nep-sea New Economics Papers
on South East Asia
Issue of 2015‒10‒17
nineteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. The impact of China?s slowdown on the Asia pacific region : an application of the GVAR model By Inoue,Tomoo; Kaya,Demet; Ohshige,Hitoshi
  2. Child Malnutrition in Indonesia: Can Education, Sanitation and Healthcare Augment the Role of Income? By Sumarto, Sudarno; de Silva, Indunil
  3. Structural transformation, biased technological change, and employment in Vietnam By Philip Abbott; Finn Tarp; Ce Wu
  4. Implications of a Philippine-US Free Trade Agreement on Trade in Goods: An Indicator Approach By Manzano, George N.; Martin, Kristine Joy
  5. Constructing Indonesia Financial Stability Index By Anhar Fauzan Priyono; Arief Bustaman
  6. Inequality and Fiscal Redistribution in Middle Income Countries: Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa - Working Paper 410 By Nora Lustig
  7. Social capital impact in Vietnam pepper supply chain management By Bui, Anh Kim
  8. Readiness of the Philippine Agriculture and Fisheries Sectors for the 2015 ASEAN Economic Community: A Rapid Appraisal By Clarete, Ramon L.; Villamil, Isabela Rosario G.
  9. The Culture of Patriarchy and Its Effects on the Human Rights of Girl-children in Cagayan de Oro and Claveria, Misamis Oriental: Implications to Policy Formulation By Medina, Noemi A.
  10. The relevance of inter-personal and inter-organizational ties for interaction quality and outcomes of research collaborations in South Korea By Hemmert, Martin
  11. Monetary Policy Transmission in Emerging Asia: The Role of Banks and the Effects of Financial Globalization By Nasha Ananchotikul; Dulani Seneviratne
  12. Decomposing the trade-environment nexus for Malaysia: What do the technique, scale, composition and comparative advantage effect indicate? By Ling, Chong Hui; Ahmed, Khalid; Muhamad, Rusnah binti; Shahbaz, Muhammad
  13. Natural Gas Consumption and Economic Growth: The Role of Foreign Direct Investment, Capital Formation and Trade Openness in Malaysia By Solarin, Sakiru Adebola; Shahbaz, Muhammad
  14. Conservation vs. equity: Can payments for environmental services achieve both? By Vorlaufer, Miriam; Ibanez, Marcela; Juanda, Bambang; Wollni, Meike
  15. Nexus between Tourism demand and output per capita with relative importance of trade and financial development: A study of Malaysia By Shahbaz, Muhammad; Kumar, Ronald Ravinesh; Ivanov, Stanislav; Loganathan, Nanthakumar
  16. The Impact of Global Liquidity on Financial Landscapes and Risks in the ASEAN-5 Countries By Tao Sun
  17. Asymmetric volatility of the Thai stock market: evidence from high-frequency data By Thakolsri, Supachok; Sethapramote, Yuthana; Jiranyakul, Komain
  18. Industrialisation in Time and Space By Lavopa A.M.; Szirmai A.
  19. Current Structure and Future Challenges of the Agricultural Sector By Majah-Leah V. Ravago; Arsenio M. Balisacan

  1. By: Inoue,Tomoo; Kaya,Demet; Ohshige,Hitoshi
    Abstract: An export-oriented development strategy fostered the Asia Paci?c region?s economic success, making it the fastest growing region in the world. In recent years, despite waning demand from the crisis-hit Western economies, the accelerating demand from China boosted intraregional trade in Asia. Although China?s Asian trading partners bene?t from increasing exports to China, this stronger linkage with China has made them more vulnerable to the risk of a Chinese slowdown. This paper examines the impact of a negative Chinese gross domestic product (GDP) shock on Asian economies by employing the Global Vector Autoregressive (GVAR) model, using the dataset through the third quarter of 2014 for 33 countries. The analysis finds that a negative Chinese GDP shock impacts commodity exporters, such as Indonesia, to the greatest extent, re?ecting both demand and terms of trade shocks. Export-dependent countries in the East Asian production cycle, such as Japan, Malaysia, Singapore and Thailand, are also severely a?ected. The analysis also finds that a negative shock to China?s real GDP would not only have an adverse e?ect on the price of crude oil, as some previous studies have also shown, but also on the prices of metals and agricultural products. The study also investigates the impact of a potential negative shock to the real GDP of the United States on Asian countries, and determines that although the U.S. economy has a larger in?uence on Asian economies than China?s economy, the Asian countries are more exposed to China than ever through increased economic ties.
    Keywords: Economic Theory&Research,Debt Markets,Emerging Markets,Currencies and Exchange Rates,Markets and Market Access
    Date: 2015–10–14
  2. By: Sumarto, Sudarno; de Silva, Indunil
    Abstract: In spite of sustained economic growth and progress in poverty reduction, the status of child nutrition in Indonesia is abysmal, with chronic malnutrition rates continuing to remain at very high levels. In this backdrop, this study attempts to shed light on the channels through which various socioeconomic risk factors affect children’s nutritional status in Indonesia. We investigated the impact of child, parental, household characteristics, access and utilization of healthcare, and income effects on children’s height-for-age and on the probability of early childhood stunting. Using recent data from IFLS surveys and Indonesia’s National Health Survey, and controlling for an exhaustive set of socioeconomic factors, the study revealed that maternal education, water and sanitation conditions, household poverty and access to healthcare strongly influence chronic malnutrition in Indonesian children. Child stunting rates were surprisingly high even in the wealthiest quintile of households, implying that income growth will not automatically solve the nutritional problem. Our findings bear important policy implications and represent a further step towards an improved understanding of the complex determinants of child malnutrition. As a policy recommendation, we suggest the implementation of direct supply-side policies aimed at child malnutrition. In particular, two kinds of strategies are noteworthy. First to maximize impact, nutrition-specific interventions targeting the poorest and high burden regions in Indonesia may include, for example, breastfeeding promotion, vitamin and mineral supplements, improved sanitation facilities, public healthcare services and insurance coverage. Second, adopting nutrition-sensitive development planning across all sectors in the country will help ensure that development agendas fully utilize their potential to contribute to reductions in child malnutrition in Indonesia .
    Keywords: Child nutrition, Malnutrition, Stunting, Quantile regression, Indonesia.
    JEL: D01 D1 I1 I12
    Date: 2015–05–05
  3. By: Philip Abbott; Finn Tarp; Ce Wu
    Abstract: Employment in Vietnam and elsewhere in Asia has grown more slowly than GDP over the last several decades. This means GDP per capita is rising. Vietnamese policymakers, however, are concerned that ongoing structural transformation is creating too few jobs. We use data for seven aggregated sectors and the overall Vietnamese economy to examine the roles played by structural transformation, technical change, and institutional bias toward capital intensive development to evaluate the Vietnamese development experience. We find that while some of the difference between GDP and employment growth can be attributed to capital intensive investment by the state, the majority of the difference is due to technical change. A positive rather than a pessimistic overall assessment is warranted based on the available evidence
    Keywords: employment, labour demand, structural transformation, biased technological change, minimum wage, state investment, Leontief production function, Vietnam
    Date: 2015
  4. By: Manzano, George N.; Martin, Kristine Joy
    Abstract: The Trans-Pacific Partnership (TPP) is a regional free trade agreement (FTA) initiated by the United States (US) and is presently being negotiated among 11 countries. With the Philippines negotiating in many fronts at the global scene, such as its engagement in the ASEAN Economic Community and in the forthcoming European Union-Philippine FTA, among others, the invitation to join the TPP is another opportunity worth studying. Departing from the prevalence of computable general equilibrium models in estimating the effects of the TPP on prospective partners, this study will use an alternative methodology, the Sussex framework. It aims to complement the existing works of other researchers in the field. This paper furthermore will focus on analyzing the (1) possible impact on Philippine-US trade in goods in joining the TPP agreement as well as the (2) probable negative effects that could befall the country if it were not a member of the TPP once the agreement is completed. More specifically, to analyze the impact of the TPP on Philippine-US trade in goods, the study will model the TPP as a collection of bilateral US-TPP partner FTAs. The relevant indicators generated from the series of bilateral FTAs will then be interpreted in the context of how these would impact on the Philippines as a third, nonpartner country.
    Keywords: Philippines, free trade agreements (FTAs), Trans-Pacific Partnership, Philippine-US trade, Sussex framework
    Date: 2015
  5. By: Anhar Fauzan Priyono (Department of Economics, Padjadjaran University); Arief Bustaman (Department of Economics, Padjadjaran University)
    Abstract: Financial system stability is required to ensure a sustainable economic development. Indonesia's financial system has experienced some major shocks in its history (e.g., Asian Financial Crisis in 1997, and most recently 2008 sub-prime mortgage crisis). These financial shocks to certain extent affect the stability of Indonesia financial system, later, transmitted to contraction of Indonesia's economic growth. By this point, one might consider that financial stability and economic performance are highly correlated. This study has the following objectives. First, it offers an alternative concept and methodology for constructing Indonesian Financial System Stability Index (IFSI). Second, perform a forecast of IFSI. This study employed two methods IFSI namely Aggregation with Variance Equal Weight, and Principal Component Analysis (PCA). We found that Indonesia financial stability index constructed by the two approaches have the same trend pattern. By reducing dimension of variables in PCA technique loosing information on the movement of the index variation, we found that banking performance has major contribution to IFSI. Moreover, in the term of forecasting performance, we found that Adaptive Holt Winters Exponential Smoothing is superior to Autoregressive Moving Average (ARMA) technique.
    Keywords: Indonesia financial market, Financial Stability Index
    JEL: G0
    Date: 2015–10
  6. By: Nora Lustig
    Abstract: This paper examines the redistributive impact of fiscal policy for Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa using comparable fiscal incidence analysis with data from around 2010. The largest redistributive effect is in South Africa and the smallest in Indonesia. Success in fiscal redistribution is driven primarily by redistributive effort (share of social spending to GDP in each country) and the extent to which transfers/subsidies are targeted to the poor and direct taxes targeted to the rich. While fiscal policy always reduces inequality, this is not the case with poverty. Fiscal policy increases poverty in Brazil and Colombia (over and above market income poverty) due to high consumption taxes on basic goods. The marginal contribution of direct taxes, direct transfers and inkind transfers is always equalizing. The marginal effect of net indirect taxes is unequalizing in Brazil, Colombia, Indonesia and South Africa. Total spending on education is pro-poor except for Indonesia, where it is neutral in absolute terms. Health spending is pro-poor in Brazil, Chile, Colombia and South Africa, roughly neutral in absolute terms in Mexico, and not pro-poor in Indonesia and Peru.
    Keywords: fiscal incidence, social spending, inequality, developing countries
    JEL: H22 D31 I3
    Date: 2015–08
  7. By: Bui, Anh Kim
    Abstract: This article develops a set of indicators to assess social capital of the Vietnamese pepper supply chain in the three main aspects, i.e. trust, norm, and network. Likert scale is used to quantify the magnitude of the social capital and to calculate the social capital index. Then, the research evaluates the impact of social capital on the performance of the Vietnamese pepper supply chain using the Structural Equation Modelling (SEM). Finally, implications of the influence of social capital in supply chain management are discussed. This study contributes to the literature of social capital and SEM methodology.
    Keywords: social capital, supply chain, Structural Equation Modelling, pepper, Vietnam, Agribusiness, Agricultural and Food Policy,
    Date: 2015
  8. By: Clarete, Ramon L.; Villamil, Isabela Rosario G.
    Abstract: The ASEAN Economic Community (AEC) transforms the ASEAN region into a single market and production base by 2015. This promotes greater competition for the Philippine agriculture and fisheries (A&F) sectors. With the country`s A&F sector lagging behind its neighboring ASEAN countries, there are fears that local industries will be displaced. The Global Trade Analysis model suggests an increase in both imports and exports as an impact of tariff reforms. The sectors ready for integration include mangoes, bananas, and pineapples. For the coconut sector, intensification of planting, replanting, and product diversification are needed to enhance and maintain supply. Production increase for perishable commodities, such as onions and meats, entails the need for lower power costs. With corn as a potential export commodity, cultivation areas are being expanded and agricultural policies are being aligned with the policies of the ASEAN Free Trade Agreement. To reap the benefits from the AEC, several measures must be performed, i.e., diversification and product quality upgrading. Public support must focus on providing adequate infrastructure, general services, research and development, and extension programs. Particularly, this paper recommends modernizing the country`s value chains in the A&F sector to effectively mobilize A&F exports into the ASEAN market. This is done by creating industry road maps to equip major stakeholders knowledge on market opportunities; organizing the value chains and effectively assisting their various participants to comply with international trade product standards, processes, and regulations; building capability for effectively managing the risk of disputes among value chain participants; and promoting the cooperation among farmers, small and medium enterprises, and large enterprises within these agro-based value chains.
    Keywords: Philippines, ASEAN Economic Community (AEC), value chain, agriculture and fisheries, tariff reforms
    Date: 2015
  9. By: Medina, Noemi A.
    Abstract: The Philippines, as a signatory of various international declarations, is one with other countries in instituting programs and policies to protect women and children. Despite this, the effectiveness of these measures cannot be established as patriarchy remains evident in Philippine culture. To study the effects of this culture on the human rights of girl-children in Cagayan de Oro and Claveria, Misamis Oriental, Philippines, this paper examined the factors that affect the kind of life that they live. Data were collected from a comprehensive review of existing literature, in-depth interviews, and case studies of the life stories of the respondents. The study found that poverty has a huge impact on perpetuating a patriarchal mentality. The school, media, church, and family were also identified as key players in transforming the society into having a culture that is safer and more protective of the rights of girl-children. Aside from their partnership and coordination, the review and proper implementation of existing laws and policies are measures geared toward diminishing, and eventually eradicating, the culture of patriarchy in Philippine society.
    Keywords: Philippines, patriarchy, patriarchal culture, human rights, girls` rights
    Date: 2015
  10. By: Hemmert, Martin
    Abstract: Informal social ties have long been recognized as relevant not only for interaction between individuals, but also for knowledge transfer and other important outcomes of business activities. This applies in particular to East Asian countries such as South Korea where informal networks are widely believed to be prevalent in economy and society. However, less is known about their role in interorganizational collaboration efforts, such as research collaborations. This research examines the relevance of interpersonal and interorganizational ties for interaction quality and outcomes of research collaborations in South Korea. Two types of research collaborations are studied: new product development (NPD) collaborations between companies and university-industry research collaborations (UICs). Interpersonal ties are found in a majority of both types of collaborations being studied. However, whereas interorganizational tie strength is strongly related to interaction quality and outcomes of research partnerships, interpersonal ties are not. Implications for research and for the management of interorganizational research collaborations are shown.
    Keywords: social ties,research collaborations,interaction quality,knowledge acquisition,Korea
    Date: 2015
  11. By: Nasha Ananchotikul; Dulani Seneviratne
    Abstract: Given the heavy reliance on bank lending as the main source of financing in most Asian economies, banks could potentially play a pivotal role in monetary policy transmission. However, we find that Asia’s bank lending channel or, more broadly, credit channel of domestic monetary policy is not very strong at the aggregate level. Using bank-level data for nine Asian economies during 2000–2013, we show that heterogeneity of bank characteristics (e.g., ownership type, financial position), degree of foreign bank penetration of the domestic banking sector, and global financial conditions all have a bearing on the response of domestic credit to changes in domestic monetary policy, and may account for the apparently weak credit channel at aggregate level.
    Keywords: Monetary transmission mechanism;Asia;Emerging markets;Banks;Loans;Financial systems;Banking sector;Globalization;Monetary policy;Monetary policy transmission; bank lending channel; financial globalization
    Date: 2015–09–28
  12. By: Ling, Chong Hui; Ahmed, Khalid; Muhamad, Rusnah binti; Shahbaz, Muhammad
    Abstract: This paper investigates the impact of trade openness on CO2 emissions using time series data over the period of 1970QI-2011QIV for Malaysia. We disintegrate the trade effect into scale, technique, composition and comparative advantage effects to check the environmental consequence of trade at four different transition points. To achieve the purpose, we have employed ADF and PP unit root tests in order to examine the stationary properties of the variables. Later, the long-run association among the variables is examined by applying ARDL bounds testing approach to cointegration. Our results confirm the presence of cointegration. Further, we find that scale effect has positive and technique effect has negative impact on CO2 emissions after threshold income level and form inverted-U shaped relationship – hence validates the environmental Kuznets curve hypothesis. Energy consumption adds in CO2 emissions. Trade openness and composite effect improve environmental quality by lowering CO2 emissions. The comparative advantage effect increases CO2 emissions and impairs environmental quality. The results provide the innovative approach to see the impact of trade openness in four sub-dimensions of trade liberalization. Hence, this study attributes more comprehensive policy tool for trade economists to better design environmentally sustainable trade rules and agreements.
    Keywords: Trade, Environment, Malaysia
    JEL: O1
    Date: 2015–10–05
  13. By: Solarin, Sakiru Adebola; Shahbaz, Muhammad
    Abstract: The objective of this paper is to reinvestigate the relationship between natural gas consumption and economic growth by including foreign direct investment, capital and trade openness in Malaysia for the period of 1971-2012. The structural break unit root test is employed to investigate the stationary properties of the series. We have applied combined cointegration test to examine the relationship between the variables in the long run. For robustness sake, the ARDL bounds testing method is also employed to test for possible of long run relationship in the presence of structural breaks. We note the validity of cointegration between the variables. Natural gas consumption, foreign direct investment, capital formation and trade openness have positive influence on economic growth in Malaysia. The results support the presence of feedback hypothesis between natural gas consumption and economic growth, foreign direct investment and economic growth, and natural gas consumption and foreign direct investment. The policy implications of these results are provided.
    Keywords: Natural gas consumption, Economic growth, Causality
    JEL: C1
    Date: 2015–10–11
  14. By: Vorlaufer, Miriam; Ibanez, Marcela; Juanda, Bambang; Wollni, Meike
    Abstract: This paper investigates the trade-off between conservation and equity considerations in the use of payments for environmental services (PES) that implicitly incorporate different distributive justice principles. Using a public good experiment with heterogeneous participants, we compare the effects on additional area conserved and distribution of earnings of two PES schemes: an equal payment and a payment based on Rawls distributional principle, which we refer to as maxi-min payment scheme. The main findings of the framed field experiment conducted in Jambi province (Indonesia) indicate that the introduction of a maxi-min PES scheme can function as a multi-purpose instrument. It realigns the income distribution in favor of low-endowed participants and does not necessarily need to be compromised by lower environmental additionality at the group level.
    Keywords: Payments for Environmental Services,efficiency equity trade-off,public good experiment,endowment heterogeneity,productivity heterogeneity
    Date: 2015
  15. By: Shahbaz, Muhammad; Kumar, Ronald Ravinesh; Ivanov, Stanislav; Loganathan, Nanthakumar
    Abstract: This paper revisits the tourism-growth nexus in Malaysia using time series quarter frequency data over the period of 1975-2013. We examine the impact of tourism using two separate indicators – tourism receipts per capita and visitor arrival per capita. Using the augmented Solow (1956) production function and the ARDL bounds procedure, we also incorporate trade openness and financial development, and account for structural break in series. Our results show the evidence of cointegration between the variables. Assessing the long-run results using both indicators of tourism demand, it is noted that the elasticity coefficient of tourism is 0.13 and 0.10 when considering visitor arrival and tourism receipts (in per capita terms) respectively. Notably, the impact of tourism demand is marginally higher with visitor arrival. The elasticity for trade openness is 0.19, financial development is 0.09, and capital share is 0.15. In the short-run, the coefficient of tourism is marginally negative, and for financial development and trade openness, it is 0.01 and 0.18, respectively. The Granger causality tests show bi-directional causation between tourism and output per capita; financial development and tourism; and trade openness and tourism demand, duly indicating the feedback or mutually reinforcing impact between the variables, and the evidence that tourism is central to enhancing the key sectors and the overall income level.
    Keywords: tourism and output per capita; Malaysia; trade openness; financial development; tourism-led growth hypothesis
    JEL: C1
    Date: 2015–09–13
  16. By: Tao Sun
    Abstract: This paper analyzes the transmission of global liquidity to the ASEAN-5 countries (ASEAN-5), including the impact on financial landscapes and risks to financial stability. It finds that global liquidity transmission and changing financial landscapes have contributed to increases in risks to financial stability in ASEAN-5. Therefore, policymakers in ASEAN-5 should prepare for possible liquidity tightening, strengthen regulation of nonbanks, and establish a comprehensive financial stability framework. A number of couontries are well-advanced in this process.
    Keywords: Brunei Darussalam;Cambodia;Capital inflows;Association of Southeast Asian Nations;Cross country analysis;Financial risk;Malaysia;Myanmar;Nonbank financial sector;Financial stability;Indonesia;International liquidity;Vietnam;Shadow banking;Central banks and their policies;Global liquidity;Philippines;Singapore;Thailand;financial landscape, liquidity, debt, security, international debt security, International Lending and Debt Problems, financial stability.,
    Date: 2015–09–29
  17. By: Thakolsri, Supachok; Sethapramote, Yuthana; Jiranyakul, Komain
    Abstract: This study employs the daily data of the Stock Exchange of Thailand to test for the leverage and volatility feedback effects. The period of investigation is during January 4, 2005 to December 27, 2013, which includes the Subprime crisis period in the US that might affect the volatility of stock market return in emerging stock markets. The results from this study show that the US subprime crisis imposes a minimal positive impact on volatility. In addition, the estimations of the three parametric asymmetric volatility models give the results showing some evidence of the volatility feedback and leverage effects. The findings give implications for portfolio diversification and risk management.
    Keywords: Asymmetric volatility, feedback effect, leverage effect, emerging stock market
    JEL: C22 G10
    Date: 2015–10
  18. By: Lavopa A.M.; Szirmai A. (UNU-MERIT)
    Abstract: This paper analyses broad changes in the global structure of production in the last half century. The analysis is carried out along two dimensions sectoral and geographical. A novelty of the paper is the use of sector-specific PPPs to estimate the structure of production in current PPP international dollars. The analysis is based on a comprehensive dataset that covers 140 countries accounting for 98 of global GDP in 2012 for the period 1960-2012. Salient findings of the paper include the following. First, in current prices there was a process of global de-industrialisation. The manufacturing share in global GDP dropped from more than 20 in the early 1960s to 12 by the end of the period. This process, however, was not even across country-groups and regions. As expected, it was much more pronounced in the advanced economies. In developing countries there was an increase in the share of manufacturing, followed by a decline from the early 1990s onwards. However, in constant prices, the share of manufacturing remained more or less constant. This implies that prices of services have been increasing much more rapidly than those of manufactured goods, probably due to slower productivity growth in services. In geographic terms, the share of developing countries in world manufacturing value added has increased from 25 to more than 50. This phenomenon was clearly driven by the Asian developing economies. Finally, within manufacturing knowledge-intensive, high-tech industries and natural-resource intensive industries have increased their shares in global manufacturing value added.
    Keywords: Industrial Organization and Macroeconomics: Industrial Structure and Structural Change; Industrial Price Indices; Industry Studies: Manufacturing: General; Macroeconomic Analyses of Economic Development;
    JEL: L16 L60 O11
    Date: 2015
  19. By: Majah-Leah V. Ravago (School of Economics, University of the Philippines Diliman); Arsenio M. Balisacan (School of Economics, University of the Philippines Diliman)
    Abstract: This chapter provides an overview of the patterns, composition, policies and institutional environment that have influenced the performance of the agriculture sector in recent years. The focus is on the changing dynamics of supply and demand for agriculture as a whole and for key commodity groups and livestock in the context of a growing economy, urbanization, and regional market integration. It concludes with a discussion of the policy and institutional challenges to making agriculture a key pillar in the country’s pursuit of inclusive growth, poverty reduction, and sustainable development.
    Keywords: Philippine agriculture, structural transformation, poverty
    JEL: Q10 Q17 Q18
    Date: 2015–10

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