nep-sea New Economics Papers
on South East Asia
Issue of 2015‒01‒03
twenty-two papers chosen by
Kavita Iyengar
Asian Development Bank

  1. East Asian Financial Cycles: Asian vs. Global Financial Crises By Akira Kohsaka; Jun-ichi Shinkai
  2. Importing High Food Prices by Exporting: Rice Prices in Lao PDR By Durevall, Dick; van der Weide, Roy
  3. The happy farmer: Self-employment and subjective well-being in rural Vietnam By Markussen, Thomas; Fibaek, Maria; Tarp, Finn; Nguyen, Do Anh Tuan
  4. Human Trafficking in Southeast Asia: Results from a Pilot Project in Vietnam By Dinh, Ngan; Hughes, Conor; Hughes, James W.; Maurer-Fazio, Margaret
  5. Economic Growth, Financial and Trade Globalization in the Philippines: A Vector Autoregressive Analysis By Deluna, Roperto Jr; Chelly, Antiquisa
  6. Global Production Sharing and Asian Trade Patterns: Implications for the Regional Comprehensive Economic Partnership (RCEP) By Prema-chandra Athukorala
  7. Financial Sector Assessment : Vietnam By World Bank
  8. The Effects of Productivity Gains in Asian Emerging Economies: A Global Perspective By Taya Dumrongrittikul; Heather Anderson; Farshid Vahid
  9. Implementation of Treasury Single Account and Strengthening of Cash Management in Vietnam By World Bank
  10. The role of sponsor and external management on the capital structure of Asian-Pacific REITs: the case of Australia, Japan, and Singapore By Chen, Dong; Gao, Yanmin; Kaul, Mayank; Leung, Charles Ka Yui; Tsang, Desmond
  11. Temporal causal relationship between stock market capitalization, trade openness and real GDP: evidence from Thailand By Jiranyakul, Komain
  12. Land Reform and Productivity: A Quantitative Analysis with Micro Data By Tasso Adamopoulos; Diego Restuccia
  13. Los efectos de las transformaciones agrícolas en los antiguos países socialistas: Algunas consideraciones para Cuba By Gonzalez Corzo, Mario
  14. Determinants of Foreign Direct Investment in Fast-Growing Economies: A Study of BRICS and MINT By Uduak Akpan; Salisu Isihak; Simplice Anutechia Asongu
  15. Farms, Families, and Markets: New Evidence on Agricultural Labor Markets By Daniel LaFave; Duncan Thomas
  16. Cambodia.s land management and administration project By Biddulph, Robin
  17. The political economy of inclusive healthcare in Cambodia Guarantee Scheme in India By Tim Kelsall; Heng Seiha
  18. Efficiency Gains by Modifying GMM Estimation in Linear Models under Heteroskedasticity By Jan F. KIVIET; Qu FENG
  19. Comparing Consumption-based Asset Pricing Models: The Case of an Asian City By Kwan, Yum K.; Leung, Charles Ka Yui; Dong, Jinyue
  20. Exchange-Rate Overshooting: An Analysis for Intermediate Macro By Fidelina B. Natividad-Carlos
  21. Complementarity in Institutional Quality in Bilateral FDI Flows By Chang Pao-Li
  22. The Wealth Distribution in Bewley Models with Investment Risk By Shenghao Zhu; Alberto Bisin; Jess Benhabib

  1. By: Akira Kohsaka (Professor, School of International Studies, Kwansei Gakuin University); Jun-ichi Shinkai (Specially Appointed Researcher, Osaka School of International Public Policy, Osaka University)
    Abstract: We examine the role of financial shocks in business cycles in general and in financial crises in particular in East Asia (Indonesia, Korea, Malaysia and Thailand) since the 1990s. Estimating a Financial Conditions Index, we found that financial shocks explain most of business downturns in all the economies in the Asian Financial Crisis (AFC) in 1997-98, but that the effects of financial shocks are diverse across economies in the Global Financial Crisis (GFC) in 2008-09. In the GFC, the financial shocks played a relatively minor role in Indonesia, Malaysia and Thailand, while it played a similarly dominant role in Korea. Among individual financial channels, risk factors related to volatile external financial inflows were most significant in all the economies in the AFC and in Korea in the GFC.
    Keywords: Business cycles, Financial Conditions Index (FCI), Asian Financial Crisis, Global Financial Crisis, East Asia
    JEL: E32 E42 E44
    Date: 2014–11
  2. By: Durevall, Dick (Department of Economics, School of Business, Economics and Law, Göteborg University); van der Weide, Roy (Development Economics Research Group, The World Bank, Washington DC, The United States)
    Abstract: This paper shows how a developing country, Lao PDR, imports high glutinous rice prices by exporting its staple food to neighboring countries, Vietnam and Thailand. Lao PDR has extensive export controls on rice, generating a sizable difference between domestic and international prices. Controls are relaxed after good harvests, leading to a surge in exports early in the season and rapidly rising prices later in the year. There is thus a strong case for removal of trade restrictions since they give rise to price spikes, keep the long-term price of glutinous rice low, and thereby hinder increases in income from agriculture. Although this is a case study of Lao PDR, the findings may equally apply to other developing countries that export their staple food.
    Keywords: exports; food prices; free trade; rice prices; rice markets; sticky rice; welfare
    JEL: F15 Q11 Q17 Q18
    Date: 2014–11
  3. By: Markussen, Thomas; Fibaek, Maria; Tarp, Finn; Nguyen, Do Anh Tuan
    Abstract: Using survey data from rural Vietnam, this paper documents a statistically significant, positive effect of self-employment in farming on subjective well-being. Wage workers are less happy than farmers across a range of different types of wage jobs. These
    Keywords: happiness, self-employment, wage work, agriculture, Vietnam
    Date: 2014
  4. By: Dinh, Ngan (University of Cambridge); Hughes, Conor (National Bureau of Economic Research); Hughes, James W. (Bates College); Maurer-Fazio, Margaret (Bates College)
    Abstract: Human trafficking is one of the most widely spread and fastest growing crimes in the world. However, despite the scope of the problem, the important human rights issues at stake and the professed intent of governments around the world to put an end to "modern day slavery", there is very little that is actually known about the nature of human trafficking and those most at risk as potential victims. This is due in large part to the difficulty in collecting reliable and statistically useful data. In this paper we present the results of a pilot study run in rural Vietnam with the aim of overcoming these data issues. Rather than attempt to identify victims themselves, we rely on the form rural migration often takes in urbanizing developing countries to instead identify households that were sources of trafficking victims. This allows us to construct a viable sampling frame, on which we conduct a survey using novel techniques such as anchoring vignettes, indirect sampling, list randomization and social network analysis to construct a series of empirically valid estimates that can begin to shed light on the problem of human trafficking.
    Keywords: human trafficking, labor migration, Vietnam, household survey, indirect sampling, social network analysis, pilot study, public policy
    JEL: J47 J61 J82 K42 O15
    Date: 2014–11
  5. By: Deluna, Roperto Jr; Chelly, Antiquisa
    Abstract: This study was conducted to examine the relationship among Economic Growth, Financial and trade Globalization in the Philippines from 1980 to 2011. The study used the Vector Autoregressive VAR (1) model and Granger Causality test. It was found out that the current value of GDP is positively affected by the previous value of itself and trade openness. The estimation results suggested that growth in trade volumes accelerate economic growth. However, financial openness has no significant effect on the current value of GDP. This implies that the level of openness of the Philippine economy is not sufficient to obtain the potential benefits of financial globalization in enhancing economic growth.
    Keywords: VAR, Globalization, Economic Growth, Development
    JEL: C32 O1 O11 O4
    Date: 2014–08
  6. By: Prema-chandra Athukorala
    Abstract: This paper documents and analyzes emerging trade patterns in Asia, with special reference to the implications of global production sharing with a view to informing the policy debate on forming the Regional Comprehensive Economic Partnership (RCEP). The analysis reveals that the degree of dependence of RCEP countries on this new form of global division of labour is much larger compared to Europe and North America. Global production sharing has certainly strengthened economic interdependence among the countries in the region, but the dynamism of the regional cross-border production networks depends inexorably on global, rather than regional, trade in final goods. The findings of this paper make a strong case for a global, rather than a regional, approach to trade and investment policy making.
    Keywords: Free trade agreement, regional economic cooperation, ASEAN, global production sharing, trade patterns
    JEL: F13 F14 F13 O53
    Date: 2014
  7. By: World Bank
    Keywords: Finance and Financial Sector Development - Access to Finance Banks and Banking Reform Private Sector Development - Emerging Markets Finance and Financial Sector Development - Bankruptcy and Resolution of Financial Distress Finance and Financial Sector Development - Debt Markets
    Date: 2014–06
  8. By: Taya Dumrongrittikul; Heather Anderson; Farshid Vahid
    Abstract: This paper investigates international responses of key macroeconomic variables, particularly real exchange rates, to simultaneous shocks to productivity in the traded sector in eight Asian emerging and developing countries. We use panel estimation techniques to construct component submodels in a thirty country global vector autoregressive (GVAR) model. The GVAR approach can account for interaction among all countries and capture many potential international transmission channels. We identify the shocks by using sign restricted impulse responses. We find that increases in traded-sector productivity in Asian developing countries lead to a real appreciation of the domestic currencies, in line with the Balassa-Samuelson hypothesis. Inflation also increases in many Asian developing countries. After the shocks, nontraded sector productivity in the US and other developed countries increases, suggesting that there is a compositional shift in their production, away from the traded goods toward the nontraded goods. This allows productivity in the nontraded sector to increase. Further, the traded sector productivity shocks in Asia stimulate international trade in most countries.
    Keywords: Asian developing countries; Exchange rate fundamentals; Global vector autoregression; Panel vector error correction model; Real exchange rates; Sign restricted impulse response.
    JEL: C51 E52 F31
    Date: 2014
  9. By: World Bank
    Keywords: Finance and Financial Sector Development - Access to Finance Public Sector Expenditure Policy Finance and Financial Sector Development - Debt Markets Public Sector Economics Banks and Banking Reform Public Sector Development
    Date: 2014–01
  10. By: Chen, Dong; Gao, Yanmin; Kaul, Mayank; Leung, Charles Ka Yui; Tsang, Desmond
    Abstract: This paper studies how the presence of sponsor and external management affect leverage and debt maturity decisions in three major Asian-Pacific REIT markets: Australia, Japan and Singapore. Our empirical results indicate that sponsored REITs opt for higher levels of leverage and loans with longer maturity. On the contrary, externally managed REITs are associated with lower leverage and loans with shorter maturity. Our results are robust to the inclusion of other firm variables and to alternative specifications. Subsequent to the financial crisis, the impact of sponsorship on debt financing decisions has diminished, and borrowing of externally managed REITs is further constrained.
    Keywords: Asian-Pacific REIT markets, capital structure, debt maturity, simultaneous equation modelling, financial crisis
    JEL: E60 F30 G10
    Date: 2014–12
  11. By: Jiranyakul, Komain
    Abstract: This study examines both short-run and long-run causal relationship between stock market capitalization, trade openness and economic growth in Thailand. Quarterly data over the period from the first quarter of 1993 to the fourth quarter of 2013 are used in the analysis. The results from this study show that there exists a unidirectional long-run causality running from stock market capitalization and trade openness to real GDP. In the short run, stock market capitalization does not causes economic growth while trade openness negatively cause it. Furthermore, there exist short-run bidirectional negative causations between economic growth and trade openness. However, the short-run phenomena are temporary. The long-run relationship shows that both market capitalization and trade openness are important determinants of real GDP. Based upon the results from this study, policymakers should pay attention to measures that are able to enhance stock market capitalization and trade openness if the long-run target is to achieve high economic growth rate.
    Keywords: Economic growth, market capitalization, trade openness, cointegration, causality
    JEL: C22 F41 O11
    Date: 2014–11
  12. By: Tasso Adamopoulos; Diego Restuccia
    Abstract: We assess the effects of a major land-policy change on farm size and agricultural productivity using a quantitative model and micro-level data. We study the 1988 land reform in the Philippines that imposed a ceiling on land holdings and severely restricted the transferability of the redistributed farm lands. We study this reform in the context of an industry model of agriculture with a non-degenerate distribution of farm sizes featuring an occupation decision and a technology choice of farm operators. In this model, a land reform reduces agricultural productivity not only by misallocating resources from large/high productivity farms to incumbent small/low productivity farms, but also by distorting farmers' occupation and technology adoption decisions. The model, calibrated to pre-reform farm-level data in the Philippines, implies that on impact the land reform reduces average farm size by 34% and agricultural productivity by 17%. The government assignment of land and the ban on its transfer are key for the magnitude of the results since a market allocation of the above-ceiling land produces only 1/3 of the size and productivity effects. These results emphasize the potential role of land market efficiency for misallocation and productivity in the agricultural sector.
    Keywords: agriculture, misallocation, within-farm productivity, land reform.
    JEL: O11 O14 O4
    Date: 2014–12–09
  13. By: Gonzalez Corzo, Mario
    Abstract: This paper examines the principal agricultural transformations in a selected group of former socialist countries in Asia and Eastern and Central Europe, using commonly-accepted indicators such as physical output, labor productivity, and agricultural yields, and offers some relevant recommendations for Cuba. The countries included in this study are: China, Vietnam, Russia, Ukraine, Estonia, the Czech Republic, Hungary, Poland, Bulgaria, Rumania and Slovenia. Section one presents a brief introduction. Section two analyzes the role of agriculture in the (post-socialist) transition countries included in the study. This is followed by a detailed analysis of general trends and indicators such as output, labor productivity, and agricultural yields in these countries during the first decade of agricultural transformations. Finally, section four discusses the relevance of these experiences in the case of Cuba within the context of the ongoing process of “updating” the country’s (socialist) economic model.
    Keywords: Agriculture, Cuba, economic reforms, transition economies
    JEL: P2 P25 P3 P32
    Date: 2013–12–31
  14. By: Uduak Akpan (Association of African Young Economists); Salisu Isihak; Simplice Anutechia Asongu (Association of African Young Economists)
    Abstract: This study employs panel analysis to examine the determinants of foreign direct investment (FDI) in Brazil, Russia, India, China, and South Africa (BRICS) and Mexico, Indonesia, Nigeria, and Turkey (MINT) using data for eleven years i.e. 2001 – 2011. First, it uses pooled time-series cross sectional analysis to estimate the model on determinants of FDI for three samples: BRICS only, MINT only, and BRICS and MINT combined; then, random effects model is also employed to estimate the model for BRICS and MINT combined. The results show that market size, infrastructure availability, and trade openness play the most significant roles in attracting FDI to BRICS and MINT while the roles of availability of natural resources and institutional quality are insignificant. Given that FDI inflow to a country has the potential of being mutually beneficial to the investing entity and host government, the challenge is on how BRICS and MINT can sustain the level of FDI inflow and ensure it results in economic growth and socio-economic transformation. To sustain the level of FDI inflow, governments of BRICS and MINT need to ensure that their countries remain attractive for investment. BRICS and MINT also need to ensure that their economies absorb substantial skills and technology spillovers from FDI inflow to promote sustainable long-term economic growth by investing more in their human capital. The study is significant because it contributes to literature on determinants of FDI by extending the scope of previous studies which often focus only on BRICS.
    Keywords: FDI, determinants, fast-growing economies, BRICS, MINT
    Date: 2014–07
  15. By: Daniel LaFave; Duncan Thomas
    Abstract: The farm household model has played a central role in improving the understanding of small-scale agricultural households and non-farm enterprises. Under the assumptions that all current and future markets exist and that farmers treat all prices as given, the model simplifies households’ simultaneous production and consumption decisions into a recursive form in which production decisions can be treated as if they are independent of preferences of household members. These assumptions, which are the foundation of a large literature in labor and development have been tested and not rejected in several important studies, notably Benjamin (1992). Using new, longitudinal survey data from Central Java, Indonesia, this paper tests a key prediction of the recursive model: demand for farm labor is unrelated to the demographic composition of the farm household. This prediction is rejected. This rejection is not explained by contamination due to unobserved heterogeneity at the farm level, potential endogeneity of household demographic composition, nor differential monitoring costs for family and hired labor. The difference in conclusions can be attributed to implausibly low levels of family labor in the data used by Benjamin.
    JEL: J1 J43 O12 Q12
    Date: 2014–11
  16. By: Biddulph, Robin
    Abstract: This paper presents the case of World Bank support to the mass titling component of the Cambodia Land Management and Administration Project. This was a project for which there was clear national demand, as evidenced by the fact that the Cambodian governme
    Keywords: Social spending, human development, aggregate welfare, child mortality, developing countries
    Date: 2014
  17. By: Tim Kelsall; Heng Seiha
    Abstract: Over the past 15 years, Cambodia has made significant strides in expanding effective access to free healthcare for poor people, thanks largely to 'Health Equity Funds' (HEFs), a multi-stakeholder health-financing mechanism. HEF operators have helped expand access, incentivise health staff, and lobby on behalf of poor patients. However, despite their successes, they have been unable convincingly to address some of the deeper-seated problems of the Cambodian health system, such as under-resourced facilities, underpaid, poorly qualified staff, and a burgeoning private sector. This paper explains this state of affairs as a product of Cambodia's 'political settlement', in which relatively successful multi-stakeholder initiatives exist as 'islands of effectiveness' in a sea of rent-seeking and patronage. While such islands may currently be the best solution available for poor people, the deeper problems are unlikely to be solved without a shift in the political settlement itself.
    Date: 2014
  18. By: Jan F. KIVIET (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological Univer- sity. Address: 14 Nanyang Drive, Singapore, 637332.); Qu FENG (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological Univer- sity. Address: 14 Nanyang Drive, Singapore, 637332.)
    Abstract: While coping with nonsphericality of the disturbances, standard GMM suffers from a blind spot for exploiting the most e¤ective instruments when these are ob- tained directly from unconditional rather than conditional moment assumptions. For instance, standard GMM counteracts that exogenous regressors are used as their own optimal instruments. This is easily seen after transmuting GMM for linear models into IV in terms of transformed variables. It is demonstrated that modified GMM (MGMM), exploiting straight-forward modifications of the instru- ments, can achieve substantial efficiency gains and bias reductions, even under mild heteroskedasticity. Feasible MGMM implementations and their standard er- ror estimates are examined and compared with standard GMM and IV for a range of typical models for cross-section data, both by simulation and by empirical il- lustration.
    Keywords: efficiency, generalized method of moments, instrument strength, non-spherical disturbances, (un)conditional moment assumptions
    JEL: C01 C13 C26
    Date: 2014
  19. By: Kwan, Yum K.; Leung, Charles Ka Yui; Dong, Jinyue
    Abstract: Eight consumption-based asset pricing models are developed, estimated and compared their capacities in accounting for the asset markets in Hong Kong. Results based on conventional metrics or recently developed econometric techniques deliver similar results: introducing housing into the consumption-based models does not always improve the models’ performance; how it is introduced matters. Recursive utility model and its housing-augmented variant, which emphasize the importance of early resolution of uncertainty and long term risk, outperform alternative models in forecasting stock returns. Collateral constraint model outperforms in predicting housing return, suggesting the importance of imperfect capital market in the housing market.
    Keywords: Consumption-based asset pricing model; Recursive utility; Habit formation; Consumption growth risk; Composition risk; Labor income risk; Long-run risk; Collateral constraint; Hansen-Jagannathan distance; Model confidence sets.
    JEL: E20 G12 R30
    Date: 2014–12
  20. By: Fidelina B. Natividad-Carlos (School of Economics, University of the Philippines Diliman)
    Abstract: While exchange rate dynamics is an important topic in open economy macroeconomics, the standard tool commonly used to introduce exchange rate dynamics - the Dornbusch (1976) seminal paper along with phase diagram - is not well-suited for undergraduate students as most of them do not have yet a background on dynamic macroeconomic analysis. This paper attempts to provide a graphical device – a panel IS*-LM* diagram – which can be used to teach intermediate macroeconomics students about Dornbusch’s idea of exchange rate dynamics. In addition, it also attempts to bridge the gap between undergraduate teaching and graduate teaching of exchange rate dynamics by showing the correspondence between the economy’s adjustment path in the IS*-LM* diagram and that in the phase diagram.
    Keywords: undergraduate teaching, graduate teaching, exchange rates, exchange rate dynamics, sticky prices, interest parity, open economy macroeconomics, fiscal policy, monetary policy
    JEL: A23 F31 F41
    Date: 2014–10
  21. By: Chang Pao-Li (Singapore Management University)
    Abstract: This paper develops a theory on the complementarity in institutional qualities between the home and host countries in bilateral FDI. Firms `born' in countries with poorer institutions tend to invest more in informal institutions to mitigate political risk. The marginal advantage of higher informal institution endowment is bigger when the political risk at the FDI destination is higher. Thus, all else being equal, the ranking of the MNE's home institutions predicts the ranking of the institutional qualities of their FDI destinations. I find robust empirical evidence for this theoretical prediction using bilateral FDI for 219 economies during year 2001-2010.
    Keywords: Foreign Direct Investment; Informal Institution; Political Risk; Gravity Equation; Tobit
    JEL: C21 C23 C24 F21 F23
    Date: 2014–10
  22. By: Shenghao Zhu (National University of Singapore); Alberto Bisin (New York University); Jess Benhabib (NYU)
    Abstract: We study the wealth distribution in Bewley economies with idiosyncratic capital income risk (entrepreneurial risk). We find, under rather general conditions, a unique ergodic distribution of wealth which displays fat tails (a Pareto distribution in the right tail).
    Date: 2014

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