nep-sea New Economics Papers
on South East Asia
Issue of 2016‒07‒23
twenty-two papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Technology and Innovation Policies for Small and Medium-Sized Enterprises in East Asia By Intarakumnerd, Patarapong; Goto, Akira
  2. How Growth Deceleration in the People’s Republic of China Affects Other Asian Economies: An Empirical Analysis By Lee, Minsoo; Park, Donghyun; Ramayandi, Arief
  3. The Determinants of Structural Transformation in Asia: A Review of the Literature By Sen, Kunal
  4. Contingent Claims Analysis of Sovereign Debt Sustainability in Asian Emerging Markets By Brière, Marie; Ferrarini, Benno; Ramayandi, Arief
  5. Cadeia Global de Valor de Eletrônicos e Inserção do Vietnã e da Malásia By Eduardo Costa Pinto
  6. The Role of Structural Transformation in the Potential of Asian Economic Growth By Foster-McGregor, Neil; Verspagen, Bart
  7. Determinants of Consumer Price Inflation versus Producer Price Inflation in Asia By Jongwanich, Juthathip; Wongcharoen, Petchtharin; Park, Donghyun
  8. Deflation in Asia: Should the Dangers Be Dismissed? By Eichengreen, Barry; Park, Donghyun; Shin, Kwanho
  9. Energy efficiency gains from trade in intermediate inputs: firm-level evidence from Indonesia By Michele Imbruno; Tobias Ketterer
  10. The Impact of Pre-marital Sex Ratios on Household Saving in Two Asian Countries: The Competitive Saving Motive Revisited By Charles Yuji Horioka and Akiko Terada-Hagiwara
  11. Analytical Tools for Measuring Poverty Dynamics: An Application Using Panel Data in the Philippines By Martinez, Jr., Arturo
  12. Demographic Change and Fiscal Sustainability in Asia By Lee, Sang-Hyop; Kim, Jungsuk; Park, Donghyun
  13. Determining Statistical Pattern on the Drug-Related Killing in Philippines Using ARIMA and Poisson Techniques By Tamayo, Adrian
  14. Students’ Participation in Waste Management at International School of Tourism By Chuleewan Praneetham; Jaree Phrommana; Prasert Sitthijirapat
  15. Exploring Risk-Adjusted Fiscal Sustainability Analysis for Asian Economies By Kopits, George; Ferrarini, Benno; Ramayandi, Arief
  16. A Case Study of Blended Learning in Higher Education in Malaysia: Flipped, Flopped or Forgotten? By Michelle Jones
  17. Do patient satisfaction and health improvement affect sustainability of voluntary co-location clusters? Evidence from Vietnam By Quan-Hoang Vuong
  18. Catching Up, Structural Transformation, and Inequality: Lessons from Asia By Martorano, Bruno; Park, Donghyun; Sanfilippo, Marco
  19. Implications of the Trans-Pacific Partnership for the World Trading System By Jeffrey J. Schott; Cathleen Cimino-Isaacs; Euijin Jung
  20. EU corporate R&D intensity gap: What has changed over the last decade? By Pietro Moncada-Paternò-Castello
  21. In Search of a Better Match: Qualification Mismatches in Developing Asia By Chua, Kenn; Chun, Natalie
  22. The Effect of attitude toward aging on ICT adoption: the Readiness of user By Ju-Chuan Wu; Chih-Jou Chen

  1. By: Intarakumnerd, Patarapong (Asian Development Bank Institute); Goto, Akira (Asian Development Bank Institute)
    Abstract: Policies for stimulating technological development and innovation in small and medium-sized enterprises can be divided into three groups. Supply-side policies aim at increasing firms’ incentives to invest in innovation by reducing costs. Demand-side policies are public actions to induce innovation and/or speed up the diffusion of innovation. Systemic policies focus on strengthening interactive learning between actors in innovation systems. Policies can be implemented through various instruments comprising tax incentives, grants or direct subsidies, low-interest loans, and the government’s direct equity participation. These instruments have pros and cons. The experiences of four late-industrializing East Asian economies—Taipei,China; Singapore; Malaysia; and Thailand—provide key lessons. Firms at different levels of technological and innovative capability need different policy instruments. The more successful economies have a higher level of flexibility and policy coordination and learning. The amount, duration, and continuity of government supporting schemes are crucial. Policy makers must have a deep understanding of what constitutes innovations and innovation systems, and how they evolve over time. Innovation financing policies require other corresponding policy initiatives to make them successful. Lastly, institutional factors do shape the choices and effective implementation of these policies.
    Keywords: technological development; East Asia SMEs; diffusion of innovation; demand-side policies
    JEL: D22 L25 O31
    Date: 2016–07–20
  2. By: Lee, Minsoo (Asian Development Bank); Park, Donghyun (Asian Development Bank); Ramayandi, Arief (Asian Development Bank)
    Abstract: Developing Asia has benefited greatly from the rise of the People’s Republic of China (PRC), primarily through the trade channel. The PRC and its neighbors have collectively formed a regional production network, and the PRC is becoming an increasingly important source of final demand. Two empirical methodologies are used to examine the likely economic impact of growth deceleration in the PRC on other Asian economies: (i) a single-equation approach that captures the trade channel and (ii) a global vector autoregressive model that captures the effects beyond just the trade channel. The results of both analyses confirm that deceleration in the PRC will indeed have a non-negligible negative effect on other economies, especially on East and Southeast Asia. An out-of-sample analysis to tease out the effect of slower growth in the PRC from the recent growth performance of selected Southeast Asian economies suggests that the PRC effect is contributing to the growth dynamics of this region but is not always dominant.
    Keywords: Asia; growth; People’s Republic of China; spillover; trade
    JEL: F43
    Date: 2016–05–13
  3. By: Sen, Kunal (University of Manchester)
    Abstract: Structural transformation—the movement of workers from low-productivity to high-productivity activities—is an essential ingredient of inclusive growth. This paper reviews the evidence on why the pace of structural transformation has differed widely across countries in Asia, with a specific focus on the People’s Republic of China, India, and Thailand. It argues that both government failures relating to the functioning of labor, land, and product markets; and market failures relating to coordination of investment, credit market imperfections, and human capital formation have been the primary causes of the slow pace of structural transformation in several Asian countries. The paper suggests that a specific focus is needed to reform policies that impede the functioning of labor, land, and product markets as well as on strengthening industrial and education policies to address specific market failures around investment coordination and human capital formation.
    Keywords: Asia; government failure; market failure; structural transformation
    JEL: O14 O53 P51
    Date: 2016–03–29
  4. By: Brière, Marie (Paris Dauphine University); Ferrarini, Benno (Asian Development Bank); Ramayandi, Arief (Asian Development Bank)
    Abstract: Contingent claims analysis applied to Indonesia, Malaysia, the Philippines, the Republic of Korea, and Thailand shows no particular vulnerability to sovereign debt distress during recent years. However, the highly volatile “distance to distress” measure suggests that any of these countries may fall victim to a sudden loss in market confidence. For example, the value of Indonesia’s sovereign assets dropped to just two standard deviations above its repayment obligations during the 2013 United States Federal Reserve taper tantrum, causing capital outflows and currency depreciation. Generally, we find that contingent claims analysis and market-based risk measures well complement conventional debt sustainability analysis for Asia.
    Keywords: contingent claims analysis; public debt sustainability
    JEL: E60 F34 G13 H63
    Date: 2016–06–09
  5. By: Eduardo Costa Pinto
    Abstract: Este artigo tem como objetivos: i) apresentar a evolução e as características da cadeia global de eletrônicos nos anos 2000; e ii) analisar as linhas gerais da inserção do Vietnã e da Malásia nas cadeias globais de valor (CGV) de eletrônicos, buscando identificar os determinantes exógenos e endógenos desse processo e as diferenças nos atuais estágios de inserção desses países. This paper aims at: i) presenting the evolution and features of the Global Value Chain electronics in the 2000s; and ii) analyzing the general lines of the Vietnam and Malaysia insertion in Global Value Chains (CVG) electronics, seeking to identify the exogenous and endogenous determinants of this process and differences in the current stages of integration of these countries.
    Date: 2016–05
  6. By: Foster-McGregor, Neil (UNU-Merit); Verspagen, Bart (UNU-Merit)
    Abstract: The transition from low-income developing country to high-income developed country involves a deep process of structural transformation in which the productive structure of an economy changes. In this paper we examine this process of structural change and its link to productivity growth for a sample of Asian countries. In particular, the paper addresses the following questions: What is the typical pattern of structural change that countries experience when they catch up from low-income levels to the economic frontier?; To what extent and in which form did structural change contribute to productivity growth in Asia since 1990?; How does the contribution of structural change to productivity growth compare to the effects of deviations of actual growth from potential growth?; How does the effect of structural change differ between total factor productivity growth and labor productivity growth?; And, what is the order of magnitude of the productivity effects that can be expected from further convergence of Asian countries to the economic structure that characterizes middle-income and high-income countries?
    Keywords: labor productivity; structural decomposition; total factor productivity
    JEL: O14 O47
    Date: 2016–03–29
  7. By: Jongwanich, Juthathip (Thammasat University); Wongcharoen, Petchtharin (Thammasat University); Park, Donghyun (Asian Development Bank)
    Abstract: We empirically examine and compare the determinants of producer and consumer price inflation in 10 Asian economies during 2000–2015. In this connection, we also investigate the pass-through of global oil prices, global food prices, and exchange rates to domestic producer and consumer prices. Overall, we find that cost-push factors such as oil and food prices are more important in explaining producer price inflation than consumer price inflation in the 10 Asian economies. On the other hand, for consumer prices, demand-pull factors still explain much of the inflation. Finally, we find that the pass-through of global oil prices, global food prices, and exchange rates tend to be higher for producer prices than consumer prices in Asia.
    Keywords: Asia; commodity price shocks; consumer price; exchange rate; inflation; monetary policy; pass-through; producer price
    JEL: E31 F43 O53
    Date: 2016–07–14
  8. By: Eichengreen, Barry (UC Berkeley); Park, Donghyun (Asian Development Bank); Shin, Kwanho (Korea University)
    Abstract: Deflation has emerged as a new concern for Asian policy makers. The traditional view is that deflation can lead to a vicious cycle of falling demand and prices, and is thus a dangerous condition. However, another school of thought emphasizes the role of positive supply shocks and takes a more benign view of deflation. In a recent paper that examines the relationship between deflation and economic growth, using consumer prices time series, Borio et al. (2015) find some evidence that casts doubt on the traditional view. In this paper, we revisit the relationship and find some grounds for concern about the harmful effect of deflation on growth.
    Keywords: deflation; growth; producer prices
    JEL: E31
    Date: 2016–07–06
  9. By: Michele Imbruno; Tobias Ketterer
    Abstract: This paper investigates whether importing intermediate goods improves firm-level environmental performance in a developing country, using data from the Indonesian manufacturing sector. We build a simple theoretical model showing that trade integration of input markets entails energy efficiency improvements within importers relative to non-importers. To empirically isolate the impact of firm participation in foreign intermediate input markets we use ‘nearest neighbour’ propensity score matching and difference-in-difference techniques. Covering the period 1991-2005, we find evidence that becoming an importer of foreign intermediates boosts energy efficiency, implying beneficial effects for the environment.
    Date: 2016–06
  10. By: Charles Yuji Horioka and Akiko Terada-Hagiwara
    Abstract: This paper estimates a household saving rate equation for India and Korea using long-term time series data for the 1975-2010 period, focusing in particular on the impact of the pre-marital sex ratio on the household saving rate. To summarize the main findings of the paper, it finds that the pre-marital sex (or gender) ratio (the ratio of males to females) has a significant impact on the household saving rate in both India and Korea, even after controlling for the usual suspects such as the aged and youth dependency ratios and income. It has a negative impact in India, where the bride’s side has to pay substantial dowries to the groom’s side at marriage, but a positive impact in Korea, where, as in China, the groom’s side has to bear a disproportionate share of marriage-related expenses including purchasing a house or condominium for the newlywed couple.
    Date: 2016–07
  11. By: Martinez, Jr., Arturo (Asian Development Bank)
    Abstract: This study reviews two methods of measuring poverty dynamics. The components approach uses the longitudinally averaged income to determine whether a household is chronically poor or not. On the other hand, the spells approach counts the number of poverty episodes experienced by a household. Using panel data from the Philippines, we examine the differences between these analytical methods of measuring chronic and transient poverty. Furthermore, the study also examines the sensitivity of estimates of poverty dynamics to measurement parameters. While I find that both the components and spells approaches suggest that most poverty experiences of Filipino households were persistent, my robustness analysis reveals that the relative importance of persistent and transient poverty are sensitive to the type of poverty measure used and the poverty line pecified. In particular, the relative importance of transient poverty increases dramatically as the poverty line decreases or as the poverty measure becomes more sensitive to the welfare of the poorest of the poor.
    Keywords: persistent poverty; Philippines; transient
    JEL: D31 I32 O15
    Date: 2016–03–15
  12. By: Lee, Sang-Hyop (University of Hawaii at Manoa); Kim, Jungsuk (Sogang University); Park, Donghyun (Asian Development Bank)
    Abstract: Changes in the population age structure can have a significant effect on fiscal sustainability since they can affect both government revenues and expenditures. For example, population aging will increase expenditures on the elderly while reducing potential growth and hence revenues. In this paper, we project government revenue, expenditure, and fiscal balance in developing Asia up to 2050. Using a simple stylized model and the National Transfer Accounts data set, we simulate the effect of both demographic changes and economic growth. Rapidly aging economies like the Republic of Korea; Japan; and Taipei,China, are likely to suffer a tangible deterioration of fiscal sustainability under their current tax and expenditure system. On the other hand, rapid economic growth can improve fiscal health in poorer economies with relatively young populations and still-growing working-age populations. Overall, our simulation results indicate that Asia’s population aging will adversely affect its fiscal sustainability, pointing to a need for Asian economies to further examine the impact of demographic shifts on their fiscal health.
    Keywords: Asia; fiscal balance; fiscal projection; population aging; public spending; tax
    JEL: H20 H50 H62 J11 J14
    Date: 2016–04–08
  13. By: Tamayo, Adrian
    Abstract: A univariate time series technique was conducted to determine statistical pattern on killings of drug suspects in Philippines from May 19 to July 7, 2016. The technique reveal a moving-average of order 2, MA(2) with a positive coefficient suggestive that value of outcome variable tend to increase, on the average, than the recent value of . This means that drug-related killings will tend to be higher than the most current rate; and killings is seen to increase as weekend comes. Poisson regression indicated an average of 13 deaths on a Sunday; only 2 on average on a Monday; odds of survival increases as well as weekend comes. Finally, the forecast model and the simulation are limited by the data used. Structure of the univariate series may change as additional data are added; this is also true for the forecasted average occurrence.
    Keywords: drug violence, influence, government
    JEL: C53
    Date: 2016–07–13
  14. By: Chuleewan Praneetham (Suratthani Rajabhat University); Jaree Phrommana (Suratthani Rajabhat University); Prasert Sitthijirapat (Sripatum University)
    Abstract: This study was carried out at International School of Tourism of Suratthani Rajabhat University, Surat Thani province, Thailand. The study examined the level of awareness, attitude and behavior of students with regard to the environment and their practice in waste management with the development of the waste management activities by the participatory action research (PAR). This study used a combination of both quantitative and qualitative methodologies to research. One hundred and twenty-nine students were selected by purposive sampling. The instrument used in this research was self-administered close-ended questionnaire with a five-level rating scale and Pretest-Posttest. The percentage, mean, standard deviation and t-test were used to analyze the data. The findings revealed that students had good awareness and highly attitude towards the environment. They had good behavior towards the environment. Before and after the PAR process was implemented, awareness and attitude were determined. It was found that there were high statistically significant (p
    Keywords: participation, waste, waste management, students
    JEL: Q56
  15. By: Kopits, George (Woodrow Wilson International); Ferrarini, Benno (Asian Development Bank); Ramayandi, Arief (Asian Development Bank)
    Abstract: The paper explores risk-based fiscal analytical approaches to complement a standard debt sustainability analysis when applied under conditions of risk and uncertainty. To outline a possible road map for risk-adjusted fiscal sustainability analysis, the paper first examines the types of vulnerability faced by different emerging economies in Asia and reviews a range of stochastic methods that attempt to explicitly incorporate risk in their analysis. Drawing on international experience, we note that the usefulness of applying a stochastic approach hinges on policy makers’ capacity to identify the sources and extent of risks in assessing fiscal sustainability, which should then allow them to simulate the impact of a hypothetical corrective action on the baseline trajectory of debt or net worth and on its stochastic distribution, including fat-tail risks of default.
    Keywords: fiscal sustainability; risk-based fiscal analysis; sovereign debt; stochastic approach
    JEL: D81 E62 G13 H63
    Date: 2016–05–13
  16. By: Michelle Jones (Institute of Educational Leadership, University of Malaya)
    Abstract: Every day, in Universities across the globe, more and more courses are being created to embrace blended learning approaches. Classes are now being ‘flipped’ in the pursuit of more effective learning and better student outcomes. However, the concept of blended and flipped learning in Malaysia is relatively new. This paper outlines an exploratory study of blended learning in a higher education institution (HEI) in Malaysia. The focus of this paper is an investigation of the pedagogical processes associated with blended and flipped learning in a Higher Education context. The paper provides a discussion of the implementation challenges associated with delivering a new blended learning programme. The paper concludes that there are significant benefits to students from learning in a learning environment that uses blended and flipped approaches.
    Keywords: Higher Education, blended and flipped learning, Malaysia
    JEL: I29
  17. By: Quan-Hoang Vuong
    Abstract: Background: Over the past 15 years or so the phenomenon of voluntarily co-located patients communities has been emerging. Patients, especially the poor, have chosen to live together, seeking/lending supports from/to one another. Nonetheless, despite the existence of these communities, little is researched or known about how those co-located patients as main subjects of the clusters perceive the value they receive and see their future connection to the communities they are, or were, living in. Answering these questions helps us to better understand the prospect of those community, in terms of sustainability.Methods: The study employs the method of categorical data analysis, specifically multiple logistic regressions, to investigate relationships between groups of factors such as perceived degrees of satisfaction with financial means provided by the communities, and reported health improvements (predictor variables), and patients' short- and longer-term commitments to these communities (response variable).Results: All groups of factors, and variables entering the analytical models, have shown statistical significance upon successful estimations based on the provided empirical data sets. The results suggest two meaningful empirical relationships following the data modeling efforts: 1) between financial stress facing patients and the financial benefits they received from the community, and their propensity to stay connected to it; and 2) between general level of satisfaction, health improvements, and patients' long-term commitment to these communities. Overall all, financial benefits and health improvements are found to influence a significant increase in probabilities for patients to become committed to their communities in the short and long term, respectively.Conclusions: This study is to inform policy makers and social workers in healthcare sector about the realities that patients choose to stick to the co-location clusters have an economic reason: finding means to fight their financial hardship. This may suggest a higher degree of complication in dealing with social matters for poor patients than many previously thought of. The issue of suitable income-generating jobs for patient may probably be ignored by the majority of the public by only focusing on charity programs a0nd giving in-kind donations (which turn out to be not very useful). With respect to social policies, it is noteworthy that patients are not those who seek to ask for supports but can potentially be the donors as suggested by the evidence found that the probability of staying committed to the community increase upon completion of medical treatments, seeing health conditions improve.
    Keywords: Voluntary communities; Co-location clusters; Financial benefits; Low-income countries; Vietnam
    JEL: I12 I19
    Date: 2016–07–13
  18. By: Martorano, Bruno (Institute of Development Studies); Park, Donghyun (Asian Development Bank); Sanfilippo, Marco (University of Antwerp)
    Abstract: While structural transformation, driven by technological progress, productivity growth, and capital deepening, has contributed to Asia’s sustained rapid growth, its effect on income inequality is uncertain. The central objective of our paper is to empirically examine the effect of structural change on wage inequality in Asia, using industry-level data for three skill groups of workers. Our evidence indicates that structural change, pushed by productivity catch-up with advanced economies, capital deepness, and the shift of the economic structures to more skill-intensive industries, has exacerbated inequality in the region. However, we also find that policy responses, especially investment in education matching the higher demand for skills and competitive exchange rates, can mitigate the increase in inequality.
    Keywords: Asia; inequality; productivity; structural change; wage gap
    JEL: E24 L16
    Date: 2016–06–21
  19. By: Jeffrey J. Schott (Peterson Institute for International Economics); Cathleen Cimino-Isaacs (Peterson Institute for International Economics); Euijin Jung (Peterson Institute for International Economics)
    Abstract: The Trans-Pacific Partnership (TPP), signed in February 2016 between the United States and 11 countries in the Asia-Pacific, is the most comprehensive trade deal ever negotiated between developed and developing countries. To be sure, the TPP is not yet ratified and US implementing legislation in particular faces significant resistance. Despite strong protectionist undercurrents in the US political debate, however, the TPP merits congressional approval because of its impetus to trade and economic growth, its innovative rules governing areas such as digital trade, state-owned enterprises (SOEs), and environmental policies, and its positive impact on strategic relations with important US allies. This Policy Brief assesses how the TPP is likely to shape bilateral and regional trade initiatives in the Asia-Pacific and set precedents for new multilateral trade initiatives. Given the large economic footprint of TPP countries, the TPP will affect the economies of both participating and nonparticipating countries alike and influence the trade talks in the Asia-Pacific region in which they are engaged. TPP precedents also could contribute to the revival of multilateral trade negotiations in the World Trade Organization.
    Date: 2016–07
  20. By: Pietro Moncada-Paternò-Castello (European Commission – JRC)
    Abstract: This paper contributes with new findings to the literature on corporate research and development (R&D) intensity decomposition by examining the effects of several parameters on R&D intensity and investigating its comparative distribution among top R&D firms, sectors and world regions/countries. It draws on a longitudinal company-level micro-dataset from 2005 to 2013, and uses both descriptive statistics and decomposition computation methods. The results confirm the structural nature of the EU R&D intensity gap. In the last decade the gap between the EU and the US has widened, whereas the EU gap with Japan and Switzerland has remained relatively stable. The study also uncovers differences in R&D intensity between EU and US companies operating in the sectors more responsible for the aggregate R&D intensity gap. In contrast, the BRIC (Brazil, Russia, India and China) and Asian Tiger countries (Hong Kong, Singapore, South Korea and Taiwan) R&D intensity gap compared to the EU has remained relatively stable, while companies from the rest of the world are considerably reducing such gap. Finally, the study shows a high concentration -sustained over time- of R&D investment in a few countries, sectors and firms, but in the EU there are fewer smaller top R&D firms that invest more intensively in R&D, than in the most closed competing countries.
    Keywords: corporate R&D; decomposition; EU R&D intensity gap, EU R&D policy
    JEL: O30 O32 O38 O57
    Date: 2016–07
  21. By: Chua, Kenn (Asian Development Bank); Chun, Natalie (Asian Development Bank)
    Abstract: This paper empirically tests the role of search frictions in driving qualification mismatches in the labor market. Using new data from several low-income economies in urban Asia we find that overeducation in less developed labor markets are more pervasive than in more developed economies. Moreover, frictions related to search costs are a crucial determinant of match quality resulting in socially inefficient talent misallocation. Our findings suggest scope for policy interventions that improve worker-job matches with potential gains to wages and aggregate productivity.
    Keywords: Asia; labor markets; matching; qualification mismatches; search
    JEL: J20 J30 O12
    Date: 2016–02–26
  22. By: Ju-Chuan Wu (Department of Business Administration, Feng Chia University); Chih-Jou Chen (Department of Marketing and Logistics Management, National Penghu University of Science and Technology)
    Abstract: Due to progression of modern medication and technology, the average life span is extending, pursuing high-quality, healthy and long life growing to an old age is more desirable than ever. Taiwan is one of the fastest growing aging countries in Asia, in addition to the problem of an aging population; birth rate is also very low, nursing and elderly care might affect our financial and economic development. This research aims to explore the current situation of aging society, the gap between user’s attitude toward aging and the ICT needs for better performance of ICT innovative products and (or) service. In this study, the proposed model is composed the concepts of attitude toward aging, Innovation Diffusion Theory, and User’s Informational-Based Readiness. The research findings show that be helpful to the further application, cross-field cooperation, and long-term development between ICT and elderly service industry.
    Keywords: Aging in Place, Attitude toward aging, Information and Communication Technology (ICT), Service Innovation, Innovation Diffusion Theory Technology Readiness, User’s Informational-Based Readiness

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