nep-sea New Economics Papers
on South East Asia
Issue of 2016‒01‒03
thirty-two papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Long-Term Health Effects of Vietnam War's Herbicide Exposure on the Vietnamese Population By Nikolay Gospodinov; Hai V. Nguyen
  2. A Critical Analysis of Purchasing of Health Services in the Philippines: A Case Study of PhilHealth By Picazo, Oscar F.; Ho, Beverly Lorraine C.; Ulep, Valerie Gilbert T.; Pantig, Ida Marie T.
  3. Nowcasting Indonesia By Luciani, Matteo; Pundit, Madhavi; Ramayandi, Arief; Veronese , Giovanni
  4. Managing Capital Flows in Asia: An Overview of Key Issues By Villafuerte , James; Yap, Josef T.
  5. Cambodia’s Special Economic Zones By Warr , Peter; Menon, Jayant
  6. ASEAN PPP: From Institutional Development to Streamlined Implementation By NORIHIRO KAWASAKI
  7. Indonesia’s Single Registry for Social Protection Programmes By Adama Bah; Suahasil Nazara; Elan Satriawan
  8. Achieving Environmental Sustainability in Myanmar By Raitzer, David A.; Samson, Jindra Nuella G.; Nam, Kee-Yung
  9. Why Inequality Matters in Poverty Reduction and Why the Middle Class Needs Policy Attention By Albert, Jose Ramon G.; Raymundo, Martin Joseph M.
  10. Initial Conditions Matter: Social Capital and Participatory Development By Cameron, Lisa A.; Olivia, Susan; Shah, Manisha
  11. Developing Myanmar’s Information and Communication Technology Sector toward Inclusive Growth By Nam, Kee-Yung; Cham, Maria Rowena; Halili, Paulo Rodelio
  12. Energy Efficiency Priority for Indonesia: A General Equilibrium Analysis By Arief Anshory Yusuf
  13. Assessing Mandated Credit Programs: Case Study of the Magna Carta in the Philippines By Khor, Niny; Jacildo, Ryan; Tacneng, Ruth
  14. Tracking Clean Energy Progress in ASEAN Member States and Analysis of Implementation Deficits By Venkatachalam ANBUMOZHI; HAN Phoumin
  15. The Impact of Infrastructure on Trade and Economic Growth in Selected Economies in Asia By Ismail, Normaz Wana; Mahyideen, Jamilah Mohd
  16. 50 years ago today, American diplomats endorsed mass killings in Indonesia. Here's what it means for today. By Kai Thaler
  17. Adopting income groups' weights in multidimensional inequality measures; Empirical case of Indonesia By Suska
  18. Two Decades of Rising Inequality and Declining Poverty in the Lao People’s Democratic Republic By Warr, Peter; Rasphone, Sitthiroth; Menon, Jayant
  19. Myanmar Human Capital Development, Employment, and Labor Markets By Tanaka, Sakiko; Spohr, Christopher; D’Amico, Sandra
  20. Public Debt Sustainability in Developing Asia: An Update By Ferrarini , Benno; Ramayandi, Arief
  21. Power Sector Development in Myanmar By Nam, Kee-Yung; Cham, Maria Rowena; Halili, Paulo Rodelio
  22. The Impact of Financial Factors on the Output Gap and Estimates of Potential Output Growth By Felipe, Jesus; Sotocinal, Noli; Bayudan-Dacuycuy, Connie
  23. Educational expansion and the role of education in expenditure inequality in Indonesia since the 1997 financial crisis By Takahiro Akita
  24. Do we need a global ‘central planner’ and ‘optimal’ economic policy for all? By Sergey Drobyshevsky
  25. Solar Home Systems in Ho Chi Minh City: A promising technology whose time has not yet come By Baulch, Bob; Do, Thuy Duong; Le, Thai-Ha
  26. Determinants of corruption: Can we put all countries in the same basket? By Blaise Gnimassoun; Joseph Keneck
  27. Myanmar’s Agriculture Sector: Unlocking the Potential for Inclusive Growth By Raitzer, David A.; Wong, Larry C. Y.; Samson, Jindra Nuella G.
  28. A Darwinian Perspective on “Exchange Rate Undervaluation” By Du , Qingyuan; Wei , Shang-Jin
  29. The Competitive Saving Motive: Concept, Evidence, and Implications By Wei , Shang-Jin; Zhang, Xiaobo
  30. What Accounts for the Growth of Carbon Dioxide Emissions in Advanced and Emerging Economies? The Role of Consumption, Technology, and Global Supply Chain Trade By Ferrarini , Benno; de Vries , Gaaitzen J.
  31. Global Increase in Climated-Related Disasters By Thomas, Vinod; López, Ramón
  32. Salience of debt and homebuyers' credit decisions By Sumit Agarwal; Artashes Karapetyan

  1. By: Nikolay Gospodinov; Hai V. Nguyen
    Abstract: Background: Long-term health effects of exposure to Agent Orange have been a subject of debate and controversy. Most studies on Agent Orange health effects were based on small samples. The objective of this population-based study is to determine whether Agent Orange exposure increases the risks of cancer and hypertension for the Vietnamese population. Methods: This study employs a quasi-experiment research design to estimate the causal long term effect of Agent Orange on incidences of cancer and hypertension for Vietnamese population. Specifically, difference-in-differences regressions are estimated which compute the difference between the Agent Orange-affected cohort versus the unaffected cohort in a treated area (where the Agent Orange was sprayed) and compare that difference with the similar difference computed for the control area (where the Agent Orange was not used). Results: People who were directly exposed to Agent Orange spraying have a higher risk of developing cancer. Agent Orange exposure appears to raise significantly the risk of hypertension for those who lived as well as those who were born during the spraying period. The most harmful effects of Agent Orange occur in areas that received the largest amounts of herbicide spray. Interpretation: The results provide statistical evidence for the harmful effects inflicted by herbicide exposure on the Vietnamese population. Our findings of elevated risk of cancer and hypertension complement the small-sample studies conducted for the Vietnam War veterans and raise warnings for the use of Agent Orange and other herbicides in populated areas.
    Keywords: agent orange, difference-in-differences, herbicide exposure, Vietnam war
    Date: 2015–12
  2. By: Picazo, Oscar F.; Ho, Beverly Lorraine C.; Ulep, Valerie Gilbert T.; Pantig, Ida Marie T.
    Abstract: This study is a critical analysis of health services purchasing undertaken by the PhilHealth, which implements the National Health Insurance Program of the Philippines. Purchasing is about how an institution should determine, negotiate for, and obtain health services on behalf of a group of people that has contributed resources, either through taxes, premiums, or point-of-service payments, in exchange for anticipated health services. The study employs a principal/agent framework for analyzing three critical relationships: that between the purchaser and health-care providers, between the purchaser and citizens (or members of Philhealth), and between the purchaser and the government, both as regulator and as funder of services, at the national government and local government levels. The study is an analysis of the key alignments and variances of purchasing practices vis-a-vis the "design" and the theoretical ideal in each of the three relationships. To do this, the study employs an extensive document review as well as key informant interviews of decisionmakers and other stakeholders, including PhilHealth management and staff, the Department of Health, provider representatives, and consumer representatives. It is part of a multicountry analysis of purchasing of health services in selected African and Asian health-financing organizations. It also provides key findings and policy implications.
    Keywords: Philippines, PhilHealth, purchasing of health services, strategic purchasing, active purchasing, health-care financing
    Date: 2015
  3. By: Luciani, Matteo (Board of Governors of the Federal Reserve System); Pundit, Madhavi (Asian Development Bank); Ramayandi, Arief (Asian Development Bank); Veronese , Giovanni (Banca d'Italia)
    Abstract: We produce predictions of the current state of the Indonesian economy by estimating a Dynamic Factor Model on a dataset of 11 indicators (also followed closely by market operators) over the time period 2002 to 2014. Besides the standard difficulties associated with constructing timely indicators of current economic conditions, Indonesia presents additional challenges typical to emerging market economies where data are often scant and unreliable. By means of a pseudo-real-time forecasting exercise we show that our model outperforms univariate benchmarks, and it does comparably with predictions of market operators. Finally, we show that when quality of data is low, a careful selection of indicators is crucial for better forecast performance.
    Keywords: Dynamic Factor Models; emerging market economies; nowcasting
    JEL: C32 C53 E37 O53
    Date: 2015–12–15
  4. By: Villafuerte , James (Asian Development Bank); Yap, Josef T. (University of the Philippines)
    Abstract: Global capital flows into emerging markets, including those in Asia, continue to be volatile. These capital flows generate both benefits and costs. The latter are associated with episodes of currency and banking crises like the 1997 Asian financial crisis and the 2008 global financial and economic crisis. Policy responses can be implemented to minimize the costs. At the same time, policy responses should vary depending on whether “pull” factors or “push” factors dominate the capital flows. Data show that the main impact of capital flows on economies of East Asia is reflected in real effective exchange rates, equity prices, and accumulation of foreign exchange reserves. If “pull” factors are dominant, policy makers should allow real exchange rates to appreciate in the long-term. Three broad categories of macroeconomic measures are available to countries facing surges of capital inflows, if they are not willing to allow the nominal exchange rate to appreciate: (i) sterilized intervention, (ii) greater exchange rate flexibility, and (iii) fiscal tightening (preferably through expenditure cuts). However, all of them have major drawbacks. Instead, capital controls or, more generally, macroprudential policy can be considered. Other policy recommendations include measures to encourage foreign direct investment, as this type of capital flow is more stable and beneficial; exchange rate coordination to reduce the adverse impacts of currency appreciation on the global competitiveness of domestic firms; and regional financial cooperation, particularly in the development of local bond markets. Recent data show the adverse impact of Quantitative Easing tapering on Asian economies. This is verified by econometric results showing the strong linkages between the United States bond markets and those in Asia. These findings enhance the role of macroprudential policy, which can be implemented in the context of regional cooperation in order to reduce negative spillovers across economies in Asia.
    Keywords: capital flows; exchange rates; regional cooperation; volatility
    JEL: F31 F32 F36
    Date: 2015–11–25
  5. By: Warr , Peter (Crawford School of Public Policy); Menon, Jayant (Asian Development Bank)
    Abstract: This study examines the role of special economic zones (SEZs) within the trade policy of Cambodia. It asks whether Cambodia’s establishment of SEZs since late 2005 has been successful, based on the evidence to date, and analyzes the appropriate role and management of SEZs over the next decade or more. The study finds that the SEZs have attracted significant levels of foreign investment into Cambodia that would not have been present otherwise. These investments have created around 68,000 jobs, with equal or better pay and better prospects than the alternatives that would otherwise have existed, raising the economic welfare of the workers concerned. A feature of the Cambodian experience is that the government has left the establishment and management of the zones to private sector developers, avoiding the large and sometimes wasteful public sector set up costs associated with SEZ establishment in many other countries.
    Keywords: Cambodia; foreign investment; production networks; special economic zones
    JEL: F21 F23
    Date: 2015–10–14
  6. By: NORIHIRO KAWASAKI (Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: There is a growing momentum to set ambitious infrastructure development targets across member states of the Association of Southeast Asian Nations (ASEAN). With the aim of mobilising private resources, ASEAN member states have begun to put in a great deal of efforts to upgrade their enabling frameworks for public-private partnership (PPP). Yet, evidence suggests that implementation of PPP projects on the ground has fallen far behind expectations. This policy brief emphasises the importance of realistic and consistent project planning, preparation, and offering in streamlining the implementation process to accelerate PPP market development in ASEAN.
    Date: 2015–12
  7. By: Adama Bah (IPC-IG); Suahasil Nazara (IPC-IG); Elan Satriawan (IPC-IG)
    Abstract: Indonesia began to implement targeted social assistance programmes for both households and individuals in the aftermath of the 1997 Asian financial crisis. The crisis had halted Indonesias economic growth and caused a sharp rise in domestic prices—particularly for food items, which led to a rapid and significant increase in poverty. The massive economic and social impacts of the crisis required a rapid roll-out of large-scale social assistance programmes, collectively termed the Social Safety Net (JPS), to protect households and communities that were most affected and to prevent the further spread of poverty. Such programmes relied on locally validated data from the National Family Planning Coordination Board and were largely pro-poor, although several targeting issues emerged. (…)
    Keywords: Indonesia, Single Registry, Social Protection Programmes
    Date: 2015–07
  8. By: Raitzer, David A. (Asian Development Bank); Samson, Jindra Nuella G. (Asian Development Bank); Nam, Kee-Yung (Asian Development Bank)
    Abstract: Myanmar’s long isolation from international markets and sources of finance historically limited development, and thus, the pressure on its environment. Many of its resources remain relatively intact, despite an absence of effective environmental regulations. Yet, as the country integrates into the global economy and its economic development accelerates, resource degradation is rising rapidly. Deforestation of closed forests in recent years has taken place at the fastest rate among major Southeast Asian countries, much of it driven by concessions for plantations and other large-scale projects. Marine capture fishing pressure has increased rapidly, and the sustainability of catches is largely unknown. Water and air pollution effluents and emissions are escalating. At the same time, policy responses to date, while emphasizing overall sustainability, need to be developed to address these issues. Environmental impact assessment procedures, environmental quality standards, emissions regulations, and penalties for environmental violations remain under development. Perverse incentives for resource destruction are still in place and efforts to create market incentives for sustainable practices are at an initial stage. To ensure long-run, sustainable economic development, Myanmar’s reforms need to address these issues more quickly and comprehensively.
    Keywords: deforestation; environmental protection and conservation; Myanmar; pollution management; vulnerability to climate change
    JEL: O13 O44 Q15 Q56
    Date: 2015–12–14
  9. By: Albert, Jose Ramon G.; Raymundo, Martin Joseph M.
    Abstract: While the Philippines has had a new economic growth trajectory in recent years, the country has had little progress in reducing poverty and in making growth more inclusive. In this paper, the authors examine trends in macroeconomic statistics, and the progress that government has had in its Philippine Development Plan and in achieving the Millennium Development Goals. They look into income distribution and income inequality; propose a definition of the middle-income class, laying down seven income classes based on the national poverty lines. They also profile the middle-income class vis-a-vis other income classes given the potential of the middle-income class to sustain economic growth. They argue that government needs not only focus its attention to the poor, but also strengthen the middle class toward improving opportunities and reducing inequalities.
    Keywords: Philippines, income inequality, inclusive growth, middle-income class
    Date: 2015
  10. By: Cameron, Lisa A. (Monash University); Olivia, Susan (Monash University); Shah, Manisha (University of California, Los Angeles)
    Abstract: Billions of dollars have been spent on participatory development programs in the developing world. These programs give community members an active decision-making role. Given the emphasis on community involvement, one might expect that the effectiveness of this approach would depend on communities' pre-existing social capital stocks. Using data from a large randomised field experiment of Community-Led Total Sanitation in Indonesia, we find that villages with high initial social capital built toilets and reduced open defecation, resulting in substantial health benefits. In villages with low initial stocks of social capital, the approach was counterproductive – fewer toilets were built than in control communities and social capital suffered.
    Keywords: participatory development, social capital, sanitation, economic development, Indonesia
    JEL: O12 O22 I15
    Date: 2015–12
  11. By: Nam, Kee-Yung (Asian Development Bank); Cham, Maria Rowena (Asian Development Bank); Halili, Paulo Rodelio (Asian Development Bank)
    Abstract: Myanmar’s recent socioeconomic and political reforms have signaled a readiness to reintegrate into the world economy. To leapfrog the economy and accelerate growth, the country should take advantage of digital technology. This paper assesses Myanmar’s information and communication technology sector, identifies constraints the sector faces, and recommends policies that will help the government overcome them. Given limited public resources, Myanmar will need help translating its information and communication technology infrastructure needs into financially viable and bankable projects that can attract private sector financing.
    Keywords: e-governance; ICT infrastructure; information and communication technology development; Myanmar; telecommunications
    JEL: L86 L88 L96 L98
    Date: 2015–11–17
  12. By: Arief Anshory Yusuf (Department of Economics, Padjadjaran University)
    Abstract: Climate change mitigation, through the means of energy efficiency improvement, requires all countries to play important roles. Developing countries are not the exception. However, in the context of developing countries, the benefit of energy efficiency improvement need to be measured against a broad range of development indicators. Using a general equlibrium model of the Indonesian economy, we simulate various different energy efficiency scenarios and compare its impact not only on the amount of emissions reduction, but also on other relevant development indicators such as employment creation, poverty incidence and income distribution. The result suggests that energy efficiency improvement which leave more resource available for output expansion is employment-generating, poverty-reducing and can have a favorable distributional implication. For Indonesia, improving fuel efficiency in public road transportation and improving energy efficiency of the energy-intensive manufacturing sector has come out as the key priority areas where energy efficiency strategy should focus on.
    Keywords: Energy efficiency, Computable General Equilibrium, Indonesia
    JEL: Q40
    Date: 2015–12
  13. By: Khor, Niny (Asian Development Bank); Jacildo, Ryan (Consultant at the Economic Research and Regional Cooperation Department, ADB); Tacneng, Ruth (Universidade Catolica Portuguesa)
    Abstract: We examine the effects of a mandated credit program to small and medium enterprises in the Philippines (Magna Carta Law) using a panel dataset compiled from official data published by the Bangko Sentral ng Pilipinas. The final sample of 109 financial institutions represented over 90% of total finance sector assets in the Philippines. We highlight three important findings. First, although the total lending levels to micro, small, and medium enterprises (MSMEs) grew slightly, the percentage shares of loans allocated to MSMEs declined drastically from a peak of 30% of total loans in 2002 to 16.4% in 2010. Second, following the upwards revision of the loan target (from 6% to 8%) for smaller firms in 2008, there was a sharp increase in noncompliance especially amongst universal and commercial banks. Kernel density estimates suggest that the revision of the Magna Carta in 2008 was binding for small firm lending particularly for the universal and commercial banks. On the other hand, total loans to medium enterprises were still more than threefold larger than the targeted 2%. Third, there is an increased heterogeneity in optimal loan portfolio across banks. Most surprisingly, the absolute level of MSME lending by rural and cooperative banks declined since 2008. Direct compliance amongst universal and commercial banks decreased beginning in the late 2007, while that of thrift banks increased to almost 100%. Abolishing the Magna Carta targets for medium-sized enterprise loans would most likely yield little adverse effects. Meanwhile, efforts to improve financial access to MSMEs should focus on alternative nondistortionary ways to increase financing supply, such as improving institutional framework for informational availability and development of equity and bond markets for MSMEs.
    Keywords: financial inclusion; financial markets; financial policy; Philippines; SME; targeted lending
    JEL: G21 G28 O16
    Date: 2015–11–25
  14. By: Venkatachalam ANBUMOZHI (Economic Research Institute for ASEAN and East Asia (ERIA)); HAN Phoumin (Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: The extreme prevalence of energy poverty in several Member States of Association of Southeast Asian Nations (ASEAN) calls for urgent action. This paper shows how clean energy development can be made inclusive by involving low-income households as producers, employees, and business owners. From this perspective, it also analyses how ASEAN economies are stepping up clean energy ambitions and the implementation deficits. One imperative is (i) clean energy with positive externalities that are not factored in either the production or purchasing decisions of consumers. (ii) If non-clean energy companies or products generate negative externalities but no tax or disincentive is levied, then governments may either tax these firms or give incentives to clean energy producers. It concludes that ASEAN Member States need to link the clean energy paradigm and inclusive development policies as part of the Environmental Fiscal Reform to strengthen the foundations for the ASEAN Socio-Cultural Community.
    Keywords: Rural development; employment creation; energy poverty; inclusive growth; ASEAN
    JEL: Q34 O13 O23
    Date: 2015–12
  15. By: Ismail, Normaz Wana (Asian Development Bank Institute); Mahyideen, Jamilah Mohd (Asian Development Bank Institute)
    Abstract: Infrastructure plays a key role in facilitating trade, especially since recent trade liberalization in Asia has resulted in significant tariff reductions. This study quantifies the impacts of both hard and soft infrastructure on trade volume for exporters and importers in the region as well as on various economic growth indicators.
    Keywords: infrastructure; trade facilitation; hard infrastructure; soft infrastructure
    JEL: O18 O53 R53
    Date: 2015–12–30
  16. By: Kai Thaler
  17. By: Suska
    Abstract: The existing literature on multidimensional inequality do not explicitly include weights of each dimension for different groups such as income groups. It is important to distinguish the value of each dimension for each income group in order to reflect the different preferences which are believed to increase welfare. This paper incorporates dimensional weights based on income groups into multidimensional inequality measures. Using ordered probit model of subjective well-being for weights estimation, the results applied on Gini coefficient of well-being, Maasoumi's multidimensional inequality measure and Multidimensional Gini index of Decancq and Lugo to estimate multidimensional inequality with Indonesia data. The results show applying dimensional weights based on income groups affect multidimensional inequality estimation differently depends on degree of substitution used in the estimation.
    Keywords: multidimensional inequality, subjective well-being, ordered probit model
    JEL: D31 D63 O15
    Date: 2015–12
  18. By: Warr, Peter (Australian National University); Rasphone, Sitthiroth (National Economic Research Institute); Menon, Jayant (Asian Development Bank)
    Abstract: Over the last 2 decades the distribution of private household expenditures has become more unequal in the Lao People’s Democratic Republic, with the Gini coefficient rising from 0.311 to 0.364, even though absolute poverty incidence has halved. The increase in inequality was statistically significant and reduced the average rate of poverty reduction per year by about 28%, meaning the actual rate compared with the counterfactual rate that would have occurred if the mean real expenditures had increased at their observed levels but inequality had not changed. When the data are decomposed into rural and urban areas of residence or by province, or by the ethnicity of the household head, the increase in inequality within groups dominates any changes between groups; inequality has increased throughout the country. In contrast, access to publicly provided services has become more equal; disparities in participation rates between richer and poorer groups have diminished.
    Keywords: expenditure inequality; Gini coefficient; Lao PDR; poverty reduction
    JEL: D31 D39 I39
    Date: 2015–11–05
  19. By: Tanaka, Sakiko (Asian Development Bank); Spohr, Christopher (Asian Development Bank); D’Amico, Sandra (BDLINK Cambodia)
    Abstract: Improvement in human capital is essential for rapid, sustainable, and inclusive economic growth in Myanmar. Investments in health and education—including technical and vocational education and training—are essential to engineer a productive labor force that can contribute to and benefit from growth opportunities, while equipping the country’s young population to participate in the country’s dramatic socioeconomic transformation. This paper focuses on developing human capital, with an emphasis on health and education in the context of employment growth and an employment-enabling environment. While awaiting the release of up-to-date data and the outcome of broad ongoing legislative reforms, the paper draws on extensive analysis of available data, including the Integrated Household Living Condition Survey 2009–2010, nationally led assessments, and consultations with the government and a variety of stakeholders to provide a snapshot of important recent developments that are helping to shape the transformation.
    Keywords: education; employment; health; Myanmar; technical and vocational education and training (TVET)
    JEL: E24 I15 I25 O15
    Date: 2015–12–15
  20. By: Ferrarini , Benno (Asian Development Bank); Ramayandi, Arief (Asian Development Bank)
    Abstract: Our previous assessment of debt sustainability in developing Asia, conducted in 2011, found that the region’s fiscal outlook was mostly benign. In this study we update the debt sustainability assessment, taking stock of the latest data and including a larger number of countries. With the benefit of hindsight, we assess the accuracy of our earlier debt ratio forecasts and the underlying macroeconomic assumptions. By and large, we find that standard debt sustainability analysis (DSA) represents a valid forecasting tool, able to predict debt ratios fairly accurately under reasonable assumptions and circumstances. Further, our fan chart analysis confirms the importance for stochastic analysis to integrate standard DSA, in order to capture heightened macroeconomic volatility, which we observe for some countries in the region. Looking forward to 2020, debt ratio projections confirm that the outlook remains benign for the region as a whole, country heterogeneity notwithstanding. On the issue of DSA methods and implementation, we emphasize the importance of macroeconomic forecast accuracy and suggest that volatility be captured by risk analysis tools that would optimally flank the standard DSA framework.
    Keywords: debt-to-GDP ratio; fan charts; public debt sustainability; sovereign debt
    JEL: E62 H63 H68
    Date: 2015–12–14
  21. By: Nam, Kee-Yung (Asian Development Bank); Cham, Maria Rowena (Asian Development Bank); Halili, Paulo Rodelio (Asian Development Bank)
    Abstract: While the economic literature has yet to establish whether greater electricity consumption leads to faster economic growth, or vice versa, it is widely accepted that the better provision of electricity can enable pro-poor growth. Because electricity consumption is expected to grow in emerging economies such as Myanmar, it is important that the government prioritize its stable, efficient, and affordable supply. This paper assesses Myanmar’s electricity sector and recommends several concrete policy options to enable government to address issues such as supply security, greater accessibility, and affordability, especially for the poor and disadvantaged. The paper also estimates infrastructure demand and the corresponding investment requirements to narrow the supply gap in the power sector.
    Keywords: electricity access; Myanmar; power investment gap; power sector development; supply security
    JEL: H54 L94 Q43 Q47
    Date: 2015–10–29
  22. By: Felipe, Jesus (Asian Development Bank); Sotocinal, Noli (Asian Development Bank); Bayudan-Dacuycuy, Connie (Ateneo de Manila University)
    Abstract: The literature on the finance–growth nexus highlights the importance of the financial cycle for the estimation of potential output of an economy. We estimate potential output growth for the G-5 countries, as well as for 10 high- and middle-income Asian economies, using a multivariate model that includes financial factors. We find that the latter have a positive and statistically significant effect on the output gap of the G-5 and high-income Asian economies, but not on that of the middle-income Asian economies. We also find that average potential growth of the economies included in the study is lower in 2008–2014 than in 2000–2007.
    Keywords: economic growth; financial factors; output gaps; potential output growth
    JEL: E32 G00 O11 O16 O47
    Date: 2015–10–07
  23. By: Takahiro Akita (Rikkyo University)
    Abstract: Based on the National Socio-Economic Survey (Susenas) from 1997 to 2011, this study examines the role of education in expenditure inequality in Indonesia under educational expansion since the 1997 financial crisis. This is achieved using the three decomposition methods: the Blinder-Oaxaca decomposition; the decomposition of the Gini coefficient; and the hierarchical decomposition of the Theil index. The expansion of education, particularly basic education in rural areas, appears to have not only lowered educational disparity between the urban and rural sectors but also educational inequality within the rural sector. Due in large part to the declining educational disparity between the urban and rural sectors, the urban-rural expenditure disparity has narrowed since the mid-2000s. On the other hand, the expansion of higher education in urban areas appears to have played an important role in the recent rise in overall expenditure inequality by raising not only disparity between educational groups but also inequality within the tertiary education group. Basic education policies would still serve as an effective means to mitigate expenditure inequality, as they could reduce not only educational gap between the urban and rural sectors but also educational inequality within the rural sector by raising general educational levels. Since the expansion of higher education in urban areas seems to be one of the main factors of the recent rise in overall expenditure inequality, higher education policies would also be crucial.
    Keywords: educational expansion, expenditure inequality, decomposition of education Gini, hierarchical decomposition of Theil index, Indonesia
    Date: 2015–12
  24. By: Sergey Drobyshevsky (Gaidar Institute for Economic Policy)
    Abstract: Recently we see a growing interest to and debates on the role of international associations like G20 or BRICS in the global economic renewal and global economic governance. Along with this there is a lot of issues related to establishing new international financial institutions like the New Development Bank or the Asian Infrastructure Investment Bank. However, in our view, all these discussions are based on the experience of the preceding economic crises and false theoretical backgrounds. In the paper we consider the necessity of current processes as a natural response to a new systemic crisis and the probable secular stagnation in the global economy. We argue that because the situation is completely new for both academic economists and policy makers the appropriate response to the global economic challenges is to give more competition and independence to international institutions and national policies. Correspondingly, the role and tasks of G20, or BRICS, as well as role of the World Bank, the IMF, or the WTO should change. We see all those organizations rather as venues for presenting and discussion of domestically oriented national policies and cooperation of international financial organizations than ‘central planners’ aiming at elaborating jointly agreed policy favorable for all member countries.
    Keywords: Russian economy, secular stagnation, systemic crisis, BRICS, G20
    JEL: H12
    Date: 2015
  25. By: Baulch, Bob; Do, Thuy Duong; Le, Thai-Ha
    Abstract: This study examines the constraints to the uptake of Solar Home Systems (SHS) in Ho Chi Minh City (HCMC), Vietnam. SHS are photovoltaic systems which generate electricity for residential properties. The limited numbers of SHS installed in HCMC are mostly on‐grid systems with backup batteries to supply electricity during evenings and/or power cuts. Semi‐structured interviews with SHS installers, manufacturers and users, plus government agencies and technical experts identify policy constraints and the cost of systems as major constraints. Cost‐benefit analysis is then used to estimate the payback period for three representative SHS. Raising residential electricity prices and introducing net metering or a feed‐in tariff could dramatically shorten the payback periods for SHS. In the next five years, these and other expected changes to the electricity market will make SHS more finally attractive than at present. SHS also have the potential to generate supplement electricity during peak times, thereby diversifying and greening the energy mix. SHS therefore represent a promising technology for HCMC in the future.
    Keywords: solar home systems; Vietnam; electricity; payback period.
    JEL: Q42 Q48 R48
    Date: 2015–12–14
  26. By: Blaise Gnimassoun; Joseph Keneck
    Abstract: This paper aims to study the determinants of corruption by examining specificities relating to the region and the level of economic development. Starting from a cross-sectional study on 130 countries, we rely on the Bayesian Model Averaging (BMA) approach to address the issue of model uncertainty and identify the key determinants of corruption according to the level of development and the region.Our results highlight the need for specific remedies in the fight against corruption given the regional, sociocultural, economic and institutional specificities. Indeed, the key determinants of corruption in sub-Saharan Africa are not the most relevant in the East Asia and Pacific region. Similarly, the most important determinants in developed countries are not the most worrying in developing countries.
    Keywords: Bayesian model averaging, Corruption, Government, Political economy.
    JEL: C11 D73 H11 P16
    Date: 2015
  27. By: Raitzer, David A. (Asian Development Bank); Wong, Larry C. Y. (Institute of Strategic and International Studies); Samson, Jindra Nuella G. (Asian Development Bank)
    Abstract: Myanmar’s agriculture sector offers substantial unexploited potential to underpin the country’s inclusive economic development. With extensive land, water, and labor resources, as well as proximity to fast-growing markets, the country’s agriculture has key competitive advantages. At the same time, Myanmar’s agricultural productivity trails its neighbors as a result of constraints in input markets, infrastructure, and institutions. Key actions to address these constraints include improving land tenure, expanding credit availability, investing in input markets for nutrients and machinery, developing drainage and irrigation systems, and enhancing rural transport and electricity connectivity. In the short-term, public–private partnerships may help to address these barriers to investment, but increased public investment is vital over the longer term. All these direct actions should be underpinned by investments in innovation and attention to climate change effects as part of comprehensive long-term agricultural development planning.
    Keywords: agricultural policy; crop performance; fisheries and aquaculture; input markets development; Myanmar
    JEL: O13 Q13 Q15 Q18
    Date: 2015–12–15
  28. By: Du , Qingyuan (Monash University); Wei , Shang-Jin (Asian Development Bank)
    Abstract: This paper studies how status competition for marriage partners can generate surprising effects on the real exchange rate (RER). In theory, a rise in the sex ratio(increasing relative surplus of men) can generate a decline in the RER. The effect can be quantitatively large if the biological desire for a marriage partner is strong. We also provide within-the People’s Republic of China and cross country empirical evidence to support the theory. As an application, our cross-country estimation suggests that sex ratio as well as other factors in the existing literature can account for the recent evolution in Chinese RER almost completely.
    Keywords: currency manipulation; equilibrium real exchange rate; surplus men
    JEL: F31 F42 J10 J70
    Date: 2015–10–07
  29. By: Wei , Shang-Jin (Asian Development Bank); Zhang, Xiaobo (Peking University)
    Abstract: This short essay surveys recent literature on the competitive saving motive and its broader economic implications. The competitive saving motive is defined as saving to improve one's status relative to other competitors for dating and marriage partners. Here are some of the key results of the recent literature: (i) cross-country evidence show that greater gender imbalances tend to correspond with higher savings rates; (ii) household-level evidence suggest that: (a) families with unmarried sons in rural regions with more skewed sex ratios tend to have higher savings rates, while savings rates of families with unmarried daughters appear uncorrelated with gender imbalances; and (b) savings rates of families in cities tend to rise with the local sex ratio; (iii) rising sex ratios contribute nearly half of the rise in housing prices in the People’s Republic of China; and (iv) families with sons in regions of greater sex ratios are more likely to become entrepreneurs and take risky jobs to earn more income.
    Keywords: competition; current account; saving; sex ratio
    JEL: D14 E21 F30 I10 J12 J20
    Date: 2015–11–26
  30. By: Ferrarini , Benno (Asian Development Bank); de Vries , Gaaitzen J. (University of Groningen, the Netherlands)
    Abstract: Climate policy pledges and negotiations involve commitments about the reduction of emissions within national borders. However, the rise of global value chains has changed the nature of production and international trade, blurring the attribution of ultimate responsibility for emissions. This paper applies a novel method that examines the change in territorial emissions due to changes in energy intensity, supply chain participation, and domestic and foreign consumption. Our findings suggest that rising levels of domestic consumption are related to increased carbon dioxide emissions in both advanced and emerging economies. A substantial share of emissions growth in emerging economies is accounted for by higher participation in global production networks that serve expanding foreign consumption. However, even for economies that most rapidly integrated in global production networks, such as the People’s Republic of China, rising domestic consumption accounts for the bulk of territorial emissions. Improved energy efficiency partially stemmed the spike in emissions from higher consumer demand.
    Keywords: global multiregional input–output model; global value chains; structural decomposition analysis; World Input–Output Database
    JEL: D57 E01 F18 Q56
    Date: 2015–10–14
  31. By: Thomas, Vinod (Asian Development Bank); López, Ramón (University of Chile)
    Abstract: Intense climate-related disasters—floods, storms, droughts, and heat waves—have been on the rise worldwide. At the same time and coupled with an increasing concentration of greenhouse gases in the atmosphere, temperatures, on average, have been rising, and are becoming more variable and more extreme. Rainfall has also been more variable and more extreme. Is there an ominous link between the global increase of these hydrometeorological and climatological events on the one side and anthropogenic climate change on the other? This paper considers three main disaster risk factors—rising population exposure, greater population vulnerability, and increasing climate-related hazards—behind the increased frequency of intense climate-related natural disasters. In a regression analysis within a model of disaster risk determination for 1971–2013, population exposure measured by population density and people’s vulnerability measured by socioeconomic variables are positively linked to the frequency of these intense disasters. Importantly, the results show that precipitation deviations are positively related to hydrometeorological events, while temperature and precipitation deviations have a negative association with climatological events. Moreover, global climate change indicators show positive and highly significant effects. Along with the scientific association between greenhouse gases and the changes in the climate, the findings in this paper suggest a connection between the increasing number of natural disasters and man-made emissions of greenhouse gases in the atmosphere. The implication is that climate mitigation and climate adaptation should form part of actions for disaster risk reduction.
    Keywords: climate; climate hazards; government policy; natural disasters; sustainable development
    JEL: C22 Q54 Q56 Q58
    Date: 2015–11–26
  32. By: Sumit Agarwal (National University of Singapore); Artashes Karapetyan (The Central Bank of Norway)
    Abstract: We show that salience of debt has a significant effect on homebuyers' borrowing outcome. In a setting where homebuyers need to combine several sources of debt, we show that they are biased towards less salient loans. The bias brings about a large mispricing in equilibrium: dwellings that are financed with a greater amount of salient debt are cheaper to buy. Matching the transaction data to individual-level administrative data, we show that young homebuyers, first-time homebuyers, and homebuyers with no investments in the financial markets are more likely to overpay for dwellings with hidden debt. We first quantify the effect of the bias on equilibrium prices. We then analyze a regulatory change that made hidden debt more salient and reduced the mispricing considerably, confirming that the lack of salience resulted in biased prices.
    Keywords: Salience, Housing, Cooperatives, Mortgage, Household Finance, Mispricing
    JEL: D12 G14 G21 G32
    Date: 2015–12–24

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