nep-sea New Economics Papers
on South East Asia
Issue of 2016‒11‒27
eighteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. When China Sneezes Does ASEAN Catch a Cold? By Sohrab Rafiq
  2. Foreign Direct Investment and Value Added in Indonesia By Sjöholm, Fredrik
  3. Sociodemographic factors and expenditure issues in Vietnamese consideration of periodic general health examination By Quan-Hoang Vuong; Quang-Hoi Vu
  4. Asian Giants' Fossil Fuel Dependence and the Challenge of Low Carbon Growth: Contrasting Performance of Clean Energy Development, Trade and Investment By Jain, Varinder
  5. Weather Events and Welfare in the Philippine Households By Dacuycuy, Connie B.
  6. Performance and Inequality in Health: A Comparison of Child and Maternal Health across Asia By Bénédicte H. Apouey; Jacques Silber
  7. Public debt sustainability and economic growth in Malaysia: Threshold and causality analysis By Qaiser Munir; Sook Ching Kok; Winnie Abdulnasir
  8. Can Insurance Mitigate Household Businesses’ Vulnerability to Health Shocks? By Axel Demenet
  9. The Sale of Goods Act 1893 (UK) stands tall in Hong Kong, India and Malaysia By Abdul Majid; Sri Yogamalar; Sandra Ho; Shanthy Rachagan
  10. Pakistan's productivity performance and TFP trends 1980-2015: Cause for real concern By Amjad, Rashid; Awais, Namra
  12. Health Shocks and Permanent Income Loss: the Household Business Channel By Axel Demenet
  13. Israel's Open-Secret Trade By Lorenzo Rotunno; Pierre-Louis Vézina
  14. Slack-based directional distance function in the presence of bad outputs: Theory and Application to Vietnamese Banking By Manh D. Pham; Valentin Zelenyuk
  15. Theorizing the Meaning(s) of ‘Expatriate’: Establishing Boundary Conditions By Yvonne McNulty; Chris Brewster; ;
  16. Corporate Leverage, Firm Characteristics and Financial Crisis By Jang-Shee Barry Lin
  17. STONEWORKING HEALTH RISKS: SILICA AND TOTAL DUST By Devina Kemmy; Audrey Adhisty; Yashinta Astia Junia Putri; Hikmah Dyah Permata Sari; Miski Irfani
  18. TOLLS VERSUS MOBILITY PERMITS: A COMPARATIVE ANALYSIS By André De Palma; Stef Proost; Ravi Seshadri; Moshe Ben-Akiva

  1. By: Sohrab Rafiq
    Abstract: This paper looks at the effects of a China slowdown on Emerging Market Economies (Indonesia, Malaysia, and Thailand) and Frontier Developing Economies (Cambodia, Lao P.D.R., and Vietnam) in ASEAN. The main finding is that the impact of China growth shocks on ASEAN has risen since the global financial crisis. A one percent decline in China’s growth implies a 0.3 percent reduction in growth for ASEAN EMEs and 0.2 for FDEs. An important component of inflation is also shared between ASEAN and China. These magnitudes are double what they were two decades ago due to stronger trade and financial linkages. Finally, a slowdown in China, while having real effects, also has a financial impact via slower credit growth and lower equity prices. This is in line with the existence of both portfolio balance and signaling channels, in which ASEAN market participants absorb news on China economic activity as an indicator over domestic growth prospects.
    Date: 2016–11–10
  2. By: Sjöholm, Fredrik (Department of Economics, Lund University)
    Abstract: Foreign Direct Investment (FDI) has increased in importance over the last decades, globally as well as in Indonesia. We examine how such inflows of FDI affects value added in Indonesia. The effect is positive: foreign firms generate relatively high levels of value added and they also seem to have a positive impact on value added in local firms. Moreover, FDI contribute to a structural change of the economy towards more high-value added activities. High value added could lead to increased investments and higher tax revenues for the government. High value added could also benefit labor through higher wages, an effect that is empirically confirmed in Indonesia.
    Keywords: Foreign Direct Investment; Multinational Firms; Value Added; Industrial Development
    JEL: F23 F61 F63
    Date: 2016–11–18
  3. By: Quan-Hoang Vuong; Quang-Hoi Vu
    Abstract: Medical expenditure is perceived as a major obstacle for people wanting to access healthcare services in general, and in particular periodic general health examinations (GHE). However, the extant literature concerning expenditure on periodic health examinations in Vietnam is rather scarce and lacking in specific figures. Therefore, this article aims to examine the price people are willing to pay to take GHE periodically. From analyzing a dataset of 2,068 subjects collected from Hanoi and its vicinities, our study confirms that demographic factors (gender, job status, marital status) and socioeconomic factors (health insurance, low belief in healthcare quality and perceptions on public’s health status) have significant effects on GHE fees. The probability of people accepting to spend a larger sum (>VND2mn) for periodic GHE is relatively low (
    Keywords: Medical expenditure; general health examination; public perception; Vietnam
    JEL: I12 I18 P20
    Date: 2016–11–21
  4. By: Jain, Varinder
    Abstract: With sluggish growth in alternate technologies, economic growth across the world has remained largely fuelled by hydro-carbons whose burning has contributed to the menace of global warming. In such a situation, this study focusing on the economies of China, India and Japan – the three Asian Giants, aims at not only ascertaining their fossil fuel dependence but it also addresses its environmental implications. Moreover, it contrasts their attainments in clean energy development. An analysis of trade in climate smart technologies reflects the nature of mutual cooperation among these giants. Similarly, an analysis of recent trends in investment financing corroborates their pursuit of low carbon growth agenda which is a major cause of concern in most of the international climate change negotiations.
    Keywords: Fossil Fuels, Oil, Coal, Natural Gas, Clean Energy, Solar Energy, Wind Energy, Renewable Energy Investment, Climate Smart Technologies Trade, Asian Giants, India, China, Japan
    JEL: F15 Q20 Q41 Q42
    Date: 2016–11–17
  5. By: Dacuycuy, Connie B.
    Abstract: Using fixed effects estimators to remove unobserved heterogeneity and instrumental variable technique to address the endogeneity of income, this paper analyzes the effect of weather events on welfare in the Philippines. It finds that, one, treating income as an exogenous variable underestimates the effect of income on the household's resource allocation. Two, there are more expenditure shares for which income is endogenous using the tropical cyclone data than using the heat index deviation data as instruments. Three, households choose cheaper foods but just as nutritious when they are frequently hit by tropical cyclones. Four, the presence of children affects most of the food items, and it has the biggest effect on non-alcoholic beverages, such as juice and coffee, while the presence of the elderly affects only a few expenditure items, such as education and medical care. Based on the results, specific recommendations are forwarded. In broader terms, the study points to the desirability of greater forms of investment in resilience against weather events and climate change. At the household level, poverty is a binding constraint to good investment in resilience against weather events and the government has to continue its efforts toward poverty reduction. To this end, the government should ensure that the Department of Social Welfare and Development internal and external convergence strategy is successfully implemented.
    Keywords: Philippines, weather events, welfare, fixed effects, Department of Social Welfare and Development
    Date: 2016
  6. By: Bénédicte H. Apouey (PSE - Paris-Jourdan Sciences Economiques - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - École des Ponts ParisTech (ENPC) - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics); Jacques Silber (Bar-Ilan University [Israël])
    Abstract: A country’s performance in health attainment refers to both its achievement (level) and its improvement (evolution) in the health domain. Studies on performance generally measure health attainment using the average health level of the population, and quantify health improvement employing the change in attainment over time. However this approach is flawed because the change in attainment does not satisfy good properties, on the one hand, and because health attainment should not only account for the average health level, but also for disparities in health in the population, on the other hand. We propose a solution to the first limitation by following the lead of Kakwani (1993), who uses achievement and improvement measures which are based on attainment measures and which satisfy important properties. For the second limitation, we extend the work of Kakwani and propose new definitions of attainment that account for the average health level but also for health inequalities in the population. Specifically, we focus on overall and social health inequalities and on the health of the poor. By including these new attainment variables into Kakwani’s indices, we generate new classes of achievement and improvement indices. Using data on 11 low and middle-income Asian countries in the twenty-first century, we highlight that child and maternal health have generally improved in recent decades, due to both an increase in the average health level and a decrease in inequalities.
    Keywords: achievement indices,improvement indices,health inequalities,Asia,child health,maternal health
    Date: 2016–09
  7. By: Qaiser Munir (Faculty of Business, Economics and Accountancy, Universiti Malaysia Sabah); Sook Ching Kok (Faculty of Business, Economics and Accountancy, Universiti Malaysia Sabah); Winnie Abdulnasir (Faculty of Business, Economics and Accountancy, Universiti Malaysia Sabah)
    Abstract: The 2008 financial crisis has led to an unprecedented increase in public debt across the world, raising serious concerns about its economic impact. This paper investigates the impact of public debt on long-run GDP growth in Malaysia from the year 1970 to 2013. We employ novel methods and diagnostics from the time-series literature, such as threshold regression approach suggested by Hansen (2000), causality test and cointegration test. The empirical results suggest an inverse relationship between debt and GDP growth, controlling for other determinants of growth. Further, our results suggest that there is strong evidence of causality from growth to public debt. In addition, threshold effect and nonlinearity between debt-growth is examined. We found a non-linear impact of public debt on GDP growth with a turning point—beyond which the public debt-to-GDP ratio has a deleterious impact on long-term growth—at about 50-60% of GDP.
    Keywords: Public debt; Economic growth; fiscal policy; Threshold analysis; Causality
    JEL: H63 O40 C50
  8. By: Axel Demenet (DIAL, UMR 225, IRD, Paris, France, PSL Research University, Université Paris-Dauphine, LEDa, Paris, France)
    Abstract: Household Businesses (HB) are vulnerable to health shocks affecting all members of the household to which they belong. The monetary costs of these shocks affect HB revenue and investment. Health insurance, by offering financial protection against catastrophic health expenditures and increasing health care utilisation, should mitigate this specific vulnerability. A 2005 reform giving free health insurance to children under 6 in Vietnam introduced a discontinuity in the coverage of children, and lets evaluating the influence of insurance in this regard. The change allows comparing otherwise similar household businesses that differ only by the proportion of insured children in the household. The results show that health insurance did not decrease health expenditures, and neither increased the number of days during which the HB operated. The potential of health insurance to mitigate the effect of health shocks on informal microenterprises is conditional on the actual level of financial protection offered –which was low in this context. I nevertheless evidence a potential peace of mind effect: health insurance can stimulate investment, at least temporarily, even while no actual mitigating effect exists.
    Keywords: informal sector, microenterprises, household business, health insurance
    JEL: O17 I13 I15
    Date: 2016–10
  9. By: Abdul Majid (Monash University Malaysia); Sri Yogamalar (Monash University Malaysia); Sandra Ho (The Hong Kong Polytechnic University); Shanthy Rachagan (Monash University Malaysia)
    Abstract: When UK’s Sale of Goods Act 1893 (“the UK Act†) was passed, the United Kingdom was a flourishing colonial power having dominion over, inter alia, Hong Kong, India and Malaysia. This explains the adoption, with minor modifications, of the UK Act in Hong Kong (as the Sale of Goods Ordinance 1896 (“SOGO†)), in India (as the Sale of Goods Act, 1930 (“the Indian Act†)) and in Malaysia (as the Sale of Goods Enactment 1932 (No. 1 of 1932) (“the Enactment†)). The Indian Act was mainly based on the provisions of the UK Act, modified in the light of subsequent judicial decisions in England and India. Thereafter, the Indian Act has neither been subjected to major review nor amended to incorporate changes in its UK counterparts. While Hong Kong was a British colony (until 1 July 1997), all changes in the UK sale of goods legislation were ultimately incorporated into SOGO. From 1896-1997, SOGO was amended 12 times to keep pace with changes in the UK Act. In Britain, the Act was repealed and replaced by the Sale of Goods Act 1979 (“the 1979 Act†). Hong Kong, however, did not follow suit but retained SOGO and amended it to follow the 1979 Act. Malaya gained independence from the British in 1957 and became the Federation of Malaysia in 1963. The Enactment has since been re-intituled twice. First, it was retitled, Sale of Goods (Malay States) Ordinance 1957 (No. 1 of 1957) and in 1989, it became the Sale of Goods Act 1957 (“SOGA†). Save for its re-intitulement, there has been no amendment of any significance. Malaysia has seen fit not to be guided by local judicial pronouncements or developments in the law of the sale of goods in other common law jurisdictions. SOGA remains, as a result, an ossified version of the UK Act.
    Keywords: Sale of goods, legislative history, United Kingdom, Hong Kong, India, Malaysia
    JEL: K39
  10. By: Amjad, Rashid; Awais, Namra
    Abstract: This paper reviews Pakistan’s productivity performance over the last 35 years (1980–2015) and identifies factors that help explain the declining trend in labor productivity and total factor productivity (TFP),both of which could have served as major drivers of productivity growth – as happened in East Asia and more recently in India. A key finding is that the maximum TFP gains and their contribution to economic growth are realized during periods of high-output growth. The lack of sustained growth and low and declining levels of investment appear to be the most important causes of the low contribution of TFP to productivity growth, which has now reached levels that should be of major concern to policymakers vis-à-vis Pakistan’s growth prospects. Using the endogenous growth model, we examine the contribution of physical capital, human capital and TFP to labor productivity. The results suggest that, over these35 years, the contribution of physical capital and education remains modest and there has been a declining trend in TFP growth. This shows that Pakistan’s economy has not taken full advantage of the favorable technological developments and rapid globalization of the period. We also question the view expressed in recent studies that Pakistan’s growth has been driven primarily by factor inputs, namely labor and capital, and not by TFP growth. The paper argues to the contrary that it is the lack of investment in and growth of the stock of capital embodying the most recent knowledge and technology that has inhibited TFP growth post-1990. Finally, there is an urgent need for further research to understand the dynamics of growth in services and to raise TFP in this sector as India has done post-1990.
    Keywords: Growth, labour, capital, labour productivity, total factor productivity, Pakistan.
    JEL: D24 E01 O47
    Date: 2016–09
  11. By: Kamolchanok Khaengmak; Somsak Priebprom Author-Email : - (Department of Agricultural and Resource Economics,Faculty of Economics,Kasetsart University,Thailand)
    Abstract: This study aimed to do a financial comparative analysis between para rubber farming and oil palm farming in Tambon Tha Uthae, Amphoe Kanchanadit, Changwat Surat Thani. The study was based on a total sample size of 60 small farm households composing of 30 holders of para rubber farms and 30 holders of oil palm farms. An average size of 11 rai farm was chosen for financial analysis and comparison at a given discount rate of 2.25% per annum covering 25 years of the investment period with the 3 financially feasible measures, namely NPV (net present value), BCR (benefit-cost ratio) and IRR (internal rate of return). The analytical results indicated that both para rubber and oil palm farming investment were commercially worthwhile as their NPV, BCR and IRR were positive, greater than 1, and greater than the opportunity cost of capital, respectively. When comparing returns between para rubber farming and oil palm farming, the net benefit or NPV of oil palm farming was over the para rubber farming. This research concluded that in order to change the para rubber farming, oil palm farming is one of the feasible alternatives that can replace it. However, if the price of oil palm dropped below 3.24 baht per kilogram, oil palm farming investment was not worth the investment
    Keywords: Financial Analysis, Para Rubber and Oil Palm Farming
    JEL: D61
    Date: 2016–11
  12. By: Axel Demenet (DIAL, UMR 225, IRD, Paris, France, PSL Research University, Université Paris-Dauphine, LEDa, Paris, France)
    Abstract: This study uses an original Vietnamese panel data to provide strong evidence that microenterprises are vulnerable to health shocks affecting their operators and/or other household members. Although intra-household labour reallocation mitigates the direct labour supply decrease, large out-of- pocket health expenditures have the potential of crowding out business-related expenditure, and to significantly decrease investment. The costs associated with illness thus affect directly the household businesses that generate income for countless individuals around the developing world. These results have important implications, among which the underestimation of the positive externalities of health insurance schemes.
    JEL: I15 E26 O17
    Date: 2016–10
  13. By: Lorenzo Rotunno (Aix-Marseille University (Aix-Marseille School of Economics), CNRS, & EHESS); Pierre-Louis Vézina (King’s College London)
    Abstract: This paper uncovers and quantifies Israel’s exports to countries that ban trade with Israel. Israel exported a total of $6.4 billion worth of merchandise to boycott countries between 1962 and 2012, and most of this trade is illicit, i.e. not recorded by the importers. We find that electronic exports to Malaysia account for the lion’s share of this trade but it also includes a wide array of products from footwear to fruit and vegetables. Our estimates suggest Israel’s exports to these countries would be 10 times larger without the boycott. On top of providing further evidence on the unintended consequences of unilateral trade bans, this paper provides a case study on the role of politics in international trade.
    Keywords: trade policy, Israel, illegal trade
    JEL: F13 O17
    Date: 2016–10
  14. By: Manh D. Pham (School of Economics, The University of Queensland); Valentin Zelenyuk (Centre for Efficiency and Productivity Analysis, The University of Queensland)
    Abstract: In this paper we extend the slack-based directional distance function introduced by F ̈are and Grosskopf (2010) to measure efficiency in the presence of bad outputs and illustrate it through an application on data of Vietnamese commercial banks. We also compare results from the slack-based directional distance function relative to the directional distance function, the enhanced hyperbolic efficiency measure (F ̈are et al., 1989) and the Farrell-type technical efficiency and confirm that it has greater discriminative power.
    Keywords: Banking, Bad outputs, Data Envelopment Analysis, Directional distance function, Slack-based efficiency, Performance analysis
    JEL: C14 C15 C44 D24 G21
    Date: 2016–11
  15. By: Yvonne McNulty (SIM University, Singapore); Chris Brewster (Henley Business School, University of Reading, UK); ;
    Abstract: This paper examines the concept of expatriates, arguing that sloppy use of the term in the past has led to problems of inconsistent research, incompatible findings and a lack of clarity in the field. The increasing interest over the last dozen years or so in other forms of international experience, often equally poorly conceptualised, has compounded the problem. We argue for the need for greater construct clarity in studies of expatriates and, by extension, of other forms of international experience. Specifically we attempt to clarify to whom does the term ‘expatriate’, and specifically ‘business expatriate’, apply and the boundary conditions under which expatriate employment is enacted.
    Keywords: expatriates, expatriate definition, boundary conditions for expatriation, business expatriates,migrants, sojourners
    Date: 2016–11
  16. By: Jang-Shee Barry Lin (Khalifa University of Science, Technology and Research)
    Abstract: This paper investigates the leverage decision of Japanese firms in their corporate leverage choice by analyzing the multi-directional causal relationship among firm characteristics such as firm size, profitability, tangibility (ratio of fixed to total assets), and growth opportunity (as measured by market-to-book ratio) on firms’ choice of leverage. Using corporate finance data for a large sample of Japanese firms (25,698 firm-years) between 1980 and 2000, this paper finds a highly significant and positive size effect. Tangibility positively affects total debt, but Profitability negatively affects total debt. Market valuation also positively affects total debt. Finally, profitability is positively affected by operating cash flow, growth in sales, and change in earnings. The model is applied to sub-samples before and after the Asian financial crisis and results remain broadly similar before and after the financial crisis. Our findings support the hypothesis that the firm leverage choice is driven by firm characteristics.
    Keywords: Leverage, Profitability, Size effect, Market to book
    JEL: A10
  17. By: Devina Kemmy (Universitas Indonesia); Audrey Adhisty (Universitas Indonesia); Yashinta Astia Junia Putri (Universitas Indonesia); Hikmah Dyah Permata Sari (Universitas Indonesia); Miski Irfani (Universitas Indonesia)
    Abstract: The popularity of colored gemstone is skyrocketing. The grinding process produces dust and silica that will expose the workers. Thus, will impair the workers’ health particularly in their respiratory system. NIOSH Manual of Analytical Methods 0500 and NIOSH Manual of Analytical Methods 7602 are used for total dust and silica. There were two workers that were being sampled with personal sampling method – one for total dust and one for silica. The results of this sampling are 2.22 mg/m3 and 0.4981 mg/m3 for total dust and silica. Both of the results are below OSHA PEL, but exceeding ACGIH TLV for silica.
    Keywords: total dust, silica, gemstone workers
    JEL: I19
  18. By: André De Palma (CES, ENS Cachan, CNRS, Universite Paris-Saclay, 94235 Cachan, France); Stef Proost (Department of Economics, KU Leuven); Ravi Seshadri (Singapore-MIT Alliance for Research and Technology (SMART) Centre); Moshe Ben-Akiva (MIT - Massachusetts Institute of technology [Cambridge])
    Abstract: To address traffic congestion, two categories of instruments are used: price regulation (for instance, road pricing or congestion tolling) and quantity regulation (credit-based mobility schemes). Although the comparison of price and quantity regulation has received significant attention in the economics community, the literature is relatively sparse in the context of transportation systems. This paper develops a methodology to compare the toll and mobility permit instruments using a simple transportation network consisting of parallel highway routes and a public transport alternative. The permits can be traded across roads. The demand for each route is determined by a mixed logit route choice model and the supply consists of static congestion. The comparison is based on the optimum social welfare which is computed for each instrument by solving a non-convex optimization problem involving the mixed logit equilibrium constraints. Equity considerations are also examined. Numerical experiments conducted across a wide range of demand/supply inputs indicate that the toll and mobility permit instruments perform very closely in efficiency terms. The permit system is on average more efficient, but only by a small margin.
    Keywords: Social Welfare, Mixed Logit,Tolls, Mobility Permits, Equity, Stochastic Demand
    Date: 2016–11–16

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