nep-sea New Economics Papers
on South East Asia
Issue of 2016‒02‒12
fifteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Urbanization and Inequality in Hypertension Diagnosis and Medication in Indonesia By Helble, Matthias; Aizawa, Toshiaki
  2. How much teachers know and how much it matters in class : analyzing three rounds of subject-specific test score data of Indonesian students and teachers By De Ree,Joppe Jaitze
  3. Investing in Human Capital for Inclusive Growth: Focus on Higher Education By Canlas, Dante B.
  4. Trading Down: Unemployment, Inequality and Other Risks of the Trans-Pacific Partnership Agreement By Jeronim Capaldo; Alex Izurieta; Jomo Kwame Sundaram
  5. After 200 years, why is Indonesia’s cadastral system still incomplete? By Pierre van der Eng
  6. The Political Economy of Inclusive Rural Growth By Carter, Michael; Morrow, John
  7. The Emergence of the Corporate Form By Dari-Mattiacci, Giuseppe; Gelderblom, Oscar; Jonker, Joost; Perotti, Enrico C
  8. Clean Energy and Sustainable Development lab activity report, 2014-09-31 to 2015-12-31 By Minh Ha-Duong; Hoang Anh Tran
  9. "The 2030 Sustainable Development Goals and Measuring Gender Inequality: A Technical Articulation for Asia-Pacific" By Bhavya Aggarwal; Lekha S. Chakraborty
  10. Using Natural Resources for Development: Why Has It Proven So Difficult? By Venables, Anthony J
  11. Testing Monotonicity in Unobservables with Panel Data By Liangjun Su; Stefan Hoderlein; Halbert White
  12. Testing for Monotonicity in Unobservables under Unconfoundedness By Stefan Hoderlein; Liangjun Su; Halbert White; Thomas Tao Yang
  13. Performance of the banking sector of a developing country: A non-structural model using the disequilibrium approach By Matousek, Roman; Nguyen, Thao Ngoc; Chris, Stewart
  15. A Commercial Gift for Charity By Adriaan R. Soetevent; Te Bao; Anouk L. Schippers

  1. By: Helble, Matthias (Asian Development Bank Institute); Aizawa, Toshiaki (Asian Development Bank Institute)
    Abstract: Urbanization has been progressing quickly in Indonesia and the consequences on health and health inequities are still not well understood. In this paper, we present new empirical evidence on the differences in the utilization of health care services between rural and urban areas as well as for the respective health inequities. Exploiting the rich dataset of the Indonesian Family Life Survey, this paper measures the socioeconomic inequality of health care utilization for the case of the diagnosis of hypertension and its medication. In the Indonesian Family Life Survey, about 45% of all respondents over the age of 39 were found to suffer from hypertension (average systolic blood pressure higher than 140). However, more than half of the people with hypertension have never been diagnosed by a health care professional, and only a small fraction of the people suffering from hypertension are taking medicine for it. Our analysis further shows that diagnosis and medication rates are significantly higher in urban areas than in rural areas, implying that urban areas offer better access to health care services and medicines. Calculating concentration indices, we find that underdiagnosis of hypertension is more prevalent among the poor and this health inequality is more pronounced in rural areas. For the case of medication, we are unable to detect strong evidence of inequality either in rural or urban areas, as most Indonesians with hypertension do not take medicine irrespective of their socioeconomic status. Finally, decomposition analysis shows that the inequality in education, living standards, sanitary conditions, and the possession of vehicle and home appliances can explain a large fraction of the inequality of diagnosis and medication.
    Keywords: hypertension; health care; health services; Indonesia; urbanization
    JEL: I14 I15 I18
    Date: 2016–02–01
  2. By: De Ree,Joppe Jaitze
    Abstract: Improving the quality of education is one of today's main challenges for governments in the developing world. Based on a unique matched student-to-teacher panel data set on test scores this paper presents two empirical results for Indonesia. First, through detailed inspection of teacher-level responses to test questions, the paper concludes that subject matter knowledge of primary school teachers in Indonesia is low on average and that a 1.0, but also a 2.0 standard deviation increase in teachers'subject matter knowledge seem to be achievable medium-term goals for education policy making in Indonesia. Second, the paper presents the results of three types of value-added regressions, a (standard) level specification, a school fixed-effects specification, and a flexible student-teacher fixed-effects specification. The student-teacher fixed-effects approach estimates the parameters of a value-added model using test score variation within each student-teacher pair across three different subjects, mathematics, science and Indonesian language. The results suggest that a 1.0 (and 2.0) standard deviation increase in teachers'subject matter knowledge across-the-board can yield increases in student achievement by 0.25 (and 0.50) student-level standard deviations by the time students complete the six-year primary school cycle.
    Keywords: Education For All,Effective Schools and Teachers,Secondary Education,Tertiary Education,Primary Education
    Date: 2016–02–02
  3. By: Canlas, Dante B.
    Abstract: What does the Philippines need to do to transform its economy into a high middle-income economy and ensure that the benefits from such a transformation are within reach of every Filipino? Investment in human capital, especially higher education, is one instrument that serves the twin goals of boosting economic growth with broad-based rewards, that is, inclusive growth. Currently, the Philippines is confronted by a low proportion of enrollees and graduates in higher and scientific education, and needs to raise its stock of labor with higher and scientific education amid rising demand for skilled workers and widening gaps in lifetime earnings between college and high school graduates. Several policies are indicated, but priority must be accorded to instituting loan programs for higher education, accelerating rationalization of the state university and college sector based on instituting regional university systems and centers of excellence, and devising grant programs for content standards for subjects and courses and formulating standardized tests for measuring and monitoring compliance with those standards applied to both public and private institutions of higher learning.
    Keywords: Philippines, higher education institutions (HEIs), higher education, inclusive growth, human capital, student loans
    Date: 2016
  4. By: Jeronim Capaldo; Alex Izurieta; Jomo Kwame Sundaram
    Abstract: Proponents of the Trans-Pacific Partnership agreement (TPP) emphasize its prospective economic benefits, with economic growth increasing due to rising trade volumes and investment. Widely cited projections suggest modest GDP gains after ten years, varying from less than half a percentage point in the United States to 13 percent in Vietnam. However, these projections assume full employment and constant income distribution in all countries excluding some of the major risks of trade liberalization. In this paper, we provide alternative projections of the TPP’s economic effects using the United Nations Global Policy Model. Allowing for changes in employment and income distribution, we obtain very different results. We find that the benefits to economic growth are even smaller than those projected with full-employment models, and are negative for Japan and the United States. More important, we find that the TPP will likely lead to losses in employment and increases in inequality.
    Date: 2016–01
  5. By: Pierre van der Eng
    Abstract: This paper discusses Indonesia’s experience with establishing a uniform cadastral system in rural areas since the idea was first mooted in the early 19th century. Until 1961, a formal cadastre that identified, measured, registered and certified land titles existed only in urban areas. A cadastre for rural land did not start until after the 1960 Agrarian Law. Until then, the village-based land tax registers acted as a substitute cadastral register in areas subject to land tax. In the 19th century, this system was imperfect and calls to resolve issues of inequity in tax assessment led to improvements, especially since 1907. A proper rural cadastre was not introduced during the colonial era, because of the high cost involved, and because its certification of individual land rights would have clashed with customary regulations, including notions of communal land tenure. The introduction of a rural cadastre after 1960 was piecemeal, and the use of property tax registration as a substitute cadastre has continued. By 1992 cadastre registrations covered just 20% of land plots, mostly in urban areas. A World Bank-sponsored project helped to increased coverage since 1994 to 32% in 2013. Greater coverage was delayed by the rapid increase in newly opened up agricultural areas, the cost of land title certificates, the difficulties of reconciling individual land ownership with customary regulations, and also the continued use of property tax registers as a substitute cadastre.
    Keywords: land tax, land tenure, land rights, land registration, cadastre, Indonesia
    JEL: N55 Q15 R52
    Date: 2016–02
  6. By: Carter, Michael; Morrow, John
    Abstract: Commentators on the ‘East Asian Miracle’ of inclusive rural growth have often pointed toward shared growth policies. But why were these policies not chosen elsewhere? This paper shows that economies with a stronger middle class may sustain higher productivity through public good provision. We model voters who invest in either subsistence or technologies in which public goods complement private capital. Investment and technology choices vary with wealth and the level of public goods enforced by political lobbies. We show that increased productive possibilities, such as those of an emerging middle class, can further power reforms when money matters in politics.
    Date: 2015
  7. By: Dari-Mattiacci, Giuseppe; Gelderblom, Oscar; Jonker, Joost; Perotti, Enrico C
    Abstract: We describe how the business corporation gradually emerged in the 17th century in response to the need to lock in long-term capital to profit from trade opportunities with Asia. Since contractual commitments to lock in capital were not fully enforceable in partnerships, this evolution required a legal innovation, essentially granting the corporation a property right over capital. Locked-in capital exposed investors to a significant loss of control, and could only emerge where and when political institutions limited the risk of expropriation. The Dutch East India Company (VOC, chartered in 1602) benefited from the restrained executive power of the Dutch Republic and was the first business corporation with permanent capital. The English East India Company (EIC, chartered in 1600) kept the traditional cycle of liquidation and refinancing until, in 1657, the English Civil War put the crown under strong parliamentary control. We show how the time advantage in the organizational form had a profound effect on the ability of the two companies to make long-term investments and consequently on their relative performance, ensuring a Dutch head start in Asian trade that persisted for two centuries. We also show how other features of the corporate form emerged progressively once the capital became permanent.
    Keywords: capital lock in; corporate form; institutional development; legal innovation; limited liability
    JEL: G30 K22 N24
    Date: 2016–01
  8. By: Minh Ha-Duong (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - CIRAD - Centre de coopération internationale en recherche agronomique pour le développement - EHESS - École des hautes études en sciences sociales - École des Ponts ParisTech (ENPC) - AgroParisTech - AgroParisTech, CleanED - Clean Energy and Sustainable Development Lab - USTH - Université des Sciences et des Technologies de Hanoi); Hoang Anh Tran (CleanED - Clean Energy and Sustainable Development Lab - USTH - Université des Sciences et des Technologies de Hanoi)
    Abstract: The Clean Energy and Sustainable Development laboratory – CleanED – was established in December 2014 with support from USTH and French Embassy in Hanoi. In September 2015, CleanED lab counted five researchers from France and Vietnam, five doctoral fellows and two internationally qualified staff. This international and interdisciplinary research team gets the mission to contribute to the green growth of the energy sector in Vietnam. Its expertise ranges from engineering to public policy on: Natural resources characterization and management Biomass and waste to energy conversion process technologies Energy systems optimization from smart grid to national plans
    Keywords: clean energy, biomass energy, sustainable development, Vietnam, cooperation, activity report, smart grid
    Date: 2016–01–27
  9. By: Bhavya Aggarwal; Lekha S. Chakraborty
    Abstract: Against the backdrop of the 2030 UN Agenda for Sustainable Development, this paper analyzes the measurement issues in gender-based indices constructed by the United Nations Development Programme (UNDP) and suggests alternatives for choice of variables, functional form, and weights. While the UNDP Gender Inequality Index (GII) conceptually reflects the loss in achievement due to inequality between men and women in three dimensions--health, empowerment, and labor force participation--we argue that the assumptions and the choice of variables to capture these dimensions remain inadequate and erroneous, resulting in only the partial capture of gender inequalities. Since the dimensions used for the GII are different from those in the UNDP's Human Development Index (HDI), we cannot say that a higher value in the GII represents a loss in the HDI due to gender inequalities. The technical obscurity remains how to interpret GII by combining women-specific indicators with indicators that are disaggregated for both men and women. The GII is a partial construct, as it does not capture many significant dimensions of gender inequality. Though this requires a data revolution, we tried to reconstruct the GII in the context of Asia-Pacific using three scenarios: (1) improving the set of variables incorporating unpaid care work, pay gaps, intrahousehold decision making, exposure to knowledge networks, and feminization of governance at local levels; (2) constructing a decomposed index to specify the direction of gender gaps; and (3) compiling an alternative index using Principal Components Index for assigning weights. The choice of countries under the three scenarios is constrained by data paucity. The results reveal that the UNDP GII overestimates the gap between the two genders, and that using women-specific indicators leads to a fallacious estimation of gender inequality. The estimates are illustrative. The implication of the results broadly suggests a return to the UNDP Gender Development Index for capturing gender development, with an improvised set of choices and variables.
    Keywords: Gender Inequality; Unpaid Work; Human Development; Composite Indicator
    JEL: D63 J16 J31 O15
    Date: 2016–02
  10. By: Venables, Anthony J
    Abstract: Developing economies have found it hard to use natural resource wealth to improve their economic performance. Utilising resource endowments is a multi-stage economic and political problem that requires private investment to discover and extract the resource, fiscal regimes to capture revenue, judicious spending and investment decisions, and policies to manage volatility and mitigate adverse impacts on the rest of the economy. Experience is mixed, with some successes (such as Botswana and Malaysia) and more failures. This paper reviews the challenges that are faced in successfully managing resource wealth, the evidence on country performance, and the reasons for disappointing results.
    Keywords: depletion; diversification; Dutch disease; genuine saving.; Natural resources; non-renewable; resource curse; revenue management
    JEL: Q3
    Date: 2016–01
  11. By: Liangjun Su (Singapore Management University); Stefan Hoderlein (Boston College); Halbert White
    Abstract: Monotonicity in a scalar unobservable is a crucial identifying assumption for an important class of nonparametric structural models accommodating unobserved heterogeneity. Tests for this monotonicity have previously been unavailable. This paper proposes and analyzes tests for scalar monotonicity using panel data for structures with and without time-varying unobservables, either partially or fully nonseparable between observables and unobservables. Our nonparametric tests are computationally straightforward, have well behaved limiting distributions under the null, are consistent against pre- cisely specified alternatives, and have standard local power properties. We provide straightforward bootstrap methods for inference. Some Monte Carlo experiments show that, for empirically relevant sample sizes, these reasonably control the level of the test, and that our tests have useful power. We apply our tests to study asset returns and demand for ready-to-eat cereals.
    Keywords: monotonicity, nonparametric, nonseparable, specification test, unobserved heterogeneity
    JEL: C12 C14 C33
  12. By: Stefan Hoderlein (Boston College); Liangjun Su (Singapore Management University); Halbert White; Thomas Tao Yang (Boston College)
    Abstract: Monotonicity in a scalar unobservable is a common assumption when modeling heterogeneity in structural models. Among other things, it allows one to recover the underlying structural function from certain conditional quantiles of observables. Nevertheless, monotonicity is a strong assumption and in some economic applications unlikely to hold, e.g., random coefficient models. Its failure can have substantive adverse consequences, in particular inconsistency of any estimator that is based on it. Having a test for this hypothesis is hence desirable. This paper provides such a test for cross-section data. We show how to exploit an exclusion restriction together with a conditional independence assumption, which in the binary treatment literature is commonly called unconfoundedness, to construct a test. Our statistic is asymptotically normal under local alternatives and consistent against global alternatives. Monte Carlo experiments show that a suitable bootstrap procedure yields tests with reasonable level behavior and useful power. We apply our test to study the role of unobserved ability in determining Black-White wage differences and to study whether Engel curves are monotonically driven by a scalar unobservable.
    Keywords: Control variables, Conditional exogeneity, Endogenous variables, Monotonicity, Nonparametrics, Nonseparable, Specification test, Unobserved heterogeneity
    JEL: C12 C14 C21 C26
    Date: 2015–10–23
  13. By: Matousek, Roman (Kent Business School, University of Kent); Nguyen, Thao Ngoc (Nottingham Business School, Nottingham Trent University); Chris, Stewart (Kingston University London)
    Abstract: Based on the non-structural model – disequilibrium approach (Goddard and Wilson, 2009), this paper presents an empirical assessment of the degree of competition within the Vietnamese banking system from 1999 to 2009. We examine a greater number of environmental covariates and different dependent variables compared to previous applications of this model. Moreover, we use lagged input prices (to avoid endogeneity) and exclude assets (to avoid specification bias) in our models. The results indicate that the Vietnamese banking system operates in a monopolistic environment.
    Keywords: Banking; Performance; Non-structural model; Disequilibrium approach; Vietnam
    JEL: C23 G21 L22
    Date: 2016–02–05
  14. By: Fernanda Ricotta (Dipartimento di Economia, Statistica e Finanza, Università della Calabria)
    Abstract: This paper investigates differences in productivity by destination market of firms exports. The total factor productivity (TFP) is used as measure of productivity. The productivity differences by export destination are estimated using multilevel approach considering the first destination country of the firm’s exports as the second level group of the model. The analysis is based on a dataset that provides comparable cross-country data of manufacturing firms in seven European countries (Austria, France, Germany, Hungary, Italy, Spain and the United Kingdom). The results are as follows. Productivity differs from market to market and, thus, it gives support to the expectations derived from Chaney’s model (2008). The estimates confirm that non-exporters are, on average, the less productive. On the contrary, the European firms that export to China and India register the highest positive difference. A positive difference also exists for firms that export to the USA and Canada. On the contrary, there is no relevant TFP difference for firms exporting to the EU-15 area. The difference is positive but slight for the Other Asian countries and Other EU countries, while it is negative for Other areas, Other non EU countries and Central and South America. Among firm-specific characteristics only size and sector membership help to explain the productivity differences by destination market and the role of size is by far the most dominant factor.
    Keywords: Productivity, Heterogeneous firms, Export, Market of destination, Multilevel model
    JEL: D22 F10 F14 C31
    Date: 2016–01
  15. By: Adriaan R. Soetevent (University of Groningen, the Netherlands); Te Bao (Nanyang Technological University, Singapore); Anouk L. Schippers (University of Groningen, the Netherlands)
    Abstract: Commercial firms are increasingly tying the sales of their products with donations to a charitable cause. Apart from a charitable motive, offering these charity-linked bundles could be a strategic instrument for firms to increase profits. We report the results of an experiment that investigates for different of these schemes whether they are able to increase profits net of the donation, and which donation scheme is most profitable. From a theoretical perspective, given rational agents, complete markets, and absent transaction cost, selling charity-linked bundles should not be profitable even when consumers are altruistic. We find however that sellers who donate 5% of their gross revenues or an equivalent absolute amount do attain significantly higher profits. No such effect is observed when the donation is limited to 2%. Offering charity-linked bundles considerably crowds out private donations by buyers.
    Keywords: Market competition; Firm behavior; Charity-linked bundling; Charitable giving; Cause marketing
    JEL: D4 L2 L31
    Date: 2016–02–09

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