nep-sea New Economics Papers
on South East Asia
Issue of 2015‒05‒09
fifteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Asia Bond Monitor September 2014 By Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB)
  2. Innovative Asia: Advancing the Knowledge-Based Economy: Country Case Studies for the PRC, India, Indonesia, and Kazakhstan By Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB)
  4. Regional Economic Integration and Multilateralism: The Case of the ASEAN-Australia-New Zealand FTA and the Malaysia-New Zealand FTA By Vitalis, Vangelis
  5. China Integrates Asia with the World: An Empirical Study By Dinda, Soumyananda
  6. Innovative Asia: Advancing the Knowledge-Based Economy: The Next Policy Agenda By Asian Development Bank (ADB); ; ;
  7. Myanmar: Unlocking the Potential By Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB); Asian Development Bank (ADB)
  8. Australia in the Asian Century By Ken Henry
  9. Prolonged reserves accumulation, credit booms, asset prices and monetary policy in Asia By Andrew J Filardo; Pierre L Siklos
  10. Investment Efficiency, State-Owned Enterprises and Privatisation: Evidence from Vietnam in Transition By O'Toole, Conor; Morgenroth, Edgar; Ha, Thi Thu Thuy
  11. Technical and Vocational Education and Training in Viet Nam: An Assessment By Asian Development Bank (ADB); ; ;
  12. La charité islamique : un levier innovant pour le financement du développement ? By El Sharkawy, Nourhan
  13. Hofstede, Schwartz, Inglehart and beyond. New directions in empirical global value research By Tausch, Arno
  14. Axiomatization of Reverse Nested Lottery Contests By Jingfeng Lu; Zhewei Wang
  15. Market Sentiment and Paradigm Shifts By Liya Chu; Xue-Zhong He; Kai Li; Jun Tu

  1. By: Asian Development Bank (ADB); Asian Development Bank (ADB) (Office of Regional Economic Integration, ADB); Asian Development Bank (ADB) (Office of Regional Economic Integration, ADB); Asian Development Bank (ADB)
    Abstract: This publication reviews recent developments in East Asian local currency bond markets along with theoutlook, risks, and policy options. It covers the 10 members of the Association of Southeast Asian Nations plus the People’s Republic of China; Hong Kong, China; and the Republic of Korea.
    Keywords: emerging East Asia; local currency bond market; foreign currency bonds; bonds; bond yields; bonds outstanding; government bonds; corporate bonds; bond issuance; foreign investor holdings; People's Republic of China; Hong Kong, China; Indonesia; Republic of Korea; Malaysia; Philippines; Singapore; Thailand; Viet Nam; foreign capital inflows; G3 currency bond; international currency; bond market developments; renminbi internationalization; dim sum bonds; cross-border settlement; offshore renminbi bond market
    Date: 2014–09
  2. By: Asian Development Bank (ADB); Asian Development Bank (ADB) (Regional and Sustainable Development Department, ADB); Asian Development Bank (ADB) (Regional and Sustainable Development Department, ADB); Asian Development Bank (ADB)
    Abstract: This report presents the case studies of the People’s Republic of China, India, Indonesia and Kazakhstan in their knowledge-based economy approaches. It identifies a range of policies and initiatives that these economies need to consider to strengthen innovation led growth and make a transition from middle income to high income levels.
    Keywords: PRC; IND; INO; KAZ; economic incentive and institutional regime; education and training; innovation; ICT; jugaad; knowledge-based economy; technology; research and development; science
    Date: 2014–09
  3. By: Nguyen Van Phuong
    Abstract: Vietnam has been implementing the export-oriented economy, in which the central bank of Vietnam, well-known as the State Bank of Vietnam (SBV), adopted the managed float exchange rate regime in 1990. Therefore, the exchange rate movement plays an important role in stimulating the Vietnamese export activities. By applying the long-run SVAR model, pioneered by Blanchard and Quah (1989), this research examines how the real and nominal shocks impact the nominal and real exchange rate (USD/VND) in Vietnam. Based on monthly data concerning USD/VND exchange rate and, the price levels in Vietnam and the United States from May 1995 to December 2013, our empirical results reveal that: the real shock primarily leads the real and nominal exchange rate (USD/VND) to fluctuate over time. Meanwhile, the nominal shock has a temporary effect on the movement in the real exchange rate in Vietnam. Our research also finds that the long-run Purchasing Power Parity (PPP) does not hold in Vietnam.
    Keywords: The State Bank of Vietnam, the exchange rate, unit root test, SVAR.
    JEL: E60 E69
    Date: 2015–04–01
  4. By: Vitalis, Vangelis (Asian Development Bank Institute)
    Abstract: Regional economic integration is back in vogue following the "stumble" in the Doha Round in July 2008. Preferential trade agreements (PTAs) are driving this trend in Asia and the Pacific as well as in Central and South America, and the sheer volume of PTAs is striking. In the 1990s there were barely five PTAs in force, but now there are more than 200 either under negotiation or in force. In this regard, Asia and the Pacific has developed a rapidly evolving regional economic architecture that spans two major plurilateral agreements, the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (or ASEAN+6 RCEP), as well as the putative Free Trade Agreement of the Asia-Pacific (FTAAP), which received a new lease on life through the Asia-Pacific Economic Cooperation (APEC) leaders' meeting in Beijing late last year. ASEAN, as a group or individually, has been particularly busy in this sphere, deliberately using PTAs as a supplement to its own regional integration process. In Central and Latin America, economic integration has been similarly pursued at variable speeds and in variable geometries. In the meantime, there have been some concerns about the proliferation of PTAs for all the usual reasons. Trade diversion is a reality and with their less-than-comprehensive approach to sensitive issues like agriculture and burdensome rules of origin (ROO), many PTAs are perceived as being at best of marginal business interest and at worst a "stumbling block" to conclusion of the Doha Development Round. This paper argues, however, that more recent PTA outcomes, like the ASEAN-Australia-New Zealand FTA (AANZFTA) and the Malaysia-New Zealand FTA (MNZFTA) present a rather more nuanced picture. There may even be some grounds for modest optimism about how PTAs can be building—not stumbling—blocks for multilateralism. Four distinct criteria are used to assess the AANZFTA and the MNZFTA. These include: 1) the breadth and depth of agricultural market access liberalization; 2) the existence (or non-existence) of WTO-plus commitments; 3) how the risks of complex ROO, etc., are mitigated; and 4) the introduction of bespoke solutions of direct commercial value to business (e.g., facilitated business visitor access). The paper suggests that both the AANZFTA and the MNZFTA provide the basis for engagement at the WTO on how to multilateralize the outcomes secured through the AANZFTA and the MNZFTA. The role and experience of New Zealand in both of these high quality and comprehensive PTAs is something that may be of enduring interest.
    Keywords: regional economic integration; preferential trade agreements; doha development round; asean-australia-new zealand free trade agreement; malaysia-new zealand free trade agreement; multilateralization; Australia; Malaysia Trade; New Zealand; Asia
    JEL: F13 F15 F53
    Date: 2015–04–22
  5. By: Dinda, Soumyananda
    Abstract: The paper focuses on China’s economic integration with Asia region and the world. It also attempts to find the long run relation with short run dynamics of China’s trade in Asia and the world. The augmented Dicky-Fuller (ADF) and Phillips-Perron (PP) methods are applied to test the time-series properties of the variables. Co-integration technique is used to detect the economic integration of China’s export to the US and its import from Asian nations using monthly aggregate data from December 2005 to July 2010. This study observed that empirically China’s export to the US depends on exchange rate and China’s import from Asia depends on China’s export to the US. China has double role in international trade – (i) China acts as an attractor of all inputs from Asia and (ii) China exports the final products in international market. This study also reveals that the speed of China’s import from Asia is faster than that of China’s export to the US. The results imply that China’s trade should be treated as an engine of growth in the Asian developing countries and the trade promotion policies should be encouraged. The emerging China will create other opportunities through trade integration with Asia and the world. China is economically integrated with region and the world. The paper contributes to measure the speed of China's export and import within Asia and the world. These empirical findings will help policy makers to formulate their policy and design the mechanism for application as per their targets.
    Keywords: Economic Integration, production network, Co-integration, Asia, China, the US, ECM, Engine of Growth, Export, Import, Long run, Short run dynamics.
    JEL: C22 C52 F2 F4 F5 N95 R12
    Date: 2012–07
  6. By: Asian Development Bank (ADB); (Regional and Sustainable Development Department, ADB); ;
    Abstract: This study outlines policy actions required in developing countries of Asia to advance as knowledge-based economies. The study uses the four pillars of the Knowledge Economy Index to benchmark the performance of developing economies in Asia against advanced economies of the world. It analyzes opportunities by which Asia’s middle and low income countries can tap new technology trends to move up global value chains and towards high-income levels.
    Keywords: economic incentive and institutional regime; education and training; innovation; ICT; jugaad; knowledge-based economy; technology; research and development; science
    Date: 2014–09
  7. By: Asian Development Bank (ADB); Asian Development Bank (ADB) (Economics and Research Department, ADB); Asian Development Bank (ADB) (Economics and Research Department, ADB); Asian Development Bank (ADB)
    Abstract: After 3 years of historic reforms, Myanmar has entered a pivotal stage in its socioeconomic development. Natural, cultural, and demographic advantages are positioning the country for long-term success, but many challenges and potential pitfalls lie ahead. This publication examines how to leverage the opportunities and offers solutions to the challenges. For Myanmar to achieve its economic transition, considerable investments will have to be made in infrastructure and developing human capital, and progress made on building institutional capacity, a regulatory environment for the private sector to flourish, and a modern finance sector. In all reform efforts, the government should embrace good governance, and strive for inclusive, environmentally sustainable, and regionally connected growth. Ensuring that the benefits of growth are shared broadly and regionally balanced stands out in a crowded development agenda.
    Keywords: Myanmar unlocking the potential, Myanmar economic transition, Myanmar economic potential, Myanmar economic development, Central Bank of Myanmar, Ministry of National Planning and Economic Development, Framework for Economic and Social Reforms, Myanmar Comprehensive Development Vision, National Comprehensive Development Plan Myanmar CGE model, Core growth strategies, governance and public sector reform, macroeconomic and financial stability creating a business-enabling environment, leveraging rich endowment, enhancing regional connectivity and integration promoting human development and poverty reduction, pursuing environmentally sustainable growth public-private partnership, financial sector reform policy, responsible tourism, infrastructure development inclusive growth, industrial development
    Date: 2014–09
  8. By: Ken Henry (Crawford School of Public Policy)
    Abstract: This paper examines a new economic narrative for Australia to replace the emphasis on 'competitiveness' that sustained the wave of reform in the 1980s and 1990s. The need to ensure that Australians are endowed with the capabilities that will be relevant to success in this Asian century calls for a renewed focus on these, and other, national endowments. The White Paper on Australia in the Asian Century identified a need for new foundational investments, including public investments : in Australian schools, universities and vocational training centres; in developing Asia-capable workplaces and institutions; in developing a much deeper understanding of the history, cultures, languages, geography and governance of our regional neighbours; in devoting more effort to what has become known as ‘track 2 diplomacy’; in building strong people-to-people relationships based on trust and mutual respect; and in encouraging adaptability. International competitiveness in the Asian century will be enhanced by paying attention to all of these endowments, and leveraging them into commercial partnerships, not by pursuing a race to the bottom on wages, taxes, social foundations, environmental standards or animal welfare.
    Date: 2015–04
  9. By: Andrew J Filardo; Pierre L Siklos
    Abstract: This paper examines past evidence of prolonged periods of foreign exchange reserves accumulation in the Asia-Pacific region. One empirical challenge is to identify periods of reserve accumulation that are sufficiently large and persistent to be categorised as prolonged. Several proxies for prolonged episodes are considered, including a newly proposed one based on a factor model. We then identify the key macrofinancial determinants of prolonged reserve accumulation. Two broad conclusions emerge from the stylised facts and the econometric evidence. First, the best protection against costly reserves accumulation is a more flexible exchange rate. Second, the necessity of accumulating reserves as a bulwark against goods price inflation is misplaced. Instead, there is a strong link between asset price movements and the likelihood of accumulating foreign exchange reserves that are costly. Policy implications are also drawn.
    Keywords: foreign exchange reserves accumulation, monetary and financial stability
    Date: 2015–04
  10. By: O'Toole, Conor; Morgenroth, Edgar; Ha, Thi Thu Thuy
    Abstract: Our research tests the difference in investment efficiency between state-owned enterprises (SOEs) and private firms and then evaluates the effect of privatisation and equitisation policies on the investment efficiency of former state owned enterprises (SOEs). We use a novel dataset from Viet Nam which covers large and non-listed SMEs across the construction, manufacturing, and services sectors. Our methodology uses a structural model to test the relationship between Tobin's Q and capital spending. We find no evidence of investment spending being linked to marginal returns by SOEs across all sectors and size classes. However, former SOEs which have been privatised and equitized with a minority state shareholding display positive links between Q and investment. In fact, the link is stronger for these firms than for private firms.498
    Keywords: investment/manufacturing/Policy/Services
    Date: 2015–03
  11. By: Asian Development Bank (ADB); (Southeast Asia Department, ADB); ;
    Abstract: This publication is an assessment of the subsector’s major trends, strengths, and issues, focusing on formal skills development programs operated by the General Department of Vocational Training of the Ministry of Labor, Invalids and Social Affairs of the Socialist Republic of Viet Nam. It analyzes the country’s technical and vocational training system as well as subsector policies and strategies. Data on related issues (such as growth in employment, education indicators, and enrollment rates) were collected, consolidated, and displayed in tabular form to give readers an overall picture and comprehensive view of the development of the subsector.
    Keywords: eeducation, technical and vocational education training, professional qualification, levy system, nonformal skills, enterprise-based training, Viet Nam, Quality Assurance and System Accreditation, National Skills Standards and Certification, technical education, vocational training
    Date: 2014–09
  12. By: El Sharkawy, Nourhan
    Abstract: For many centuries, forms of Islamic charity such as zakat (i.e. "obligatory" alms) and waqf (i.e. endowment or philanthropic foundation) have proven to be essential tools for economic and human development. Both of these schemes aim to reduce income inequality and to encourage productive investment and an entrepreneurial spirit among needy people. Despite their importance, zakat and waqf have received less attention in economic and financial strategies. Consequently, their potential for poverty alleviation and reducing unemployment has not been fully utilized. The main objective of this study is to provide an overview of an efficient management and investment strategies which maximize the revenues of charitable funds and enhance their contribution to socioeconomic development. We will also try to give answers to the following questions: What are the economic roles of zakat and waqf? Can Islamic charity be used as an innovative source of finance for development? How do we maximize returns on these flows to make them productive? Based on experiences in some countries of the Arab World, Africa and Southeast Asia, our study will show that good governance and tax exemption may be significant factors in increasing charitable giving. Therefore, investing charitable funds in socially responsible projects, based on expert knowledge of Islamic finance, should be an efficient strategy to provide permanent revenues and help solve the problems of poverty. Finally, cooperation between mainstream international development agencies and waqf and zakat institutions could improve their capacity to reduce poverty and social exclusion.
    Keywords: charitable funds; poverty; investments; economic development; Islamic finance; Arab World; Africa; Asia; fonds de charité; zakat; waqf; pauvreté; investissements; développement économique; finance islamique; Monde Arabe; Afrique; Asie;
    JEL: P45 O55 O53 O16
  13. By: Tausch, Arno
    Abstract: However much we appreciate the enormous scientific contribution by Professor Ronald Inglehart, who initiated the international data collection of the World Values Survey, our re-analysis of the very World Values Survey data [“roll-outs” of the World Values Survey data wvs1981_2008_v20090914.sav] brought us to question Inglehart’s theories, with which he and his associates interpret the mass of the World Values Survey data. Their theoretical approach does not use a sufficiently number of hard-core indicators how global publics view central issues of economic policy, and their theories overemphasize a secularistic view of the religious phenomenon in modern society. Their theories predict the gradual waning of the religious phenomena in parallel with the increase of human security, and even cherish at times the tendencies brought about by such a waning of the religious element in advanced democracies. Inglehart spells them out: higher levels of tolerance for abortion, divorce, homosexuality; the erosion of parental authority, the decrease of the importance of family life et cetera. Is that really something to cherish? Today, societal and economic development is discontinuous; regional centers of the world economy shift at an enormous speed; and above all, religion and family values can be an important assett in the stability of capitalist development. Economic growth inexorably shifts away from the North Atlantic arena towards new centers of gravitation of the world economy. Alberto Alesina’s and Paola Giuliano’s new maps of global values (Alesina and Giuliano, 2013) present a real break with the hitherto existing secularistic consensus of global value research. Their maps of family ties, respect for parents et cetera coincide with the global map of economic growth today. Leading representatives of the global economics profession now start to take up the challenge to interpret the mass of the data from the World Values Survey project on their own. The essay by Barro and McCleary (2003) was an important beginning and a good example of how today economic research uses data from the World Values Survey project to study the relationship between religion, denominations and economic growth. Alesina (2013); Alesina and Angeletos (2005); Alesina and Fuchs-Schündeln (2007); Alesina and Guiliano (2010, 2011, 2013); Alesina, Cozzi and Mantovan (2012); and Alesina, di Tella, and MacCulloch (2004) all show how the economic discipline can gain hard-core, quantitative and valuable insights from comparative knowledge about such phenomena as generalized trust and social capital, individualism, family ties, morality, attitudes toward work and perception of poverty, and religious practice for economic processes. In our re-analysis, we use the advanced statistical multivariate analysis technique of the Promax factor analysis, which allows for correlations between factors. It is available to the global public via the IBM-SPSS statistical package XXI. We eliminated missing values by listwise delition. In our first re-analysis, there were 92289 interview partners from around the globe with complete data for all the 30 variables of our research design. Our main model explains 47.89% of the total variance of all the 30 variables. We highlight the relationships between the original 30 variables and the newly derived factor analytical dimensions: a) economic permissiveness b) traditional religion c) racism d) higher education for the younger generation (education gap between the generations) e) distrust of the army and the press f) authoritarian character g) tolerance and respect h) the 'ego' company (i. e. the rejection of obedience and unselfishness as values in education) i) [predominantly] female rejection of the market economy and democracy We also look at the trajectory of global society by analyzing the factor scores along the path of the Human Development Indicator of the UNDP (“human security indicator”, also used by Inglehart and his associates). - Economic permissiveness clearly captures the dimension of lawlessness, moral-ethical decay and the shadow economy, so prominent in contemporary economic theory of growth. In statistical terms, it is the most important of all the resulting factors. - Traditional religion is linked in a very complex way to the absence of economic permissiveness. We also look at the exceptional performers (“residuals”) which best avoided economic permissiveness on each stage of secularization. We also present Chropleth maps of human values across the globe, and show the regional implications of our analysis. Our global value development index combines law-abiding and social capital, avoiding racism; trust of the army and the press; no authoritarian character; a high degree of tolerance and respect + post-materialism; and a female acceptance of the market economy and democracy. The weight, given to each factor, corresponds to the Eigen values listed in this work. Our country results show that the five best ranked countries of our entire globe are all western democracies with a solid historical anchoring of their societies in the traditions of the Enlightenment – Switzerland, Norway, Sweden, New Zealand, and Australia. But we already find among the next five countries Canada, the two developing countries Vietnam and Tanzania, and the EU-member countries Italy (predominantly Roman Catholic, with a long history of liberal Catholicism since the Second Vatican Council) and Finland (predominantly Protestant). Our global value development index ranks the predominantly Muslim nation of Morocco twelfth – just behind the United States of America – and still ahead the Latin American democracy Uruguay and the EU-country Germany, to be followed by Bosnia and Indonesia. While in general terms our analysis is quite optimistic about the civil society foundations for a stable democracy for several Muslim countries, including Morocco, Bosnia, Indonesia, Turkey and Jordan, our analysis is fairly pessimistic for the former communist countries and successor states of the former Soviet Union, predominantly Muslim and non-Muslim alike. In a second factor analysis, we re-analyze the question of Islam and feminism, based on an analysis of all respondents from the World Values Survey. The Muslim population covered in this survey comprises representatives of 62.6% of the Muslim population of our globe. The data were based on the following variables: - Age - Education level (recoded) - Highest educational level attained - How important is God in your life - How often do you attend religious services (never?) - Important child qualities: religious faith - Jobs scarce: Men should have more right to a job than women (reject) - Sex (Gender) - University is more important for a boy than for a girl (reject) - Acceptancy of woman as a single parent The respondents (all denominations) comprised n = 173231 representative global citizens in 83 countries and territories. After Promax factor analysis, three factors explained 53.8% of total variance. While the distance to religious practice is explained to some 4% by the education level (correlation between the two factors is 0.192), one can say with certainty that there is no real sharp contradiction between religion and feminism on a global scale. And while gender determines feminist convictions, contained in our analysis to some 40%, it is also evident that feminist convictions are not only held by women, but also increasingly by enlightened men, non-Muslims and Muslims alike. Interestingly enough, our data also show that people supporting typical feminist contentions, like female access to tertiary education and jobs even at a time of crisis (Factor 3), are not necessarily too strongly in support of the acceptancy of women as a single parent (factor loading 0.352, i. e. only 12.39% of variance explained). Single parenthood is a form of household organization very common now in Western countries: the argument is that marriage is an outdated institution et cetera. Support for single parenthood by women is rather an expression of the distance towards religion around the globe (factor loading of 0.431, i. e. 18.58% of variance explained). Data emerging from the World Values Survey in the first decade of the 2000s also seem to suggest that the precariousness, which more and more characterizes the economies of leading Western countries leads toward an implosion of what Inglehart and his sociological school of thought interpreted as “self-expression values”. Our analysis of the time series element in the World Values Survey data shows that indeed, global value change seems to correspond to various ups and downs. To this end, we calculated which countries – in descending order – had very high increases or decreases in non-traditional values over preceding World Values Survey surveys from the original WVS website Inglehart’s own data ( The very idea that self-expression values in the West are imploding, while in other regions of the world they are rising, is a challenge to existing value theories. The world, described by Inglehart and Baker, 2000, where in advanced industrial societies people pay large sums of money and travel long distances to experience exotic cultures no longer seems to exist for the “1.000 Euro” generation born after 1975, which experiences more and more job insecurity and hardly finds full-time tenured work opportunities, let alone the financial means to travel to long-distant countries. No wonder then that “self-expression” is dramatically declining in the West. We also highlight the fact that the latest wave of World Values Survey data, wave 6, from 2010 - 2014, released in May 2014 contains an item which directly asked 74,044 respondents in 52 countries whether they think that self-expression is an important value for child education. The correlation between these data and Inglehart’s self-expression index is negative and the R^2 between the two variables is almost 20%. Among the twenty countries of our globe with a strong resilience of the self-expression tendencies, there is a greater number of Muslim countries (i.e. members of the Organization of Islamic Cooperation) among them. Let us think for an instance Inglehart’s theory to its end: according to the World Values Survey data, among the twenty superstars of a resilient trend towards self-expression we find Jordan; Pakistan; Bangladesh; Nigeria; Turkey; Algeria; Egypt; and Uganda! The most notable implosions or slow developments of self-expression – independent from the secularization process – had to be noted by contrast in western democracies. The resilience of self-expression is explaining more than 1/5 of economic growth in the world system. Muslim countries are among the trend leaders in both directions, i.e. the resilience of self expression, and economic growth during the crisis years. Our Choropleth maps in this part of our article underline our contentions. Even a pure Inglehartian world values analysis would have to come to the conclusion that the value basis of Western society is eroding. So while the methodology of the two approaches – Inglehart’s and our own – is different, the same conclusions can be drawn from it. With all the extensions of the World Values Survey project over the last decades, both in terms of geography as well as the completeness of the data, the Inglehart world map of global values recedes into the memory about a world order, which no longer exists and which was severely shattered in its foundations by the tsunami of the global economic crisis of 2008. As we try to show in this article, it was also shattered by the long shadows of the internal corrosion, which social decay and the loss of values brought about long before the 2008 crisis hit the North Atlantic arena. In addition, we present a still more conclusive proof of the interrelationship between the different types of permissiveness and the weight these factors have in relationship to the other variables contained in the World Values Survey data. Based on our analysis of the complete available data based on 28 items from the World Values Survey from 70 countries of the world, including the OIC (Organization of Islamic Cooperation) member countries Albania; Azerbaijan; Bangladesh; Bosnia and Herzegovina; Burkina Faso; Indonesia; Jordan; Kyrgyzstan; Mali; Nigeria; Turkey; and Uganda we attempt to show the interrelationships between permissiveness, the shadow economy, educational values, and other socio-political variables, like fundamental positions on the market economy and democracy. The nine factors to be extracted from the data for more than 90.000 representative respondents in 70 countries are the following: - moral (sexual) permissiveness (‘Permissiveness 1’) - acceptancy of the shadow economy(‘Permissiveness 2’) - distance from religion (‘Permissiveness 3’) - educational values: independence and imagination - distance to market economy values - education values: responsibility and tolerance - educational values: determination and perseverance and being against saving - right wing acceptance of inequality - educational values: favoring unselfishness, rejecting hard work Contrary to Inglehart’s expectations about a positive role of the low importance given to religion in society, and divorce and abortion being fully accepted, it emerges that the two factors of permissiveness (permissive family values and the loss of hard-core Max Weberian economic values) are closely interrelated with one another and with the loss of religious values. Table 5.3 of our article shows the factor loadings for each of the variables analyzed here. The variables with a high importance for “effective democracy”, i. e. tolerance and respect for other people, rejection or acceptance of corruption, and the assessment of democracy as such and vis-à-vis military rule, are highlighted in our Table 5.3. Nowhere there is a notable negative or positive factor analytical loading of beyond 0. 333 (>10% of variance explained) confirming that religious people are antidemocratic, right-wing, and pro or anti-market. In addition, the structure of the factor loadings even suggests the following: a) distance from religion is even a motive to reject a democratic political system b) moral/sexual permissiveness goes hand in hand with economic and social decay Table 5.4 shows the correlations between the promax factors, extracted from the correlation matrix between the variables of our model. Table 5.5 and Maps 5.1 to 5.9 show the country values for our analysis (“factor scores”) as well as the cascades of moral and social decay in the Western countries and also the evidence for the Muslim countries with available data. Graph 5.5 finally summarizes the pessimistic research findings, which rather support the views of Barro and Schumpeter against the secularistic and permissive logic, proposed by Inglehart. In Table 5.6 we provide our readers with clear-cut Pearson-Bravais correlation coefficients between the data presented by Hofstede and Inglehart and the factor scores from our own analytical dimensions, presented in this work on the bases of promax factor analysis with individual data from up to more than 80 countries. Table 5.7 shows the Pearson-Bravais correlations between the Schwartz dimensions and our results. In many ways, we can show that Hofstede’s Power Distance, Individualism versus Collectivism, Long-Term Orientation, and Indulgence versus Restraint very well correspond to our own factor analyses. The same happens with Inglehart’s main dimensions, traditional versus secular, and survival versus self-expression, which we can well interpret in our own system. In all cases, however, we could avoid some of the problematic assumptions, still inherent in the research by Hofstede and Inglehart. Schwartz’s factors Affective Autonomy and Harmony do not achieve any correlations which have more than 25% of variance in common with our own factors, and in addition, the following dimensions from our own research are untapped, it seems, by the Schwartz’ factors (to judge from the less than 25% of variance they have in common with the Schwartz factors). In addition, the following factors from Hofstede and Inglehart are untapped; it seems, by Schwartz’s theories (again to judge from the less than 25% of variance they have in common with the Schwartz factors) Hofstede: Masculinity versus Femininity Hofstede: Uncertainty Avoidance Index Inglehart: Self-Expression Values (WVS 1-4, 2006) Table 5.8 shows the correlations of the country scores from Schwartz’ work with standard socio-economic indicators. Interestingly enough, Muslim population shares and OIC membership present high correlations with the Schwartz factors “Embeddedness”, “Hierarchy” and “Mastery”. We then debate current contentious political cleavages, especially in Europe in the light of the empirics, as suggested by the World Values Survey. These days, in the leading world newspapers we read stories which tell us a lot about the conflicts about global values in countries like Europe today. Is prostitution justifiable? Is homosexuality justifiable? The French socialists, it seems, for example seem to think that one is not, and the other is. President Hollande and his administration put considerable political energy into legalizing homosexual marriages and prohibiting prostitution. But global citizens hold another view, and there is a high positive correlation of 0.632 between the two items in the World Values Survey, based on 218877 individuals from around the globe. I.e. people in favor of the complete acceptability of homosexuality will also be in favor of the complete acceptability of prostitution and vice versa. Graph 5.1 highlights the politically, socially and ethically robust and globally applicable message of our article on the drivers of “effective democracy”: a sound gender political agenda, ending the political discrimination of women, and economic freedom will be conducive to “effective democracy”. Nevertheless the path towards “effective democracy” will be one of ups and downs, and especially in developing countries, there will be also certain limits for a too rapid economic liberalization in terms of “effective democracy”. As the manuscript to this article was about to be finished, the new data of the World Values Survey, 2010-2014 were released, containing yet another enormous wealth of new data, including on the Muslim world. We have chosen to concentrate on two phenomena, which received a large attention on the pages of this article – tolerance and democracy. In Table 5.12 we calculate a simple UNDP Human Development Index type of Index of Tolerance, minimizing the rejection of neighbors with the following characteristics among the publics of the above mentioned countries of wave 6 of the World Values Survey: - People who speak a different language - People of a different religion - Immigrants/foreign workers - People of a different race According to the World Values Survey data, the most tolerant nation on earth today is Uruguay, followed by Sweden; New Zealand; Spain; Trinidad and Tobago; Poland; Rwanda; Colombia; Chile and Australia. Uzbekistan, Morocco and Kazakhstan are nowadays ahead of Germany; and Pakistan, Qatar and Tunisia are more tolerant than the EU-member country Romania. Some Muslim countries such as Turkey (which is still ahead of the OECD-member country South Korea), have still a poor performance. Table 5.13 and Maps 5.9 to 5.12 list the World Values Survey results for the average importance given by the global publics to democracy and the standard deviation of this indicator. Where the standard deviation is low, opinions on democracy – either way – are undivided, while high standard deviations indicate that the publics are – often bitterly – divided on the issue of democracy. Countries with an above than average importance assigned to democracy, and very high internal divisions on this issue are Tunisia; Mexico; Romania; Armenia and Yemen. While there is a general consensus that democracy is important, there are important dissenting voices. Nostalgia for past more authoritarian patterns of government can go hand in hand with economic discontent with present conditions. Countries with an above than average importance assigned to democracy, and very low internal divisions on this issue are the Netherlands; Egypt; Sweden; Turkey; and Cyprus. For anyone, attempting to turn back the clocks of history in such countries could result to be a very costly error. The recent introduction of internet censorship in Turkey would be just one example showing the relevance of this hypothesis. Countries with still a below than average importance assigned to democracy, but already very high internal divisions on the issue are Libya; Philippines; Qatar; the Occupied Palestinian Territories; and Russia. In these countries and territories, debates on the issue of democracy will surge, one way or the other. While the average importance assigned to democracy is still lower than the world average, the divisions on the issue are already very high, and unforeseen events could trigger a popular movement for more participation and democracy. Finally, countries with a below than average importance assigned to democracy, and very low internal divisions on this issue are Singapore; Rwanda; South Korea; Estonia; and Lebanon. One might expect that the current stagnation in the democratic development of the country will continue: publics don’t assign a great importance to democracy, and they are hardly divided on this issue. Table 5.13 and our maps also have another, more immediate and direct implication: the dire state of the support of democracy in many Western countries, currently hit by the economic crisis and austerity packages, and the surge of democracy in the Muslim world and the Arab world in particular. That Egypt is ahead of Germany, Uzbekistan ahead of the EU-members Poland and Spain, and a number of other Arab and Muslim countries in general ahead of the United States; and Qatar ahead of the EU-member Estonia with justification could be celebrated by the Arab and Muslim readership of this article.
    Keywords: Relation of Economics to Social Values; religion; other Economic Systems: Political Economy; Legal Institutions; Property Rights, Formal and Informal Sectors, Shadow Economy, Institutional Arrangements; Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy
    JEL: A13 N3 O17 P48 Z12
    Date: 2015–04–29
  14. By: Jingfeng Lu (Department of Economics, National University of Singapore); Zhewei Wang (School of Economics, Shandong University)
    Abstract: In this paper, we identify a set of axioms that is necessary and sufficient for axiomatizing the reverse nested lottery contest proposed by Fu, Lu and Wang (2014), which is the "mirror image" of the conventional nested lottery contest of Clark and Riis (1996). This paper thus provides an axiomatic underpinning for the reverse model, which which further reveals the connections and differences between the two (conventional and reverse) multi-prize contest models.
    JEL: C72 D72 D74
    Date: 2015–01
  15. By: Liya Chu (Singapore Management University); Xue-Zhong He (Finance Discipline Group, UTS Business School, University of Technology, Sydney); Kai Li (Finance Discipline Group, UTS Business School, University of Technology, Sydney); Jun Tu (Singapore Management University)
    Abstract: The equity premium forecasting literature provides ample evidence of predictability for both fundamental economic variables and non-fundamental variables, such as time-series momentum. In this paper, we study the role of investor setiment in equity premium predictability. Consistent with the theory of investor sentiment, we ?nd that although economic variables can have strong predicting power when investor sentiment is low, their predictability tends to become insigni?cant when investor sentiment is high and the fundamental link between economic variables and equity premium is weakened. In contrast, the predictability of non-fundamental variables can be strong in high sentiment periods while tends to vanish away when sentiment is low and behavioural actions boosting the predictability of non-fundamental variables are moderated. Moreover, about 80% (20%) times can be classi?ed as low (high) sentiment periods in our framework, which idicates that economic variables could be a more prevalent force than non-fundamental variables in terms of predicting equity premium
    Keywords: Return predictability; fundamental; momentum; investor sentiment
    JEL: C53 G12 G17
    Date: 2015–03–01

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