nep-sea New Economics Papers
on South East Asia
Issue of 2016‒04‒23
37 papers chosen by
Kavita Iyengar
Asian Development Bank

  1. The supply chain in East Asia By Lei, Lei
  2. Farmers’ Adaptation to Flood Disasters: Evidence from the Mekong River Basin in Thailand By Phumsith Mahasuweerachai
  3. The Economic Valuation of Tropical Forest Land Use Options: A Manual for Researchers By Camille Bann
  4. Networks of Enterprises and Innovations: Evidence from SMEs in Vietnam By Doan, Quang Hung; Vu, Hoang Nam
  5. Exchange Risk Management and the Choice of Invoice Currency: 2013 questionnaire survey of Japanese exporting firms (Japanese) By ITO Takatoshi; KOIBUCHI Satoshi; SATO Kiyotaka; SHIMIZU Junko
  6. (Not so) Gently down the stream: river pollution and health in Indonesia By Teevrat Garg; Stuart Hamilton; Jacob Hochard; Evan Plous; John Talbot
  7. How Do Households Discount over Centuries? Evidence from Singapore's Private Housing Market By Fesselmeyer, Eric; Liu, Haoming; Salvo, Alberto
  8. A Big Frog in a Small Pond or a Giant of Asia? Understanding the Political Leadership Style of Lee Kuan Yew By H.M.S. Amanda Herath
  9. Mediation Analysis of Factors that Influence Household Flood Mitigation Behavior in Developing Countries: Evidence from the Mekong Delta, Vietnam By Phung Thanh Binh; Xueqin Zhu; Rolf Groeneveld; Ekko van Ierland
  10. Estimation of Vulnerability to Poverty Using a Multilevel Longitudinal Model: Evidence from the Philippines By Mina, Christian D.; Imai, Katsushi S.
  11. Cost-Benefit Analysis of Climate-Resilient Housing in Central Vietnam By Tran Tuan Anh
  12. Intergenerational Games with Dynamic Externalities and Climate Change Experiments By Ekaterina Sherstyuk; Nori Tarui; Majah-Leah Ravago; Tatsuyoshi Saijo
  13. Is There Any Regional Price Disparity in Peninsular Malaysia? By Lee, Chin
  14. Biofuel Production in Vietnam: Cost-Effectiveness, Energy and GHG Balances By Loan T. Le
  15. Financial and Economic Viability of Bioplastic Production in Thailand By Siriluk Chiarakorn; Chompoonuh K. Permpoonwiwat; Papondhanai Nanthachatchavankul
  16. Does ISO14001 raise firms f awareness of environmental protection? |Case from Vietnam By Bin Ni; Hanae Tamechika; Tsunehiro Otsuki; Keiichiro Honda
  17. Economic Benefit of Management Options for a Suburban Forest in South Thailand By Saowalak Roongtawanreongsri; Prakart Sawangchote; Sara Bumrungsri; Chaisri Suksaroj
  18. Household Vulnerability to Climate Change in Selected Municipalities in Laguna, Philippines By Jaimie Kim B. Arias; Ma. Emilinda T. Mendoza; Vicente G. Ballaran, Jr.; Rowena A. Dorado
  19. Impacts of and Adaptation to Extreme Weather Events: An Intra-household Perspective By Jaimie Kim B. Arias
  20. Determinants of Non Performing Financing in Indonesian Islamic Banks By Sukmana, Raditya
  21. Cost-Benefit Analysis of Flood Adaptations in the An Xuan Tributary Basin, Thua Thien Hue, Vietnam By Bui Dung The; Bui Duc Tinh
  22. Downscaling REDD Policies in Developing Countries: Assessing the Impact of Carbon Payments on Household Decision Making and Vulnerability to Climate Change in Vietnam By Nghiem Phuong Tuyen; Pam Mc Elwee; Le Hue; Vu Huong
  23. Electricity Pricing for North Vietnam By Nguyen Van Song; Nguyen Van Hanh
  24. Economic Valuation of health Impacts of Haze Pollution in Malaysia By Jamal Othman; Mazrura Sahani; Mastura Mahmud; Md. Khadzir Sheikh Ahmad
  25. Adverse Selection and Moral Hazard in the Corporate Insurance Market: Evidence from the 2011 Thailand floods By ADACHI Daisuke; NAKATA Hiroyuki; SAWADA Yasusyuki; SEKIGUCHI Kunio
  26. Directors as Connectors: The Impact of the External Networks of Directors on Firms By Quoc-Anh Do; Yen-Teik Lee; Bang Dang Nguyen
  27. The influence of the CEO and the largest shareholder on dividend payout policy in Thailand By Thitima Sitthipongpanich
  28. Using Foreign Direct Investment to Upgrade and Diversify Exports from Morocco: Opportunities and Challenges in Comparative Perspective By Theodore H. Moran
  29. Using Feedback as a Tool for Household Energy Conservation: An Experimental Approach By Kannika Thampanishvong
  30. Culturally Responsive Teaching in the Higher Learning Institutions By SITI ZUBAIDAH ANUAR
  31. Industrial policy and exchange rate skepticism By Luiz Carlos Bresser-Pereira; Fernando Rugitsky
  32. Impacts of and Adaptation to Extreme Weather Events: An Intra-household Perspective By Jaimie Kim B. Arias; Jefferson A. Arapoc; Hanny John P. Mediodia
  33. Understanding the Decision Making Process of Sovereign Wealth Funds: The Case of Temasek By Jean-Yves Gnabo; Malik Kerkour; Christelle Lecourt; Hélène Raymond-Feingold
  34. Filipino 2040 Environmental Resources, Shocks, and National Well-Being By J. Roumasset; M. Ravago; K. Jandoc; C. Arellano
  35. Stability of complementarity between Japanese FDI and import of intermediate goods : agglomeration effects and parent-firm heterogeneity By Ito, Tadashi; Matsuura, Toshiyuki; Yang, Chih-Hai
  36. Are Unemployment Rates in OECD Countries Stationary? Evidence from Univariate and Panel Unit Root Tests By Khraief, Naceur; Shahbaz, Muhammad; Heshmati, Almas; Azam, Muhammad
  37. The European Union’s growing innovation divide By Reinhilde Veugelers

  1. By: Lei, Lei
    Abstract: East Asia is a major tea-consuming and -producing area; however, few studies have examined the East Asian tea industry from the perspective of the supply chain. Based on field and desktop studies of the tea markets in Taiwan and China, this paper provides an overview of each market together with detailed case studies. In this analysis, the characteristics of the tea industry and the main problems in the current supply chain in terms of governance, upgrading, and food safety and quality control are identified. This paper will help fill the gap in studies of the East Asian tea industry from the perspective of the supply chain.
    Keywords: East Asia, China, Taiwan, Tea, International trade, Quality control, Agricultural economics, Food safety, Supply chain analysis
    JEL: O13 Q13 Q17
    Date: 2016–03
  2. By: Phumsith Mahasuweerachai (Department of Economics, Faculty of Management Science, Khon Kaen University, Khon Kaen, 40002, Thailand)
    Abstract: This study accessed the impact of government aid on farmers’ adaptation to climate change in Nam Phong River Basin, Thailand. This area is prone to flooding between September and October. After the floods, the government generally provides financial compensation to affected farmers of about 70%– 80% of the cropping costs. Our study found that this sort of help from the government is likely to discourage farmers to adapt to climate change. This study found that farmers who believe that the government will step in whenever they suffer losses from floods are more likely to stay with their current crop pattern that carries the highest risk of flooding. In addition, government support was also found to undermine the crop insurance market that the government has been trying to develop.
    Keywords: Thailand, Climate change, Adaptation practices/projects, Climate change impacts, Econometric analysis
    Date: 2015–11
  3. By: Camille Bann (Cambodia)
    Abstract: This manual has been prepared as an aid to researchers in Southeast Asia involved in the economic evaluation of tropical forest land use options. It was developed initially to serve as an aid to Cambodian researchers in the execution of an EEPSEA-financed study of non-timber forest values in Ratanakiri Province, Cambodia. (The report resulting from that study is available as an EEPSEA Research Report.) The aim of the manual is to provide non-specialists with a basic theoretical background to economic valuation of the environment and with a practical methodology for an economic evaluation of alternative tropical forest land uses.
    Keywords: Economic Valuation, Tropical Forest, Manual
    Date: 2016–03
  4. By: Doan, Quang Hung; Vu, Hoang Nam
    Abstract: By using the latest dataset from the survey of SMEs conducted in Vietnam in 2011, we show that a firm both participating in a wider network of input suppliers, buyers, and associations of enterprises and conducting innovative activities in production has higher labor productivity than others, implying that networks of enterprises and innovation are complementary to each other in affecting performance of SMEs in Vietnam. We also find that supports of the government including providing better infrastructure to the SMEs and helping the SMEs to be formalized when being established are conducive to the development of the SMEs in Vietnam.
    Keywords: Complementary, supermodularity, Network, Innovation, SMEs.
    JEL: D58 O3
    Date: 2016–01
  5. By: ITO Takatoshi; KOIBUCHI Satoshi; SATO Kiyotaka; SHIMIZU Junko
    Abstract: This study presents new findings regarding Japanese exporting firms' foreign exchange risk management and choice of invoice currency, based on the 2013 RIETI questionnaire survey of Japanese exporting firms. Comparing these results to that from the 2009 survey, we confirm the following. First, in exports to the world, U.S. dollar invoicing share increased from 42% to 49% while Japanese yen invoicing share decreased from 48% to 42%, and euro invoicing share also declined slightly. In addition, Asian currencies' invoicing showed a tendency to increase gradually. Second, in exports to Asia, U.S. dollar invoicing share increased while a marked increase in the use of Asian currencies was not observed. Third, the number of foreign currencies being handled increased from an average of 3.1 to 3.4, indicating that Japanese firms face more foreign exchange exposure. In summary, we confirm the invariable characteristics of Japanese firms' invoicing currency whereby they select the importer's currency for exports to advanced countries such as the United States and the eurozone, and select the U.S. dollar for trade in Asia. In other words, Japanese firms maintain their pricing-to-the-market policy in their choice of invoicing currency, and the larger the size of the firm, the stronger there is of such tendency. With the aspects of foreign exchange risk management, the larger the size of the firm, the more it utilizes hedging strategies, and there is little change in the results between 2009 and 2013.
    Date: 2016–03
  6. By: Teevrat Garg; Stuart Hamilton; Jacob Hochard; Evan Plous; John Talbot
    Abstract: Waterborne diseases are the leading cause of mortality in developing countries. We emphasize a previously ignored cause of diarrhea – upstream river bathing. Using newly constructed data on upstream-downstream hydrological linkages along with village census panel data in Indonesia, we find that upstream river bathing can explain as many as 7.5% of all diarrheal deaths. Our results, which are net of avoidance behavior, show no effect of trash disposal on diarrheal infections. Furthermore we find that individuals engage in avoidance behavior in response to trash disposal visible pollutants) but not river bathing (invisible pollutants). We conduct policy simulations to show that targeting upstream individuals could generate substantial environmental and health savings relative to targeting downstream individuals. This provides a potential roadmap for low- and middle-income countries with limited resources for enforcement of water pollution.
    Date: 2016–04
  7. By: Fesselmeyer, Eric (National University of Singapore); Liu, Haoming (National University of Singapore); Salvo, Alberto (National University of Singapore)
    Abstract: We examine Singapore's fairly homogeneous private-housing market and show that new apartments on historical multi-century leases trade at a non-zero discount relative to property owned in perpetuity. Descriptive regressions indicate that new apartments with 825 to 986 years of tenure remaining are priced 4 to 6% below new apartments under perpetual ownership contracts that are otherwise comparable. We consider an empirical model in which asset value is decomposed into the utility of housing services and a second factor that shifts with asset tenure and the discount rate schedule. Exploiting the supply of new property with tenure ranging from multiple decades to multiple centuries, we estimate the discount rate schedule, restricting it to vary smoothly over time through alternative parametric forms. Across different specifications and subsamples, we estimate discount rates that decline over time and, accounting for the observed price differences, are of the order of 0.5% p.a. by year 400-500. The finding that households making sizable transactions do not entirely discount benefits accruing many centuries from today is new to the empirical literature on discounting and, with the appropriate risk adjustment, of relevance to evaluating climate-change investments.
    Keywords: discounting, social discount rate, declining discount rates, asset pricing, cost-benefit analysis, policy evaluation, long time horizon, climate change, real estate
    JEL: D61 G12 H43 Q51 Q54 R32
    Date: 2016–04
  8. By: H.M.S. Amanda Herath
    Abstract: The passing of a national political leader, widely regarded as a world figure, marked the beginning of the year 2015. The long standing Senior Minister of Singapore, Lee Kuan Yew left an undeniably significant mark upon the political leadership sphere. In order to assess his intriguing leadership style I will be using three theoretical models namely; Kouzes and Posner Model (1995), Blondel Model (1987) and Simonton Model (1988). The paper will mainly focus on Lee Kuan Yew’s attempts at building a new Singaporean Identity from a multiethnic pluralistic society. By this exercise I try to answer the question of whether another leader can adopt Lee Kuan Yew’s leadership style as a guiding principle.
    Keywords: Lee Kuan Yew; Singapore; Political Leadership; Identity; Leadership Styles.
    JEL: Y8
    Date: 2015–10
  9. By: Phung Thanh Binh (Schoolf of Economics, University of Economics Ho Chi Minh City); Xueqin Zhu (Environmental Economics and Natural Resource Group, Wageningen University); Rolf Groeneveld (Environmental Economics and Natural Resource Group, Wageningen University); Ekko van Ierland (Environmental Economics and Natural Resource Group, Wageningen University)
    Keywords: Flood mitigation, Vietnam
    Date: 2016–03
  10. By: Mina, Christian D.; Imai, Katsushi S.
    Abstract: Using the panel data for the Philippines in 2003-2009, the paper estimates a three-level random coefficient model to measure household vulnerability and to decompose it into idiosyncratic and covariate components. It corrects heterogeneity bias using Bell and Jones's (2015) "within-between" formulation. A majority of the poor and 18 percent of the nonpoor are found to be vulnerable to unobservable shocks, while both groups of households are more susceptible to idiosyncratic shocks than to covariate shocks. Adequate safety nets should be provided for vulnerable households that lack access to infrastructure, or are larger in size with more dependents and less-educated household heads.
    Keywords: Philippines, poverty, vulnerability, multilevel model, panel data
    Date: 2016
  11. By: Tran Tuan Anh (Faculty of Architecture, College of Sciences, Hue University)
    Abstract: This study applied a cost-benefit analysis (CBA) to quantify the economic benefits of long-term, safety-related measures put in place for housing. The results of the CBA show that the possible returns on investment in storm-resilient housing would be positive and high, which implies that investing in storm-resilient houses can be economically viable. The results also show that the returns would highly depend on the year when a storm event would take place. If an event would happen early in the housing lifetime, positive returns would be gained from the investment. From a private perspective, positive returns would encourage households to invest in housing resilience. Autonomous adaptation has been occurring and has generally been driven by individual households that are likely to result in substantial investments to increase the resilience of houses. The CBA results also show that storm-resilient housing would have high benefit-cost ratios. In order to encourage individual investment in storm-resilient housing, the government should consider offering assistance to households that agree to undertake appropriate climate-resilient housing. This may take the form of technical assistance, direct subsidies, or low-interest loans.
    Keywords: Vietnam, Climate Change, Adaptation Practices/Projects, Climate Change Impacts, Economic Analysis
    Date: 2016–03
  12. By: Ekaterina Sherstyuk (University of Hawaii at Manoa, Department of Economics); Nori Tarui (University of Hawaii at Manoa, Department of Economics); Majah-Leah Ravago (School of Economics, University of the Philippines Diliman); Tatsuyoshi Saijo (Kochi University of Technology)
    Abstract: Dynamic externalities are at the core of many long-term environmental problems, from species preservation to climate change mitigation. We use laboratory experiments to compare welfare outcomes and underlying behavior in games with dynamic externalities under two distinct settings: traditionally studied games with infinitely-lived decision makers, and more realistic intergenerational games. We show that if decision makers change across generations, resolving dynamic externalities becomes more challenging for two distinct reasons. First, decision makers' actions may be short-sighted due to their limited incentives to care about the future generations' welfare. Second, even when the incentives are perfectly aligned across generations, increased strategic uncertainty of the intergenerational setting may lead to an increased inconsistency of own actions and beliefs about the others, making own actions more myopic. Access to history and advice from previous generations may improve dynamic efficiency, but may also facilitate coordination on non-cooperative action paths.
    Keywords: economic experiments; dynamic externalities; intergenerational games; climate change
    Date: 2015–05
  13. By: Lee, Chin
    Abstract: This study examines whether there are significant differences in prices across four regions in Peninsular Malaysia, namely Northern, Central, Southern, and Eastern Peninsular Malaysia. Disaggregate monthly consumer price indices for twelve types of goods and services from July 2010 to February 2013 were analyzed. Based on the Levin and Lin (1993) panel unit root test, this study found statistical evidence of price convergence among the four zones for two-thirds of the price groups. Most importantly, price convergence exists for three major consumers’ expenditures items: Food and Non-Alcoholic Beverages; Housing, Water, Electricity, Gas and Other Fuels; and Transport. Indeed, these eight price groups that converged comprised 83.6% of total consumer expenditures. Evidence of price convergence among these price groups suggests that Peninsular Malaysia markets are highly integrated. In addition, this study found that the half-life for the tradable goods is roughly 2-3 months and for nontradable goods about 5-10 months. These findings indicate that tradable goods prices adjust more rapidly than nontradable goods do.
    Keywords: regional price disparity, price convergence, half-life, speed of adjustment, panel unit root test
    JEL: D12 E31 E64 R11 R12
    Date: 2015
  14. By: Loan T. Le (Faculty of Economics, Nong Lam University)
    Keywords: Biofuel, cost effectiveness
    Date: 2016–03
  15. By: Siriluk Chiarakorn (King Mongkut’s University of Technology Thonburi); Chompoonuh K. Permpoonwiwat; Papondhanai Nanthachatchavankul
    Keywords: Economic Viability,Bioplastic Production
    Date: 2016–03
  16. By: Bin Ni (Graduate School of Economics, Osaka University); Hanae Tamechika (Graduate School of Economics, Nagoya City University); Tsunehiro Otsuki (Graduate School of Economics, Osaka University); Keiichiro Honda (Department of Administration, Prefectural University of Kumamoto)
    Abstract: Environmental protection is an inevitable issue that developing countries all have to deal with during the process of inviting foreign direct investment (FDI). However, high correlation between FDI and pollution doesn ft necessarily indicate that foreign firms are to blame. In this paper, we apply firm-level panel data in Vietnam and unique information on waste discharge to show that foreign firms are actually more active to acquire ISO14001, a voluntary environmental standard. And the adoption will in turn improve firms f performance in waste control. It also increases firms f welfare as well as their productivity level. This paper provides strong evidence that firms f efforts towards corporate social responsibility will eventually benefit themselves as well.
    Keywords: FDI, ISO14001, Vietnam, environmental protection
    JEL: D22 F21 Q56
    Date: 2016–03
  17. By: Saowalak Roongtawanreongsri (Faculty of Environmental Management, Prince of Songkla University); Prakart Sawangchote (Prince of Songkla University); Sara Bumrungsri (Prince of Songkla University); Chaisri Suksaroj (Prince of Songkla University)
    Keywords: Economic Benefit,Management Options,Forest
    Date: 2016–03
  18. By: Jaimie Kim B. Arias (Department of Economics, College of Economics and Management,University of the Philippines Los Baños); Ma. Emilinda T. Mendoza (College of Human Ecology, University of the Philippines Los Baños); Vicente G. Ballaran, Jr. (College of Engineering and Agro-Industrial Technology, University of the Philippines Los Baños); Rowena A. Dorado (College of Economics and Management, University of the Philippines Los Baños)
    Keywords: Household, Vulnerability,Climate Change,Philippines
    Date: 2016–03
  19. By: Jaimie Kim B. Arias (Department of Economics, College of Economics and Management, University of the Philippines Los Baños, College, Los Baños, Laguna, Philippines)
    Abstract: This study documented and analyzed the experiences of households and their individual members during two extreme weather events in the Philippines in 2013. The first weather event took the form of heavy monsoon rain (local name: Habagat) and the subsequent widespread flooding in August 2013; this event affected households in Bacoor, Cavite. The second weather event was typhoon Haiyan (local name: Yolanda), which affected coastal households in Ajuy, Iloilo. Results showed that warnings, experience of flooding, and community adaptation activities were significant determinants of household adaptation in Bacoor. The results also showed that undergoing disaster risk reduction and management training, engaging in community adaptation, and receiving information from local government increased the likelihood of households in Ajuy undertaking preparations in advance of the weather event. The losses in Bacoor were about a third of household income. The welfare losses from typhoon Yolanda were estimated to be six times that of the household income in Ajuy; households in Ajuy with mangrove cover experienced less damages to their property by as much as PHP 7,641. Policy implications were derived from the results of the analysis.
    Keywords: Philippines, Climate Change, Adaptation practices/projects and Climate Change Impacts, Damage Valuation and Econometric Analysis
    Date: 2016–01
  20. By: Sukmana, Raditya (The Islamic Research and Teaching Institute (IRTI))
    Abstract: .
    Date: 2016–04–12
  21. By: Bui Dung The (College of Economics, Hue University); Bui Duc Tinh (College of Economics, Hue University)
    Keywords: Cost-Benefit Analysis,Flood Adaptations,Vietnam
    Date: 2016–03
  22. By: Nghiem Phuong Tuyen (Vietnam National University); Pam Mc Elwee (Vietnam National University); Le Hue (Vietnam National University); Vu Huong (Vietnam National University)
    Keywords: REDD,Carbon Payments,Climate Change
    Date: 2016–03
  23. By: Nguyen Van Song (Economics and Rural Development Faculty, Hanoi Agricultural University); Nguyen Van Hanh (Economics and Rural Development Faculty, Hanoi Agricultural University)
    Abstract: The rapid economic growth in Vietnam has resulted in an increasing demand for electricity. This in turn translates to a higher rate of coal resource extraction and consequent rise in pollution of water and land resources.This study estimated the environmental costs associated with the electricity demand requirements of the coal electricity sector, as a component of the long-run marginal opportunity cost (LR-MOC) of electricity production. The LR-MOC has three components: Marginal Production Cost or direct cost (MPC), Marginal User Cost (MUC) and the Marginal Environmental Cost (MEC). The MEC is divided further into two components: Marginal Environmental Cost of coal mining (MEC1) and Marginal Environmental Cost of coal burning (MEC2). The MEC1 consists of on-site environmental cost and off-site environmental cost while the MEC2 is made up of control cost and off-site environmental cost. The total production cost per tonne of clean coal was 241,050 VND in 1998 and was estimated to be 343,679.70 VND in 2010. The marginal environmental cost of coal mining (MEC1) is 19,029.4 VND/per tonne in 2010 or 5.5% of production cost. Of the MEC1, on-site and off-site cost is about 3.6% and 1.93% of production cost, respectively.The LR-MOC of coal electricity is 771.9 VND/per kWh at transmission and 975.5 VND/per kWh at distribution. The MEC (MEC1 + MEC2) accounts for 16.6% at transmission and 13.9% at distribution level. In comparison to the current tariff, the cost of the total electricity in 2010 is 1.75 times higher. The most suitable technological options for pollution control in coal-fired thermal power plants are precipitators for Group A and bag filters and limestone injection for Group B2. The least abatement and damage cost is associated with environmental technology alternative 2 (ETA2) valued at 1,862 billion VND. Given the worsening environmental problems in Halong Bay, which is a coal mining area, and the overall deteriorating environmental situation due to coal-fired power plants in Vietnam, the current subsidy of 25-30% to production cost and electricity tariff should gradually be removed. In fact, the environmental cost should be included in electricity and coal prices.
    Keywords: Hydropower, Vietnam
    Date: 2016–03
  24. By: Jamal Othman (Department of Agricultural and Resource Economics, Faculty of Economics, Universiti Kebangsaan Malaysia); Mazrura Sahani (Universiti Kebangsaan Malaysia); Mastura Mahmud (Universiti Kebangsaan Malaysia); Md. Khadzir Sheikh Ahmad (Universiti Kebangsaan Malaysia)
    Keywords: haze, malaysia
    Date: 2016–03
  25. By: ADACHI Daisuke; NAKATA Hiroyuki; SAWADA Yasusyuki; SEKIGUCHI Kunio
    Abstract: We examine the existence of adverse selection and moral hazard in the corporate insurance market empirically. While natural disasters hit households and firms alike, corporate insurance against disasters have been under-investigated in the literature. To bridge this gap, we employ a unique firm dataset on the 2011 Thailand floods exclusively collected for this study. We aim to uncover how insurance subscription is geographically diversified before and after the floods and how insurance subscription and payment are associated with firms' production and employment levels after the floods. We find that the property insurance subscription before the floods was systematically higher amongst firms located in the areas directly affected by the floods than amongst others, indicating adverse selection, while the market is missing after the floods. Also, both insurance subscription and payment of business interruption insurance are negatively associated with firms' production and employment after the floods, suggesting the existence of moral hazard.
    Date: 2016–03
  26. By: Quoc-Anh Do (Département d'économie); Yen-Teik Lee (Singapore Management University); Bang Dang Nguyen (University of Cambridge)
    Abstract: The external networks of directors significantly impact firm value and decisions. Surrounding close gubernatorial elections, local firms with directors connected to winners increase value by 4.1% over firms connected to losers. Director network’s value increases with network strength and activities, and is not due to network homophily. Connected firms are more likely to receive state subsidies, loans, and tax credits. They obtain better access to bank loans, borrow more, pay lower interest, invest and employ more, and enjoy better long-term performance. Network benefits are concentrated on connected firms, possibly through quid pro quo deals, and unlikely spread to industry competitors.
    Keywords: External Networks of Directors; Board of Directors; Connectors; Regression Discontinuity Design; Close Gubernatorial Election
    Date: 2016–04
  27. By: Thitima Sitthipongpanich (Dhurakij Pundit University)
    Abstract: In a setting of weak law enforcement and low investor protection, minority shareholders may find it difficult to extract cash from a company. This paper examines whether or not the CEO and the largest shareholder affect dividend decisions. Using a sample of Thai firms, I find that the CEO tenure and the ownership of the largest shareholder increase the likelihood of a dividend payout. As a result of high commitment and incentives, CEOs and the largest shareholder use dividend payments as a mechanism to mitigate free cash flow problems and reduce potential expropriation of minority shareholders. In addition, the possibility of a dividend payout decreases if firms are controlled by domestic financial institutions. Domestic financial institutions seem to play a significant role in monitoring management teams; consequently, the need for a dividend payment in alleviating agency costs is lower than other firms. Moreover, firms are more likely to pay dividends when they have higher profitability and a lower leverage ratio.
    Keywords: Dividend, CEO, large shareholder, agency costs, Thailand
    JEL: G30 G35
  28. By: Theodore H. Moran
    Abstract: Developing countries that manage to upgrade and diversify their export profile grow more rapidly and achieve greater welfare gains than countries that simply export larger volumes of what they have traditionally produced. This discussion paper examines what market imperfections and other impediments make the task of using FDI for structural transformation so difficult. Drawing on country case studies from Malaysia, Costa Rica, the Czech Republic, and South Africa, the paper identifies best practices for making progress, on the one hand, and examining impediments that lead to failure, on the other. This study has been prepared to serve as the basis for a workshop at which on-the-ground practitioners in Morocco can view their country’s efforts at structural transformation in light of similar experiences elsewhere. The objective is to highlight accomplishments and raise questions about future obstacles for Morocco’s aerospace sector, for the automotive cluster in Tangier Med, for OCP, and for investment promotion via the Moroccan Agency in Charge of Promoting Foreign Direct Investment .
    Keywords: Foreign Direct Investment, diversification, structural transformation, exports, growth, market failures, Morocco, Aerospace Cluster, Automotive Hub, competitiveness
    Date: 2016–03
  29. By: Kannika Thampanishvong (Thailand Development Research Institute)
    Keywords: Household Energy Conservation,Experimental Approach, Thailand
    Date: 2016–03
    Abstract: This paper presents an evident that there is a need for Culturally Responsive Teaching (CRT) in English language classrooms in higher learning institutions. CRT is relatively a new concept to be explored in the Malaysian educational setting and studies have been conducted and researchers suggested trainings to help teachers to manage their racially diverse classroom should be carried out (Tengku Nor Rizan, Nooreiny, & Manisah, 2013; Faizah, 2014). With an increase enrolment of international students to Malaysian higher learning institutions, the teachers teaching in the universities who prepare the students with English language proficiency and also other related English courses should be equipped the with culturally responsive pedagogy. Semi-structured interviews were carried out to 9 English language teachers teaching in 2 different language faculties from two universities in the country to find out if the teachers do have traits of CRT. The findings show that teachers do have traits of becoming culturally responsive and welcoming the idea of becoming culturally responsive in the classroom.
    Keywords: Culture, culturally responsive teaching, higher learning institutions, English language classroom.
    JEL: I29
  31. By: Luiz Carlos Bresser-Pereira; Fernando Rugitsky
    Abstract: The aim of the present paper is to put in historical perspective the development thinking on the relationship between industrial and exchange rate policies. The first section focuses on the thought of the so-called pioneers of development economics, specifically their preference for protectionism and their belated recognition that an exchange-rate policy could act as a substitute to it. In the second one, we analyze the exchange rate skepticism that arises out of the theories that identify a foreign constraint to growth, in addition to the one revealed by the pioneers. The third section briefly complements the previous discussion with reference to macroeconomic formulations that allow for short-run contractionary effects of a devaluation, reinforcing the skepticism in question. In the fourth section, we discuss the revival of development thinking in the 1980s and its discussion about East Asian trajectories, a literature that placed great emphasis on industrial policy. Finally, in the fifth section we discuss the new historical facts and the new development macroeconomics’ models that are putting an end to exchange rate skepticism.
    Keywords: exchange rate; industrial policy; protectionism; East Asian countries.
    JEL: B20 O24 O25
    Date: 2016–03–24
  32. By: Jaimie Kim B. Arias (Department of Economics, College of Economics and Management,University of the Philippines Los Baños); Jefferson A. Arapoc (Department of Economics, College of Economics and Management,University of the Philippines Los Baños); Hanny John P. Mediodia (College of Arts and Sciences, University of the Philippines Visayas)
    Keywords: Adaptation, climate change, Philippines
    Date: 2016–03
  33. By: Jean-Yves Gnabo; Malik Kerkour; Christelle Lecourt; Hélène Raymond-Feingold
    Abstract: Sovereign wealth funds (SWFs) have been increasingly active over the past decade, raising concern from governments regarding their actual motives and potential cross-border stakes in national strategic sectors. The aim of this paper is to contribute to the existing literature to understand better the decisions taken by this new class of investors. the whole process of investment decision strategy is complex in the sense where it combines several dimensions that may potentially interact. For that, we investigate the economic determinants of SWF's cross-border stakes while considering the whole sequence of choices involved in this decision: (i) the decision to invest abroad or not, (ii) the decision to invest in a listed versus unlisted firm, and (iii) the decision to make large versus small investment in target company. Using a nested logit approach on one of the biggest SWF, the Singaporean fund Temasek over the 1990 to 2010 period, we provide clear evidence of dependence in the three considered levels of decision. In addition, we show that Temasek's cross-border investment probability increases with the excess of FX reserves, tends to target unlisted firms when asymmetry of information is low between the target and the home countries and involves in large stakes depending on firm financial characteristics.
    Keywords: Sovereign Wealth Funds; Nested Logit model; Foreign Investment.
    JEL: F30 G11 G15
    Date: 2016
  34. By: J. Roumasset (University of Hawaii; Energy Policy and Development Program); M. Ravago (University of the Philippines; Energy Policy and Development Program); K. Jandoc (University of Hawaii; Energy Policy and Development Program); C. Arellano (University of the Philippines; World Bank, Philippines)
    Abstract: The contribution of the environmental-resource sector to national well-being is the sum of natural resource depletion and environmental degradation. Inasmuch as existing resource stocks are below efficient levels, better enforcement of existing laws as well as policies that incentivize sustainable use are needed. Similarly, progressive royalty assessment of mineral resources can incentivize exploration without transferring the bulk of resource rents to private interests. In the case of pollution, the key is to face firms with the full costs of their production, e.g. through emission taxes and/or cap and trade systems. Calculating total depletion and degradation (TDD) will facilitate the calculation of green national income (GNI), a more inclusive metric of national well-being. In the same way, simultaneous optimization of disaster management policies in the face of climate change can facilitate a further improvement in national well-being, this time measured as comprehensive national income (CNI).
    Keywords: Well-being, risk, natural disaster, scenario-building, Philippines
    JEL: N55 Q01 Q54 Q56 Q58
    Date: 2016–04
  35. By: Ito, Tadashi; Matsuura, Toshiyuki; Yang, Chih-Hai
    Abstract: This paper examines the duration of intermediate goods imports and its determinants for Japanese affiliates in China. Our estimations, using a unique parent-affiliate-transaction matched panel dataset for a discrete-time hazard model over the 2000–2006 period, reveal that products with a higher upstreamness index, differentiated goods, and goods traded under processing trade are less likely to be substituted with local procurement. Firms located in more agglomerated regions with more foreign affiliates tend to shorten the duration of imports from the home country. For parent-firm characteristics, multinational enterprises that have many foreign affiliates or longer foreign production experience import intermediate goods for a longer duration.
    Keywords: East Asia, Japan, China, International trade, Imports, Foreign investments, FDI, Trade duration, Intermediate goods, Agglomeration
    JEL: F14
    Date: 2016–03
  36. By: Khraief, Naceur (Faculty of Economic Science and Management of Sousse, University of Sousse, Tunisia, & GREDEG (Research Group on Law Economics and Management, University of Nice Sophia Antipolis, France); Shahbaz, Muhammad (Department of Management Sciences, COMSATS Institute of Information Technology, Lahore, Pakistan); Heshmati, Almas (Jönköping International Business School (JIBS), Centre of Excellence for Science and Innovation Studies (CESIS),& Department of Economics, Sogang University, Seoul, South Korea); Azam, Muhammad (School of Economics, Finance & Banking, College of Business, Universiti Utara Malaysia)
    Abstract: This paper revisits the dynamics of unemployment rate for 29 OECD countries over the period of 1980-2013. Numerous empirical studies of the dynamics of unemployment rate are carried out within a linear framework. However, unemployment rate can show nonlinear behaviour as a result of business cycles or some idiosyncratic factors specific to labour market (Cancelo, 2007). Thus, as a testing strategy we first perform Harvey et al. (2008) linearity unit root test and then apply the newly ESTAR nonlinear unit root test suggested by Kruse (2011). This test has higher power than conventional unit root tests when time series exhibits nonlinear behaviour. Our empirical findings provide significant evidence in favour of unemployment rate stationarity for 25 countries. For robustness purpose, we have also used panel unit root tests without and with structural breaks. The results show that unemployment hysteresis hypothesis is strongly rejected when taking into account the cross-sectional and structural break assumptions. Thus, unemployment rates are expected to return back to their natural levels without executing any costly macroeconomic labour market policies by the OECD’s governments.
    Keywords: Unemployment; Unit root; labour market policy; OECD
    JEL: C23 E24 J48 J64 N30
    Date: 2016–04–06
  37. By: Reinhilde Veugelers
    Abstract: Highlights There is a significant divide between the European Union countries with the greatest capacity to innovate, and those with the least capacity to innovate. The difficult convergence process has been proceeding only very slowly and unevenly, and more recently seems to have come to a halt. For footnotes and references, see the PDF version of this paper. A particular weak spot for the EU is corporate investment in research; in this area, the intra-EU divide is growing. As the business sector is responsible for the persistent R&D intensity gap between the EU and the United States and Asia, the persistent failure of lagging EU countries to catch up in this area provides much of the explanation for the EU’s weak performance compared to other economies. The evidence shows that the deployment of public budgets and the mix of policies employed by EU member states have tended to aggravate the intra-EU divide. The EU needs to better understand its growing internal innovation divide if it is to achieve its ambition of becoming a world innovation leader. 1. Introduction The European Union’s lofty ambition is that its growth should be socially and environmentally sustainable and its future prosperity should be built on foundations of innovation. But ambition has so far not translated into leading performance. According to the European Commission’s 2015 Innovation Union Scoreboard indicator (IUS), a composite indicator developed to assess innovation performance, Europe is not doing well. The EU’s IUS score is only 81 percent of that of the United States. For the moment, Europe still has a substantial lead over emerging markets. But China, with an IUS score still half of the EU's, is catching up fast. On private expenditure on research and development, a key indicator to assess a nation’s capacity for innovation, the EU is lagging significantly. Its private R&D-to-GDP ratio is 57 percent of the US level. In terms of public expenditure on R&D, there is no gap between the EU and the US. But Europe’s overall R&D-to-GDP-ratio continues to stand at 2 percent, far from the EU's 3 percent target and significantly lower than the US, Japan, South Korea and Singapore. China has caught up fast and in terms of overall R&D spending is already on par with the EU. This Policy Contribution examines the EU’s struggle to improve its capacity for innovation, in particular the differences between EU member states in terms of their capacity to innovate. Is the EU’s failure to catch up a failure of its innovation-leading member states to defend and further improve their leading positions? Or is it because its innovation-lagging member states fail to catch up and the EU has not closed the innovation divide between its member countries? We show a serious divide between EU member states in terms of their capacity to innovate, with convergence taking place only very slowly and unevenly. More recently, the already-difficult convergence process seems to have come to a halt. In terms of the innovation policies used by member states, the evidence shows that the deployment of public budgets and the mix of instruments might have aggravated the divide. 2. The innovation capacity of EU member states - a growing divide The innovation capacity of nations measures their ability to generate new ideas and to translate them into economic growth and prosperity (Furman et al, 2002). Because of differences in initial conditions and because of differences in how EU countries have sought to create innovation-based growth, we can expect substantial differences between European countries in terms of innovation capacity. We would however expect that the process of EU integration would allow lagging countries to catch up faster, pushing convergence within the EU in terms of innovation capacity, along with economic convergence. In order to assess countries’ innovation capacities, a range of factors needs to be explored. In addition to the availability of R&D inputs, public R&D infrastructure and financing, this includes the linking of public and private bodies involved in innovation, incentives for firms to innovate, and the ability of firms to create and capture value from their innovations on world markets (Furman et al, 2002). To measure innovation capacity, we use the Summary Innovation Index from the IUS. This covers eight aspects of innovation capacity - human resources, public research systems, finance, investment by firms, linkages, intellectual property rights, innovations and economic effects1. We measure the variation in innovation capacity across the EU countries. Convergence occurs when the variation decreases over time. The divide in innovation capacity measures the gap between the best and worst performers within a group of countries2. When looking within the EU at differences in IUS performance (Table 1), the countries at the top are Denmark, Finland, Germany and Sweden, while Bulgaria, Latvia and Romania sit at the bottom.
    Date: 2016–04

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