nep-sea New Economics Papers
on South East Asia
Issue of 2016‒11‒06
ten papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Damming Trans-boundary Rivers: A Welfare Analysis of Conflict and Cooperation By Yuyu Zeng; Harold Houba; Ariel Dinar; Miroslav Marence
  2. Investigating the Interaction between the Volatility of Exchange Rate and Stock Returns in Four Asian Countries By SEK, SIOK KUN
  3. What makes Vietnamese (not) attend periodic general health examinations? A cross-sectional study By Quan-Hoang Vuong; Quang-Hoi Vu; Thu Trang Vuong
  4. The Impact of Visa-Free Entry on the Determinants of Inbound Tourism Demand in Indonesia By Ferika Pujiharini; Masaru Ichihashi
  5. Spatial Estimation of the Nexus between the PRC’s Foreign Direct Investment and ASEAN’s Growth By Uttama, Nathapornpan Piyaareekul
  6. The Changing Pattern of China’s Economic Relations with Southeast Asia By Anne Booth
  7. Do Employers Value Return Migrants? An Experiment on the Returns to Foreign Work Experience By Paolo Abarcar
  8. India’s Trade Partnership with East African Community: Exploratory Results from Trade Indices By Chakraborty, Debashis; Sahu, Manoj
  9. On the Geography of Global Value Chains By Alonso de Gortari; Pol Antras
  10. On the widely differing effects of free trade agreements: Lessons from twenty years of trade integration By Baier, Scott; Yotov, Yoto; Zylkin, Thomas

  1. By: Yuyu Zeng (VU University Amsterdam, The Netherlands); Harold Houba (VU University Amsterdam, The Netherlands); Ariel Dinar (University of California, Riverside, United States); Miroslav Marence (UNESCO-IHE Institute for Water Education, The Netherlands)
    Abstract: Dams are essential for water storage and hydropower generation, but change river flow patterns and endanger local environments. Dam projects may further exacerbate already existing problems in trans-boundary rivers. We consider three scenarios of institutional factors: (1) each country pursues its own interests, (2) efficient cooperation along the river and (3) partial cooperation among neighboring countries. We conduct cost-benefit analyses for these scenarios incorporating dam projects and their externalities. We demonstrate our approach for the Mekong River incorporating expert hydrological knowledge regarding installed hydropower capacity and dam location instead of the standard economic assumptions of such costs. Our results show that cooperation between Laos and Cambodia internalizes the negative impacts of dam construction in Laos on fishery in Cambodia, and Laos refrains from building some planned dams. Our results also hint that the 1995 Mekong agreement among Thailand, Laos, Cambodia and Vietnam is internally stable.
    Keywords: Trans-boundary river basin management; Institutional factors; Dams; Externalities; Welfare analysis; Conflict and cooperation
    JEL: C61 C70 D60 Q20 Q50 R10
    Date: 2016–10–24
  2. By: SEK, SIOK KUN
    Abstract: In this paper, we are interested to investigate how changes in exchange rate regime/ flexibility can affect the interaction between the volatility of exchange rate and stock returns in four selected Asian countries (Indonesia, Korea, Philippines and Thailand). The reason to focus the study on these countries is due to the drastic change in their exchange rate regime from fixed to flexible regime and inflation targeting aftermath the Asia financial crisis of 1997. In particular, we are interested to investigate the above matter by comparing the results of pre- inflation targeting (IT) and post-IT periods in addition to reveal macroeconomic factors that determine the relationship. For the purpose of analyses, a wide range of generalized autoregressive conditional heteroskedasticity, GARCH-type models are used to model the volatility of exchange rate and stock returns respectively for each country. The generated volatility series are used to be analyzed for the interaction effects under vector autoregressive (VAR) model. Our results detect significant bi-directional relationship between volatility of exchange rate and stock returns in three markets: Indonesia, Korea and Thailand. Also, the monetary variables (interest rate, money supply, international reserves) have significant impacts on determining the volatility of exchange rate and stock returns in Indonesia, Korea and Thailand. In general, the adoption of inflation targeting leads to different significant impacts across the four countries.
    Keywords: inflation targeting, exchange rate regime, volatility of stock
    JEL: E0 F3 F30 F62
    Date: 2015
  3. By: Quan-Hoang Vuong; Quang-Hoi Vu; Thu Trang Vuong
    Abstract: Background: General health examinations (GHE) have become an increasingly common measure for preventive medicine in Vietnam. However there has still been a lack of understanding about what make Vietnamese (not)attend GHE. The effects of budget or time constraints remain to evaluated. Better-informed policy making needs these inputs. Aim & Objectives: This study aims to investigate factors that may affect Vietnamese behaviors with respect to periodic GHE. Main objectives are to: i) explore empirical relationships between influencing factors and periodic GHE frequencies; and, ii) predict the probabilities of attending GHE and associated conditions.Materials and Methods: The study uses a 2,068-observation categorical dataset obtained from a Vietnamese survey in 2016Q4. The analysis is then performed using the methods of baseline-category logits for establishing relationships between predictor and response variables. Results: There exist relationships among: (i) GHE expenditure and time consumption; (ii) health priority and sensitivity to health data; (iii) insurance status, and (iv) the frequency of GHE, with most p’s
    Keywords: General health examination; Health insurance; Medical costs; Health service consumers; Vietnam
    JEL: I18 P20 I10
    Date: 2016–10–26
  4. By: Ferika Pujiharini (Graduate School for International Development and Cooperation, Hiroshima University); Masaru Ichihashi (Graduate School for International Development and Cooperation, Hiroshima University)
    Abstract: Many countries have applied a new visa-free policy to boost the number of international tourist. In 2003, the Presidential Decree of the Republic of Indonesia No. 18/2003 concerning the Exemption from Brief Visit Visa for citizens from 11 countries was enacted. Further the revised on Presidential Decree of the Republic of Indonesia No. 43/2011, the latest exemption regarding brief visa-free visit, was implemented for 15 countries. In this study, a panel data set that covers 25 years (1990-2014) for a group from 20 of 30 main export destination countries was used. The number of inbound international visitor arrivals was employed as a dependent variable in this research. The impact of visa-free entry will be measured in this research. Other variables that determine the dependent variables are the real GDP per capita of the source countries; the trade value between Indonesia and the source country, the population levels of the source country, the total number of rooms in hotels available in Indonesia; the export value for the iron metal, steel, machinery, and automotive sector, and the palm oil processing sectors; the relative CPI of Indonesia; the number of world heritage sites in Indonesia; the distance between the capital city of the source country to Indonesia; dummy variables for the Bali bombings, Aceh tsunami, and Economic Crisis in 1998; and the geographical characteristic of Indonesia and the source country, such as whether there are neighboring regions, and whether they practice the same language as Indonesia, and whether they practice the same religion as Indonesia. The results show that the new visa-free entry policy has a positive impact on the number of tourist arrivals. The new visa policy positive significantly can boost the number of tourist arrivals.
    Keywords: Indonesia; Inbound tourist; Visa-free entry; Panel analysis;
    JEL: F63 O19 Z32
    Date: 2016–10
  5. By: Uttama, Nathapornpan Piyaareekul (Asian Development Bank Institute)
    Abstract: Forging closer economic relations between the People’s Republic of China (PRC) and the Association of Southeast Asian Nations (ASEAN) over the last 2 decades has contributed to building a stronger ASEAN economy. It is particularly important to know how the PRC’s foreign direct investment responds to ASEAN’s economic performance. This study investigates the causal relationship between the PRC’s foreign direct investment and economic growth among the 10 ASEAN member countries from 1995 to 2013. Panel unit root tests, a spatial panel vector autoregressive model, and spatial Granger causality are employed as empirical techniques for spatial panel estimation. The empirical results reveal that the PRC’s direct investment in ASEAN caused economic growth in ASEAN, and economic growth in ASEAN resulted in the PRC’s direct investment in ASEAN. This finding raises potentially interesting external investment policy implications.
    Keywords: foreign direct investment; direct investment; investment; the People’s Republic of China; Association of Southeast Asian Nations; economic growth
    JEL: C33 F23 O47
    Date: 2016–11–01
  6. By: Anne Booth (Department of Economics, SOAS, University of London, UK)
    Abstract: This paper examines the debates which have arisen in the ten countries of ASEAN about the impact of growing trade and investment ties with China, both before and after the full implementation of the ASEAN-China Free Trade Agreement in 2010. It examines the changes which have taken place in the country composition of trade and investment flows within the ASEAN countries, and between the ASEAN countries, China, and the rest of the world. The evidence indicates that while merchandise trade values have increased between China and ASEAN since 2010, the increase has not been as rapid as some predicted. But China is now running a substantial trade surplus with the ASEAN countries; the value of exports from China to ASEAN exceed the value of imports to China from the ASEAN countries. This surplus could lead to frictions in the future. Investment flows from China to ASEAN are still small in relation to flows into ASEAN from the rest of the world.
    Keywords: ASEAN, China, Trade, Investment, Migration
    JEL: F55
    Date: 2016–10
  7. By: Paolo Abarcar
    Abstract: What is the value of return migrants and the foreign experience they bring to domestic employers? This paper describes an experiment conducted in the Philippines, in which over 8,000 fictitious resumes were randomly assigned varying lengths of foreign work experience and were sent to online job ads.
    Keywords: return migration, foreign work experience, international migrants, resume-audit study, employers, location-specific human capital
    JEL: F Z J
  8. By: Chakraborty, Debashis; Sahu, Manoj
    Abstract: Since the initiation of economic reforms in 1991, India adopted an outward-oriented strategy for development. After inception of World Trade Organization (WTO) in 1995, the country initially relied on multilateral trade reforms for export growth, but slow progress of the Doha Round negotiations over the last decade caused it to explore the regional trade agreements (RTAs) route as well from 2003-04 onwards. While in the initial period India focused on deeper trade relationship with Asian partners, namely, Association of Southeast Asian Nations (ASEAN), Japan, South Korea etc. as preferential trade allies, the perceived need to diversify the export markets has led the country to focus on potential trade partners in Africa, Europe, North and Latin America as well in recent times. On the other hand, the economies of East Africa are also embracing the RTA route for their trade promotion and the growing Indian market offers an opportunity for them as well. The present analysis attempts to understand the trade potential between the five East African Community (EAC) countries and India in the sphere of merchandise and services trade by looking through various trade indices. The empirical results indicate that bilateral trade between the two regions have a strong potential, which can be aided further through policy reforms at both ends.
    Keywords: Trade Policy, International Trade Organizations, Economic Integration, India, East Africa
    JEL: F15 F19
    Date: 2016–10–29
  9. By: Alonso de Gortari (Harvard University); Pol Antras (Harvard University)
    Abstract: This paper studies the optimal location of production for the different stages in a sequential global value chain. We develop a general-equilibrium model featuring a proximity-concentration tradeoff: slicing global value chains across countries allows to better exploit agglomeration economies, but such fragmentation comes at the cost of increased transportation costs. We show that, other things equal, it is optimal to locate relatively downstream stages of production in relatively central or well-connected locations, while upstream stages of production are optimally assigned to more remote locations. We illustrate this result by working out the optimal location of production for a few basic topologies featuring a low number of countries and stages. Exact solutions to the problem for a larger number of countries and stages are computationally complex, but can be obtained using combinatorial optimization tools. We apply the model to study the optimal specialization within chains in eleven countries in Factory Asia.
    Date: 2016
  10. By: Baier, Scott (Clemson University); Yotov, Yoto (Drexel University); Zylkin, Thomas (National University of Singapore)
    Abstract: We develop a novel two-stage methodology that allows us to study the empirical determinants of the ex post effects of past free trade agreements (FTAs) as well as obtain ex ante predictions for the effects of future FTAs. We first identify 908 unique estimates of the effects of FTAs on different trading pairs for the years 1986-2006. We then employ these estimates as our dependent variable in a “second stage” characterizing the heterogeneity in these effects. Interestingly, most of this heterogeneity (~ 2/3) occurs within FTAs (rather than across different FTAs), with asymmetric effects within pairs (on exports vs imports) also playing a important role. We offer several intuitive explanations for these variations. Even with the same agreement, FTA effects are weaker for more distant pairs and for pairs with otherwise high levels of ex ante trade frictions. The effects of new FTAs are similarly weaker for pairs with existing agreements already in place. In addition, we are able to relate asymmetries in FTA effects to each country’s ability to influence the other’s terms of trade. Out-of-sample predictions incorporating these insights enable us to predict direction-specific effects of future FTAs between any pair of countries. A simulation of the general equilibrium effects of TTIP demonstrates the importance of our methods.
    Keywords: Free Trade Agreements; International Trade; Gravity
    JEL: F13 F14 F16
    Date: 2016–10–28

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