networks ranging from biology to computer and social sciences to economics and finance. Here we use network models to describe the evolution of a particular economic system, namely the International Trade Network (ITN). Previous studies often assume that globalization and regionalization in international trade are contradictory to each other. We re-examine the relationship between globalization and regionalization by viewing the international trade system as an interdependent complex network. We use the modularity optimization method to detect communities and community cores in the ITN during the years 1995-2011. We find rich dynamics over time both inter- and intra-communities. Most importantly, we have a multilevel description of the evolution where the global dynamics (i.e., communities disappear or reemerge) tend to be correlated with the regional dynamics (i.e., community core changes between community members). In particular, the Asia-Oceania community disappeared and reemerged over time along with a switch in leadership from Japan to China. Moreover, simulation results show that the global dynamics can be generated by a preferential attachment mechanism both inter- and intra- communities.
    Keywords: Complex Networks, International Trade, Community Detection
    JEL: F10 F15
    Date: 2014–04
  19. By: Ozabaci, Deniz (Binghamton University, New York); Henderson, Daniel J. (University of Alabama); Su, Liangjun (Singapore Management University)
    Abstract: In this paper we consider nonparametric estimation of a structural equation model under full additivity constraint. We propose estimators for both the conditional mean and gradient which are consistent, asymptotically normal, oracle efficient and free from the curse of dimensionality. Monte Carlo simulations support the asymptotic developments. We employ a partially linear extension of our model to study the relationship between child care and cognitive outcomes. Some of our (average) results are consistent with the literature (e.g., negative returns to child care when mothers have higher levels of education). However, as our estimators allow for heterogeneity both across and within groups, we are able to contradict many findings in the literature (e.g., we do not find any significant differences in returns between boys and girls or for formal versus informal child care).
    Keywords: oracle estimation, generated regressors, endogeneity, additive regression, structural equation, child care, nonparametric regression, test scores
    JEL: C14 C36 I21 J13
    Date: 2014–04

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