nep-sea New Economics Papers
on South East Asia
Issue of 2015‒12‒12
eleven papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Competition Law Enforcement of Viet Nam and the Necessity of a Transparent Regional Competition Policy By Phan Cong THANH
  2. Modelling of Distributional Impacts of Energy Subsidy Reforms: an Illustration with Indonesia By Olivier Durand-Lasserve; Lorenza Campagnolo; Jean Chateau; Rob Dellink
  3. The Potential of REDD+ for Carbon Sequestration in Tropical Forests: Supply Curves for carbon storage for Kalimantan, Indonesia By Yonky Indrajaya; Edwin van der Werf; Hans-Peter Weikard; Frits Mohren; Ekko C. van Ierland
  4. Demand for Secondhand Goods and Consumers' Preference in Developing Countries: An analysis using the field experimental data of Vietnamese consumers By HIGASHIDA Keisaku; Nguyen Ngoc MAI
  5. Investing in Workers and Firms as Learning Centres for Industrial Upgrading By Hank LIM
  6. The Competition Act 2010—the Issues and Development since Coming into Force By Vince Eng Teong SEE
  7. Dynamics of innovation and internationalization among Vietnamese SMEs By Trinh, Long
  8. Latin America and the middle-income trap By Paus, Eva
  9. An Assessment of the Korea-China Free Trade Agreement By Jeffrey J. Schott; Euijin Jung; Cathleen Cimino
  10. The Mystery of Saving in Latin America By Ilan Noy; Eduardo A. Cavallo; Oscar Becerra
  11. Pathways to Deep Decarbonization in Italy By Isabella Alloisio; Alessandro Antimiani; Simone Borghesi; Enrica De Cian; Maria Gaeta; Chiara Martini; Ramiro Parrado; Maria Cristina Tommasino; Elena Verdolini; Maria Rosa Virdis

  1. By: Phan Cong THANH (Vietnam Competition Authority)
    Abstract: Competition is becoming an important issue among the countries of the Association of Southeast Asian Nations (ASEAN). However, having a transparent and positive competition policy is much more difficult than enacting a competition law. Competition policy strongly depends on the enforcement of competition law and the way the government positions competition law in its general policy for developing the national economy. This paper discusses the enforcement of Viet Nam’s competition law and argues for the need for a regional competition policy for ASEAN and the East Asia area which enhances an individual country’s competition policy and prevents conflicts of interest among countries.
    Keywords: Competition policy, industrial policy, regional competition policy, Viet Nam, ASEAN, East Asia, extraterritorial application, compliance, state-owned enterprises.
    JEL: K21
    Date: 2015–12
  2. By: Olivier Durand-Lasserve (OECD Environmental Directorate, France); Lorenza Campagnolo (Ca’ Foscari University of Venice, Centro Euro-Mediterraneo sui Cambiamenti Climatici and Fondazione Eni Enrico Mattei, Italy); Jean Chateau (OECD Environmental Directorate, France); Rob Dellink (OECD Environmental Directorate, France)
    Abstract: This report develops an analytical framework that assesses the macroeconomic, environmental and distributional consequences of energy subsidy reforms. The framework is applied to the case of Indonesia to study the consequences in this country of a gradual phase out of all energy consumption subsidies between 2012 and 2020. The energy subsidy estimates used as inputs to this modelling analysis are those calculated by the International Energy Agency, using a synthetic indicator known as “price gaps”. The analysis relies on simulations made with an extended version of the OECD’s ENV-Linkages model. The phase out of energy consumption subsidies was simulated under three stylised redistribution schemes: direct payment on a per household basis, support to labour incomes, and subsidies on food products. The modelling results in this report indicate that if Indonesia were to remove its fossil fuel and electricity consumption subsidies, it would record real GDP gains of 0.4% to 0.7% in 2020, according to the redistribution scheme envisaged. The redistribution through direct payment on a per household basis performs best in terms of GDP gains. The aggregate gains for consumers in terms of welfare are higher, ranging from 0.8% to 1.6% in 2020. Both GDP and welfare gains arise from a more efficient allocation of resources across sectors resulting from phasing out energy subsidies. Meanwhile, a redistribution scheme through food subsidies tends to create other inefficiencies. The simulations show that the redistribution scheme ultimately matters in determining the overall distributional performance of the reform. Cash transfers, and to a lesser extent food subsidies, can make the reform more attractive for poorer households and reduce poverty. Mechanisms that compensate households via payments proportional to labour income are, on the contrary, more beneficial to higher income households and increase poverty. This is because households with informal labour earnings, which are not eligible for these payments, are more represented among the poor. The analysis also shows that phasing out energy subsidies is projected to reduce Indonesian CO2 emissions from fuel combustion by 10.8% to 12.6% and GHG emissions by 7.9% to 8.3%, in 2020 in the various scenarios, with respect to the baseline. These emission reductions exclude emissions from deforestation, which are large but highly uncertain and for which the model cannot make reliable projections.
    Keywords: Computable General Equilibrium Model, Households’ Heterogeneity, Fossil Fuel Subsidy Reforms, Distributional Impacts, Indonesia
    JEL: C68 H23 O53
    Date: 2015–07
  3. By: Yonky Indrajaya (Environmental Economics and Natural Resources Group, Wageningen University (The Netherlands)); Edwin van der Werf (Environmental Economics and Natural Resources Group, Wageningen University (The Netherlands) and CESifo (Germany)); Hans-Peter Weikard (Environmental Economics and Natural Resources Group, Wageningen University (The Netherlands)); Frits Mohren (Forest Ecology and Forest Management Group, Wageningen University (The Netherlands)); Ekko C. van Ierland (Environmental Economics and Natural Resources Group, Wageningen University (The Netherlands))
    Abstract: We study the potential of tropical multi-age multi-species forests for sequestering carbon in response to financial incentives from REDD+. The use of reduced impact logging techniques (RIL) allows a forest owner to apply for carbon credits whereas the use of conventional logging techniques (CL) does not. This paper is the first to develop a Hartman model with selective cutting in this setting that takes additionality of carbon sequestration explicitly into account. We apply the model using data for Kalimantan, Indonesia. RIL leads to less damages on the residual stand than CL and has lower variable but higher fixed costs. We find that a system of carbon credits through REDD+ has a large potential for carbon storage. Interestingly, awarding carbon credits to carbon stored in end-use wood products does not increase the amount of carbon stored and reduces Land Expectation Value. We also observe that the level of the carbon price at which it becomes optimal not to harvest depends on the interpretation of the steady state model.
    Keywords: REDD+, Carbon Credits, Carbon Sequestration, Sustainable Forest Management, Reduced Impact Logging, Optimal Forest Management, Carbon Price
    JEL: Q2 Q23
    Date: 2015–10
  4. By: HIGASHIDA Keisaku; Nguyen Ngoc MAI
    Abstract: Using the data from a series of field experiments that were carried out in in Hanoi, Thai Ping, and Thai Hong in Vietnam, we examined the relationship between consumers' preference for secondhand products and consumers' and products' attributes. In particular, we extracted their risk, time, and social cooperative preferences through the experiments. In addition, we surveyed their personal attributes and conducted a type of conjoint questionnaire about motorbikes and fridges. Regarding product attributes, we focused on the age, brand, size, quality labeling, origin, and so on. We found that product attributes influence consumer utility as expected. For example, the Honda brand positively influences consumer utility. Moreover, we obtained several important results about the relationship between personal attributes and demand, in particular, about preference for secondhand products. For example, consumers who are more far-sighted and/or older have stronger preference for secondhand goods compared with the less far-sighted and/or younger consumers; the older and/or male consumers have stronger preference for Japanese brands as compared with the younger and/or female consumers. It is also possible that environmental consciousness affects the preference for secondhand products. We also provide policy implications on quality certification and international trade of secondhand goods.
    Date: 2015–12
  5. By: Hank LIM (Singapore Institute of International Affairs (SIIA))
    Abstract: Investing in workers and firms as learning centres for industrial upgrading is important for economic, social, and cultural development in the context of the Association of Southeast Asian Nations (ASEAN) Economic Community and the ASEAN Socio-Cultural Community. The critical question is how best to impart learning and training of relevant skills in a rapidly changing and dynamic global environment. A collective approach of the government, firms, and workers as major stakeholders holds the key to this issue. This must be done proactively and should involve active participation by the stakeholders on a lifelong and sustained basis. Special programmes must be established for small and medium enterprises as they face structural constraints, including learning and training processes. Indeed, some ASEAN Member States (AMSs) have developed an effective and workable system for investing in workers and in firms for economic restructuring and industrial upgrading. In this context, AMSs should seriously consider publicly funded workers’ training and upgrading through various empirically tested schemes, initiated and supported regionally. For example, an ASEAN Academy for human resource development and an ASEAN Labour Exchange initiative could be established for skills training and upgrading and as a platform for region-wide recognition of industries and firms with outstanding performance in investment in workers and firms as learning centres for industrial upgrading.
    Keywords: investing in workers, SME, human capital
    JEL: J24 O38 L16
    Date: 2015–12
  6. By: Vince Eng Teong SEE (University of Malaya Centre of Regulatory Studies)
    Abstract: Competition law was almost unheard of in the first hundred years after the Sherman Act was passed. However, the number of jurisdictions with a competition law increased dramatically in the last 20 years. One of the countries that joined the rank is Malaysia when it passed Competition Act 2010 and Competition Commission Act 2010. Competition Act 2010 represents an attempt to reduce the hitherto European competition jurisprudence to a concise piece of legislation supported by other guidelines. This paper will attempt to examine the two pieces of legislation, and explore various issues, both normative and practical. It will also look at some development that has taken place since the law came into force in January 2012, some cases, and initiatives of the Commission.
    JEL: K21
    Date: 2015–12
  7. By: Trinh, Long
    Abstract: Innovation and internationalization have been considered as the major sources of growth for a long time. Various theoretical models suggest a bi-directional causality relationship between these two decisions. However, so far there is limited empirical evidence on whether there is a dynamic interdependence of innovation and internationalization decisions among SME firms in developing countries. Using a dynamic bivariate probit model and adopting a broader definition of internationalization, this paper analyzes the dynamic interdependence of internationalization and innovation decisions at the firm level in a developing country, by using a rich panel data set of SMEs collected biannually from 2005 to 2013 in Vietnam. Our empirical results show a high persistence in process, product innovations and internationalization decisions. Furthermore, we find that, for non-micro firms (i.e. firms with at least six fulltime permanent workers), past internationalization has a positive effect on process innovation but past process innovation do not has a significant effect on internationalization decision of these firms. For this group of firms, we also find signs of cross-dependence between process innovation and internationalization decision. Our empirical results, however, does not show dynamic interdependence between internationalization and product innovation. For micro firms, we do not find any evidence relating to interdependence of internationalization and both types of innovation.
    Keywords: internationalization, process innovation, product innovation, persistence of innovation, dynamic random effect bivariate probit, SME, Vietnam
    JEL: F14 L20 O31
    Date: 2015–12
  8. By: Paus, Eva (Comisión Económica para América Latina y el Caribe (CEPAL) United Nations)
    Abstract: Promising economic growth during the 2000s obfuscates the reality that Latin American countries are facing the acute threat of a middle-income trap. In a review of the literature on the middle-income trap I distinguish two approaches to the middle-income trap: one focuses mainly on the lack of structural change, the driving forces behind it, and the national and global context in which it unfolds; the other stresses growth slowdowns irrespective of time and place. I offer an extension of the structural change approach with an emphasis on the implications of the current globalization process. A productive capabilities-focused analysis reveals serious gaps in social and firm-level capabilities in Latin America economies, though the magnitude differs across indicators and countries. The experiences of China and small latecomers trying to move from the middle to the high-income level (Chile, the Dominican Republic, Jordan, Ireland, and Singapore) suggest that a cohesive productive capabilities-focused development strategy holds out great promise for generating growth-enhancing structural change. I conclude with a discussion of the key challenges Latin American countries have to overcome for the successful implementation of such a strategy to avoid the middle-income trap.
    Date: 2014–06
  9. By: Jeffrey J. Schott (Peterson Institute for International Economics); Euijin Jung (Peterson Institute for International Economics); Cathleen Cimino (Peterson Institute for International Economics)
    Abstract: Of all the free trade agreements (FTAs) concluded by Korea with its major trading partners since the turn of the century, the Korea-China FTA may be the largest in trade terms. It is, however, far from the best in terms of the depth of liberalization and the scope of obligations on trade and investment policies. Korea and China agreed to liberalize a large share of bilateral trade within 20 years, but both sides incorporated extensive exceptions to basic tariff reforms and deferred important market access negotiations on services and investment for several years. Political interests trumped economic objectives, and the negotiated outcome cut too many corners to achieve such a comprehensive result. The limited outcome in the Korea-China talks has two clear implications for economic integration among the northeast Asian countries. First, prospects for the ongoing China-Japan-Korea talks will be limited and unlikely to exceed the Korea-China outcome. Second, Korea and Japan need to strengthen their bilateral leg of the northeast Asian trilateral and the best way is by negotiating a deal in the context of the Trans-Pacific Partnership.
    Date: 2015–12
  10. By: Ilan Noy; Eduardo A. Cavallo; Oscar Becerra
    Abstract: Using reduced-form regression models, this paper shows that average predicted private saving rates in Latin America and the Caribbean (LAC) are significantly lower than in other regions, particularly Emerging Asia (about 4 percentage points of GDP on average). Predicted public saving rates in LAC are also lower than in Emerging Asia, but by a smaller margin (1 percentage point of GDP on average). It is further shown that LAC private saving rates are below the region-specific prediction by approximately 1. 5 percentage points of GDP on average. Finally, it is found that a greater reliance on external savings does not fully close the negative estimated private saving gap, reducing it by less than 1 percentage point. No gap is found in the case of public saving rates, suggesting that the lower predicted public saving rate in LAC is accounted for by the known determinants of fiscal policy.
    Keywords: Savings, Development Banks, Economic Development & Growth, Saving rates, Saving gap, Determinants of saving, Private saving, Public saving *, IDB-WP-615
    Date: 2015–11
  11. By: Isabella Alloisio (Fondazione Eni Enrico Mattei (FEEM) and Centro Euromediterraneo sui Cambiamenti Climatici (CMCC)); Alessandro Antimiani (INEA); Simone Borghesi (University of Siena and Fondazione Eni Enrico Mattei (FEEM)); Enrica De Cian (Fondazione Eni Enrico Mattei (FEEM) and Centro Euromediterraneo sui Cambiamenti Climatici (CMCC)); Maria Gaeta (Studies and Strategy Unit, ENEA); Chiara Martini (Energy Efficiency Unit, ENEA); Ramiro Parrado (Fondazione Eni Enrico Mattei (FEEM) and Centro Euromediterraneo sui Cambiamenti Climatici (CMCC)); Maria Cristina Tommasino (Studies and Strategy Unit, ENEA); Elena Verdolini (Fondazione Eni Enrico Mattei (FEEM) and Centro Euromediterraneo sui Cambiamenti Climatici (CMCC)); Maria Rosa Virdis (Studies and Strategy Unit, ENEA)
    Abstract: The Deep Decarbonization Pathways Project (DDPP), an initiative of the Sustainable Development Solutions Network (SDSN) and the Institute for Sustainable Development and International Relations (IDDRI), aims to demonstrate how countries can transform their energy systems by 2050 in order to achieve a low-carbon economy and significantly reduce the global risk of catastrophic climate change. Built upon a rigorous accounting of national circumstances, the DDPP defines transparent pathways supporting the decarbonization of energy systems while respecting the specifics of national political economy and the fulfillment of domestic development priorities. The project comprises 16 Country Research Teams, composed of leading research institutions from countries representing about 70% of global GHG emissions and at very different stages of development. These 16 countries are: Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, South Africa, South Korea, the United Kingdom, and the United States. “Pathways to Deep Carbonization in Italy” contributes to the national debate on climate-change mitigation, and the importance of deep decarbonization, by examining three alternative pathways that could reduce Italian CO2 emissions by at least 40% in 2030 and 80% in 2050, compared to 1990. It analyzes the challenges the Italian energy system faces, and possible future technological developments that will need to be pursued.
    Keywords: Decarbonization, Low-carbon Economy, Climate Change
    JEL: Q4 Q5
    Date: 2015–09

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