nep-sea New Economics Papers
on South East Asia
Issue of 2015‒05‒22
34 papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Regional connectivity in continental ASEAN By Taguchi, Hiroyuki; Nozaki, Kenji
  2. The Challange of China and the Role Deepening ASEAN Integration for the Philippine Semiconductor Industry By Emily Christi A. CABEGIN
  3. Asymmetric Exchange Rate Exposure in Indonesian Industry Sectors By Lestano, Lestano
  4. AEC Blueprint Implementation Performance and Challenges: Trade Facilitation By Ponciano INTAL Jr
  5. AEC Blueprint Implementation Performance and Challenges: Investment Liberalization By Ponciano S. INTAL Jr.
  6. Asian Participation and Performance at the Olympic Games By Noland, Marcus; Stahler, Kevin
  7. Government Strategy and Support for Regional Trade Agreements: The Case of Thailand By Kazunobu HAYAKAWA; Nuttawut LAKSANAPANYAKUL; Pisit PUAPAN; Sasatra SUDSAWASD
  8. Asia’s Evolving Role in Global Wine Markets By Kym Anderson; Glyn Wittwer
  9. Cautious or misguided? Vietnam’s rice policies By Vanzetti, David; Pham, Dung
  10. International production networks in ASEAN economies By Taguchi, Hiroyuki; Murofushi, Harutaka
  11. Demographic change in the Asian Century : Implications for Australia and the Region By Peter McDonald
  12. Productivity lessons for the Asian region By Jungsoo Park, Lawrence Lau
  13. Does Labor Market Rigidity Matter for Economic Performance? Evidence from the Four Asian Tigers By Huang, Li-Hsuan; Huang, Julia Hsin-Yi
  15. Measuring the Costs of FTA Utilization: Evidence from Transaction-level Import Data of Thailand By Kazunobu HAYAKAWA; Nuttawut LAKSANAPANYAKUL; Shujiro URATA
  16. Long-term projection of Myanmar economy by macro econometric model By Taguchi, Hiroyuki; Lar, Ni
  17. Low Carbon Green Growth in Asia: What is the Scope for Regional Cooperation? By Venkatachalam ANBUMOZHI
  18. Consumer attitudes towards attributes of food and the use of digital media and smart technologies to inform and purchase food By Sanders, C.M.; Guenther, M.; Tait, P.R.; Daziel, P.C.
  19. Technology Transfer in ASEAN Countries: Some Evidence from Buyer-Provided Training Network Data By Dionisius A. NARJOKO
  20. AEC Blueprint Implementation Performance and Challenges: Non-Tariff Measures and Non-Tariff Barriers By Dionisius A. NARJOKO
  21. Nature or Nurture in Higher Education? Inter-generational Implications of the Vietnam-Era Lottery By Christofides, Louis N.; Hoy, Michael; Milla, Joniada; Stengos, Thanasis
  22. Firm-level Impact of Free Trade Agreements on Import Prices By Kazunobu HAYAKAWA; Nuttawut LAKSANAPANYAKUL; Shujiro URATA
  23. The Japan-U.S. Price Level Index for Industry Outputs By NOMURA Koji; MIYAGAWA Kozo
  24. FDI, industrial upgrading and economic corridor in Myanmar By Taguchi, Hiroyuki; Lar, Ni
  26. Market-Based Mechanisms to Promote Renewable Energy in Asia By Venkatachalam ANBUMOZHI; Alex BOWEN; Puthusserikunnel Devasia JOSE
  27. The conceptualization and measurement of ethnic and religious divisions: categorical, temporal, and spatial dimensions with evidence from Mindanao, the Philippines By Rachel M. Gisselquist; Omar McDoom
  28. AEC Blueprint Implementation Performance and Challenges: Service Liberalization By Dionisius A. NARJOKO
  29. Co-Production Dimensions in Medical Services By Emily Hon Tshin Yapp; Stephen Sondoh J.R; Ruth Siganul
  30. Aiding innovation and entrepreneurship through migration policy: A view from Australia By Khanh Hoang
  31. Lowering of SPS settings to international standards offers big gains all round: The case of Vietnamese pork trade By Trewin, Ray; Vanzetti, David; Thang, Tran Cong
  32. Hofstede, Inglehart and beyond. New directions in empirical global value research By Tausch, Arno
  33. Trade Creation Effects of Regional Trade Agreements: Tariff Reduction versus Non-tariff Barrier Removal By Kazunobu HAYAKAWA; Tadashi ITO; Fukunari KIMURA
  34. Tariff Pass-through of the World-wide Trade: Empirical Evidence at Tariff-line Level By Kazunobu HAYAKAWA; Tadashi ITO

  1. By: Taguchi, Hiroyuki; Nozaki, Kenji
    Abstract: This chapter examines the issue on Mekong region’s connectivity on quantitative base through the analysis of the gravity trade model and its modified fragmentation model. The main findings are as follows: First, the evolution of international production networks (IPNs) between Thailand and Vietnam as well as the other advanced ASEAN could be identified in terms of their two-way trade integration of machinery parts and components beyond the gravity trade standard. Second, the trade intensity of machinery parts and components, in particular, the one between Thailand and Vietnam, could be partly explained by the fragmentation factors, i.e. their gaps in per capita GDP and the relatively lower service-link costs in Vietnam, through the fragmentation-model estimation. Third, the trade disintegration of machinery parts and components between Thailand and Mekong latecomers, such as Cambodia and Myanmar, could be explained by their higher service-link costs also through the fragmentation-model estimation. This chapter also investigates the border area development in Mekong region, which is a crucial issue for the connectivity in a continental area. Since the border areas have their own area-advantages called “border bonuses”: “complementary factor endowment” and “cross-border infrastructure services”, the areas might be the real gateways for IPN penetration across the countries in Mekong region, if their development were carefully designed. This was proved by the success stories of forerunners: the Maquila case at US-Mexico border and the Savannakhet SEZ at Thai-Lao PDR border. Considering their lessons, the strategies for border area development should be careful designing of institutional frameworks for Special Economic, enhancing outer-link connectivity from borders to central cities, and securing labor forces with skill developments.
    Keywords: Regional connectivity, ASEAN, Mekong region gravity trade model, border area development
    JEL: F23 O53
    Date: 2014–03
  2. By: Emily Christi A. CABEGIN (School of Labor and Industrial Relations, University of the Philippines)
    Abstract: From a rising share in the global semiconductor market in the 1990s, which peaked at 7.7 percent in 1999, the standing of the Philippines has since weakened with shares declining to four percent in 2005 and 2.5 percent in 2012. Heavy reliance of the Philippine semiconductor industry on foreign capital, which was concentrated largely in the United States and Japan for the most part of the past two decades, had made it vulnerable to trade risks faced by these countries that resulted in significant downturns in exports in 2001 and 2009. The erosion in the worldwide market share for the Philippines was also associated with the phenomenal rise of China as a dominant global supplier in the 2000s for advanced packaging and test services. Lacking technological capability, the Philippine semiconductor industry was pushed farther down the lower tiers of back-end manufacturing as it struggled to compete in this market with China, which sustained a strong technological leadership. Unlike the more developed Association of Southeast Asian Nations (ASEAN) member countries of Singapore and Malaysia, which have demonstrated upgraded technological intensities and have more diversified international production linkages, the Philippines has failed to optimize the huge opportunity to tap into China’s large and growing semiconductor market and to attract Chinese capital inflow. Increased investments from Taiwan, South Korea, and Singapore in the 2000s, alongside a deepening ASEAN integration and economic interdependence, have cushioned the negative impact of the global crisis on Philippine semiconductor trade. This paper recommends policy reforms for the Philippines to facilitate its transition to more knowledge-intensive, higher-value operations
    Keywords: global value chain, semiconductor, technological capability, regional integration
    JEL: F14 F15 L63 O14
    Date: 2015–04
  3. By: Lestano, Lestano
    Abstract: This paper investigates asymmetric exchange rate exposure on Indonesia industry’s stock returns in both (non)linear specifications and different setting in exchange rate regimes and sub-sample periods using the EGARCH model. The results reveal that negative exchange rate exposure dominates over positive exposure in the linear exposure setting, but there is no dominance sign in nonlinear exposure effect specification. The negative exchange rate exposure is more pronounced in the episodes of Asian and Global financial crisis and largely reduces in tranquility period. In relation to exchange rate arrangements, many industries experience statistically significant negative exposure to the US dollar with managed floating exchange rate regime than flexible regime.
    Keywords: exchange rate exposure, industry-level exposure, exponential GARCH-type model, Indonesia
    JEL: C22 F31 G15
    Date: 2015
  4. By: Ponciano INTAL Jr (Economic Research Institute for ASEAN and East Asia, Indonesia)
    Abstract: As the intra-ASEAN tariffs are virtually eliminated, it is the non-tariff measures and trade costs associated with moving goods and services across border that hinder intra-ASEAN trade. This paper focuses on reviewing the state of trade facilitation initiatives in ASEAN, especially on customs modernization, National Single Window, and National Trade Repository. The study uses questionnaires and interviews with the government officials of eight ASEAN Member States (Malaysia and Singapore are excluded). The questionnaires are similar to the ones for the ERIA Mid-Term Review Study 2011, thus, allowing for monitoring of progress across period. The result shows there has been significant progress in trade facilitation in the region in recent years. Nonetheless, there remains a huge gap between the front runners and the tail-enders. The main challenges include inadequacy of funds, availability of technical talent, long process of development of the technical infrastructure of the system, and coordination issues among agencies. For initiatives post-2015, the paper recommends amplification of the WTO Trade Facilitation Agreement at the regional level. The paper also notes that political will, human capital, and persistence are the key determinants for the success of trade facilitation initiatives in the region.
    Keywords: ASEAN Economic Community, trade facilitation, custom modernization, national single window, trade repository.
    JEL: F13 F14 F15
    Date: 2015–05
  5. By: Ponciano S. INTAL Jr. (Economic Research Institute for ASEAN and East Asia)
    Abstract: Investment liberalization is central for ASEAN to attract greater FDI inflows and intra-region direct investment flows. This paper focuses on measuring and examining the progress and challenges in the implementation of the investment liberalization initiatives in the AEC Blueprint 2009–2015. It also draws on country reports produced as part of the AEC Scorecard Project regarding other constraints on creating much better investment regimes in selected ASEAN countries. The result shows the foreign investment liberalization rate, based on the ASEAN Comprehensive Investment Agreement (ACIA), is high in manufacturing with the challenges to further liberalization to be found primarily in Indonesia and Viet Nam. The picture of liberalization in the agriculture–mining sector is much more mixed across ASEAN, with some ASEAN Member States very liberal in their foreign investment stance, while several others are more cautious, measured, and/or restrictive towards foreign equity participation. The main challenges of further investment liberalization in the region include complex cultural, political, and security sensitivities regarding foreign equity majority control in some sectors, especially in agricultural and natural resource–based industries. There may also be strategic industrial, nationalist, and/or developmental gap considerations working against foreign majority ownership in some manufacturing sectors in several ASEAN Member States. The paper ends with some recommendations for ASEAN investment liberalization initiatives post-2015.
    Keywords: ASEAN Economic Community, investment liberalization, ACIA.
    JEL: F13 F15 F36
    Date: 2015–04
  6. By: Noland, Marcus; Stahler, Kevin
    Abstract: This paper examines Asian exceptionalism at the Olympics. Northeast Asian countries conform to the statistical norm while the rest of Asia lags, but this result obscures underlying distinctions. Asian women do better than men. Non-Northeast Asia’s relative underperformance is due to the men. Asian performance is uneven across events, finding more success in weight-stratified contests, perhaps due to the fact that competition is more “fair” physiologically. The models imply that China, Japan, and South Korea will place among the top ten medaling countries at the 2016 Games, while China will continue to close the medal gap with the United States.
    Keywords: Asia, gender, sports, Olympics
    JEL: J16 L83 Z13
    Date: 2015–05–05
  7. By: Kazunobu HAYAKAWA (Bangkok Research Center, Institute of Developing Economics, Thailand); Nuttawut LAKSANAPANYAKUL (Science and Technology Development Program, Thailand Development Research Institute, Thailand); Pisit PUAPAN (Fiscal Policy Office, Ministry of Finance, Thailand); Sasatra SUDSAWASD (School of Development Economics, National Institute of Development Administration, Thailand)
    Abstract: Academic literature has theoretically discussed government strategy on regional trade agreements (RTAs) and has empirically identified some elements that play significant roles for that. The purpose of this study is to check the validity of these elements by means of a questionnaire survey of government officials in Thailand. For example, it asks how the officials choose the RTA partners, the products to be excluded from liberalization, and the liberalization patterns. Furthermore, in order to clarify who has influence on the officials' decision, the survey asks the order of priority among several kinds of stakeholders. Our findings provide valuable insight about understanding the formulation process of trade negotiation strategy and the motivation for different liberalization patterns from the policy-makers' perspective.
    Keywords: Regional trade agreements; Government; Thailand
    JEL: F15 F33
    Date: 2015–05
  8. By: Kym Anderson; Glyn Wittwer
    Abstract: Over the past decade Hong Kong and China have become far more important to the world’s wine markets, while Southeast Asia’s imports of fine wine continue to grow steadily. This paper reviews recent developments in the light of comparative advantage theory before drawing on a model of global wine markets to project developments in Asia and elsewhere over the next five years under various economic growth, real exchange rate, and policy assumptions. It concludes that China is set to continue to be by far the most dominant player in Asia, and to change global markets for wines dramatically, just as it has been doing and will continue to do for so many other products.
    Keywords: wine comparative advantage, changes in tastes, global grape and wine model projections, real exchange rate changes
    JEL: C53 F11 F17 Q13
    Date: 2015
  9. By: Vanzetti, David; Pham, Dung
    Abstract: Vietnam has designated 3.8 million hectares of agricultural land for paddy rice production, reflecting historical and ongoing concerns about food security. However, Vietnam is now the world’s second largest exporter of rice, and it imports vast quantities of livestock feed, some of which could be produced domestically if the land area restrictions were relaxed. Rather than improving food security, this policy may in fact increase malnourishment because some groups in the population lack a diversified diet. The Government has a plan to diversify into other crops. The implications of the Government land use policy for domestic consumers and producers of food, feed and livestock products are assessed in this paper with the aid of VAST, a dynamic, eight region, 13 commodity non-linear programming model of Vietnam’s agricultural sector. The reallocation of land currently designated for rice production would allow increased production of maize and a range of vegetable crops. However, the switch into feed products sold primarily on the domestic markets puts downward pressure on producer prices. The Government should remove restrictions on land use and let producers judge for themselves what products to grow.
    Keywords: Agricultural and Food Policy, Food Security and Poverty, Land Economics/Use, Production Economics,
    Date: 2015–02
  10. By: Taguchi, Hiroyuki; Murofushi, Harutaka
    Abstract: This chapter examines the international production network (IPN) development mainly by focusing on ASEAN economies. The emphases through the findings and observations can be highlighted as follows: the IPNs have actually been developed since 1990s in ASEAN, especially in Mekong region with rapid way; the IPN development has been accompanied with win-win relationships of industrial activities among ASEAN economies; and an economy’s IPN participation has contributed to its GDP growth with dynamic “smile curve” development path with upgrading industrial capacities. For further penetration of IPNs at the edge of ASEAN, there should be several issues to be cleared such as enhancing regional connectivity.
    Keywords: International production networks, ASEAN, Mekong region
    JEL: F23 O53
    Date: 2014–03
  11. By: Peter McDonald (The Australian National University)
    Abstract: From the demographic perspective, the 21st century is the population ageing century. Population ageing is well underway in all Asian countries as a result of the spectacular falls in both fertility and mortality rates in the second half of the 20th century.
    Keywords: Demographic Trends, Asian Century, Intergenerational Policy
    JEL: J11 J14 J18
    Date: 2015–04
  12. By: Jungsoo Park, Lawrence Lau
    Abstract: This study investigates how the patterns of productivity growth have changed over the past few decades for the Asian economies in comparison with the advanced economies. The findings indicate that the Asian economies are in the process of transition in terms of pattern of growth. It seems that the 4 NIEs have already transitioned from input-based growth to productivity-based growth, and the remaining Asian economies are starting to show signs of transition in the past decade. Scrutinizing the recent trends in human capital, R&D, patent statistics, and inward FDIs, they all indicate that the productivity growth will be stronger in the Asian region than before and will constitute the major basis for growth.
    Keywords: total factor productivity, Asian economies, economic growth
    JEL: O47 O57
    Date: 2015–04
  13. By: Huang, Li-Hsuan; Huang, Julia Hsin-Yi
    Abstract: With the increments of labor market institutions, the potential problem caused by labor market rigidity is emerging within the four Asian tigers, namely, Hong Kong, South Korea, Singapore and Taiwan. This study emphasizes the impact of labor market rigidity on economic performance in the four Asian tigers over the 1980-2010 period. Through the estimation of the aggregate production function, we find that labor market rigidity has a negative impact on output and economic growth. On the other hand, without imposing any labor market institutional adjustment that would lower the standard of labor conditions, the rises in country’s competitiveness can serve as a balancing force to mitigate the negative impacts of labor market rigidity. A crucial insight for policymakers is to determine the most efficient method for giving labor effective protection without hurting economic performance.
    Keywords: Labor market rigidity, output, economic growth, four Asian tigers, openness, international competitiveness.
    JEL: J0 J08
    Date: 2013–09
  14. By: Asplund, André (European Institute of Japanese Studies)
    Abstract: In light of an increased focus, in Japanese diplomacy since the turn of the millennium, on the need for strengthening democracy and human rights within ASEAN, this paper examines Japanese Official Development Assistance (ODA) to ASEAN during the 21st century in order to understand if Japan has lived up to its self-imposed principles of paying full attention to human rights and democracy in recipient countries when providing foreign aid. By comparing Japanese ODA flows to ASEAN members, committed through exchange notes between 2001 and 2013 with levels of democracy and human rights adherence in the same countries this paper argues that Japan is pragmatic in its approach to the ODA principles regarding democratization and human rights in recipient countries and balances considerations for normative values with national interests. Given ASEAN’s increasing importance for Japan, as a growing market and a strategic hedge against what is perceived as increased Chinese influence in the region, a major shift of said approach seems highly unlikely in the near future, particularly with the Abe administration set on using ODA more strategically as a means to secure regional stability and national security.
    Keywords: Japanese foreign aid; Japanese ODA; ASEAN; Human Rights and Democracy
    JEL: F35 F50 F59
    Date: 2015–05–12
  15. By: Kazunobu HAYAKAWA (Bangkok Research Center, Institute of Developing Economics, Thailand); Nuttawut LAKSANAPANYAKUL (Science and Technology Development Program, Thailand Development Research Institute, Thailand); Shujiro URATA (Graduate School of Asia-Pacific Studies, Waseda University, Japan)
    Abstract: In this paper, we measure the costs for utilization of free trade agreement (FTA) tariff schemes. To do that, we use shipment-level Customs data on Thai imports, which identify not only the firms, source country, and commodity, but also the tariff schemes. We propose several measures as a proxy for the FTA utilization costs. The example includes the minimum amount of firm level saving of tariff payments, i.e. trade values under FTA schemes multiplied by the tariff margin, in all transactions. As a result, for example, the median costs for FTA utilization are estimated to be around two thousand US dollars in the case of exporting from China and around one thousand US dollars in the case of exporting from Korea. We also found that FTA utilization costs differ by rule of origin and industry.
    Keywords: FTA; Fixed costs; Thailand
    JEL: F15 F33
    Date: 2015–05
  16. By: Taguchi, Hiroyuki; Lar, Ni
    Abstract: The purpose of this chapter is to investigate the long-term growth prospects of Myanmar economy under such scenarios as intensifying investment and improving total factor productivity (TFP), to represent demand-management policies necessary to sustain its long-term economic growth, to provide strategic implications on the prerequisites to achieve an optimal growth path, and also to represent the sectoral breakdowns for GDP and labor projections. For these purpose, we construct a simple macro-econometric model as shown in Appendix 1 in detail, and conduct sectoral breakdowns by the methodology of using Thailand input-output tables.
    Keywords: Long-term projection, Myanmar, macro econometric model
    JEL: E17 O53
    Date: 2015–03
  17. By: Venkatachalam ANBUMOZHI (Economic Research Institute for ASEAN and East Asia)
    Abstract: This paper develops a framework to assess the scope of collaboration among countries that are pursuing low-carbon green growth. Much of the policy studies in the area of low-carbon green growth have focused on individual countries or a group of countries. Little attention is given to how countries can work together to pursue the lowcarbon green growth agenda. Developing Asia has been witnessing rapid growth in economic activities, both at the sub-regional level and Asia-Pacific wide. There is therefore much scope for market-based and other forms of regional cooperation to augment domestic actions. For example, there are other pressing development needs and resource constraints at the national level that limit the scale or ambition of policies. Regional cooperation can help to overcome those constraints by providing additional resources for incremental costs, technical assistance, and policy support. This paper examines several critical areas such as technology, finance, and capacity building, where regional cooperation will have a significantly greater payoff than will actions by any country alone. The paper concludes with concrete policy actions to realise the regional cooperation potential in developing Asia.
    Keywords: climate change, green growth, sustainability analysis, regional cooperation
    JEL: Q54 Q58 F15 F18
    Date: 2015–04
  18. By: Sanders, C.M.; Guenther, M.; Tait, P.R.; Daziel, P.C.
    Abstract: Understanding international consumer preferences and attitudes towards food is important for countries like New Zealand that depend heavily on food exports. New Zealand’s export focus has changed over the last few decades from almost all exports going to Europe, to more into Asian markets, in particular to China. It is therefore important that different cultures and preferences in these markets are considered and understood. This paper will present results from a pilot survey in six countries (UK, Korea, Japan, India, China and Indonesia) focusing on how consumers in different markets respond to different attributes and on how New Zealand producers can communicate those using smart technology and digital media in overseas markets. The results highlight the importance of food safety and health foods in these markets. In general, developing countries valued attributes more than developed countries. This included environmental quality in food which was also seen as key for underpinning food safety.
    Keywords: Consumer preferences, food products, smart media, New Zealand, developing countries, cross-country comparison, Consumer/Household Economics, International Relations/Trade, D120,
    Date: 2015–04
  19. By: Dionisius A. NARJOKO (Economic Research Institute for ASEAN and East Asia, Indonesia)
    Abstract: Technology transfers are important channels for firms in developing countries to get access to new technology and initiate innovation. This paper examines the geographical pattern of technology transfers in the form of buyer-provided training in domestic and international production networks. Our unique buyer-supplier network data in four countries in Southeast Asia allow us to directly observe the buyer-supplier relationship as well as the existence of inter-firm provision of training for product/process innovation in order to investigate the geographical structure of knowledge acquisition, dissemination, and aggregation among local and non-local firms. The empirical analysis finds the following: (i) the probability of having training provided by the main buyer presents a U-shaped quadratic pattern with respect to the geographical distance between the respondent firms and the main buyers. The geographical proximity to the main buyer seems to be particularly important for local firms. (ii) The training provision is likely for both local and non-local firms when the main buyer is a multinational located in the same country. (iii) The probability of having training from the main buyer is high when the main buyer conducts R&D. (iv) Both local and non-local firms that have training provided by their main buyers are likely to provide training to their main suppliers. (v) In the case of non-local firms, product innovation with production partners is more likely when they have upstream/downstream training. However, such links seem to be weaker in the case of local firms
    Keywords: buyer-provided training; FDI spillovers; backward linkages; Southeast Asia
    JEL: M5 O31 O32 R12
    Date: 2015–05
  20. By: Dionisius A. NARJOKO (Economic Research Institute for ASEAN and East Asia, Indonesia)
    Abstract: ASEAN has successfully reduced tariffs but not non-tariff measures (NTMs). Efforts to reduce NTMs always hit the debate surrounding justification of application of the measures. Efficiency of implementation of the measures adds to another issue in the agenda to reduce NTMs regardless the debate, and this is the topic addressed by this paper. It examines whether the extent of NTMs affects the operation of firms in doing business, utilizing a small sample of survey conducted at firm level in all ASEAN member states (AMSs). The results showed that significant costs are borne by implementation of NTMs in practice. The higher the cost to implement the measures, the higher the production cost, and this is added to the price of output. The results indicated that procedures and transparency in the process to acquire licenses, permits, and certificates of exporting/importing are the critical factors. This calls for the need of regulatory reform as the way to tackle the issue. The results also suggest the need to improve the availability and the quality of testing facilities which are found to be lacking in many AMSs. These policy recommendations are critical to increase the participation of small and medium enterprises in regional trade, utilizing many preferential measures offered by the ASEAN Economic Community.
    Keywords: Non-tariff measures (NTMs), ASEAN Economic Community (AEC), firm-level survey
    JEL: F15 F33
    Date: 2015–05
  21. By: Christofides, Louis N. (University of Cyprus); Hoy, Michael (University of Guelph); Milla, Joniada (CORE, Université catholique de Louvain); Stengos, Thanasis (University of Guelph)
    Abstract: It is evident that a strong positive correlation persists between the educational attainment of parents and that of their children in many, if not most, populations. This relationship may form an important part of the phenomenon of low social mobility as well as inefficiently low investment in human capital by youth who have parents with relatively low educational attainment. Is it a genetic inter-generational transmission of innate ability from parents to their children (i.e. nature) or is it the environment that the better educated parents provide for their children (i.e. nurture) that explains this positive relationship? Understanding the relative contributions of nature versus nurture is critical to the development of any social policy designed to increase social and economic mobility between generations. Separating the so-called nature and nurture effects of this relationship is a difficult task. We use the Vietnam Era Draft Lottery as a natural experiment to address the nature-nurture question. Attending university in order to avoid the draft created a cohort which included individuals who would not normally have attended post-secondary educational institutions. Comparing the educational attainment of children of this cohort to that of cohorts who attended university in "normal times" creates a natural experiment to test the relative importance of the nature or nurture explanations. Our findings provide evidence in support of the nurture argument.
    Keywords: inter-generational mobility, higher education attendance
    JEL: I0
    Date: 2015–05
  22. By: Kazunobu HAYAKAWA (Bangkok Research Center, Institute of Developing Economies, Thailand); Nuttawut LAKSANAPANYAKUL (Science and Technology Development Program, Thailand Development Research Institute, Thailand); Shujiro URATA (Graduate School of Asia-Pacific Studies, Waseda University, Japan)
    Abstract: We examine the firm-level impact of the use of free trade agreement (FTA) schemes on import prices by employing firm-level import data that enables us to identify the use of different tariff schemes, such as FTA schemes and most favoured nation (MFN) schemes. Unlike the previous studies, we estimate the firm-level effects of FTA use on import prices by controlling for firms’ characteristics. We find that, on average, the use of FTA schemes raises (tariffexclusive) import prices by 3 percent in total. Interestingly, the use of FTA schemes raises import prices even if FTA rates are same as MFN rates. We also find that the large-sized firms in terms of import values reduce the positive effects of the use of FTA schemes on import prices.
    Keywords: FTA; Prices; Thailand
    JEL: F15 F33
    Date: 2015–04
  23. By: NOMURA Koji; MIYAGAWA Kozo
    Abstract: This paper provides new benchmark estimates of industry-level price differentials between Japan and the United States, based on the input-output framework expanded from the 2005 Japan-U.S. Input-Output Table published in 2013 by the Ministry of Economy, Trade and Industry (METI). The purchasing power parities (PPPs) we construct cover not only the products for final demands, but also the products of outputs and for intermediate uses, using a classification of 174 products. We postulate a price model describing the relationships among producers' prices and purchasers' prices for domestically-produced and imported products, considering the differences in the trade structure, freight and insurance rates, duty tax rates, wholesale and retail trade margins, and transportation costs in each product between Japan and the United States. Using demand-side data for purchasers' price PPPs for final uses (e.g., the Eurostat-OECD PPPs) and for intermediate uses (e.g., the METI survey), producers' price PPPs for outputs are estimated based on our price model and the related parameters. Many sources of data on price differentials by agencies and ministries of the government of Japan are used in this paper.Compared to our previous study in Nomura and Miyagawa (1999), which developed the 1990 benchmark estimates of industry-level price differentials between Japan and the United States, there are several improvements. One improvement is the expansion in the framework and the price model to cover imports from China, Germany, Korea, Malaysia, Taiwan, and Thailand. The second improvement is our revisions on PPPs for wholesale and retail trades. The revisions of PPPs for trade have a considerable impact on the estimates of PPP for gross domestic product (GDP) from the production side. In this paper, we examine Japan's margin rates and provide new estimates by products, based on establishment data from the Census of Commerce in 2002 and 2007 by METI. Our estimates suggest that the margin rates of retail in the official benchmark input-output table may be underestimated.Our estimates enable us to illuminate the sources of price competitiveness through inter-industry transactions. Higher costs of products for intermediate use such as trade, electricity, and other energy in Japan have considerable and wider impacts on the price competitiveness in all industries. Japan's higher costs of trade (54% higher) and electricity (2.0 times higher) contribute to pushing the output prices in the manufacturing sector higher than the United States by 2.8% and 1.1%, respectively.
    Date: 2015–05
  24. By: Taguchi, Hiroyuki; Lar, Ni
    Abstract: This chapter addresses the issues on inward foreign direct investment (FDI), industrial upgrading, and economic-corridor development in Myanmar. We first present the economic profile of Myanmar by comparing with other economies in Mekong region as well as its brief history. Second, we discuss the role of inward FDI in Myanmar. From a short-term perspective, Myanmar needs to accept inward FDI to participate in international production networks and thus to develop a manufacturing sector. This section represents empirical evidence on the linkage between FDI and the growth of GDP and exports, and investigates a specific issue to be addressed for accepting inward FDI in Myanmar manufacturing sector. Third, from a long-term perspective, we discuss the issues on industrial upgrading and geographical linkage in Myanmar economy. Myanmar now depends heavily on natural resource production in its economy, and also on labor-intensive production in its manufacturing sector. Thus, the industrial reformation should address how to diversify its industries towards a variety of manufacturing sectors and how to upgrade its industries towards upstream and high-valued manufacturing sectors. From the geographical viewpoint, Myanmar also now depends on spot-area development through its SEZ framework. For extending the economic impacts of the SEZ development to nation-wide level, the SEZ development should contribute to an economic corridor approach linked with neighboring countries.
    Keywords: FDI, industrial upgrading, economic corridor, Myanmar
    JEL: F23 O53
    Date: 2015–03
  25. By: Zuraini Zakaria (Universiti Sains Malaysia); Siti Hajar Abdul Aziz (Universiti Sains Malaysia); Syahidah Azman (Universiti Sains Malaysia)
    Abstract: Lembah Lenggong is one of the world’s heritage sites known for its archeological discoveries. Surrounded by two mountain ranges called Banjaran Bintang Hijau and Banjaran Titiwangsa, the valley is also favoured for its exotic flora diversity. The endemic species grow wild or are cultivated by the community for the edible parts, folklore value and traditional medicinal practices. The present study was undertaken because ethnobotanical information and traditional knowledge on postnatal care play an important role in scientific research and provide insights into the development of the health care system. From the study in three subdistricts of Lembah Lenggong, 34 species belonging to 19 families were found to be commonly used by the women community. The part of plants utilised in the postnatal healthcare include leaf, fruit, rhizome, root, bark and flower. The aim of enlisting and investigating the local medicinal plant species used for the postnatal care by the community in Lembah Lenggong, could motivate the community for the preservation of their traditional knowledge; the sustainable use, cultivation and conservation of the plant species; and alternatively to promote the floral diversity as an ecotourism element of Lembah Lenggong.
    Keywords: Lembah Lenggong, ethnobotany, postnatal care
    JEL: I19
  26. By: Venkatachalam ANBUMOZHI (Economic Research Institute for ASEAN and East Asia); Alex BOWEN (London School of Economics and Political Sciences, UK); Puthusserikunnel Devasia JOSE (Indian Institute of Management Bangalore, India)
    Abstract: Market-based instruments such as Renewable Energy Certificate (REC) are increasingly favoured as an alternative to command-and-control legislation to increase the uptake of renewable energy. Focusing on the renewable energy industry and policy situation in Asia, this paper analysed the strengths and weaknesses of market-based approaches in the long-term interest of developing Asia. It found that approaches such as REC are disadvantaged by a lack of both market acceptance and a strong institutional and programme support. To identify gaps in the REC system in India, a comparative analysis with the United Kingdom (UK) model was made. This revealed some fundamental issues around market-based approaches in Asia, underscoring the need for a policy design to address the concerns of buyers and sellers in the market.
    Keywords: Market-based Mechanisms, Renewable Energy, Renewable Obligation, Regulatory Intervention
    JEL: Q41 Q42 Q48
    Date: 2015–04
  27. By: Rachel M. Gisselquist; Omar McDoom
    Abstract: A large body of recent quantitative work on the ‘diversity detriment’ hypothesis finds that ethno-religious diversity is linked with a host of societal ills, implying in turn a strong challenge to multiculturalist theory and policies. Given the stakes, the appropriate conceptualization and measurement of ethno-religious divisions is a matter of considerable importance. This paper provides a synthetic critique of how major measures each capture the notion of ‘divisions’ and relate to each other conceptually and empirically within a divided society. Furthermore, instead of presenting temporal snapshots of divisions at the national level, as in most previous work on the topic, we explore how measures perform at more localized levels of analysis and over time, drawing on individual level census data from Mindanao, the Philippines. We highlight four conceptually ‘big’ issues we believe deserve emphasis and further investigation: the sensitivity of measures to the choice of construct, categorization methodology, passage of time, and spatial variation. We provide guidance and discuss the key implications of these points both for quantitative scholars working with these measures and for qualitatively inclined empiricists and normative theorists wishing to interpret, evaluate or otherwise engage with the quantitative research on the merits of diversity.
    Keywords: ethnicity; religion; ethnic diversity; ethnic divisions; ethnic fractionalization; ethnic polarization
    JEL: D70 J1 J15 N35
    Date: 2015–02
  28. By: Dionisius A. NARJOKO (Economic Research Institute for ASEAN and East Asia, Indonesia)
    Abstract: This paper examines the progress of liberalization of the ASEAN Framework Agreement in Services (AFAS). It measures the changes in the rate of liberalization of the AFAS commitments from the 7th to the 8th package negotiations. The comparisons show only marginal improvement in the depth of services liberalization rate between the two packages, albeit significant increase in the number of subsectors covered in the 8th package. Deeper examination of the commitments suggests that many ASEAN Member States utilized a facility under AFAS (Flexibility Rule) to put a number of sensitive subsectors which are not subject to liberalization commitments. Mode 3 liberalization rate of package 8 increases significantly when the Flexibility Rule is considered. This suggests that many subsectors do not pass the threshold set by package 8.
    Keywords: AFAS, AEC, services liberalization
    JEL: F13 F15
    Date: 2015–05
  29. By: Emily Hon Tshin Yapp (Universiti Malaysia Sabah, Labuan International Campus); Stephen Sondoh J.R (Universiti Malaysia Sabah); Ruth Siganul (Universiti Malaysia Sabah, Labuan International Campus)
    Abstract: Previous research have shown that customer co-production is able to improve company’s productivity, enhance customer loyalty, increase competitiveness and enhance customer satisfaction. Although customer co-production has long been recognized in the service marketing literature, few empirical studies examine the dimensions of co-production in medical services. In addition, services providers in the industry are competing with each other to find ways to get closer to the organisations. A closer relationship between customers and organisation could enhance competitive advantage and enable more profitable relationship. Therefore, the present study aims to identify factors (affective commitment, communications, interaction justice and patient expertise) that can effectively enhance the level of customer co-production. Survey questionnaires are distributed using individually completed questionnires in a set of 24 items. Each item was phrased as statement on 5-points Likert scales. These 5-points Likert scales type scales with anchor ranging from strongly disagree to strongly agree. The respondents are the undergraduate students of a public university in Malaysia. The surveyed data are analysed using the Partial Least Squares (PLS) approach. The survey results suggest that interactional justice, communication and patients expert can increase the level of co-production. This implied that patients and doctor communication could lead to an effective understanding of each other’s role during the co-production process and the outcome. In addition, the finding also shown that interaction justice had a significant and positive association with co-production. This suggested that, the emotional of relationship between patient and doctor is also an interest for customers in order to participate in co-production. As for patients expertise, it seems that when patients have sufficient knowledge about their illness/disease, they are more likely to participate in co-production. Interestingly, affective commitment does not contribute to customer co-production. Limitation and future research directions are also discussed.
    Keywords: Co-production, service marketing, medical services
    JEL: M31
  30. By: Khanh Hoang (ANU College of Law, Australian National University)
    Abstract: In recent years, there has been significant interest internationally in the role that migration law and policies may play in aiding innovation, entrepreneurship and economic growth. Several countries, including Australia, Canada, the US and Singapore have established various investment and entrepreneur visas aimed at attracting foreign investment and human capital in return for permanent residency or citizenship. This paper analyses the effectiveness of Australia’s migration policies in strengthening its innovation system and provides suggestions for reform. It identifies shortages in venture capital and access to overseas entrepreneurial talent as two urgent areas for reform of the innovation system. Australia’s visa offerings under its Business Innovation and Investment Program - such as Significant Investment Visa (SIV) program and the Venture Capital Entrepreneur Visa - have so far failed to address these shortages. The paper draws on experiences from other jurisdictions to suggest avenues for reform of Business Innovation and Investment Program. These reforms could include: widening the ‘complying investment’ criterion for significant investor visa; mandatory investment in venture capital funds, with matching from the Government; and reducing onerous threshold criteria for entry into Australia as an entrepreneur. These proposals for reform, and Australia’s experiences, may provide lessons for other countries seeking to establish similar investment visa programs.
    Keywords: migration, innovation, investment, entrepreneurship
    JEL: K00
  31. By: Trewin, Ray; Vanzetti, David; Thang, Tran Cong
    Keywords: International Relations/Trade, Livestock Production/Industries,
    Date: 2015–02
  32. 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 Ralston et al. dimensions and our results. Ralston et al. is an application of the Schwartz categories to global business people. There was an enormous reception of the works of Shalom Schwartz, an Israeli psychologist and Professor at the Hebrew University in Jerusalem especially in the expanding field of international business studies. Our quantification of Schwartz’s theory relies exclusively on Ralston et al. The reason is simple: Ralston et al., 2011 – somewhat in the tradition of Hofstede - use samples, based on business people (Hofstede: one company, IBM; Ralston et al., 2011: business people in general). Thus his sampling is restricted to a certain segment of society, while Schwartz’s categories are much more encompassing. To provide more encompassing tests of Schwartz’s theory in the framework of theories of overall global value change would be the theme for another essay, and is beyond the scope of this paper. In Chapter 12 we analyze correlations and also show the relationships of the Ralston et al. business people data with our own dimensions. As with Hofstede and the GLOBE Project, influenced by Hofstede, there is, as we already mentioned, a problem of limited country samples in Ralston et al., 2011. To understand the Ralston et al. framework, one has to emphasize that Schwartz himself presented analyses of data from up to 73 countries, validating seven basic cultural orientations and the structure of interrelations among them: West European, English-speaking, Latin American, East European, and South Asian, Confucian influenced, and African and Middle Eastern. His seven dimensions are 1. Embeddedness 2. Hierarchy 3. Mastery 4. Affective Autonomy 5. Intellectual Autonomy 6. Egalitarianism 7. Harmony 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. Table 5.8 shows the correlations of the country scores from Ralston et al.’ work with standard socio-economic indicators. Interestingly enough, Muslim population shares and OIC membership present high correlations with the Ralston et al. 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
  33. By: Kazunobu HAYAKAWA (Bangkok Research Center, Institute of Developing Economies, Thailand); Tadashi ITO (inter-disciplinary Studies Center, Institute of Developing Economies); Fukunari KIMURA (Economic Research Institute for ASEAN and East Asia, Indonesia; Faculty of Economics, Keio University, Japan)
    Abstract: This paper empirically decomposes trade creation effects of regional trade agreements (RTAs) into those due to the tariff reduction effects and due to non-tariff barrier (NTB) removal by using the most disaggregated tariff-line level trade data in a large number of countries in the world. Specifically, making the full use of the fineness of our dataset, we employ the standard gravity equation and identify those effects by estimating trade creation effects of RTAs for products ineligible and eligible to RTA preferential schemes separately. Our major findings are as follows. First, for the whole samples, there are significantly positive trade creation effects due to tariff reduction while weak effects are detected for NTB removal. Second, effects of tariff reduction and NTB removal are smaller for differentiated products than for non-differentiated products. Third, trade creation effects of tariff reduction and NTB removal are substantially large in cases of trade between low-income countries while weak in cases of trade including high-income countries. Fourth, although larger tariff margins on average lead to larger trade creation effects, the relationship between tariff margins and trade creation effects is highly non-linear.
    Keywords: Regionalism; RTAs; NTB; gravity equation; tariff line
    JEL: F15 F33
    Date: 2015–04
  34. By: Kazunobu HAYAKAWA (Bangkok Research Center, Institute of Developing Economies, Thailand); Tadashi ITO (inter-disciplinary Studies Center, Institute of Developing Economies)
    Abstract: This paper provides the first empirical evidence about the tariff passthrough in world-wide trade. Specifically, we estimate the effects of tariff reduction on import prices for our tariff line-level data in 46 importing countries in 2007- 2011. The estimation results show that the average pass-through rate for tariff reduction by regional trade agreements (RTAs) is higher than that for reduction by the most favoured nation rates. Namely, most of the tariff rent goes to the importer in the case of multilateral trade liberalization and to the exporter in the case of trade liberalization by RTAs. We also find that product differentiation has an impact of a substantial magnitude on the tariff pass-through for RTAs. The difference in income level of country pairs affects much the tariff pass-through for RTAs. Bargaining over prices between the importer and exporter might explain these results because the use of RTAs requires exporters to incur some costs for certifying the products’ origin.
    Keywords: Tariff pass-through; RTAs; Import prices; Tariff-line level
    JEL: F15 F33
    Date: 2015–04

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