nep-sea New Economics Papers
on South East Asia
Issue of 2016‒08‒28
eighteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Asia's Rural-urban Disparity in the Context of Growing Inequality By Katsushi S. Imai; Bilal Malaeb
  2. Potential Effects of the Regional Comprehensive Economic Partnership on the Philippine Economy By Cororaton, Caesar B.
  3. Experiences with Foreign Workers in Singapore and Malaysia: What are the Lessons for Japan’s Labor Markets? By Eric D. , Ramstetter
  4. Prospective External Shocks and Indonesian Economic Performance By Prayudhi Azwar; Rod Tyers
  5. How Narrowly Should Anti-poverty Programs Be Targeted? Simulation Evidence from Bolivia and Indonesia By Stephan Klasen; Simon Lange
  6. Remittances, Growth and Poverty Reduction in Asia - A Critical Review of the Literature and the New Evidence from Cross-country Panel Data By Katsushi S. Imai; Bilal Malaeb; Fabrizio Bresciani
  7. The Impact of Pre-marital Sex Ratios on Household Saving in Two Asian Countries: The Competitive Saving Motive Revisited By Horioka, Charles Yuji; Terada-Hagiwara, Akiko
  8. Assessing Mandated Credit Programs: Case Study of the Magna Carta in the Philippines By Khor, Niny; Jacildo, Ryan; Tacneng, Ruth
  9. Skill Transferability, Migration, and Development: Evidence from Population Resettlement in Indonesia By Samuel Bazzi; Arya Gaduh; Alexander D. Rothenberg; Maisy Wong
  10. Changes in Institutional Design, Expropriation Risk and Extraction Path By Mohammad Kemal; Ian Lange
  11. Trade flows and trade specialisation: the case of China By Guglielmo Maria Caporale; Anamaria Sova; Robert Sova
  12. Transparency in Non-tariff Measures: An International Comparison By Lili Yan Ing; Olivier Cadot; Janine Walz
  13. How Do Users Value a Network Expansion? Evidence from the Public Transit System in Singapore By Fesselmeyer, Eric; Liu, Haoming
  14. Local Government Proliferation, Diversity, and Conflict By Samuel Bazzi; Matthew Gudgeon
  15. Dynamics of Rural Transformation and Poverty in Rural Asia and the Pacific By Katsushi S. Imai; Raghav Gaiha; Fabrizio Bresciani
  16. Multinational Enterprise Growth and Vietnam’s Employment and Wages in Manufacturing and Trade Industries: Did Takeovers Play a Role? By Ramstetter, Eric D.
  17. Fractional integration and asymmetric volatility in european, asian and american bull and bear markets. Applications to high frequency stock data. By Luis Alberiko; OlaOluwa S. Yaya; Olarenwaju I. Shittu
  18. Impact Assessment of the National Greening Program of the DENR: Scoping or Process Evaluation Phase - Institutional Component By Luna, Maria Paz G.

  1. By: Katsushi S. Imai (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan and School of Social Sciences, University of Manchester, UK); Bilal Malaeb (Oxford Department of International Development, University of Oxford, UK)
    Abstract: This study offers empirical evidence on the rural-urban gap in the context of growing inequality in Asia. First, China and India explain the trends of regional inequality given their large population, signifying their importance as major contributors. Overall, China’s income inequality is characterised by rural-urban disparity, but the inequality within-rural and/or within urban areas has worsened, although it experienced very high economic growth. India is mainly characterised by high inequality within urban areas despite a sharp reduction in urban poverty. Rural-urban income gap has narrowed in recent years. We also find that the rural and urban income gap has narrowed in many countries, such as, India, Vietnam and Thailand. Second, our econometric results on the agricultural and non-agricultural income gap suggest that higher non-agricultural growth rate tends to widen the urban-rural gap over time, while agricultural growth is unrelated to the rural-urban gap. Third, the rural-urban human resources gaps in terms of educational attainment have increased in both India and China. Fourth, remittances are likely to reduce poverty in many countries. Policies which would promote agricultural growth and rural education are deemed important not only for reducing rural poverty, but also for narrowing the rural-urban gap of human resources.
    Keywords: Remittances, Migration, Growth, Poverty, Inequality, Asia
    JEL: F22 O10 O15 O53 I30
    Date: 2016–08
  2. By: Cororaton, Caesar B.
    Abstract: Using a global computable general equilibrium model, the paper analyzes the potential effects of Regional Comprehensive Economic Partnership (RCEP) on the Philippine economy. The analysis involves an 80-percent reduction in tariffs and 10 percent in nontariff barriers within RCEP member-countries over a 10-year period. The results indicate trade creation within RCEP. Exports of RCEP to nonmembers decline. Within RCEP, the improvement in exports of the six non-ASEAN members is relatively higher than the Association of Southeast Asian Nations (ASEAN) members. Viet Nam benefits the most among ASEAN members. Exports of the rest of ASEAN increase as well, including the Philippines. The entry of cheaper rice in the Philippines benefits lower income households. The entry of cheaper textiles benefits the garments industry. On the whole, Philippine gross domestic product improves by 3 percent and welfare by USD 2 billion. Philippine poverty declines from 24.9 percent to 23.3 percent.
    Keywords: Philippines, ASEAN, Regional Comprehensive Economic Partnership (RCEP), regional trade, global CGE, poverty indicator
    Date: 2016
  3. By: Eric D. , Ramstetter
    Abstract: Singapore and Malaysia have a long history of relying heavily on foreign, immigrant workers in both high-skilled and low-skilled occupations. Ancestors of large portions of the local population in both countries were also immigrants. Correspondingly, economic policies have been designed to manage high levels of migration and foreign workers. In contrast, Japan limited both immigration and foreign workers quite strictly through the 1980s. Since the 1990s, however, the ratio of the stock of net inward immigrants to total population has grown much more rapidly in Japan than in Singapore or Malaysia, largely because the rapidly aging population and changes in worker preferences have resulted in strong demand for immigrant labor. Since the 1990s, Japanese policies have actively sought to entice highly skilled foreign workers and students to work and/or study in Japan. The primary purpose of this policy-oriented paper is to review the substantial economic literature on experiences with foreign workers in Japan, Singapore, and Malaysia and its implications for Japan’s labor markets and related policies.
    Keywords: Foreign workers, Asia, Employment, Wages, Skilled workers, Construction workers, Health care workers, Domestic workers, Macroeconomics, Adjustment costs, Externalities, Foreign workers, Asia, Employment, Wages, Skilled workers, Construction workers, Health care workers, Domestic workers, Macroeconomics, Adjustment costs, Externalities, F22, J20, J30, J61, N35
    Date: 2016–03
  4. By: Prayudhi Azwar (Business School, University of Western Australia and Bank Indonesia); Rod Tyers (Business School, University of Western Australia and Centre for Applied Macroeconomic Analysis (CAMA) Crawford School of Government, Australian National University)
    Abstract: The post-GFC era sees slower global growth, unusually combined with lower investment financing costs, a substantial Chinese slowdown and with the eventual prospect of a US-led re-tightening of global financial markets. For Indonesia in the medium term, these developments imply a slowing of export growth and a temporary surge in net inward investment incentives. These changes are examined here using a numerical macro model. The results suggest that recent fiscal reform is long run beneficial and that it will moderate the negative effects of expectations linked to the eventual financial tightening. Indeed, results depend importantly on whether expectations are formed on the short run effects or the prospective tightening. Expectations retard growth in either case. Depending on magnitudes, the prospect of financial tightening may be preferable to nearer term financial easing that is combined with comparatively unattractive export moderation.
    Date: 2016
  5. By: Stephan Klasen (Georg-August University Göttingen); Simon Lange (Georg-August University Göttingen)
    Abstract: A key question in the design of anti-poverty programs is to what extent they should be targeted. Empirical evaluations of targeted transfer schemes and simulation exercises often point to further gains that can be had from targeted transfers vis-à-vis universal transfers or from more narrow targeting. Theoretical work, on the other hand, has identified hidden costs associated with targeting - including politico-economic constraints on budgets - but these are frequently ignored in empirical work. In this paper we first argue that common targeting measures can be interpreted as preferences that attach specific weights to true and false positive rates. Based on data from Bolivia and Indonesia, we show that targeting based on an imperfect poverty classifier based on proxy means tests results in very distinct 'optimal' beneficiary shares when these measures are used as a decision criterion. Implications from poverty simulations are sensitive to assumptions about the political economy relationship between the beneficiary share and the available budget. In fact, in many situations, optimizing targeting measures will be misleading when the actual goal is to maximize the effect on poverty.
    Keywords: welfare and poverty measurement; targeting; transfers; social assistance; proxy means tests; poverty; Bolivia; Indonesia
    JEL: C52 I38 O21
    Date: 2016–08–22
  6. By: Katsushi S. Imai (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan and School of Social Sciences, University of Manchester, UK); Bilal Malaeb (Oxford Department of International Development, University of Oxford, UK); Fabrizio Bresciani (Asia and the Pacific Division of International Fund for Agricultural Development (IFAD), Italy)
    Abstract: This study provides a critical review of the role of remittances and migration in promoting growth and reducing and poverty and inequality in developing countries in Asia and the Pacific. It also uses the cross-country panel data and examines the effect of remittances on economic growth, poverty and inequality after taking into account the endogeneity of remittances. First, it has been found from our econometric results that remittances will promote economic growth and reduce poverty - both national poverty and rural poverty based on the international poverty lines for the US$1.25 or US$2 thresholds, while the remittances have no inequality-reducing effect. Second, we have suggested the importance of understanding the underlying factors enabling households to undertake migration and remittances in relation with the underlying structural transformation of the rural economy, such as its shift to the non-farm sector, which typically takes place as village infrastructure develops and educational level of the households improves. Third, we argue that the risk-coping roles of remittances at both macro and micro level are important in understanding the poverty-reducing mechanisms associated with migration and remittances. Fourth, poor households outside the village networks should be supported by policy measures. This is important particularly because our result suggests that the remittances increase inequality in rural areas.
    Keywords: Remittances, Migration, Growth, Poverty, Inequality, Asia
    JEL: F22 O10 O15 O53 I30
    Date: 2016–08
  7. By: Horioka, Charles Yuji; Terada-Hagiwara, Akiko
    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.
    Keywords: Age structure of the population, competitive saving motive, dowries, gender ratio, household saving rate, life cycle hypothesis, marriage expenses, pre-marital sex ratio, population control, saving for education, saving for marriage, saving rate, sex ratio, son preference, wedding expenses, Korea, India, Age structure of the population, competitive saving motive, dowries, gender ratio, household saving rate, life cycle hypothesis, marriage expenses, pre-marital sex ratio, population control, saving for education, saving for marriage, saving rate, sex ratio, son preference, wedding expenses, Korea, India, D12, D14, D91, E21, J11, J12, O16
    Date: 2016–07
  8. By: Khor, Niny; Jacildo, Ryan; Tacneng, Ruth
    Abstract: We examine the effects of a mandated credit program to small and medium enterprises in the Philippines (Magna Carta Law) using a panel dataset compiled from official data published by the Bangko Sentral ng Pilipinas. The final sample of 109 financial institutions represented over 90% of total finance sector assets in the Philippines. We highlight three important findings. First, although the total lending levels to micro, small, and medium enterprises (MSMEs) grew slightly, the percentage shares of loans allocated to MSMEs declined drastically from a peak of 30% of total loans in 2002 to 16.4% in 2010. Second, following the upwards revision of the loan target (from 6% to 8%) for smaller firms in 2008, there was a sharp increase in noncompliance especially amongst universal and commercial banks. On the other hand, total loans to medium enterpriseswere still more than threefold larger than the targeted 2%. Third, there is an increased heterogeneity in optimal loan portfolio across banks. Most surprisingly, the absolute level of MSME lending by rural and cooperative banks declined since 2008. Direct compliance amongst universal and commercial banks decreased beginning in the late 2007, while that of thrift banks increased to almost 100%. Abolishing the Magna Carta targets for medium-sized enterprise loans would most likely yield little adverse effects. Meanwhile, efforts to improve financial access to MSMEs should focus on alternative nondistortionary ways to increase financing supply, such asimproving institutional framework for informational availability and development of equity and bond markets for MSMEs.
    Keywords: financial inclusion, financial markets, financial policy, Philippines, SME, targeted lending, financial inclusion, financial markets, financial policy, Philippines, SME, targeted lending, G21, G28, O16
    Date: 2016–04
  9. By: Samuel Bazzi (Boston University & BREAD); Arya Gaduh (University of Arkansas); Alexander D. Rothenberg (RAND Corporation); Maisy Wong (University of Pennsylvania)
    Abstract: We use a natural experiment in Indonesia to provide causal evidence on the role of location-specific human capital and skill transferability in shaping the spatial distribution of productivity. From 1979– 1988, the Transmigration Program relocated two million migrants from rural Java and Bali to new rural settlements in the Outer Islands. Villages assigned migrants from regions with more similar agroclimatic endowments exhibit higher rice productivity and nighttime light intensity one to two decades later. We find some evidence of migrants’ adaptation to agroclimatic change. Overall, our re- sults suggest that regional productivity differences may overstate the potential gains from migration.
    Keywords: Internal Migration, Comparative Advantage, Spatial Labor Allocation, Agricultural Adaptation
    JEL: J43 J61 O12 O13 O15 R12
    Date: 2015–11
  10. By: Mohammad Kemal (SKKMIGAS); Ian Lange (Division of Economics and Business, Colorado School of Mines)
    Abstract: The impact of expropriation risk on the extraction path of non-renewable resources has been shown as theoretically ambiguous. It depends on capital intensity of the extraction process and the size of resource stocks. By employing producing field-level data in the South East Asia region, we observe the impact of a change in institutional design of oil governance in Indonesia on expropriation risk and extraction path. From the empirical results, we make an inference that a change in oil governance reduces expropriation risk, and the impact of the reduction on the extraction path is different for different sizes of resource stock. The results confirm the theory that for small resource stocks, reduction in expropriation risk leads to a slower extraction path. This reiterates the importance of strengthening ownership rights such that expropriation risk can be reduced, over-extraction can be avoided and more sustainable economic welfare can be achieved.
    Keywords: oil governance, expropriation risk, extraction path
    JEL: Q32 Q35 Q48
    Date: 2016–08
  11. By: Guglielmo Maria Caporale; Anamaria Sova; Robert Sova
    Abstract: Using annual data for the period 1992-2012, this paper examines trade flows between China and its main trade partners in Asia, North America and Europe, and whether increasing trade has led to industrial structural adjustment and changes in China’s trade patterns. The analysis is based on both economic indicators and the estimation of a gravity model, and applies recently developed panel data methods that explicitly take into account unobserved heterogeneity, specifically the fixed effect vector decomposition (FEVD) technique. The findings confirm the significant change in China’s trading structure associated with the fast growth of foreign trade. In particular, there has been a shift from resource- and labour-intensive to capital- and technology-intensive exports.
    Keywords: gravity model; panel data analysis; trade specialisation; comparative advantage
    JEL: C23 F14 F15
    Date: 2015–02
  12. By: Lili Yan Ing (Economic Research Institute for ASEAN and East Asia (ERIA), University of Indonesia); Olivier Cadot (University of Lausanne, Centre for Economic Policy Research (CEPR) and Foundation for International Development Study, and Research FERDI); Janine Walz (The World Bank)
    Abstract: We construct an index of transparency in non-tariff measures based on notifications to the World Trade Organization under the agreements on sanitary and phytosanitary measures and on technical barriers to trade, the existence of a trade portal giving ready access to trade-relevant regulations, the existence of NTM data collected under the Multi-Agency Support Team classification, and the results of an experiment conducted between 2015 and 2016 where we asked for specific regulations concerning the import of a particular product on behalf of a private company. The resulting country ranking shows that the Organisation for Economic Co-operation and Development countries are, by and large, the most transparent, but also shows that the Association of Southeast Asian Nations member states score well compared to other developing countries.
    Keywords: International trade, non-tariff measures, transparency, governance, index, ranking
    JEL: F12 F13 F14 F15 F16
    Date: 2016–08
  13. By: Fesselmeyer, Eric (National University of Singapore); Liu, Haoming (National University of Singapore)
    Abstract: We estimate the network externality of a public transit system by examining the effects of its expansion on the housing market. Our results show that a major expansion of Singapore's Mass Rapid Transit (MRT) system increased the price of apartments within 0.5 km of a pre-expansion station by 1.6% to 2.1% relative to apartments that were further away from a station. Evaluated at the mean housing price, the expansion increased the value of pre-connected apartments by at least S$386 million, which is equivalent to about 8% of the estimated S$5 billion cost of the expansion.
    Keywords: public transportation, housing, network effects
    JEL: H4 R21 R42 H23
    Date: 2016–08
  14. By: Samuel Bazzi (Boston University & BREAD); Matthew Gudgeon (Boston University)
    Abstract: The creation of new local governments is a key feature of decentralization in developing countries. This process often causes substantial changes in contestable public resources and the local diversity of the electorate. We exploit the plausibly exogenous timing of new district creation in Indonesia to iden- tify the implications of these changes for violent conflict. Using new geospatial data on violence, we show that allowing for redistricting along group lines can reduce conflict. However, these reductions are undone and even reversed if the newly defined electorates are ethnically polarized, particularly in areas that receive an entirely new seat of government. We identify several mechanisms highlighting the violent contestation of political control.
    Keywords: Conflict, Polarization, Ethnic Diversity, Decentralization
    JEL: D72 D74 H41 H77 O13 Q34
    Date: 2016–03
  15. By: Katsushi S. Imai (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan and School of Social Sciences, University of Manchester, UK); Raghav Gaiha (Harvard School of Public Health, Harvard University Boston, USA); Fabrizio Bresciani (Asia and the Pacific Division of International Fund for Agricultural Development (IFAD), Italy)
    Abstract: This paper analyses the dynamics of transformation in rural Asia and the Pacific, with a focus on their effect on poverty. It draws upon an up-to-date country panel data in the region. First, transformation of the agricultural sector in terms of commercialisation and product diversity has dynamically increased agricultural value added per capita and its growth, and consequently reduced both rural and urban poverty significantly. The effect of agricultural transformation in reducing child malnutrition is also corroborated, while inequality in rural area is reduced only at the initial stage of development of agriculture in low income countries. Our analysis has also confirmed that agricultural transformation, in terms of commercialisation and product diversification, has promoted total factor productivity (TFP) with lags, which reduced both rural and urban poverty significantly. Second, a higher degree of agricultural transformation and higher levels of population in the working age group are important for a country to move up from the low income country group to the lower middle income country group. Higher education attainment and lower dependency rates distinguish upper-middle income countries from low and lower-middle income countries. Poverty concentration has shifted from low income countries to lower-middle income countries from 1990 to 2014. Third, in India, gender-related factors (e.g. female headedness or having more female members), larger areas of owned land, higher education, and employment in agricultural self-employment became more important determinants of poverty in 2004-2005 than in 1993-1994. Finally, investigating the extent to which manufacturing and service sectors could absorb growing rural labour force, it is worrying that in more recent years the employment elasticities of these sectors have declined.
    Date: 2016–08
  16. By: Ramstetter, Eric D.
    Abstract: This paper examines how foreign multinational enterprises (MNEs) have grown in Vietnam’smanufacturing and trade industries, and tries to shed light on how MNE takeovers ofVietnamese firms have affected employment, and wages between 2000 and 2012. Althoughthe scale of MNE activity has been substantial and grown in recent years, there are substantialdiscrepancies in measures of MNE shares from alternative sources and uncertainty over theactual share of MNEs in Vietnamese production or employment. On the other hand, thenumber of MNE takeovers has been very small and they appear to have played only a smallrole in changes of MNE shares. Rather, changes in MNE shares have resulted primarily fromthe entry and exit MNEs and changes in the scale of MNE activity.
    Keywords: Multinational enterprises, state-owned enterprises, ownership, employment, wages, Multinational enterprises, state-owned enterprises, ownership, employment, wages, F23, J31, L60, O53
    Date: 2016–03
  17. By: Luis Alberiko (Navarra Center for International Development); OlaOluwa S. Yaya; Olarenwaju I. Shittu
    Abstract: This paper is a follow up to Gil-Alana, Shittu and Yaya (2014). In that paper, fractional integration and symmetric volatility modeling were considered on monthly frequency data, while the present paper considers high frequency data on an asymmetric volatility model. The data were first identified within the respective bull and bear phases following earlier results in the previous paper. Then, fractional integration and the asymmetric volatility model of Glosten, Jaganathan and Runkle (GJR) were applied on the stock returns. Long range dependence was detected in the squared stock returns at each market phase, and they were more persistent than those obtained in the monthly frequency data. The estimates of asymmetry of the GJR model actually detected the different patterns of the bad news (bear phases) and the good news (bull phases).
    Keywords: Bull and bear periods; fractional integration; high frequency; stock returns; volatilty
    JEL: C22 G14 G15
    Date: 2015–04
  18. By: Luna, Maria Paz G.
    Abstract: The National Greening Program (NGP) comes after a dip in the country's forest cover and a decade after a large reforestation program was judged to be unsustainable. Large-scale reforestation globally has met with limited success but as a jump-start mechanism that carpet bombed large denuded areas with reforestation effort, the NGP seems to have succeeded in at least two of its measured metrics. As a bonus, the uniformity and strict monitoring of the program, both in survival rates and financial flows, can be used to clean up the Department of Environment and Natural Resources bureaucracy if complaints can be acted on swiftly, and results are communicated to complainants. To ensure efficiency and sustainability, a succeeding program would need to diversify methods based on scale, existing forest cover, and implementer's motivations; use strategic policy interventions and targeted protection measures; and be implemented by an organization with a clear reforestation and forest production mandate and with skills for dispute resolution, organizing, and efficient technology transfer. Digital media would also have to be taken advantage of for mapping, public buy-in, crowd-sourced strategies, and methods and transparency.
    Keywords: Philippines, National Greening Program (NGP), reforestation, forestry law enforcement, tree planting, geotagging trees, forestry agency
    Date: 2016

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