nep-sea New Economics Papers
on South East Asia
Issue of 2016‒02‒29
seventeen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Empirical Analysis of Factors Promoting Product Innovation in ASEAN Economies: Focusing on Absorptive Capacity and ICT Use By Idota, Hiroki; Bunno, Teruyuki; Ueki, Yasushi; Shinohara, Sobee
  2. Exporting, Education, and Wage Differentials between Foreign Multinationals and Local Plants in Indonesian and Malaysian Manufacturing By Ramstetter, Eric D.
  3. The Effects of the ASEAN Economic Community 2015 on Industries in Kitakyushu and Shimonoseki By Ramstetter, Eric D.; Archanun, Kohpaiboon
  4. Un-Fortunate Sons: Effects of the Vietnam Draft Lottery on the Next Generation’s Labor Market By Goodman, Sarena; Isen, Adam
  5. Transformation of the national monitoring and evaluation arrangement in decentralized Indonesia By Landiyanto, Erlangga Agustino
  6. Growing Through Manufacturing: Myanmar’s Industrial Transformation By Masato Abe
  7. Business and Development in Myanmar: A Policy Handbook for Private Sector Development By Kamile Puusaag; David Abonyi; Masato Abe
  8. What makes linkages "good" linkages? Firms, the investment climate and business support services in Vietnam By Franco, Chiara; Sanfilippo, Marco; Seric, Adnan
  9. • Aquaculture in Transition: Value Chain Transformation, Fish and Food Security in Myanmar By Belton, Ben; Hein, Aung; Htoo, Kyan; Kham, L. Seng; Nischan, Ulrike; Reardon, Thomas; Boughton, Duncan
  10. China’s ‘New Normal’: Challenges Ahead for Asia-Pacific Trade By Aman Saggu; Witada Anukoonwattaka
  11. Social Protection in APEC: In Pursuit of Inclusive Growth By Cuenca, Janet S.
  12. Formal credit access for Vietnamese SMEs: What determines credit obtainment? By Nguyet Thi Khanh Cao
  13. Impact of Asia-Pacific Economic Cooperation (APEC) to the contemporary economy By Agnieszka Drews
  14. Wage Differentials among Ownership Groups and Worker Quality in Vietnamese Manufacturing By Ramstetter, Eric D.; Nguyen, Kien Trung
  15. Factors Affecting Length of Job Search and Job Switching in Davao City, Philippines By Deluna, Roperto; Berdos, Kleint
  16. Corporate Insolvency Resolution in India: Lessons from a cross-country comparison By Sengupta, Rajeswari; Sharma, Anjali
  17. A Commercial Gift for Charity By Adriaan R. Soetevent; Te Bao; Anouk L. Schippers

  1. By: Idota, Hiroki; Bunno, Teruyuki; Ueki, Yasushi; Shinohara, Sobee
    Abstract: In recent years, East Asian economies have been rapidly developing. The reason is that firms have been successfully achieving product and process innovation by introducing advanced technologies and know-how from MNCs. In order to enhance innovation, firms have to own technology, capability and ICT use. In particular, collaborations with outside organizations such as MNCs (Multi-national corporations), universities, public organizations, local firms are indispensable for firms in developing economies. Authors’ previous research clarified external linkages enhance innovation capability and ICT use, and innovation capability and ICT use promote product innovation in ASEAN firms. These studies analyzed under what conditions firms can promote absorptive capability if they had external linkages. Whether or how absorptive capacity affected innovation capability and ICT use were not explained there. Based on survey data from four ASEAN economies such as Indonesia, the Philippines, Thailand, and Vietnam, from 2013 to 2014, this study clarifies how absorptive capacity, ICTs, and innovation capability such as QC and cross-functional team enhance product innovation by using SEM (Structural equation modeling). As a result, the following causality from external linkages (origin) to innovation (final outcome) is demonstrated: (i) absorptive capacity is enhanced by external linkages such as local firms, public organizations, and universities; (ii) absorptive capacity enhances innovation capability; (iii) innovation capability enhances ICT use; and (iv) innovation capability and ICT use promote product innovation. These are similar to those of authors’ previous research. Since data are different, it is difficult to compare the results, but the robustness of the results is demonstrated.
    Keywords: ICT use,absorptive capacity,external linkages,product innovation,SEM (Structural equation modeling)
    Date: 2015
  2. By: Ramstetter, Eric D.
    Abstract: There is now substantial evidence that foreign multinational enterprises (MNEs) often pay higher wages than corresponding local plants. This paper extends this research by asking whether MNE-local wage differentials depend on whether a plant exports or not. Mean, unconditional, MNE-local wage differentials tended to be somewhat smaller for exporters than for non-exporters in large samples of 11 manufacturing industries of Malaysia in 2000-2004 (31 vs. 44 percent) and Indonesia in 2006 (58 vs. 74 percent), and the gap was particularly conspicuous for Indonesia in 1996 (89 vs. 220 percent). Conditional MNE-local wage differentials that account for the influences of worker education and sex, as well as plant size and capital or energy intensity, on plant-level wages, were smaller but positive and highly significant statistically. Conditional differentials were also smaller for exporters Indonesia in 1996 (24 vs. 32 percent), but larger for exporters in Indonesia in 2006 (12 vs. 5.7 percent) and Malaysia in 2000-2004 (8.8-9.2 vs . 6.2-7.5 percent in pooled OLS estimates and 7.2-7.8 vs. 4.7-6.7 percent in random effects estimates). However, when estimated at the industry level, conditional differentials and were often insignificant, especially for Indonesia in 2006, and industry-level differentials were not clearly related to export status.
    Keywords: Multinationalcorporations, SoutheastAsia, manufacturing, wagedetermination
    JEL: F23 J31 L60 O53
    Date: 2014–03
  3. By: Ramstetter, Eric D.; Archanun, Kohpaiboon
    Abstract: This paper asks how the formation of the Association of Southeast Asian Nations'(ASEAN's) Economic Community (AEC) in 2015 (AEC2015) will affect industries in Kitakyushu and Shimonoseki. First, ASEAN's rapid economic during the past five decades has made ASEAN a large market for Japanese goods, services, and firms. ASEAN has supported this growth by facilitating important economic and political dialogue in Southeast Asia and AEC2015 will likely reinforce this important role. Second, although ASEAN has made efforts to promote economic integration among member economies and AEC2015 is another step in this direction, substantial barriers to intra-ASEAN transactions remain and will persist after AEC2015. The ASEAN Free Trade Area (AFTA) was initiated in 1992 and facilitated elimination of tariffs on most intra-ASEAN trade by 2010, but the share of intra-ASEAN trade remains relatively low at about one-quarter of all ASEAN trade and has not changed much since 2005. Most importantly, like AFTA, AEC2015 is not likely to increase preferential margins for intra-ASEAN trade, largely because ASEAN retains strong comparative advantages with respect to major external trading partners and firms in ASEAN are deeply involved in region- or world-wide production networks. Third, despite proclamations that AEC2015 marks the advent of a "single" ASEAN market, progress toward achieving most of AEC2015's specific goals is likely to be slow, especially with respect to key non-tariff barriers and restrictions on trade in services. Fourth, Japan's multinational enterprises (MNEs) in ASEAN are likely to be the largest conduit through which AEC2015 affects Japan, Kitakyushu, and Shimonoseki. To the extent that AEC2015 affects Japan, Kitakyushu, and Shimonoseki, AEC2015 is likely to affect Japan's services' industries such as trading, logistics (trade, transportation, and communication), and business services, more than commonly appreciated. The proliferation of production networks in machinery industries, which are the source of most of Japan's gross exports, is a major reason for this.
    Keywords: Economic integration, ASEAN, Japan, Kitakyushu, Shimonoseki
    JEL: F15 F55 L60 L80 L90 O53
    Date: 2015–03
  4. By: Goodman, Sarena (Board of Governors of the Federal Reserve System (U.S.)); Isen, Adam (Treasury Department)
    Abstract: We study how randomized variation from the Vietnam draft lottery affects the next generation’s labor market. Using the universe of federal tax returns, we link fathers from draft cohorts to their sons and offer two primary findings. First, sons of men called by the lottery have lower earnings and labor force participation than their peers. Second, they are more likely to volunteer for military service themselves. Similar but smaller effects are uncovered for daughters. Our findings demonstrate that manipulating parental circumstances can alter children’s outcomes and, more specifically, are consistent with two separately operating channels: (1) parental inputs as important determinants of human capital development and (2) intergenerational transmission of occupation.
    Keywords: Vietnam War draft lottery; household environment; intergenerational mobility; labor supply; military service; occupational transmission; parental inputs
    JEL: H56 J24 J62
    Date: 2015–12–30
  5. By: Landiyanto, Erlangga Agustino
    Abstract: Indonesia started to implement the decentralization reform in 1999. It involves regional autonomy and fiscal decentralization through providing more responsibilities for local government, at provinces and districts, for development policy and process, for example including planning, budgeting, execution, and monitoring and evaluation. Using a desk review based on the the government’s law, regulations, policy documents and previous research and also participant observation, this paper investigates the transformation of the monitoring and evaluation (M&E) system in Indonesia in the context of decentralization. For the analysis, I use checklist that cover six M&E dimensions such as (i) policy, (ii) indicators, data collection and methodology, (iii) organizational issues, (iv) capacity-building (v) participation of non-governmental actors and (vi) use of M&E result. This study found that the national monitoring and evaluation arrangement in the post decentralization era has improved after government launched some policies and regulation but also still has some weaknesses and facing some challenges.
    Keywords: Decentralization; Public Administration; Monitoring and Evaluation
    JEL: H1 H7
    Date: 2015
  6. By: Masato Abe (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP))
    Abstract: Recent reforms in Myanmar have already shown some positive impacts on the manufacturing sector, which must play a key role in the industrial transformation, including increased investment flows domestically and internationally and the development of fundamental infrastructure for the sector. Government promotion of the development of industrial zones and special economic zones is one of the main development activities for further trade and investment promotion in the manufacturing sector. Also presented are the results of the recently completed country-wide business survey with over 1000 manufacturers in Myanmar, particularly concerning the business climate in the manufacturing sector and the crucial issues for the development of the sector
    Keywords: Foreign direct investment, industrialization, development policy, Myanmar
    JEL: O14 O20 O53
    Date: 2014–07
  7. By: Kamile Puusaag (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)); David Abonyi (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)); Masato Abe (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP))
    Abstract: Myanmar holds considerable promise, for businesses both domestic and foreign, as well as for development practitioners, confident of seeing a rapid transformation in economic conditions and quality of life in general. Nevertheless, while the country has attracted substantial interest from around the world, there are still many gaps in knowledge. In-depth information about the conditions facing the private sector, as well as the perspectives of the various members of the private sector, is still in the process of being uncovered. Against this background, the central purpose of this policy handbook is to provide policymakers, business communities, development organizations, and other interested parties with a thorough overview of the private sector environment in Myanmar today. The publication outlines the challenges faced by businesses in Myanmar, elaborates on the nature of the challenges and why they are significant, and offers a set of recommendations to improve the business environment in order to foster greater development of the private sector, and indeed, the country as a whole. Undeniably, the internal economic conditions and business environment will play a key role in determining the private sector’s future. Additionally, however, it is important to note that much of the excitement surrounding Myanmar stems from its 2011 shift towards greater economic openness to the rest of the world. Moreover, the upcoming ASEAN Economic Community 2015 is also likely to have a tremendous impact on the private sector in Myanmar. As a result, this policy handbook puts a sizeable focus on discussing issues affecting trade and investment in goods and services. It is ESCAP’s hope that this publication can serve as a reference point for those seeking such information, and that the publication can provide a wide-ranging understanding of the private sector’s current situation and how to help provide it with an equally-promising future.
    Keywords: Myanmar, business, private sector, development, policy handbook
    JEL: F0 F1 F2 F4 E2
    Date: 2015–02
  8. By: Franco, Chiara; Sanfilippo, Marco; Seric, Adnan
    Abstract: The role of backward linkages between foreign and local firms is considered as a crucial factor to favour the economic development of a country. This work tries to unveil its different dimensions with respect to the Vietnamese case. We develop our research questions in two steps. We first analyse what are the determinants of linkages, looking at both their extent and the capacity to set up a local supply chain. Then, we provide empirical evidence for the probability of linkages to be vehicles to enhance local firm’s capacity to benefit from FDI. Our main findings reveal that firm specific factors affect mainly the size of linkages, while it is the provision of key business support services to investors to determine the probability for linkages to become “good” linkages.
    Keywords: FDI; linkages; business climate; Vietnam
    JEL: O19
    Date: 2015–12
  9. By: Belton, Ben; Hein, Aung; Htoo, Kyan; Kham, L. Seng; Nischan, Ulrike; Reardon, Thomas; Boughton, Duncan
    Abstract: Fish farming (aquaculture) is important to Myanmar’s food security and is developing and transforming quickly. This study presents findings from a new field survey of the farmed fish value chain that is more detailed and broader than any previous study conducted in Myanmar. Many of our findings are at odds with what we perceive as conventional wisdom about fish farming in Myanmar. The findings have important policy implications to unlock the sector’s full growth potential and food security contributions.
    Keywords: Agribusiness, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety,
    Date: 2015–12
  10. By: Aman Saggu (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)); Witada Anukoonwattaka (United Nations Economic and Social Commission for Asia and the Pacific (ESCAP))
    Abstract: China has grown to become an economic powerhouse and engine of global demand. However, China’s projected GDP growth rates are now anticipated to remain below 7% per annum over the next five years. This issue of Trade Insights examines how the ‘new normal’ of lower economic growth in China will impact on the prospects for trade in the Asia-Pacific region. Compared to the hypothetical scenario that China’s economic growth returns to pre-crisis levels within the next five years (by 2019), forecasts show that China’s ‘new normal’ (7% p.a.) would lead to a slowdown in real total Asia-Pacific trade growth from 7.0% to 5.9% by 2019.
    Keywords: Economic growth, value-added, trade, economy
    JEL: F1
    Date: 2015–07
  11. By: Cuenca, Janet S.
    Abstract: The paper seeks to take stock of some of the key APEC documents/reports relevant to social protection and safety net programs, and also of the experience of APEC member-economies, with special focus on the Philippines, in implementing social protection measures. In particular, it attempts to identify and analyze social protection issues and challenges within the APEC context. In addition, it aims to provide insights, policy guidelines, and recommendations to improve social protection.
    Keywords: Philippines, APEC, social assistance, social protection, social security, labor market policies, pension, social insurance programs, social safety nets
    Date: 2016
  12. By: Nguyet Thi Khanh Cao (Graduate School of Economics, Kobe University)
    Date: 2016–02
  13. By: Agnieszka Drews (Nicolaus Copernicus University, Poland)
    Abstract: Trade is one of the important aspects of economic policy in the contexts of the third wave of regionalism. It is proven by growing number of trading agreement between regions and what goes after, expansion of positive aspects of economic cooperation. The aim of this article is to describe liberalization of trade and its changes through the ages and also deep analysis of influence of APEC at world economy. In this document the secondary data analysis and review of available literature was used. Analysis let claim that regional integration groups, with APEC in between, have crucial influence at trade and foreign direct investment creation.
    Keywords: interregional trade agreements, trade liberalization, regionalism, APEC
    JEL: J51 F13 F42 N75 O11 O24
    Date: 2015–06
  14. By: Ramstetter, Eric D.; Nguyen, Kien Trung
    Abstract: This paper examines wage differentials among medium-large (20 or more employees) whollyforeign multinational enterprises (WFs), joint-venture multinationals (JVs), state-owned enterprises (SOEs), and domestic private firms in Vietnamese manufacturing. The analysis focuses on 2009 because it is possible to examine wage differentials after accounting for the influences of two measures of worker quality, educational background and occupation. Simple comparisons in large samples of 11 industries combined indicate that averages wages in JVs were about 92 percent higher than in private firms in 2009, SOEs and WFs paid 57 and 54 percent more than private firms, respectively. Corresponding, conditional differentials that control for the influences of worker education and occupation, as well as capital intensity, size, and shares of female workers, were substantially smaller, but positive and significant in largesamples. Wage levels and differentials varied substantially among industries. Conditional differentials remained positive and significant for WFs and JFs in most of the 11 industries examined, but estimates of SOE-private differentials were insignificant in most industries. Robustness checks using 2007 data could not account for worker occupation, but revealed results similar to those for 2009.
    Keywords: Multinational enterprises, manufacturing, wage differentials, state-owned enterprises, ownership, Multinational enterprises, manufacturing, wage differentials, state-owned enterprises, ownership
    JEL: F23 J31 L60 O53
    Date: 2015–03
  15. By: Deluna, Roperto; Berdos, Kleint
    Abstract: This study was conducted to analyze factors affecting length of job search and job switching in Davao City. Ordinary Least Square (OLS) was used to examine factors affecting length of job search. Factors affecting probability of job switching was examined using logit regression model. Result shows that on the average, length of job search in Davao City is around 5 months. OLS estimation revealed that age of the job seeker and being a household head significantly affects the length of job search. Result of the job switching analysis revealed that those employed in the private sector and obtained degree from private academic institutions has a higher probability of switching job. Furthermore, it revealed that women has higher probability of job switching than men.
    Keywords: Length of job search, job switching, logit, OLS
    JEL: J22 J28 J64
    Date: 2015–04–01
  16. By: Sengupta, Rajeswari; Sharma, Anjali
    Abstract: In this paper we analyse the corporate insolvency resolution procedures of India, UK and Singapore within a common framework of well-specified principles. India at present lacks a single, comprehensive law that addresses all aspects of insolvency of a firm. It has a multiple laws, regulations and adjudication fora, each of which have created opportunities for debtor firms to exploit the arbitrage between these to frustrate recovery efforts of creditors. This adversely affets the resolution process, the time to recovery and the value recovered. The importance of a comprehensive, well-functioning insolvency resolution framework has been documented in literature. In India, the Bankruptcy Law Reforms Committee (BLRC) was constituted in 2014 with the objective of proposing a comprehensive framework for resolving the insolvency of firms and individuals. We undertake a comparison of the corporate insolvency resolution framework in UK, Singapore and India, with the underlying motivation to highlight the similarities and differences across the laws, procedures and institutional context of the three countries. The objective of this comparison is to draw lessons for the Indian reform process, in context of the formation of the BLRC. The BLRC has recently proposed an Insolvency and Bankruptcy Bill (IBB) which has been presented in Parliament and is currently being deliberated upon by a Joint Parliamentary Committee.
    Keywords: Resolving insolvency, Liquidation, Reorganisation, Adjudicator, Loss given default, Recovery rate, Timeliness, Insolvency professional, Information system
    JEL: G1 G2 G3 G33
    Date: 2016–01–14
  17. 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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