nep-sea New Economics Papers
on South East Asia
Issue of 2017‒02‒12
thirteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. ASEAN as an FDI Attractor: How Do Multinationals Look at ASEAN? By Masahito Ambashi
  2. International Investment Agreements and Investor-State Disputes: A Review and Evaluation for Indonesia By Stephen L. Magiera
  3. Impact of ISO 9001 Certification on the Projects' Success of Large-Scale (AAA) Construction Firms in the Philippines. By Neyestani, Behnam
  4. Temporary transfers of land and risk-coping mechanisms in Thailand By Gwendoline Promsopha
  5. The determinants of self-medication: Evidence from urban Vietnam By Hoai, Nguyen Trong; Dang, Thang
  6. Prioritization of Public Investment Projects in Vietnam By Glenn P. Jenkins; Mikhail Miklyaev; Shahryar Afra; Majid Hashemi
  7. Psychological gender differences in general health examinations: evidence from a 2016 Vietnamese cross-section dataset By Quan-Hoang Vuong
  8. Approaches to Asian Option Pricing with Discrete Dividends By Jacob Lundgren; Yuri Shpolyanskiy
  9. The Rise of the Middle Class and Economic Growth in ASEAN By Markus Brueckner; Era Dabla-Norris; Mark Gradstein; Daniel Lederman
  10. Plurality in Teaching Macroeconomics By Azad, Rohit
  11. Ashes of co-optation: from armed group fragmentation to the rebuilding of popular insurgency in Myanmar By David Brenner
  12. The Recent Growth Boom in Developing Economies: A Structural-Change Perspective By Diao, Xinshen; McMillan, Margaret; Rodrik, Dani
  13. Imports, supply chains, and firm productivity By Carol Newman; John Rand; Finn Tarp

  1. By: Masahito Ambashi (Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: This policy brief presents an overview of the ASEAN economy in terms of its economic relationship with multinationals, particularly Japanese companies, that have long invested in this region. ASEAN has been an attractor of foreign direct investment (FDI). Business interest in ASEAN has increased again recently due to the (i) relatively low wage of ASEAN compared to China, (ii) establishment of the ASEAN Economic Community (AEC), (iii) economic partnership network with a core of ASEAN countries, (iv) large-scale market covered by ASEAN, and (v) rise of CLMV countries (Cambodia, Lao PDR, Myanmar, and Viet Nam). In these trends, ASEAN has established a reciprocal economic relationship with other countries and regions. To develop its economy, ASEAN member states are expected to further advance the AEC at a high level. Hence, ASEAN must address challenges such as deepening further economic integration and narrowing development gaps in the region. Most importantly, ASEAN still needs to increase the attractiveness of its 'whole region' as an essential and integral part of global value chains to draw further FDI.
    Date: 2017–01
  2. By: Stephen L. Magiera
    Abstract: Foreign investors can lodge a complaint against a host country for alleged treaty violations under the Investor-State Dispute Settlement (ISDS) provisions of bilateral investment treaties (BITs). The complaints are arbitrated internationally outside the host country's domestic court, sometimes involve claims exceeding US$1 billion, and give rise to significant financial risk of international arbitration for host countries. Because of this, Indonesia has recently cancelled many of its BITs. But at the same time, Indonesia has agreed to ISDS under the ASEAN Comprehensive Investment Agreement (ACIA) and ASEAN's five agreements with Dialogue Partners. Furthermore, President Joko Widodo has expressed strong interest in joining the Trans-Pacific Partnership (TPP), which contains provisions for ISDS. ASEAN's Regional Comprehensive Economic Partnership (RCEP) will also provide for ISDS. This note reviews the status of Indonesia's international obligations with respect to ISDS, evaluates some of the benefits and costs of ISDS, and reviews the extent to which Indonesia would be undertaking new ISDS obligations under TPP. The note concludes with a discussion of ways that Indonesia can reduce the risk of international arbitration through domestic regulatory reforms.
    Keywords: Foreign Direct Investment, Standards of Treatment, Bilateral Investment Treaties, Free Trade Agreements, Investor-State Disputes, Arbitration, Indonesia, ASEAN
    JEL: K33 F21 F53
    Date: 2017–01
  3. By: Neyestani, Behnam
    Abstract: The general aim of the study was to identify the effects of ISO 9001 certification on project success, and its main criteria into large-scale construction companies in Metro Manila, Philippines. For this aim, the research was conducted an in-depth literature review for identifying the main variables first. Subsequently, a survey questionnaire was designed, and distributed randomly among 67 managers working in ISO 9001:2008-certified projects of large-scale construction firms. Then the descriptive and inferential statistics analysis employed, in order to find the results and conclusions. Finally, the findings revealed that ISO 9001 certification can significantly affect the construction project success and its main criteria, except time length of projects in Metro Manila, Philippines
    Keywords: ISO 9001 Certification; Construction Project Success; Construction Quality; Quality Management System; Customer's satisfaction
    JEL: L74 M11 O22
    Date: 2016–11–02
  4. By: Gwendoline Promsopha (LEST - Laboratoire d'économie et de sociologie du travail - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper uses data collected in Thailand among permanent rural-urban migrants to analyse the motivations in land temporary transfers such as free loans or rentals. Land transfers are here looked at in a continuum and categorized according to three characteristics: the nature of the relationship between the parties of the exchange, the monetary nature of the payment as well as its explicit or imlicit nature. This methodology allows a richer typology than traditionnally used in empiric literature, and distinguishes between various loans that are not always free. The empirical results show that land loans are frequently chosen by households who rely heavily on traditional risk-sharing networks and credit land with a high safety net value. Morevore, the statistical analysis reveal the significance of hybrid transfers such as disguised rental, that combine both rent-seeking and risk-coping motivations. Overall, the paper underlines the importance of risk-coping motivations in the design of land temporary transfers.
    Keywords: Land tenure, land markets, Thailand, rural economy, non-market transfer
    Date: 2016–12–05
  5. By: Hoai, Nguyen Trong; Dang, Thang
    Abstract: This study examines the primary determinants of self-medica- tions among urban citizens in Ho Chi Minh City, Vietnam using survey data. Employing logistic models, the article finds that the probability of self-medication is positively associated with the respondents’ high school degree or vocational certificate, married status, and income while it is negatively related to employed status, the number of children, the geographical distance from home to the nearest hospital, doing exercise, and living in a central region. Meanwhile, using Poisson models the article finds that the frequency of self-medication is positively associated with the respondents’ high school and vocational, married, income, and chronic disease while the frequency of self-medica- tion is adversely related to male, employed, children number, distance, being close to health professional and central areas.
    Keywords: Ho Chi Minh City; self-medication; Vietnam
    JEL: I11 I18
    Date: 2017–01–23
  6. By: Glenn P. Jenkins (Queen's University, Canada and Eastern Mediterranean University, North Cyprus); Mikhail Miklyaev (JDINT’L Executive Programs Department of Economics, Queen’s University, Canada and Cambridge Resources International Inc.); Shahryar Afra (Cambridge Resources International Inc.); Majid Hashemi (Cambridge Resources International Inc.)
    Abstract: Recently enforced Public Investment Law (PIL) provides a strong basis for the enhancement of the PIM system’s efficiency, however, the implementation of the PIL is progressing slowly. Quang Ninh province has been selected for an analysis of the practical difficulties authorities face in complying with PIL requirements, particularly in the preparation of investment intention reports. Discussions with provincial authorities revealed two major constraints: 1. lack of an investment intention report template and guidelines; 2. absence of methodologies and guidelines on the preliminary assessment of the socio-economic effectiveness of PIPs. The efficiency of the PIM system in Vietnam can only be improved if the investment intention reports prepared by project promoters are to form the basis for technical analysis of PIPs. The major component of technical analysis is an evaluation of PIP socio-economic returns. This evaluation should be done using CBA methodologies formulated from basic principles of applied welfare economics. The results of technical analysis must drive the project approval (or rejection) process, in sharp contrast to the current practice of approving projects to be included in regional development master plans before due diligence has been carried out.
    Keywords: Public Investment Law, Cost benefit analysis, Vietnam
    JEL: E22 G11 H54 G3
    Date: 2017–08
  7. By: Quan-Hoang Vuong
    Abstract: Whether or not periodic general health examinations (GHEs) should be maintained is a controversial issue. This study mainly focuses on the influence of gender and psychological factors on periodic GHEs. To clarify the relationship between the factors mentioned above, a survey has been carried out in Hanoi and surrounding areas, collecting 2,068 valid observations; the dataset was then analyzed using the baseline category logit model. Results show that most people are afraid of discovering diseases through general health examinations (76.64%), and among them the psychological fear of illness detection appears to be stronger for females than for males (β1(male)=-0.409, P
    Keywords: Periodic general health examination; psychological fear; gender; Vietnam
    JEL: I12 I18
    Date: 2017–02–06
  8. By: Jacob Lundgren; Yuri Shpolyanskiy
    Abstract: The method and characteristics of several approaches to the pricing of discretely monitored arithmetic Asian options on stocks with discrete, absolute dividends are described. The contrast between method behaviors for options with an Asian tail and those with monitoring throughout their lifespan is emphasized. Rates of convergence are confirmed, but greater focus is put on actual performance in regions of accuracy which are realistic for use by practitioners. A hybrid approach combining Curran's analytical approximation with a two-dimensional finite difference method is examined with respect to the errors caused by the approximating assumptions. For Asian tails of equidistant monitoring dates, this method performs very well, but as the scenario deviates from the method's ideal conditions, the errors in the approximation grow unfeasible. For general monitoring straightforward solution of the full three-dimensional partial differential equation by finite differences is highly accurate but suffers from rapid degradation in performance as the monitoring interval increases. For options with long monitoring intervals a randomized quasi-Monte Carlo method with control variate variance reduction stands out as a powerful alternative.
    Date: 2017–02
  9. By: Markus Brueckner; Era Dabla-Norris; Mark Gradstein; Daniel Lederman
    Abstract: We present estimates of the relationship between the share of income accruing to the middle class and GDP per capita of ASEAN economies. The increase in GDP per capita that ASEAN economies experienced during 1970-2010 significantly contributed to a higher share of income accruing to the middle class in these countries. The impact of a rise of the middle class on economic growth depends on ASEAN countries' initial level of GDP per capita. In the majority of ASEAN countries, a rise of the middle class that is unrelated to GDP per capita growth would have had a significant negative effect on economic growth based on values of these countries' GDP per capita in 1970. In contrast, for recent values of GDP per capita a rise of the middle class would positively contribute to GDP per capita growth. We show that human capital accumulation is an important channel through which a rise of the middle class affects economic growth.
    Keywords: Income Inequality, Economic Growth, ASEAN
    JEL: O1
    Date: 2017–01
  10. By: Azad, Rohit
    Abstract: The current Great Recession, the worst crisis that capitalism has faced since the Great Depression, has failed, at least so far, to generate a change in the teaching and practice of Macroeconomics. This seems bizarre as if nothing has happened and the economists are just going about doing business as usual. In light of this, the current paper attempts to address how Macroeconomics ought to be taught to students at the advanced intermediate level, which gives them an overall perspective on the subject.
    Keywords: Macroeconomic Teaching, New Keynesian, Post Keynesian, Keynes-Kalecki
    JEL: A2 A22 B4 B50 E3 E4 E5
    Date: 2016–10–01
  11. By: David Brenner
    Abstract: This article argues that attempts to buy insurgency out of violence can achieve temporary stability but risk producing new conflict. While co-optation with economic incentives might work in parts of a movement, it can spark ripple effects in others. These unanticipated developments result from the interactions of differently situated elite and non-elite actors, which can create a momentum of their own in driving collective behaviour. This article develops this argument by analysing the re-escalation of armed conflict between the Kachin Independence Organisation (KIO) and Myanmar's armed forces after a 17-year-long ceasefire broke down in 2011. After years of mutual enrichment and collaboration between rebel and state elites and near organisational collapse, the insurgency's new-found resolve and capacity is particularly puzzling. Based on extensive field research, this article explains why and how the state's attempt to co-opt rebel leaders with economic incentives resulted in group fragmentation, loss of leadership legitimacy, increased factional contestation, growing resentment among local communities and the movement's rank and file and ultimately the rebuilding of popular resistance from within.
    Keywords: non-state armed groups; insurgency; counterinsurgency; conflict resolution; Myanmar (Burma); Kachin Independence Organisation (KIO)
    JEL: N0
    Date: 2015–08–03
  12. By: Diao, Xinshen; McMillan, Margaret; Rodrik, Dani
    Abstract: Growth has accelerated in a wide range of developing countries over the last couple of decades, resulting in an extraordinary period of convergence with the advanced economies. We analyze this experience from the lens of structural change - the reallocation of labor from low- to high-productivity sectors. Patterns of structural change differ greatly in the recent growth experience. In contrast to the East Asian experience, none of the recent growth accelerations in Latin America, Africa, or South Asia was driven by rapid industrialization. Beyond that, we document that recent growth accelerations were based on either rapid within-sector labor productivity growth (Latin America) or growth-increasing structural change (Africa), but rarely both at the same time. The African experience is particularly intriguing, as growth-enhancing structural change appears to have come typically at the expense of declining labor productivity growth in the more modern sectors of the economy. We explain this anomaly by arguing that the forces that promoted structural change in Africa originated on the demand side, through either external transfers or increase in agricultural incomes. In contrast to Asia, structural change was the result of increased demand for goods and services produced in the modern sectors of the economy rather than productivity improvements in these sectors.
    Date: 2017–01
  13. By: Carol Newman; John Rand; Finn Tarp
    Abstract: This paper explores the relationship between imports and firm productivity, focusing on imported intermediates. Using firm-level data on over 20,000 manufacturing firms in Viet Nam, we find evidence for competition-induced productivity gains from trade. We show that gains in intermediate sectors spill-over to downstream sectors such that firms using more inputs from import-intensive sectors experience higher productivity gains. The evidence indicates that the main source of spill-over is better quality, domestically produced inputs. Ignoring the gains from trade through this mechanism may significantly underestimate the impact of trade on productivity.
    Keywords: imports, supply chains, productivity, Viet Nam
    Date: 2016

This nep-sea issue is ©2017 by Kavita Iyengar. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.