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on South East Asia |
| By: | Yeboah, Osei-Agyeman; Shaik, Saleem; Legesse, Bafikadu; Faulkner, Paula; Aku, Helga |
| Abstract: | The Trans-Pacific Partnership (TPP) is a proposed regional free trade agreement (FTA) among 12 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. The TPP by eliminating more than 18,000 taxes and other trade barriers on American products across the 11 other countries is expected make it easier for American entrepreneurs, farmers, and small business owners to sell Made-In-America products abroad. This paper attempts to examine the factors that affects trade creation and trade diversion between the US and TPP countries using the gravity model by applying both panel pooled data from 1991 to 2015 to four gravity equations (agricultural related products, bulk agricultural products, consumer oriented agricultural products, and intermediate agricultural products) in each case. The factors include traditional trade variables GDP of US (exporting country), GDP of importing countries, FTA’s, border, language, real exchange rate, arable land and population for U.S. Three models (One-way random effect, the two-way random effect and pooled) were applied to each of the four products. In all, the pooled model showed the highest predictive power and with consistent parameters. Similarly, considering the specific products, consumer oriented and intermediate products are the most sensitive to these factors while bulk agricultural products are the least. Keywords: Bilateral trade, Gravity model, TPP, FTA’s |
| Keywords: | Bilateral trade, Gravity model. Free Trade Agreement, Trans Pacific Partnership, International Relations/Trade, |
| Date: | 2017–01–18 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea17:252803&r=sea |
| By: | Manzano, George N.; Martin, Kristine Joy C. |
| Abstract: | The Trans-Pacific Partnership (TPP) is a regional free trade agreement (FTA) initiated by the United States (US) and is presently being negotiated among 12 countries. With the Philippines negotiating at many fronts at the global level--that includes the ASEAN Economic Community and the European Union-Philippines FTA, among others--the invitation to join the TPP is another opportunity worth studying. This study will use an alternative methodology--the Sussex framework--which is a departure from the prevalent use of the computable general equilibrium models to estimate the effects of the TPP on prospective partners. This paper aims to complement existing studies in the field and focuses on analyzing the (i) possible impact on the Philippines-US trade in goods when a Philippines-US FTA happens in the context of the Philippines joining the TPP and the (ii) probable negative effects that could happen to the Philippines-US bilateral trade if the Philippines opts not to be a member of the TPP. To analyze the impact of the TPP on the Philippines-US trade in goods, the study will model the TPP as a collection of bilateral US-TPP countries with FTAs. The relevant indicators generated from the series of bilateral FTAs will then be interpreted in the context of how these would impact on the Philippines as a third, nonpartner country. |
| Keywords: | Philippines, Trans-Pacific Partnership, FTA, free trade agreement, United States, trade in goods, bilateral trade, indicator approach |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:phd:pjdevt:pjd_2014-2015_vol__41-42_nos__1-2c&r=sea |
| By: | Anne Booth; Kent Deng |
| Abstract: | The paper examines the economic consequences of Japanese colonialism in Taiwan, Korea and Manchuria in the years from 1910 to 1945, and compares Japanese policies with those implemented by other colonial powers in Southeast Asia. In particular it addresses the writings of an influential group of American scholars who have published widely on Japanese colonial policies over the last fifty years. Their work has been used to support the argument that Japanese colonial policy was more developmental than that of other colonial powers, and laid the foundations for the stellar economic performance of Taiwan and the Republic of Korea in the decades after 1950. The paper challenges this argument by comparing a number of economic and social indicators in Korea, Taiwan and Manchuria with those from other Asian colonies and also from Thailand. The main conclusion is that while the Japanese colonies, especially Taiwan, score well on some indicators, they do less well on others. The idea of Japanese exceptionalism cannot be accepted uncritically. |
| Keywords: | Japan; West; colonies in Asia; state policies; growth and development |
| JEL: | N0 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:wpaper:68883&r=sea |
| By: | Thorbecke, Willem (Asian Development Bank Institute) |
| Abstract: | The PRC has become an important importer for many countries. We investigate how turbulence in the PRC can spill over to trading partners through the trade channel. Exports from several East Asian and Southeast Asian countries to the PRC exceed 10% of their gross domestic products. To shed light on economies’ exposures to the PRC, this paper estimates a gravity model. The results indicate that Taipei,China and members of the Association of Southeast Asian Nations are exposed to the PRC because they produce goods for the PRC market and are exposed to advanced economies because they ship parts and components to the PRC for processing and reexport to the West. The Republic of Korea is more exposed to a slowdown in advanced economies that purchase processed exports from the PRC than to a slowdown in the PRC. Major commodity exporters such as Australia, Brazil, Indonesia, and Saudi Arabia, and exporters of sophisticated consumption and capital goods such as Germany and Switzerland are exposed to a slowdown in the PRC domestic market. This paper also estimates import elasticities for the PRC. The results indicate that imports for processing into the PRC are closely linked to processed exports from the PRC to the rest of the world and that ordinary imports are closely linked to PRC gross domestic product. The renminbi exerts only a weak impact on imports, however. The paper concludes by recommending that firms and countries diversify their export base and their trading partners to reduce their exposures to the PRC and to advanced economies. |
| Keywords: | PRC growth spillovers; gravity model; ordinary and processing trade; Asia |
| JEL: | F14 F22 F32 |
| Date: | 2017–01–19 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0634&r=sea |
| By: | Briones, Roehlano M. |
| Abstract: | A well-known indicator of comparative advantage is domestic resource cost (DRC). This study provides updated estimates of DRC for major agricultural commodities in the Philippines toward evaluating competitiveness and comparative advantage as a policy guide. This study covers paddy rice, yellow maize, white maize, sugarcane, mango, coconut, milkfish, cardava banana, pineapple, hogs, and broilers. Results show that financial DRC ratio for all of the subject commodities are below unity, indicating that each activity is profitable from the private viewpoint. However, for some products, economic DRC ratio is much higher than financial DRC ratio; the distortion is mostly attributed to output price distortions. Economic DRC ratio is above unity, which means that the Philippines is not globally competitive in producing rice, hogs, and broilers. Sensitivity analysis is conducted for the main import-competing products, namely, rice, yellow maize, sugarcane, broilers, and hog; the sensitivity results confirm the robustness of the findings. The competitiveness analysis places the current policy framework into question. Comparative costs of rice, broilers, and hogs are currently at high levels. It is unrealistic to expect market and technology conditions to change drastically enough to make these products competitive (except perhaps for hogs). Given the large penalty of protection to consumers, and the fiscal burden of production support, it is appropriate to scale back on self-sufficiency targets for these uncompetitive products. For yellow maize and sugarcane, market conditions and technology have evolved to the point where these sectors are now globally competitive. Again, liberalization is highly appropriate, especially on the export side. There should also be greater emphasis on processing and logistics in order for the supply chain to maximize benefit from the farmers’ comparative advantage. Public goods for competitive crops, such as public research and development centers (which are historically underfunded or missing altogether), extension systems, and infrastructure, remain promising opportunities for government investment. |
| Keywords: | Philippines, agriculture, competitiveness, comparative advantage, domestic resource cost, DRC, agricultural commodities, paddy rice, yellow maize, white maize, sugarcane, mango, coconut, milkfish, cardava banana, pineapple, hogs, broilers |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:phd:pjdevt:pjd_2014-2015_vol__41-42_nos__1-2g&r=sea |
| By: | Perez-Restrepo, Camilo; Roldan-Perez, Adriana |
| Abstract: | The establishment of a Free Trade Area of the Asia-Pacific (FTAAP) is one of the priorities of the Asia-Pacific Economic Cooperation (APEC) to enhance regional economic integration beyond the Bogor Goals, as reflected in the Beijing Roadmap for APEC in 2014. There are multiple pathways that could converge into the FTAAP, and these include the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP). This paper discusses the potential of the Pacific Alliance (PA) to provide an additional pathway that also contributes to the FTAAP process and regional integration in Asia-Pacific. The analysis suggests that the PA can be considered a comprehensive mechanism that is in line with the Bogor Goals, and its achievements in areas such as market access, services, investment, and new generation issues suggest that it is a WTO+ agreement. However, there are issues that would need to be negotiated among its members--such as intellectual property, labor, and environmental protection--for the PA to profile itself as a pathway equivalent to the TPP. The PA, however, is more comprehensive than the RCEP. The analysis also suggests that despite having only four members, the PA is a "living agreement" and is open to other APEC economies for membership and, therefore, has the potential to become a region-wide agreement. This paper encourages PA members to formulate a common Asia-Pacific strategy as a necessary step to further integrate the region and be able to contribute to the realization of the FTAAP. Formulating the strategy is one of the most important challenges for the economies of PA members and, at the same time, one of their greatest opportunities to become a driving force for regional integration in the Asia-Pacific region. |
| Keywords: | Free Trade Area of the Asia-Pacific (FTAAP), regional integration, Asia-Pacific Economic Cooperation (APEC), Regional Comprehensive Economic Partnership, Trans-Pacific Partnership, TPP, free trade area, Pacific Alliance, RCEP |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:phd:pjdevt:pjd_2014-2015_vol__41-42_nos__1-2a&r=sea |
| By: | Teguh Dartanto; Jahen Fachrul Rezki; Usman; Chairina Hanum Siregar; Hamdan Bintara; Wahyu Pramono (LPEM, Faculty of Economics and Business, University of Indonesia) |
| Abstract: | The implementation of national health insurance in Indonesia since 2014 has brought out the missing middle problem in which the non-poor informal sectors have remained uncovered from the health care due to self-enrollment. Therefore, achieving UHC in Indonesia will take a long process, especially when the proportion of non-poor informal sector in total population is large enough. This study aims at examining three main issues that may have become obstacles for informal sectors to join the program: (1) observing supply side readiness, (2) examining affordable premium and willingness to pay of informal sectors, and (3) exploring why informal workers have been reluctant to join the national health insurance. This study reports that around 53.7% of Sub National Government (SNG) faced a shortage of health facilities of 59,387 beds, though in some regions had surplus of beds (per 1000 people). This study also finds that a single premium for all over Indonesia is unfair and unaffordable for some people living in eastern part of Indonesia. Observing 400 households working in informal sectors and applying Triple Bounded Dichotomies Choice Contingent Valuation Method (TCCVM) to observe the Willingness to Pay (WTP), this study finds that around 70% of respondents had the desire to join the health insurance, but their willingness to pay of the premium was lower than the current rate. The current premium seemed less affordable for informal sectors; thus, this created a barrier for them to enthusiastically join the new health insurance program. Our econometric estimations confirm that availability of hospital, insurance literacy, experiences of inpatients and outpatients, number of family member, sex of head of household, access to internet and household income are highly correlated to the likelihood of informal sectors joining the national health insurance (NHI). Moreover, in contrast with findings from many other studies, the insurance premium is surprisingly not the main reason for informal sectors to join the program; rather, the main obstacle is the lack of insurance literacy. Consequently, the necessary condition for mandating informal sectors to join the program is an improvement of insurance literacy, while the sufficient conditions are supply-side readiness and affordable premium. This study calls for a massive campaign to educate the public about the importance of health insurance. |
| Keywords: | Returns to Scale |
| JEL: | H40 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:lpe:wpaper:201511&r=sea |
| By: | Ho, Sin-Yu; Odhiambo, Nicholas M. |
| Abstract: | This paper explores the origins and development of the Philippine stock market. Specifically, it looks at the structural and regulatory development of the stock exchange, and the growth of the stock market in terms of size, liquidity, and other key market indicators. The Philippine stock market has undergone a number of reforms and development since the 1990s. These include the unification of two stock exchanges, the demutualization of the Philippine Stock Exchange (PSE), and the enactment of the Securities Regulation Code. As a result, the Philippine stock market has experienced a phenomenal growth over the years. Measured by market capitalization ratio, the world ranking of the Philippine stock market has improved from 44th in 2009 to 12th in 2014. Although the PSE has developed fast over the years, it still faces a wide range of challenges, including a less diversified investor base, a lack of competition on the PSE when compared with its regional counterparts, weak corporate governance, and weak legal framework for financial sector development. |
| Keywords: | Philippines, investment, stock market, stock exchange, Philippine Stock Exchange, PSE, Securities Regulation Code, Philippine stock market, securities, market capitalization ratio |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:phd:pjdevt:pjd_2014-2015_vol__41-42_nos__1-2f&r=sea |
| By: | Racelis, Rachel H.; Dy-Liacco, Fe Vida N.; David, Lilibeth C.; Nievera, Lucille F. |
| Abstract: | The System of Health Accounts (SHA) 2011 is the current international standard for health accounting. An expanded health accounts was estimated for the Philippines using 2012 health expenditures data and applying the SHA 2011. The SHA-based health accounts estimates consist of 11 tables, 10 tables on current health expenditures, and 1 table on health capital formation. Twelve health expenditure classifications were incorporated into the tables. This paper reports findings from the pilot 2012 SHA-based health accounts--on health-care financing, provision, and consumption in the Philippines. Applying the criteria in the SHA 2011 to determine the inclusions or the boundary of health accounts, the total current health expenditures (CHE) in 2012 is estimated at PHP 465.2 billion while another PHP 7.8 billion is estimated to have been spent for fixed capital formation, health research, and training of health personnel. The two aggregates taken together constitute 4.48 percent of the gross domestic product. Findings on health-care financing include the following: (i) household out-of-pocket still accounted for the largest share of CHE at 62.1 percent, (ii) national and local government at 19.5 percent, and (iii) PhilHealth (all programs) at 11.1 percent. Findings on health-care provision include the following: (i) 14.7 percent of CHE is spent for care in public hospitals and 21.8 percent for care in private hospitals and (ii) 32.9 percent of CHE is spent for health human resources while 43.6 percent is for pharmaceuticals. Findings on health-care consumption include the following: (i) 51.5 percent of CHE is for curative care while 9.4 percent is for preventive care, (ii) 57.3 percent of government spending went to the care of the two lowest income quintile groups, (iii) 39.0 percent of CHE was for noncommunicable diseases health care, (iv) per capita spending by region generally ranged from PHP 4,000 to PHP 6,500, (iv) per capita health spending of males and females at different ages were generally similar except at ages 15-49 years or during women’s reproductive ages, and (v) per capita health spending of the young and the elderly were generally higher compared to other population age groups. |
| Keywords: | Philippines, health expenditures, health, health care, health accounts, System of Health Accounts, health spending, per capita health spending, current health expenditures, noncommunicable diseases, public hospitals |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:phd:pjdevt:pjd_2014-2015_vol__41-42_nos__1-2h&r=sea |
| By: | Mao Ning (China-Asean International College, Dhurakij Pundit University Bangkok, Thailand); Michael McAleer (Department of Quantitative Finance, National Tsing Hua University, Taiwan; Econometric Institute Erasmus School of Economics, Erasmus University Rotterdam, The Netherlands;Department of Quantitative Economics, Complutense University of Madrid, Spain;) |
| Abstract: | This paper reviews the Thai national character according to Hofstede’s cultural dimension theory and Komin’s nine values cluster (Psychology of the Thai people), analyses the social hierarchy of Thai consumers according to the Luxury 4P Taxonomy (Han et al., 2010), integrates the Theory of Cultural Capital (Bourdieu, 1984), and expounds the features of social class. The global luxury fashion industry has grown significantly in recent years, but much of the research has been limited to conspicuous consumption and social identity. This paper involves religious beliefs that are argued to influence luxury purchasing motives. The purpose of the paper is to develop an analytical framework to aid in understanding luxury fashion consumption in a Buddhist country such as Thailand in order to inform luxury products vendors on how to improve their marketing strategies. |
| Keywords: | Luxury fashion consumption; Purchasing motives; Buddhist beliefs; Marketing strategies; Thailand. |
| JEL: | N35 Z12 Z13 |
| Date: | 2017–01–23 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20170014&r=sea |
| By: | Frankema, Ewout; Papaioannou, Kostadis |
| Abstract: | We explore a new dataset of annual and monthly district-level rainfall patterns to assess the longstanding idea that climatological conditions were more conducive to the development of dense rural populations in Asia than in Africa. We test whether there existed significant cross-regional differences in both the frequency and intensity of rainfall shocks (i.e. annual mean deviations exceeding one standard deviation). Our results confirm that rainfall shocks in tropical Africa were both more frequent and more severe. Second, we test the separate effects of precipitation levels and variability on district-level population densities from colonial population censuses. We hypothesize that higher mean levels of precipitation facilitate agricultural intensification and human settlement, while unpredictability of rainfall has the opposite effect. Controlling for average rainfall levels, we find a strong negative effect of rainfall variation on population densities. This study thus lends further support to a wide literature arguing that the ecological conditions of agricultural intensification were more challenging in the African than in the Asian tropics. |
| Keywords: | Africa; agriculture; Asia; Climate; Settlement |
| JEL: | N55 N57 O13 O44 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11795&r=sea |
| By: | Domingo, Sonny N. |
| Abstract: | This study examines the grounding and sectoral translation of the National Disaster Risk Reduction Management Plan (NDRRMP), focusing on the thematic areas of disaster prevention and mitigation, preparedness, response, and recovery. Republic Act 10121, also known as the Philippine Disaster Risk Reduction and Management Act of 2010, provided for the crafting and implementation of the NDRRMP, outlining the activities aimed at managing risks and strengthening institutional arrangements and capacity at the national and subnational levels. The NDRRMP supposedly outlines the way toward mainstreaming of DRRM and climate change adaptation in policy formulation, development planning, budgeting, and governance with its four priority pillars. Notwithstanding evident weaknesses in grounding and institutional translation, policy support and departmental creativity exhibited by the theme leaders attest to the competence of local executive servants. It was evident that disaster risk management, as espoused, had influenced development processes and institutional initiatives within five years from the NDRRMP’s launching. Ultimately, strengthening of RA 10121 through appropriate translation and more apt institutional arrangements will ensure the realization of the full potential of the law. |
| Keywords: | Philippines, disaster risk reduction and management, climate change adaptation, National Disaster Risk Reduction and Management Plan (NDRRMP), disaster risk management policy, Republic Act 10121, Philippine Disaster Risk Reduction and Management Act of 2010 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:phd:dpaper:dp_2016-49&r=sea |
| By: | Shaik, Saleem |
| Abstract: | The impacts of trade and trade risk on efficiency and productivity of Asia and Sub-Saharan Africa agriculture sector is examined using an extended stochastic frontier analysis econometric model. The extended models links the random and one-sided error term of stochastic frontier analysis to technical efficiency and productivity, respectively. The model estimates primal production function equation, efficiency function equation and productivity function equation, simultaneously. A panel of 17 Asian countries and 32 Sub-Saharan African countries from 1970 to 2010 shows differential impact of trade openness, short-term and long-term trade openness risk on efficiency and productivity. |
| Keywords: | Trade and Trade risk, Stochastic frontier analysis, Efficiency and Productivity, Asian and Sub-Saharan African, 1970-2010, International Relations/Trade, Production Economics, Productivity Analysis, Research Methods/ Statistical Methods, Risk and Uncertainty, C4, O3, O5, Q1, |
| Date: | 2017–01–18 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea17:252788&r=sea |
| By: | Manzano, George N.; Prado, Shanti Aubren |
| Abstract: | If member-economies of the Asia-Pacific Economic Cooperation (APEC) are to implement the APEC environmental goods (EGs) initiative, how should they go about it? This paper proposes an alternative modality to liberalizing a number of EGs in the APEC list. This involves accounting for two economic issues: the free-rider problem that usually afflicts liberalization on a most-favored-nation basis and the significance of trade in EGs for APEC and its individual members. Using the framework developed by Wonnacott (1994), this paper assesses the predominance of APEC in the world supply of each good and the comparative advantage of the region in the clusters of EGs. This paper finds that, on average, the world sources nearly 56 percent of EGs from APEC. Overall, the comparative advantage of the APEC is greatest in goods, which the region supplies about 60 percent of world supply. For this subset of EGs, free riding by non-APEC nations is relatively a small problem. In terms of functional areas, the most promising category for the APEC is renewable energy and clean technology production. However, the optimal benchmarks and potential areas could vary across member-economies. |
| Keywords: | APEC, environmental goods, trade liberalization, Asia-Pacific Economic Cooperation, environmental goods and services, free riding |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:phd:pjdevt:pjd_2014-2015_vol__41-42_nos__1-2b&r=sea |
| By: | Pasadilla, Gloria O.; Wirjo, Andre |
| Abstract: | The database of the Organisation for Economic Co-operation and Development-World Trade Organization (OECD-WTO) on Trade in Value Added shows that services constitute a significant share of global goods exports. These services are either embedded in the product (such as engineering services) or bundled with its sale (such as recycling services). “Servicification”--the term coined to describe the increasing value contribution of services in manufacturing value chains--is also true in the Asia-Pacific Economic Cooperation (APEC) member-economies. This paper shows the growth in the share of services value added in APEC’s manufacturing exports between 1995 and 2009. The role of services in improving productivity is a top consideration in the decision of manufacturing firms to “servicify”. Indeed, this paper shows positive correlations between services inputs and productivity but negative correlations between OECD index of services restrictiveness and manufacturing exports per capita. Particularly for business services, restrictions on the movement of people as well as on foreign ownership and other market entry conditions contribute the most to high index of trade restrictiveness. |
| Keywords: | APEC, services, manufacturing, servicification, trade in value added (TiVA), services-manufacturing linkage, productivity, servicify, trade restrictiveness, Asia-Pacific Economic Cooperation, Organisation for Economic Co-operation and Development, OECD: World Trade Organization, WTO |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:phd:pjdevt:pjd_2014-2015_vol__41-42_nos__1-2d&r=sea |
| By: | Omar Shahabudin McDoom |
| Abstract: | Although several theories of interethnic conflict emphasize ties across group boundaries as conducive to ethnic coexistence, little is known about how such ties are formed. Given their integrative potential, I examine the establishment of cross-ethnic marital ties in a deeply divided society and ask what drives individuals to defy powerful social norms and sanctions and to choose life-partners from across the divide. I theorize such choices as the outcome of a struggle between social forces and individual autonomy in society. I identify two channels through which social forces weaken and individual autonomy increases to allow ethnic group members to establish ties independently of group pressures: elite autonomy and status equalization. I find, first, that as an individual’s educational status increases, and second, as between-group inequality declines, individuals enjoy greater freedom in the choice of their social ties. However, I also find that in an ethnically ranked society this enhanced autonomy is exercised by members of high-ranked and low-ranked groups differently. Members from high-ranked groups become more likely to inmarry; low-ranked group members to outmarry. I suggest a status-optimization logic lies behind this divergent behaviour. Ethnic elites from high-ranked groups cannot improve their status through outmarriage and their coethnics, threatened by the rising status of the lower-ranked group, seek to maintain the distinctiveness of their status superiority through inmarriage. In contrast, as their own individual status or their group’s relative status improves, members of low-ranked groups take advantage of the opportunity to upmarry into the higher-ranked group. I establish these findings in the context of Mindanao, a conflict-affected society in the Philippines, using a combination of census micro-data on over two million marriages and in-depth interview data with inmarried and outmarried couples. |
| Keywords: | horizontal inequality; ethnic conflict; social status; ranked groups; intermarriage; Philippines |
| JEL: | D74 I2 Z13 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:68932&r=sea |
| By: | Caroline Freund (Peterson Institute for International Economics); Theodore H. Moran (Peterson Institute for International Economics) |
| Abstract: | This paper investigates three cases—Malaysia, Costa Rica, and Morocco—in which host authorities were successful in using foreign direct investment to change the export profile of the domestic economy. Each case highlights the importance of first-mover firms, and clusters of follower firms, in oligopolistic industries, whose emergence changes the revealed comparative advantage of the domestic economy. The results from these three cases are shown to be consistent with a broader body of econometric analysis. An important implication is that small emerging markets may be better equipped to transform their production structures and stimulate exports with foreign direct investment than by promoting broad domestic entrepreneurship. The authors find that policy changes in the host country can have very large effects if they alter the entry of multinationals or the behavior of large firms. |
| Keywords: | Foreign direct investment, development, integration, supply chains |
| JEL: | F23 F12 |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:iie:wpaper:wp17-1&r=sea |