nep-sea New Economics Papers
on South East Asia
Issue of 2017‒01‒08
fifteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Decarbonization Pathways in Southeast Asia: New Results for Indonesia, Malaysia, Philippines, Thailand and Viet Nam By Bosello, Francesco; Orecchia, Carlo; Raitzer, David A.
  2. Business networks, social capital and the productivity of creative industries in Indonesia By Fikri Zul Fahmi
  3. The Cost of Climate Stabilization in Southeast Asia, a Joint Assessment with Dynamic Optimization and CGE Models By Bosello, Francesco; Marangoni, Giacomo; Orecchia, Carlo; Raitzer, David A.; Tavoni, Massimo
  4. The Dynamics of Public Opinion towards Inequality in Malaysia By Sharon G. M. Goh; Grace H.Y. Lee; Eduard Bomhoff
  5. Quasi-Experimental Evidence on the Political Impacts of Education in Vietnam By Dang, Thang
  6. Identifying the Effects of Monetary Policy Shock on Output and Prices in Thailand By Jiranyakul, Komain
  7. Interprovincial efficiency differentials in Indonesia?s pre-and post-crisis economy By Mitsuhiko Kataoka
  8. Implications de la mise en œuvre de l’Accord sur la facilitation des échanges de l’OMC pour le Vietnam By Nguyen, Ngoc Ha
  9. Foreign direct investment and environmental degradation: Further evidence from Brazil and Singapore. By Kostakis, Ioannis; Lolos, Sarantis; Sardianou, Eleni
  10. Some are more equal than others: new estimates of global and regional inequality By Zsolt Darvas
  11. To Work for Yourself, for Others, or Not At All? How Disability Benefits Affect the Employment Decisions of Older Veterans By Courtney Coile; Mark Duggan; Audrey Guo
  12. Le rôle des pays émergents dans la gouvernance économique mondiale By Sophie Wintgens; Arnaud Zacharie
  13. Economic Valuation of Sand and Gravel in Davao del Norte, Philippines By Tamayo, Adrian; Tagalo, Romulo
  14. Portfolio Choice and Its Predictions on Japanese Municipalities in the 2040s By Yoshihiro Tamai; Chihiro Shimizu; Kiyohiko G. Nishimura
  15. Firm Dynamics, Misallocation and Targeted Policies By In Hwan Jo; Tatsuro Senga

  1. By: Bosello, Francesco; Orecchia, Carlo; Raitzer, David A.
    Abstract: Southeast Asia is one of the most vulnerable regions of the world to the impacts of climate change. At the same time, the region is also following a trajectory that could make it a major contributor to greenhouse gas emissions in the future. Understanding the economic implications of policy options for low carbon growth is essential to formulate instruments that achieve the greatest emissions reductions at lowest cost. This study focuses on five developing countries of Southeast Asia that collectively account for 90% of regional emissions in recent years—Indonesia, Malaysia, the Philippines, Thailand, and Viet Nam. The analyses are based on the CGE economy-energy-environment model ICES under an array of scenarios reflecting business as usual, fragmented climate policies, an approximately 2.4°C post 2020 global climate stabilization target, termed 650 parts per million (ppm) carbon dioxide (CO2) equivalent (eq), and an approximately 2°C global target (termed 500 ppm CO2 eq). Averted deforestation through reducing emissions from forest degradation and deforestation (REDD) is included in some scenarios. The study shows that global and coordinated action is found to be critical to the cost effectiveness of emissions stabilization policies. A 650ppm stabilization scenario (below 3°C in 2100) has a similar cost to the region to current fragmented targets, but achieves much higher levels of emissions reductions. However, only some of the countries have short-term emissions targets that are consistent with a stabilization scenario at 650ppm: these are Indonesia, Philippines and Viet Nam. None of the countries’ mid-term targets are coherent with more ambitious stabilization scenario at 500ppm.
    Keywords: Climate Change Mitigation, Asian Economies, Computable General Equilibrium Models, Environmental Economics and Policy, Q54, Q58, C68,
    Date: 2016–12–15
  2. By: Fikri Zul Fahmi
    Abstract: This study examines the role of social and professional networks in the productivity of creative firms in Indonesia. In so doing, mixed methods are employed, including multilevel modelling as well as qualitative analysis, which is also performed to elaborate further on the process in which networking affects productivity. The Indonesian government promotes traditional businesses as creative industries, but they actually have different characteristics and networks. Therefore, in this paper creative and traditional cultural industries are differentiated. The results of multilevel analysis show that social capital is associated differently with the productivity of both types of industries. Creative industries appear to benefit from friendship, which facilitates their networking and creative processes. Meanwhile, friendship is negatively associated with the productivity of traditional cultural industries. This conclusion is affirmed by the qualitative analysis, which demonstrates that the relationship between friendship and productivity is rather complex. On the one hand, friendship helps firms find and develop their networked consumers. On the other hand, such strong ties between firm owners often lead to social events and gathering and thus, eliminate competition. Further to this, enhancing the productivity of these industries is better done not by forming associations which may only strengthen their bonding ties. Rather, providing common spaces that can facilitate cross-fertilization of ideas in a serendipitous and inclusive climate would be more effective.
    Keywords: creative industries; business networks; social capital; Indonesia
    JEL: D22 R11 L25 L26
    Date: 2016–12
  3. By: Bosello, Francesco; Marangoni, Giacomo; Orecchia, Carlo; Raitzer, David A.; Tavoni, Massimo
    Abstract: Southeast Asia is at a time one of the most vulnerable region to the impacts of a changing climate, with millions of its inhabitants still trapped in extreme poverty without access to energy and employed in climate-sensitive sectors, and, potentially, one of the world’s biggest contributors to global warming in the future. Fortunately, major Southeast Asian countries are also implementing policies to improve their energy and carbon efficiency and are discussing if and how to extend these further. The present study aims to assess the implications for energy consumption, energy intensity and carbon intensity in the Southeast Asia region of a set of short-term and long-term de-carbonization policies characterized by different degrees of ambition and international cooperation. The analysis applies two energy-climate-economic models. The first, the fully dynamic Integrated Assessment model WITCH, is more aggregated in the sectoral and country representation, but provides a detailed technological description of the energy sector. The second, the ICES Computable General Equilibrium model, offers a richer sectoral breakdown of the economy and of international trade patterns, but is less refined in the representation of technology. The joint application of these two complementary models allows the capture of distinct and key aspects of low- carbon development paths in Southeast Asia.
    Keywords: Climate Change Mitigation, Asian Economies, Computable General Equilibrium Models, Environmental Economics and Policy, Q54, Q58, C68,
    Date: 2016–12–23
  4. By: Sharon G. M. Goh; Grace H.Y. Lee; Eduard Bomhoff
    Abstract: Globally income inequality is on the rise. With growing income inequality, market outcomes are no longer Pareto efficient as it is benefiting only a small group of individuals. Working with the World Values Survey data, this paper aims to provide an additional perspective on income inequality in Malaysia. We find evidence that individuals’ underlying beliefs, ideologies and education level are important determinants of their attitudes toward income distribution. In addition, the paper concludes that individuals’ preference for income distribution is significantly shaped by the experiences and economic condition in their local communities. States that are poorer and more ethnically diverse prefer more equal income.
    Keywords: The New Economic Policy, income inequality, beliefs, preferences, redistribution, World Values Survey
    Date: 2016–01
  5. By: Dang, Thang
    Abstract: In this study, I estimate the causal effects of education on political outcomes in Vietnam using data from Vietnam’s World Values Survey. To address the potential endogeneity problem of education, I employs the 1991 compulsory schooling reform in Vietnam to instrument for exogenous changes in schooling years with a regression discontinuity design. I find that in general education does cause favorable impacts on political outcomes in Vietnam using the whole sample. In particular, one more year of schooling results in increases in the probabilities of political concern and political participation by about 6–12% points and 6–8% points, respectively. However, I strikingly find that for those whose at least lower secondary degree, more schooling years they achieve less political concern they have.
    Keywords: education, political outcomes, regression discontinuity, Vietnam
    JEL: D72 I25
    Date: 2017–01–01
  6. By: Jiranyakul, Komain
    Abstract: This paper attempts to identify the effects of monetary policy shock on output and price level in Thailand during 2005Q1 and 2016Q2. Recently available policy rate is used as a monetary policy variable. The structural VAR methodology is employed to identify the monetary policy shock. To enhance the precision of the model specification, the short-run restrictions are imposed on the specified structural model of cointegrated variables to allow the levels of variables to interact simultaneously with each other. The results from the analysis of the structural model reveal that a shock to monetary policy drives cycles for both real GDP and the inflation rate.
    Keywords: Monetary policy shock, structural VAR, impulse response
    JEL: C32 E5 E52
    Date: 2016–12
  7. By: Mitsuhiko Kataoka
    Abstract: Indonesia is beset by uneven regional resource endowment and interregional income inequalities. Kataoka (2011) concluded that these are largely determined by the labor productivity differential, using the Duro and Esteban (1998) inequality decomposition approach. We empirically explored the extent to which interprovincial differentials in efficiency explain Indonesia?s pre- and post-crisis income inequalities, by employing Cheng and Li?s (2006) approach. They proposed the interpretive additive inequality decomposition of Theil?s second measure by causal factors and showed that interregional income inequality consists strictly of Theil?s second measure of productivity as well as of labor participation rates and their interaction terms. Their method improves Duro and Esteban?s (1998) inequality decomposition in which terms can take positive or negative values, although a strict Theil index maintains a non-negative value for its property. Moreover, negative decomposition values are hardly interpretive, contributing to overall inequality. To incorporate efficiency factors, we estimated the production frontier and efficiency score of each observation point, using the data envelopment analysis of Coelli et al. (1998). We adopted the piecewise-linear frontier exhibiting variable returns to scale. Efficiency is gauged by standard Farrell output-oriented measures. Our DEA model employs multiple inputs (capital and labor) and a single output to estimate two provincial output values: those without technical inefficiency, assuming variable returns to scale (denoted as ye) and those without scale inefficiency, assuming constant returns to scale (denoted as ys). Using other variables of labor (denoted as l) and actual output (denoted as ya), labor productivity (denoted as ya/L) can be expressed with three multiplicative components: pure labor productivity (denoted as ye/L), pure technical efficiency (denoted as ya/ys), and scale efficiency (denoted as ys/ye). Applying Cheng and Li?s (2006) inequality decomposition, interprovincial productivity differentials show the sum of the corresponding Theil second measure components and their interactions. We used annual observations of 26 contiguous provincial output and input factors from 1993 to 2010, sourced from Kataoka?s (2013) dataset. Taking into account of the effects of natural resource endowment on the corresponding provinces' economies, two different output values were employed: aggregate GDP and GDP without the oil and gas sector. We found that the impact of technical inefficiency on interprovincial productivity differentials has a declining trend for the observation periods. Cheng, Y.-S. and S.-K. Li., 2006. ?Income inequality and efficiency: A decomposition approach and applications to China?, Economics Letters 91 (1): 8?14. Coelli, Tim, Rao, D.S. Prasada, Battese, George E., 1998. An Introduction to Efficiency and Productivity Analysis. Kluwer Academic Publishers, Boston. Duro, Juan Antonio, Esteban, Joan, 1998. Factor decomposition of cross-country income inequality, 1960?1990. Economics Letters 60: 269?275. Kataoka, M., 2013. Capital stock estimates by province and interprovincial distribution in Indonesia, Asian Economic Journal, 27(4): 411-430.
    Keywords: Data Envelopment Analysis; Income inequality; Decomposition
    JEL: R11 R12 R58
    Date: 2016–12
  8. By: Nguyen, Ngoc Ha
    Abstract: SECO Working Paper 20/2016 by Ngoc Ha Nguyen
    Date: 2017–01–03
  9. By: Kostakis, Ioannis; Lolos, Sarantis; Sardianou, Eleni
    Abstract: This paper assesses empirically the role of foreign direct investment (FDI) inflows on environmental quality, measured by CO2 emissions. The cases of Brazil and Singapore are taken as examples for our empirical investigation, on the grounds of their specific similarities and differences. The empirical analysis is carried out in a multivariate setting, using a variety of models (ARDL, FMOLS, OLS) for the early 1970s to 2010. The results indicate that FDI inflows have lead to environmental degradation in Brazil but not in Singapore. Our findings point to the importance of the sectoral composition of FDI as a determinant of its impact on environmental quality. The analysis is supplemented with an environmental Kuznets curve (EKC), our results showing that the EKC hypothesis holds for the case of Singapore but its validity is marginal in Brazil.
    Keywords: foreign direct investment; environmental degradation; kuznets curve
    JEL: Q43 Q56
    Date: 2016–12–19
  10. By: Zsolt Darvas (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and Corvinus University Budapest and Bruegel)
    Abstract: * We compare four methodologies to estimate the global distribution of income and find that many methods work well, but the method based on two-parameter distributions is more accurate than other methods. This method is simpler, easier to implement and relies on a more internationally-comparable dataset of national income distributions than other approaches used in the literature to calculate the global distribution of income. We suggest a simulation-based technique to estimate the standard error of the global Gini coefficient. * Global income inequality among the citizens of 128 countries gradually declined in 1989-2013, largely due to convergence of income per capita, which was offset by a small degree the increase in within-country inequalities. The standard error of the global Gini coefficient is very small. * After 1994, market income inequality in the EU28 was at a level similar to market inequality in other parts of the world, but net inequality (after taxes and transfers) is at a much lower level and it declined between 1994 and 2008, since when it remained relatively stable. * Regional income inequality is much higher in Asia, Africa, the Commonwealth of Independent states and Latin America than in the EU28. In Asia, regional inequality has increased recent years, while it declined in the other three non-European regions.
    Keywords: global and regional distribution of income, Gini coefficient, income inequality, development, simulation modelling
    JEL: C63 D31 D63 O15
    Date: 2016–11
  11. By: Courtney Coile; Mark Duggan; Audrey Guo
    Abstract: The U.S. Department of Veterans Affairs Disability Compensation (DC) program provides disability benefits to nearly one in five military veterans in the US and its annual expenditures exceed $60 billion. We examine how the receipt of DC benefits affects the employment decisions of older veterans. We make use of variation in program eligibility resulting from a 2001 policy change that increased access to the program for Vietnam veterans who served with “boots on the ground” in the Vietnam theater but not for other veterans of that same era. We find that the policy-induced increase in program enrollment decreased labor force participation and induced a substantially larger switch from wage employment to self-employment. This latter finding suggests that an exogenous increase in income spurred many older veterans to start their own businesses. Additionally, we estimate that one in four veterans who entered the DC program due to this policy change left the labor force, estimates in the same range as those from recent studies of the Social Security Disability Insurance (SSDI) program.
    JEL: J22
    Date: 2016–12
  12. By: Sophie Wintgens; Arnaud Zacharie
    Abstract: [fr] Depuis les années 2000, la montée en puissance des pays émergents -- et plus particulièrement de la Chine, des pays d'Asie orientale et des BRICS -- a modifié les rapports de force au sein du système de gouvernance économique mondiale. Dans un monde de plus en plus multipolaire, les politiques extérieures des principaux pays émergents visent davantage à légitimer leur statut de puissances régionales qu'à promouvoir un multilatéralisme véritablement démocratique. Ce faisant, le basculement du monde met le multilatéralisme à l'épreuve. Bien que les pays émergents aient revendiqué plus de place dans les organisations économiques internationales, nombre de leurs demandes n'ont pas été entendues par les puissances traditionnelles occidentales, ce qui les a incités à lancer leurs propres initiatives. Il en résulte une fragmentation croissante des règles financières et commerciales internationales qui rend plus complexes les conditions politiques de réguler efficacement le système international. Bien que les pays émergents aient contribué à remettre en cause la légitimité de l'architecture existante de la gouvernance économique mondiale, ils n'ont jusqu'ici pas réussi à en modifier la nature, ni à le rendre plus cohérent.
    Abstract: [en] Since the 2000s, the rising power of emerging countries -- China, East Asian countries and the BRICS in particular -- changed the balance of power within the system of global economic governance. In an increasingly multipolar world, external policies of the main emerging countries are aimed more at legitimizing their status of regional powers rather than at promoting a truly democratic multilateralism. By doing so, the global shift in wealth puts the multilateralism to the test. Although emerging countries have claimed more room in the international economic organizations, many of their demands have not been heard by the Western traditional powers, which prompted them to launch their own initiatives. This creates an increasing fragmentation of international financial and trade rules, which makes more complex the political conditions for effectively regulate the international system. Although emerging countries have contributed to challenge the legitimacy of the global economic governance architecture, they have so far failed to change its nature or to make it more consistent.
    Keywords: pays émergents; gouvernance économique mondiale
    Date: 2016
  13. By: Tamayo, Adrian; Tagalo, Romulo
    Abstract: The study aims to quantify the economic value of the sand and gravel which is deemed as a non-renewable resource. A survey was conducted to extract the consumer surplus of the households, also construct the demand equation for the resource. With the demand equation for sand and gravel at , the consumer surplus was estimated at P8271. Using the economic valuation technique, the economic value of sand and gravel was estimated at P729,568,368. Thus, a very high value imputed on the environmental resource. The survey showed that 82% of the population in Davao del Norte is amenable for a policy to regulate sand and gravel extraction. With the new valuation measure of the sand and gravel, a new price may be introduced at price range between P125-P225 per cubic meter. The new price is set to be used as payment for environmental services and compensation projects at the quarry sites. Also, the cost structures of permitees in Davao del Norte are too low compared to the operators in Compostela Valley, Davao Oriental and Davao City. The cost of operation in Davao del Norte is approximately 18% of the cost in Davao Oriental and 20% of the cost of Compostela Valley. The cost differences are largely due to the permit cost which is cheaper in Panabo and Tagum than in other areas. This is suggestive that the permitees may likely absorb the cost rather than transfer operation given their high producer surplus value.
    Keywords: Non-renewable natural resource, willingness to pay
    JEL: Q3 Q31 Q5 Q51
    Date: 2016–10–20
  14. By: Yoshihiro Tamai (Kanagawa University); Chihiro Shimizu (Nihon University and National University of Singapore); Kiyohiko G. Nishimura (University of Tokyo and National Graduate Institute for Policy Studies)
    Abstract: This paper investigates the effect of aging population on property (land) prices. A theory of very long run portfolio choice is developed for a transition economy from young and growing to rapidly aging population and applied to estimate property price inflation in Japanese municipal markets. The results are stunning. The simulation results in which income factors are assumed to be fixed at the 2005- 2010 growth level suggest that the average residential property price (land price) in the Japanese municipalities may decrease as much as 19 percent from the present to 2020, 24 percent to 2030, and 32 percent to 2040.
  15. By: In Hwan Jo (National University of Singapore); Tatsuro Senga (Queen Mary University of London)
    Abstract: Access to external finance is a major obstacle for small and young firms; thus, providing subsidized credit to small and young firms is a widely-used policy option across countries. We study the impact of such targeted policies on aggregate output and productivity and highlight indirect general equilibrium effects. To do so, we build a model of heterogeneous firms with endogenous entry and exit, wherein each firm may be subject to forward-looking collateral constraints for their external borrowing. Subsidized credit alleviates credit constraints small and young firms face, which helps them to achieve the efficient and larger scale of production. This direct effect is, however, either reinforced or offset by indirect general equilibrium effects. Factor prices increase as subsidized firm demand more capital and labor. As a result, higher production costs induce more unproductive incumbents to exit, while replacing them selectively with productive entrants. This cleansing effect reinforces the direct effect by enhancing the aggregate productivity. However, the number of firms in operation decreases in equilibrium, and this, in turn, depresses the aggregate productivity.
    Keywords: Firm dynamics, Misallocation, Financial frictions, Firm size and age
    JEL: E22 G32 O16
    Date: 2016–12

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