nep-sea New Economics Papers
on South East Asia
Issue of 2014‒10‒03
fifteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Tertiary Education in Indonesia : Directions for Policy By World Bank
  2. Indonesia Economic Quarterly FY14 : Compilation of the July 2013, October 2013, December 2013 and March 2014 Indonesia Economic Quarterly Reports By World Bank
  3. Benefit in the wake of disaster: Long-run effects of earthquakes on welfare in rural Indonesia By Jérémie Gignoux; Marta Menéndez
  4. TRADE OPENNESS AND INCOME: A TALE OF TWO REGIONS By Mariam Camarero; Inmaculada Martínez-Zarzoso; Felicitas Nowak-Lehmann D.; Cecilio Tamarit
  5. Response of Stock Markets to Monetary Policy: An Asian Stock Market Perspective By Yoshino, Naoyuki; Taghizadeh-Hesary, Farhad; Hassanzadeh, Ali; Prasetyo, Ahmad Danu
  6. Socialist Republic of Vietnam - Results-Based National Urban Development Program in the Northern Mountains Region : Fiduciary System Assessment By World Bank
  7. Are tax incentives attracting more foreign direct investments in Asia and the Pacific? By Steve Gui-Diby
  8. Emergence and Evolution of Learning Gaps across Countries. Panel Evidence from Ethiopia, India, Peru and Vietnam (Documento de Trabajo 124 – La aparición y evolución de brechas de aprendizaje entre países: La evidencia de estudio longitudinal en Etiopía, India, Perú y Vietnam) By Abhijeet Singh
  9. Exchange Rate Populism By Sainan Huang; Cristina Terra;
  10. Migration Experience, Aspirations and the Brain Drain - Theory and Empirical Evidence By Marcus H. Böhme; Toni Glaser
  11. Asia’s Little Divergence: State Capacity in China and Japan before 1850 By Sng, Tuan-Hwee; Moriguchi, Chiaki
  12. Gender Differences in Risk Preferences and Stereotypes: Experimental Evidence from a Matrilineal and a Patrilineal Society By Andreas Pondorfer; Toman Omar Mahmoud; Katrin Rehdanz; Ulrich Schmidt
  13. Analysis of Poverty Determinant in West Java Province By Sartika Djamaluddin
  14. Who Are Poor and Do They Remain Poor? By Geoffrey M. Ducanes; Edita Abella Tan
  15. Evolutionary Economics and Household Behavior By Charles Yuji Horioka

  1. By: World Bank
    Keywords: Secondary Education Teaching and Learning Education - Primary Education Tertiary Education Access and Equity in Basic Education
    Date: 2014–06
  2. By: World Bank
    Keywords: Macroeconomics and Economic Growth - Economic Systems Finance and Financial Sector Development - Access to Finance Economic Theory and Research Finance and Financial Sector Development - Debt Markets Finance and Financial Sector Development - Currencies and Exchange Rates
    Date: 2014–06
  3. By: Jérémie Gignoux (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Marta Menéndez (PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, DIAL - Développement, institutions et analyses de long terme - Institut de recherche pour le développement [IRD], UP9 - Université Paris 9, Dauphine - Université Paris IX - Paris Dauphine)
    Abstract: We examine the long-term effects on individual economic outcomes of a set of earthquakes - numerous, large, but mostly not extreme - that occurred in rural Indonesia since 1985. Using longitudinal individual-level data from large-scale household surveys, together with precise measures of local ground tremors obtained from a US Geological Survey database, we identify the effects of earthquakes, exploiting the quasi-random spatial and temporal nature of their distribution. Affected individuals experience short-term economic losses but recover in the medium-run (after two to five years), and even exhibit income and welfare gains in the long term (six to 12 years). The stocks of productive assets, notably in farms, get reconstituted and public infrastructures are reconstructed with some improvements, seemingly partly through external aid, allowing productivity to recover. These findings tend to discount the presence of poverty traps, and exhibit the potential long-term benefits from post-disaster interventions in context where disasters primarily affect physical assets.
    Keywords: Natural disasters ; Earthquakes ; Rural Indonesia ; Long-term effects ; Welfare ; Aid and reconstruction
    Date: 2014–09
  4. By: Mariam Camarero (Departamento de Economía. Universidad Jaume I. Campus de Riu Sec. E-12071 Castellón, Spain.); Inmaculada Martínez-Zarzoso (Departamento de Economía. Universidad Jaume I. Campus de Riu Sec. E-12071 Castellón, Spain. & University of Goettingen , Ibero-America Institute for Economic Research, Platz der Goettinger Sieben 3, D-37073 Goettingen Germany .); Felicitas Nowak-Lehmann D. (University of Goettingen , Ibero-America Institute for Economic Research, Platz der Goettinger Sieben 3, D-37073 Goettingen Germany .); Cecilio Tamarit (Departamento de Economía Aplicada II. Universidad de Valencia. Avda. dels Tarongers s/n. E-46022 Valencia, Spain.)
    Abstract: In this article we present evidence of the long-run effect of trade openness on income per worker for two regions that have followed different liberalization strategies, namely Asia and Latin America. A model that re-examines these questions is estimated for two panels of Asian and Latin American countries over the 1980-2008 period using a novel empirical approach that accounts for endogeneity as well as for the time series properties of the variables involved. From an econometric point of view, we apply recent panel cointegration techniques based on factor models that account for two additional elements usually neglected in previous empirical literature: cross-dependence and structural breaks. The results point to a positive impact of trade openness in both Asia and Latin America although the size is smaller in the second region. We associate this finding with the degree to which trade was managed in both regions of the developing world.
    Keywords: GDP per worker, trade openness, panel cointegration, structural breaks, crosssection dependence, Asia, Latin America.
    JEL: F15 F43 C22 O40
    Date: 2014–09
  5. By: Yoshino, Naoyuki (Asian Development Bank Institute); Taghizadeh-Hesary, Farhad (Asian Development Bank Institute); Hassanzadeh, Ali (Asian Development Bank Institute); Prasetyo, Ahmad Danu (Asian Development Bank Institute)
    Abstract: We estimate the response of Asian stock market prices to exogenous monetary policy shocks using a vector error correction model. In our paper, monetary policy transmits to stock market price through three routes: money by itself, exchange rate, and inflation. Our result points to the fact that stock prices increase persistently in response to an exogenous easing monetary policy. Variance deposition results show that, after 10 periods, the forecast error variance of beyond 53% of the Tehran Stock Exchange Price Index (TEPIX) can be explained by exogenous shocks to the US dollar–Iranian rial exchange rate, while this ratio for exogenous shocks to Iranian real gross domestic product was only 17%. We argue that such evidence can be accounted for by an endogenous response of the stock prices to the monetary policy shocks.
    Keywords: asian stock market; monetary policy shocks; vector error correction model
    JEL: E44 G10 G12
    Date: 2014–09–05
  6. By: World Bank
    Keywords: Public Sector Corruption and Anticorruption Measures Macroeconomics and Economic Growth - Subnational Economic Development Finance and Financial Sector Development - Bankruptcy and Resolution of Financial Distress Finance and Financial Sector Development - Debt Markets Public Sector Expenditure Policy Public Sector Development
    Date: 2014–04
  7. By: Steve Gui-Diby (Macroeconomic Policy and Development Division, United Nations Economic and Social Commission for Asia and the Pacific)
    Abstract: Tax rates are key tools for mobilizing domestic resources and addressing specific market failures. Countries often offer tax concessions or reduce corporate tax rates in order to boost private investment or to direct investment to “desired areasâ€. Corporate tax rates, especially for foreign investors, have been reduced significantly in many Asia-Pacific economies during the last seven years. However, this policy has had limited success in the region in terms of foreign direct investment (FDI) inflows, but at the same time has deprived governments from valuable resources required to support inclusive and sustainable development especially when government budget is in distress. Estimated tax losses due to the reduction of corporate tax rates, as well as alternative options for attractive FDI, including regional tax agreement on avoidance of tax competition, are analyzed in this policy brief.
  8. By: Abhijeet Singh (Young Lives)
    Abstract: Los resultados de las evaluaciones internacionales estandarizadas de aprendizaje permiten identificar brechas de magnitud importante entre estudiantes de diversos países. En este documento, se utiliza información única de niños del estudio longitudinal Niños del Milenio /Young Lives en Etiopía, India, Perú y Vietnam usando las mismas evaluaciones a niños de 5, 6, 12 y 15 años de edad para encontrar a qué edades surgen las brechas entre diferentes poblaciones, cómo incrementan o disminuyen con el tiempo, y cuáles son los factores más próximos para determinar estas divergencias. Este documento usa el criterio de lo que se denomina proceso de dominancia estocástica, concepto estadístico que se aplica, en este caso, para evaluar si la distribución de notas en las evaluaciones de aprendizaje recolectadas por Niños del Milenio es similar en los cuatro países, o si, por el contrario, se da el caso que algunos países “dominan” a otros en términos de los aprendizajes logrados. Así el estudio analizó los resultados de los niños cuando estos tenían 5 años (previo a la matrícula escolar) y encontró un claro patrón de dominancia estocástica entre países, con los niños de Vietnam liderando el aprendizaje y Etiopía en el nivel inferior, mientras que los niños del Perú y de la India se mantienen en el medio. Las diferencias entre las muestras de los niños de estos países crecen en magnitud a edades posteriores, aunque el ranking de los países observado a los 5 años se mantiene en todos los rangos de edades. Cuando se dice que Vietnam domina estocásticamente al resto de países, se entiende que, al enfocarse en el mismo punto de la distribución, los niños de Vietnam siempre están mejor (por ejemplo, los estudiantes de Vietnam con peores resultados en las pruebas, están mejor que los niños que salen peor del resto de países; asimismo, los niños de Vietnam que obtienen los mejores resultados, se desempeñan mejor que sus pares con los mejores logros del resto de países; igualmente, los niveles de aprendizaje de los niños promedio de Vietnam son mejores que los de los alumnos promedio del resto de países, y así sucesivamente. Existen algunos niños del resto de países que alcanzan mejores resultados que los de Vietnam, pero si nos enfocamos en el mismo punto de la distribución en cada país, los niños de Vietnam están mejor que los niños del Perú y de la India (y Etiopía se encuentra en último lugar). Las diferencias halladas son sólo parcialmente explicadas por diferencias en inversiones educativas a nivel del hogar o en los talentos naturales de cada niño—resultado que se obtiene de estimar una función de producción con un enfoque de valor añadido. Más bien, la diferencia en logros entre los niños de Vietnam y de los otros países en la edad de la escuela primaria es explicada en mayor medida por la diferencia en la productividad de los años de escuela (siendo Vietnam el país con la mayor productividad observada). Estos hallazgos son confirmados usando un enfoque de variables instrumentales, empleando discontinuidades en la culminación de grados escolares que surgen entre niños nacidos en meses adyacentes, como consecuencia de las políticas de edad de matrícula de cada país.
    Date: 2014
  9. By: Sainan Huang; Cristina Terra; (Université de Cergy-Pontoise, THEMA and ESSEC School Business; Université de Cergy-Pontoise, THEMA; )
    Abstract: East Asian and Latin American economies present opposite exchange rate electoral cycles: exchange rates tend to be more depreciated before and appreciated after elections among East Asian economies, while the opposite is true in Latin America. We propose a explanation for these empirical findings where the driving force of the opposite exchange rate populism in these two regions is their difference in the relative size of tradable and non-tradable sectors, coupled with the distributive effect of exchange rates. In a setup where policy-makers differ in their preference bias towards non-tradable and tradable sectors, the exchange rate is used a noisy signal of the incumbent's type in an uncertain economic environment. The mechanism behind the cycle is engendered by the incumbent trying to signal he is median voter's type, biasing his policy in favor of the majority of the population before elections.
    Date: 2014
  10. By: Marcus H. Böhme; Toni Glaser
    Abstract: We develop a theoretical model of human skill formation and emigration. Additionally to existing brain drain models, we partly endogenize the heterogeneity of the individuals, by introducing aspirations. Emigration of an individual will result in a migration experience, which increases the migrant's aspirations. This will induce her to invest more in the education of her children back home. We find that this aspirations effect increases the average skill level in the society for a given migration rate. We show that the optimal migration rate that maximizes the post-migration skill-rate of the population is higher if we allow for the aspirations effect of migration. We use panel data from Indonesia to demonstrate that a migration experience has an aspirations increasing effect and calibrate our model accordingly. Our results suggest that there are potentially more countries than previously assumed which benefit from migration
    Keywords: migration, brain gain, aspirations, education
    JEL: D03 F22 I25 J61 O15
    Date: 2014–08
  11. By: Sng, Tuan-Hwee; Moriguchi, Chiaki
    Abstract: This paper explores the role of state capacity in the comparative economic development of China and Japan. Before 1850, both nations were ruled by stable dictators who relied on bureaucrats to govern their domains. We hypothesize that agency problems increase with the geographical size of a domain. In a large domain, the ruler's inability to closely monitor bureaucrats creates opportunities for the bureaucrats to exploit taxpayers. To prevent overexploitation, the ruler has to keep taxes low and government small. Our dynamic model shows that while economic expansion improves the ruler's finances in a small domain, it could lead to lower tax revenues in a large domain as it exacerbates bureaucratic expropriation. To test these implications, we assemble comparable quantitative data from primary and secondary sources. We find that the state taxed less and provided fewer local public goods per capita in China than in Japan. Furthermore, while the Tokugawa shogunate's tax revenue grew in tandem with demographic trends, Qing China underwent fiscal contraction after 1750 despite demographic expansion. We conjecture that a greater state capacity might have prepared Japan better for the transition from stagnation to growth.
    Keywords: Comparative Institutional Analysis, Geography, Principal-Agent Problem, Institutions and Growth
    JEL: D73 N15 N40 O43 P52
    Date: 2014–08
  12. By: Andreas Pondorfer; Toman Omar Mahmoud; Katrin Rehdanz; Ulrich Schmidt
    Abstract: We use a controlled experiment to analyze gender differences in risk preferences and stereotypes about risk preferences of men and women across two distinct island societies in the Pacific: the patrilineal Palawan in the Philippines and the matrilineal Teop in Papua New Guinea. We find no gender differences in actual risk preferences, but evidence for culture-specific stereotypes. Like men in Western societies, Palawan men overestimate women’s actual risk aversion. By contrast, Teop men underestimate women’s actual risk aversion. We argue that observed differences in stereotypes between the two societies are determined by the different social status of women
    Keywords: Gender roles, culture, stereotype, experiment, risk aversion
    JEL: C93 D81 J15 J16
    Date: 2014–09
  13. By: Sartika Djamaluddin (Institute of Economics and Social Research, Faculty of Economics, University of Indonesia)
    Abstract: Comprehensive profiling of impoverished households plays a fundamental role in enabling the government to compose quintessential and antipoverty policies that effectively lower poverty on a significant level. This study analyzes household assets and poverty reduction policies as one of the determinant factors of poverty. This research is based on data cumulated from a national socio-economic household survey (susenas) in 2010 as well as logistic regression model to identify factors proximately associated with poverty level in Province, regency and City in West Java. The number of observations as much as 20,541 households. Upon comprehensively evaluating samples, the outcome of the research shows that West Java is facing complex issues related to poverty. All determinant factors including demographic, economy, social and government policies are identified as significantly impact on poverty rate in the region. At all province, city and regency level, size of household member and assets variables are found to be the factors that consistently and significantly determining poverty rate. At the province level, the high probability of poverty is triggered among other by the large size of households' members, family head is married and/or employed in agriculture sector or work as laborers and having low education level as well as living at house with the ground floor/bamboo. Results of regression analyses conducted in respective sample cities/regencies nevertheless illustrates that the level of influence on poverty level vary accordingly. While Tasikmalaya city and Sukabumi regency are facing more complex poverty issues to address, cause of poverty in Kuningan and Majalengka regency are identified as exactly the same.
    Keywords: Poverty Determinant, Household, Logistic Regression Model, West Java
    JEL: I32 D1 C25
    Date: 2014–09
  14. By: Geoffrey M. Ducanes (School of Economics, University of the Philippines Diliman); Edita Abella Tan (School of Economics, University of the Philippines Diliman)
    Abstract: This paper examines the link between poverty and income, on the one hand, and human capital and location, on the other. In the process, the paper proposes a shift in the household indicator of human capital from the usual education of the household head to the education of the most educated member. The paper finds poverty to be most severe and persistent for households with low human capital, and that the effect of human capital varies substantially across locations. Additionally, the paper finds that low human capital households tend to underinvest in the human capital of school-age members, thus likely perpetuating poverty.
    Keywords: human capital, poverty, chronic poverty, regional development, enrolment rates
    JEL: I32 J24 I21 R11
    Date: 2014–06
  15. By: Charles Yuji Horioka (School of Economics, University of the Philippines Diliman)
    Abstract: This paper provides an introduction to the field of evolutionary economics with emphasis on the evolutionary theory of household behavior. It shows that the goal of evolutionary economics is to improve upon neoclassical economics by incorporating more realistic and empirically grounded behavioral assumptions and technological innovation and that the goal of the evolutionary theory of household behavior is to improve upon the neoclassical theory of household behavior by replacing the neoclassical assumption of selfish utility maximization with bounded rationality and satisficing and by incorporating the reaction of households to the introduction of new goods and services. The paper concludes with a brief discussion of loss aversion and self-interest vs. altruism.
    Keywords: Altruism, altruistic bequest motive, behavioral assumptions, behavioral economics, bequest motives, bounded rationality, consumption behavior, creative destruction, destructive technologies, dynastic bequest motive, evolution, evolutionary economics
    JEL: A12 B15 B25 B52 D11 D91 E21 O31 O33
    Date: 2014–08

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