nep-sea New Economics Papers
on South East Asia
Issue of 2017‒11‒19
29 papers chosen by
Kavita Iyengar
Asian Development Bank

  1. The Welfare and Sectoral Adjustment Effects of Mega-Regional Trade Agreements on ASEAN Countries By Hiro Lee; Ken Itakura
  2. The Distributional Impact of Fiscal Policy in Indonesia. By Jon Jellema; Matthew Wai-Poi; Rythia Afkar
  3. East Asian Integration: Towards an East Asian Economic Community By Dent, Christopher M.
  4. Can Cheap Oil Hurt Net Importers? Evidence from the Philippines By Abrigo, Michael R.M.; Brucal, Arlan Z.I.
  5. Income and Consumption Inequality in the Philippines: A Stochastic Dominance Analysis of Household Unit Records By Valenzuela, Maria Rebecca; Wong, Wing-Keung; Zhen, Zhu Zhen
  6. Philippine Journal of Development 2016, No. 1 By Various Authors
  7. Malaysia-EU Trade at the Industry Level: Is there an Asymmetric Response to Exchange Rate Volatility? By BAHMANI-OSKOOEE, Mohsen; Aftab, Muhammad
  8. Impact of Sanitary and Phytosanitary Measures and Technical Barriers on International Trade By Kang, Jong Woo; Ramizo, Dorothea
  9. Philippine Telecommunications Laws and Regulations: A TPP Gap Analysis By Villamil, Isabela Rosario G.; Uy, Krystal T.
  10. Assessing the Impacts of Deeper Trade Reform in Vietnam in a General Equilibrium Framework By To Minh Thu; Hiro Lee
  11. The EU's FTA Strategies in Its New Trade Policy Initiatives and Policy Implications By Kim, Heung Chong; Lee, Cheol-Won; Lee, Hyun Jean; Yang, Hyoeun; Kang, Yoo-Duk
  12. Demographic factors as determinants of social scientists’ productivity: SDC-based Scopus data, 2008-2017 By Thu-Trang Vuong; Hong Kong Nguyen; Tung Manh Ho; Quan-Hoang Vuong
  13. The Product-Related Environmental Regulation, Innovation, and Competitiveness: Empirical Evidence from Malaysian and Vietnamese Firms By Qizhong YANG; Tsunehiro OTSUKI
  14. China's Economic Ties with Southeast Asia By Oh, Yoon Ah
  15. Wages, Human Capital, and Structural Transformation By Berthold Herrendorf; Todd Schoellman
  16. Trade and Industrial Development : Taiwan's experience and Worldwide Pattern By Deng-Shing HUANG
  17. Employment Generation Potential of the Rice Value Chain: The Case of Mlang, North Cotabato in Mindanao By Balgos, Carol Q.; Digal, Larry N.
  18. Firm Export Survival: Micro-Evidence from the Philippines By E.O. Annette Pelkmans-Balaoing; Gerrit Hugo van Heuvelen; Jean-Marie Viaene
  19. 중국의 동남아 경제협력 현황과 시사점(China and Southeast Asia: Expanding Economic Engagement) By Oh, Yoon Ah; Shin, Minlee; Kim, Mi Lim; Lee, Sinae
  20. The cost of sanctions: Estimating lost trade with gravity By Hinz, Julian
  22. APEC 경제통합 논의와 정책 시사점(APEC Regional Economic Integration and Policy Implication) By KIM, Sangkyom
  23. The Fertilizer Industry and Philippine Agriculture: Policies, Problems, and Priorities By Briones, Roehlano M.
  24. Sources of Income Inequality: A Comparison of Japan and the United States By Aizawa, Toshiaki; Dekle, Robert; Helble, Matthias
  25. Reforming the Fee Structure of Investment Trusts to Increase Demand By Yoshino, Naoyuki; Aoyama, Naoko
  26. RCEP 역내 생산ㆍ무역구조 분석과 시사점(An Analysis of RCEP Value Chains and Policy Implications) By LA, Meeryung
  27. Bubble Testing under Deterministic Trends By Wang, Xiaohu; Yu, Jun
  28. Non-separable Models with High-dimensional Data By Su, Liangjun; Ura, Takuya; Zhang, Yichong
  29. Strong Consistency of Spectral Clustering for Stochastic Block Models By Su, Liangjun; Wang, Wuyi; Zhang, Yichong

  1. By: Hiro Lee (Osaka School of International Public Policy, Osaka University); Ken Itakura (Graduate School of Economics, Nagoya City University)
    Abstract: The U.S. withdrawal from the Trans-Pacific Partnership (TPP) has had an influence on the prospects of mega-regional trade agreements (MRTAs). In the Asian Pacific, negotiations for the Regional Comprehensive Economic Partnership (RCEP) might accelerate. In addition, ministers from the 11 other TPP signatories have confirmed their intention to proceed with the TPP without U.S. participation. Using a dynamic computable general equilibrium (CGE) model, we estimate welfare and sectoral output adjustment effects of alternative sequencings of MRTAs on ASEAN countries. Welfare gains for ASEAN countries under the scenario led by the RCEP, followed by RCEP + Taiwan and a Free Trade Area of the Asia-Pacific (FTAAP), are greater than or equal to those under the scenario led by TPP sans US, followed by an enlarged TPP and an FTAAP. When the two scenarios are assumed to develop at the same time, welfare gains of the RCEP and TPP-11 countries are found to be less than the sum of the gains under the first two scenarios. For a number of ASEAN countries, output expansion of textiles and apparel and/or electronic equipment is significant. in the trade and transport margins. When all effects are combined, Vietnam’s economic welfare is projected to increase by 8.4 per cent in 2020 compared with the baseline. Many manufacturing sectors would expand, whereas agricultural, minerals and fuel sectors would contract. The output expansion is most significant in the textiles and wearing apparel sectors.
    Keywords: MRTA, RCEP, TPP, FTAAP, CGE model, ASEAN
    JEL: F13 F14 F15 F17
    Date: 2017–11
  2. By: Jon Jellema (CEQ Institute); Matthew Wai-Poi (World Bank); Rythia Afkar (World Bank)
    Abstract: In recent years, income inequality has become a pressing issue in Indonesian politics. From 2000-2014, a rise in GDP per capita coincided with a 10% rise in the country’s Gini coefficient. This paper uses the 2012 National Socioeconomic Survey (SUSENAS) collected by the Central Statistical Agency in Indonesia and 2012 public expenditure and revenue data from the Audit Board of the Republic of Indonesia (BPK), to generate an empirical framework that assesses the redistributive impact of several fiscal measures undertaken by the Indonesian government. This paper finds that every income decile represented in SUSENAS is a net receiver from fiscal policy after taxes, transfers, in-kind transfers and subsidies are all added to “market income” to create “final income.” Gains amongst the poorest household are made much greater by the inclusion of in-kind transfers for health and education. However, SUSENAS included very few of the richest 0.5% of Indonesians, who account for the majority of personal income tax (PIT) collections, so it was assumed that Indonesians do not pay income tax. Interestingly, this study finds that 40% of the poor, measured at “consumable income,” are impoverished by taxes and transfers. This percentage drops considerably with the addition of in-kind transfers. Overall, it was found that fiscal policy does reduce inequality and poverty by a modest amount. The Gini index is lowered from 0.394 to 0.370 under the study’sbaseline scenario, which differs only slightly from scenarios utilizing different underlying assumptions. The poverty headcount (measured at $1.25 UDS per day) is reduced from 12.1% to 10.5%.
    Keywords: fiscal incidence, taxation, social spending, inequality, poverty, Indonesia
    JEL: H22 D31 I38
    Date: 2017–05
  3. By: Dent, Christopher M. (Asian Development Bank Institute)
    Abstract: East Asia is a region of great global significance, currently accounting for around 30% of the global economy by most measures, e.g. production, trade, investment, and finance. It has also become increasingly integrated in various ways. Integration at the micro-level has steadily progressed since the 1960s, as indicated by rising intraregional trade. Moreover, East Asia’s economic regionalisation has become more functionally integrative, this broadly relating to the spread of transnational business and other technical systems where production, trade, and investment have become a function of each other within those systems. For example, as later explored, much of East Asia’s regionalised trade concerns cross-border movement of parts and components within the international production networks of multinational enterprises. Since the 1990s, East Asian states have in addition looked to strengthen regional cooperation and integration intergovernmentally at the macro-level, i.e. involving whole country economies. This has been driven by the need to manage their growing regional economic interdependencies and address future challenges that confront them all, such as globalisation and climate change. As we will discuss, this has been part of regional economic community-building efforts in East Asia, both across the whole region and within it at various subregional levels. We examine the key dimensions of East Asia’s integration, how they have developed over time, and what likely paths lie ahead in the endeavour to strengthen regional economic community-building.
    Keywords: regionalism; regional integration; regional community; East Asia
    JEL: F13 F15 F18 F36 F42 F53 F55 N75 Q27 Q37 Q42 R10 R11 R12
    Date: 2017–02–14
  4. By: Abrigo, Michael R.M.; Brucal, Arlan Z.I.
    Abstract: Conventional wisdom suggests that oil price increases have a negative effect on the output of oil-importing countries. This is grounded on the experience of the United States between the 1940s and the late 1980s, where recessions were generally preceded by oil price increases. This paper evaluates the impact of oil price shocks on the Philippines--a developing country and a net oil-importing economy. Following Kilian's (2008) structural decomposition of real oil price change, we find indications that the 2008-2009 and 2014-2015 oil price drops may have lowered the Philippine economy's output growth, potentially due to the economy's reliance on remittances from abroad and the export market.
    Keywords: Philippines, oil industry, oil price, oil price shock, oil-importing economy, oil price movement
    Date: 2017
  5. By: Valenzuela, Maria Rebecca (Asian Development Bank Institute); Wong, Wing-Keung (Asian Development Bank Institute); Zhen, Zhu Zhen (Asian Development Bank Institute)
    Abstract: In this paper, we employ stochastic dominance (SD) analysis on household unit records to measure relative welfare levels and investigate sources of inequality in the Philippines from 2000 to 2012. Using SD techniques developed in Chow, Valenzuela, and Wong (2016), we test for richness and poorness in the population across various social, economic, and demographic dimensions. Our SD composition approach and application of tests showed higher and improved relative welfare levels exist for urban, non-agricultural households, and that, compared with wages and business income, other sources of income have grown in importance in narrowing welfare gaps over time. We also found that the gender of household head and educational attainments matter for welfare outcomes. In terms of age, we found high concentrations of poor income units among the youngest cohort (aged 30 and under), and high concentrations of richer income units in the older, over-60 cohort. These results help explain persistently high levels of income inequality observed in the Philippine economy.
    Keywords: income distribution; expenditure distribution; stochastic dominance; inequality
    JEL: I32 J11 J14
    Date: 2017–02–09
  6. By: Various Authors
    Abstract: This volume consists of articles on agriculture, the oil industry, and telecommunications. The first article studies the employment generation potential of the rice value chain in Mlang, North Cotabato. The second article focuses on the policies, problems, and priorities of the fertilizer industry in the Philippines. The third article evaluates the impact of oil price shocks on a developing and a net oil-importing economy like the Philippines. The last article on Philippine telecommunications laws and regulations examines the regulatory and policy reforms needed in order for the Philippines to quality for emerging trade agreements such as the Trans-Pacific Partnership.
    Keywords: Philippines, telecommunications, free trade agreement, rice value chain, employment generation, fertilizer industry, fertilizer policy, oil price shock, oil-importing economy, Trans-Pacific Partnership Agreement, Mlang, North Cotabato
    Date: 2017
  7. By: BAHMANI-OSKOOEE, Mohsen; Aftab, Muhammad
    Abstract: A study in this journal that assessed the impact of exchange rate volatility on Malaysia-EU trade at commodity level used the linear ARDL approach of Pesaran et al. (2001) and did not find significant effects in most of the 81 Malaysian exporting and 66 importing industries. In this paper, we argue for asymmetric effects of exchange rate volatility on the same industries’ trades which implies using Shin et al.’s (2014) nonlinear ARDL approach. While we find short-run asymmetric effects of volatility in almost all industries, we find evidence of adjustment asymmetry in 17 exporting and nine importing industries. We also find significant impact or short-run cumulative asymmetry in 12 exporting and six importing industries. The most important finding is significant long-run asymmetric effects in 36 Malaysian exporting industries and 25 Malaysian importing industries. Clearly, trade flows react to an increased exchange rate volatility differently than to a decreased volatility.
    Keywords: Exchange rate volatility; Asymmetry effects; Commodity trade; Malaysia; US; Nonlinear ARDL
    JEL: F1 F14 F3 F31
    Date: 2016–11–18
  8. By: Kang, Jong Woo; Ramizo, Dorothea
    Abstract: In principle, sanitary and phytosanitary (SPS) measures aim to protect the health of humans, plants and animals, while technical barriers to trade (TBT) ensure product quality and safety. However, governments may overshoot the requirements of health and consumer safety and use SPS and TBT to shield domestic producers from fair competition. Potential abuses of both measures as protectionist tools not only constrain international trade but also consumers’ welfare by restricting the choices of goods available to them. Our analysis shows that in general the measures seem to be positive for trade after controlling for other factors. However, the impacts are mainly driven by exports from advanced economies. Less developed countries do not gain as much when implementing the measures or are disadvantaged in exporting goods, particularly when importers are advanced economies. Within South countries, developing Asia are more adversely affected by SPS while non-Asian developing country exports are afflicted more by TBT. SPS in particular is damaging intraregional agricultural trade among Asian countries, which calls for policy makers to act more proactively in resolving nontariff hurdles in the region.
    Keywords: agriculture, protectionism, sanitary and phytosanitary measures, technical barriers to trade
    JEL: F13 F15
    Date: 2017–07
  9. By: Villamil, Isabela Rosario G.; Uy, Krystal T.
    Abstract: This paper aims to promote competitive access for telecommunications providers. Among other things, it includes provisions for interconnection, access to physical facilities, and transparency. Reforms in these areas will likely benefit consumers and help businesses become more competitive. There is a need, however, to determine if or what regulatory and policy reforms are necessary for the Philippines to qualify for entry into emerging new trade agreements such as the Trans-Pacific Partnership Agreement (TPPA). This paper uses the TPPA Final Text on Telecommunications (Chapter 13, Article XIII.4) released on February 6, 2016, to measure the Philippines' readiness to join the trade agreement.
    Keywords: Philippines, telecommunications, TPP, free trade agreement, telecommunications laws, telecommunications regulations, Trans-Pacific Partnership Agreement, telecommunications services, telecommunications providers
    Date: 2017
  10. By: To Minh Thu (Diplomatic Academy of Vietnam, Hanoi, Vietnam); Hiro Lee (Osaka School of International Public Policy, Osaka University)
    Abstract: Vietnam is on the way to undertake deeper trade liberalisation, including both tariff reductions and reforms in other trade-related areas. In this paper, the impacts of Vietnam’s trade reform on its economic welfare and sectoral adjustments are assessed using a dynamic computable general equilibrium (CGE) model. We consider the effects of goods and services trade liberalisation, an increase in foreign direct investment inflows, a reduction in administrative and technical barriers to trade, and a reduction in the trade and transport margins. When all effects are combined, Vietnam’s economic welfare is projected to increase by 8.4 per cent in 2020 compared with the baseline. Many manufacturing sectors would expand, whereas agricultural, minerals and fuel sectors would contract. The output expansion is most significant in the textiles and wearing apparel sectors.
    Keywords: Trade reform, economic welfare, sectoral adjustments, Vietnam, CGE model
    JEL: F13 F15 F17
    Date: 2017–11
  11. By: Kim, Heung Chong (Korea Institute for International Economic Policy); Lee, Cheol-Won (Korea Institute for International Economic Policy); Lee, Hyun Jean (Korea Institute for International Economic Policy); Yang, Hyoeun (Korea Institute for International Economic Policy); Kang, Yoo-Duk (Hankuk University of Foreign Studies)
    Abstract: Beginning with the Global Europe Initiative in 2006, the EU has conducted active trade policy measures to contribute to economic growth, job creation and social cohesion in the European community. Comprehensive and high-leveled bilateral FTA initiatives, among others, have rapidly emerged as a major tool of the new trade policy to achieve such goals. More than a decade has passed since the Global Europe Initiative was declared. In the meantime, the EU successfully established several new generational FTAs with the Republic of Korea, Singapore, Vietnam and others, despite harsh economic turmoil led by global and European financial crises, the Greek crisis, Brexit, etc. This paper aims to illuminate how the goals of the new trade policy have been achieved through the EU's FTA strategies over the years since the Global Europe Initiative. To do this, we focus on three topics: EU standards, the evaluation process of market openness and the global value chain (GVC). In other words, we will evaluate how much the EU's FTA strategies have contributed to achieving globalization of EU standards, job creation through careful evaluation processes, and economic growth of the community by utilizing GVCs.
    Keywords: New Trade Policy; EU standard; Evaluation process; GVC
    Date: 2017–09–05
  12. By: Thu-Trang Vuong; Hong Kong Nguyen; Tung Manh Ho; Quan-Hoang Vuong
    Abstract: As collaboration became widespread in academia and educational systems, and the number of authors per article increased, the count of publication is no longer an accurate indicator of scientific output in many cases. In order to overcome this limitation, the study defined and computed a relative count of publications called ‘CP’ (credit-based contribution point), based on the sequence-determinescredit (SDC) method, as a proxy for the output of authors taking into account their level of contribution of each author. Analyses were done on a sample of 410 Vietnamese social scientists whose publications have been indexed in the Scopus database during 2008-2017. Results showed that the average CP of Vietnamese researchers in the field of social sciences and humanities is very low: more than 88% of authors have CP
    Keywords: scientific productivity; social sciences; Vietnam; science funds management; administration
    JEL: D85 D91 Q01
    Date: 2017–11–07
  13. By: Qizhong YANG (The Graduate School of Economics, Osaka University); Tsunehiro OTSUKI (Osaka School of International Public Policy, Osaka University)
    Abstract: This study examined the impact of two PRERs released by the EU—RoHS and REACH—on Malaysian and Vietnamese firms’ compliance. The analysis considers productivity as a realization of innovations and examines the R&D enhancement effect of PRERs. The effect of PRERs on productivity is also broken down into direct and indirect effects through R&D enhancement. The result shows that the response to REACH can create incentives to advance R&D, and productivity can increase through both direct and indirect channels. No relationship between the response to RoHS and R&D expenditure is found. Further analysis shows that firms comply with RoHS and REACH in different ways, but just the ability to continue exporting to the EU motivates compliance.
    Keywords: RoHS, REACH, Innovation, Productivity, Porter Hypothesis
    JEL: F18 O31 Q55 Q56
    Date: 2017–11
  14. By: Oh, Yoon Ah (Korea Institute for International Economic Policy)
    Abstract: In recent years, China has emerged as a key partner of Southeast Asia across trade, investment, and infrastructure development. Bilateral trade reached $395 billion in 2015, accounting for 15 percent of Southeast Asia's external trade and making China the region's top trading partner. The trade flows are strongly influenced by an extensive regional production network established across East Asia where China used to be the processing hub but now it is expanding its role to supply parts and components to Southeast Asia. China is the fourth-largest investor in Southeast Asia, although it only accounts for 7 percent of SEA's inbound FDI flows in 2011-2015. Its FDI flows to the region reached $6.4 billion in 2015. Infrastructure development is the most visible area of China's rising economic influence in Southeast Asia. Inadequate infrastructure is the major obstacle to accelerated and sustained economic growth in the region and China's infrastructure development initiative provides a new and unprecedented momentum for tackling this challenge. External partners need to respond to the changing economic landscape in Southeast Asia proactively and constructively. China's deeper engagement in Southeast Asia may place competitive pressures on other foreign businesses and development partners, yet this may create more market opportunities and better infrastructure for everyone. External partners also need to pay greater attention to labor and environmental standards compliance in its FDI and infrastructure development in the region, taking lessons from some of the backlashes against China's investment activities. Finally, external partners and Southeast Asia share mutual interests in diversifying their economic relations away from over-dependency on China, as recent economic and security events have clearly suggested.
    Keywords: China; Southeast Asia; Trade; FDI; Infrastructure Development
    Date: 2017–09–18
  15. By: Berthold Herrendorf; Todd Schoellman
    Abstract: Average wages are considerably lower in agriculture than in the other sectors. We document this fact for thirteen countries ranging from rich (Canada, U.S.) to poor (India, Indonesia). We develop a measure of human capital that accounts for the selection of workers with different unobserved skills into sectors. We find that differences in human capital account for most of the wage gaps. We develop a model that rationalizes this finding and that allows us to quantify the distortions to the allocation of labor. We find that they are considerably smaller than typically claimed in the literature.
    Keywords: human capital gaps, misallocation of labor, wage gaps
    JEL: O10
    Date: 2017
  16. By: Deng-Shing HUANG (Institute of Economics, Academia Sinica, Taipei, Taiwan)
    Abstract: This paper firstly analyzes the relationship between Taiwan’s economic development policies since 1960s, and the corresponding change in the industrial structure. Along with the industrial upgrading process, the attached trade patterns are addressed, especially the dynamic path of major export sectors, increasingly dependence on the lately rising China market. In addition, we extend the study to worldwide trade pattern. The twin-hub trade regime since the beginning of 21st century is empirically reconfirmed using our modified hub index. Furthermore, we identify the rising China-hub along with a declining Japan-hub. The pseudo effect of AEC on the hub pattern reveals the potentiality of economic integrated Southeast Asia in the future.
    Keywords: Industrial policy, Hub index, Twin-hub trade pattern, Middle income trap
    Date: 2017–10
  17. By: Balgos, Carol Q.; Digal, Larry N.
    Abstract: This paper aims to examine the employment generation potential of the rice value chain. It analyzes the issues in the chain and the strategies to address them, including their impact on job generation. A value chain framework was used in the analysis focusing on the case of Mlang, North Cotabato. Both primary and secondary data were utilized and key informant interviews and focus group discussions were applied to collect primary data. A range of issues affecting the performance of the rice value chain from production, postproduction, to marketing can be addressed by enhancing profitability through improved productivity, pricing, lowering cost, and diversifying income sources through intercropping, processing, and product differentiation. Implementing these strategies particularly to address severe constraints can potentially generate 36,672 additional jobs.
    Keywords: Philippines, Mindanao, rice farmers, North Cotabato, rice value chain, employment generation, value chain framework, job creation
    Date: 2017
  18. By: E.O. Annette Pelkmans-Balaoing; Gerrit Hugo van Heuvelen; Jean-Marie Viaene
    Abstract: This paper explores firms’ export dynamics in emerging economies where local firms face stiff foreign competition, both at home and abroad, and thus compelled to choose the level of quality in which to export. We develop and test a model of vertical product differentiation where the link between export performance and product quality is central. The impact of other governmental decisions related to multiple uncertainties faced by exporters such as exchange rate, freight and trade policies, are investigated as well. A rich and new firm-level data base is employed, which matches the firm-coded trade transactions data (7-digit) of Philippine manufacturing firms, with their corresponding firm survey data from 1996-2007. Using discrete survival analysis, we show that export spells have a short duration, 20 months on average. Particularly 72.2% of trade relationships in year one do not survive to year two. Market uncertainties, particularly those linked to exchange rates and transport costs increase the probability of firm exit as expected. Export survival rates are highest among firms that select an export price contained in the interval between the median and mean of the international distribution of product prices. In contrast, those choosing a price located at both ends of this distribution have the least chance of survival.
    Keywords: intra-product trade, product quality, firm dynamics, survival analysis, multiple uncertainty
    JEL: F10 F14
    Date: 2016
  19. By: Oh, Yoon Ah (Korea Institute for International Economic Policy); Shin, Minlee (Korea Institute for International Economic Policy); Kim, Mi Lim (Korea Institute for International Economic Policy); Lee, Sinae (independent)
    Abstract: Korean Abstract: 중국은 동남아의 최대 교역상대국이자 주요 투자자로서 역내 경제적 영향력을 크게 강화하고 있고, 일대일로(一帶一路) 전략하에 적극적으로 동남아 인프라 개발도 확대하고 있다. 한국이 중국의존도를 줄이기 위해 동남아 등 다른 지역과의 관계강화를 꾀하는 것과 같이 동남아 역시 중국의존도를 완화하기 위해 경제관계 다각화를 원하고있다. 한국은 이러한 상황에서 동아시아의 전체적 발전을 위해 어떻게 동남아와 상호협력하며 호혜적인 방식으로 협력을 강화할 수 있는지 고민해야 할 것이다. English Abstract: In the past decade, China has emerged as a key partner of Southeast Asia across trade, investment, and infrastructure development. Southeast Asian economies have significantly benefited from the strong economic growth of China over the years, but the resulting dependency on China has created political and economic vulnerability in the region. The challenge is how to steer these relationships toward more mutually beneficial ones. Korea needs to respond to the changing economic landscape in Southeast Asia proactively and constructively. China’s deeper engagement in Southeast Asia may place competitive pressures on Korean business interests, yet China’s expanding business networks and China-financed infrastructure improvement are likely to offer more business opportunities for everyone, including Korean firms. Korea needs to make greater efforts in the fields of innovation and productivity enhancement, in addition to paying greater attention to labor and environmental standards compliance in its FDI and infrastructure development, taking lessons from some of the backlashes against China’s investment activities. Finally, Korea and Southeast Asia have mutual interests in diversifying their economic relations away from over-dependency on China, as recent economic and security events have clearly suggested.
    Keywords: China; Southeast Asia; Economic Engagement
    Date: 2017–10–13
  20. By: Hinz, Julian
    Abstract: Economic sanctions are a frequently used tool of foreign policy. Constraining trade flows towards or from the target country is supposed to coerce its government into changing certain policies. However, sanctions constitute an obstacle to trade, thereby affecting flows of all countries, including those of sanctioning countries themselves. I gauge the global impact of three recent sanctions regimes using a structural gravity framework and quantify the "lost trade" in a general equilibrium counterfactual exercise. Each of the episodes, sanctions against Iran, Russia and Myanmar, are instructive in their own way, due to the different nature of bilateral trade and severity of measures applied.
    Keywords: sanctions,embargo,General equilibrium counterfactuals,foreign policy
    JEL: F51 F14 F13 F52
    Date: 2017
  21. By: Iskandar, Azwar
    Abstract: The objective of this study is to measure the persistence of inflation level in South Sulawesi. In addition, this study intends to find out the source of inflation persistence. The analysis of the regional inflation behavior developed in this paper is explored to commodities level. Using quarterly data from Bank Indonesia from 2006.I to 2015.III, this study was conducted to make estimation by applying Univariate Autoregressive (AR) Model. The empirical result indicates that the level of inflation persistence in South Sulawesi is relatively high. This result indicates that inflation requires a long time to return to its natural value after shocks. The high degree of inflation persistence reflected by the length of the time period required to absorb of 50% of shocks occurred before returning to its natural value i.e. 13 months. Using the estimation results of Partial Adjustment Model (PAM), it shows that high inflation persistence in South Sulawesi mainly caused by inflation rate of groups of prepared food as proxy of volatile foods group and housing, water, electrical, gas and fuel as proxy of administered price group. Moreover, the existence of TIPD in South Sulawesi as an effort to coordinate monetary and regional fiscal policy in order to control the regional inflation, proved has a negative effect on regional inflation in South Sulawesi.
    Keywords: persistensi, inflasi, sulsel
    JEL: E31
    Date: 2017–06–01
  22. By: KIM, Sangkyom (Korea Institute for International Economic Policy)
    Abstract: Korea Abstract: 한국 대외교역의 70% 이상이 집중되어 있는 아시아·태평양 지역의 경제가 높은 수준으로 통합된다면 한국에 새로운 무역기회가 창출될 것으로 기대된다. 한국은 APEC 경제공동체 논의 활성화에 보다 주도적인 역할을 담당함으로써, 아시아·태평양 시장의 안정적 확보와 외연확장의 기회로 삼아야 할 것이다. 이와 같은 맥락에서 본 연구는 최근 APEC에서 전개되고 있는 경제통합 관련 논의 현황, 쟁점 및 통합효과를 검토·분석함으로써 한국의 APEC 경제통합 사업 참여와 기여방안을 제시할 목적으로 수행되었다. English Abstract: Since the turn of the 21st century, the growing interdependence and interconnectedness of the global economies intensified the need for individual economies to engage in regional economic cooperation and integration. Recent statistics indicate that the number of regional trade agreements notified to the WTO by APEC economies has reached 265 cases, making it the most prolific period in APEC history. Given this upsurge, the significance of policy coordination and cooperation within the framework of APEC’s Regional Economic Integration activities ― inter alia, discussion on implementing “Free Trade Area of the Asia-Pacific (FTAAP)” ― has attracted considerable attention from Korean policy makers and stakeholders. APEC’s vision to create a single economic community was designed not only to reduce obstacles of trade in goods and services but also to adopt more advanced trade- and investment-related rules and measures to increase the transparency and efficiency of the economic system. Successful regulatory reforms and conformity to the international rules and standards embodied in the FTAAP framework, therefore, would help accelerate the regional economic restructuring and opening of the Asia-Pacific economy. These will eventually provide the Korean economy with increased participation in global value chains (GVCs), the export and investment markets, and strengthen political and economic ties among members. In this context, the opportunity cost of being excluded from the general trend of economic integration has become a tangible threat.
    Keywords: APEC; FTAAP; GVCs
    Date: 2017–09–29
  23. By: Briones, Roehlano M.
    Abstract: The fertilizer policy in the country has evolved from pervasive interventionism in the 1970s to today's market-oriented regime. Government has abandoned price policies and subsidies, focusing rather on standard setting, quality regulation, and training. Over the same period, domestic demand for fertilizer has continually increased, though recently, resurgent fertilizer prices have reduced total utilization. Evidence suggests that farmers (at least in the case of rice) are underapplying fertilizer, forfeiting efficiency gains at the margin. On the supply side, imports have in the past few decades emerged as the main source of fertilizer, as domestic production has dwindled. Priorities for research and policy are therefore understanding the behavior of farmers in terms of fertilizer application, and addressing internal price disparities, perhaps by improved transport infrastructure and logistics.
    Keywords: Philippines, fertilizer industry, fertilizer policy, fertilizer application, fertilizer consumption, fertilizer supply chain
    Date: 2017
  24. By: Aizawa, Toshiaki (Asian Development Bank Institute); Dekle, Robert (Asian Development Bank Institute); Helble, Matthias (Asian Development Bank Institute)
    Abstract: We compare the sources of income inequality in Japan and the United States. We exploit two longitudinal household surveys to decompose the income inequality in both countries. For Japan, we use Keio Household Panel Survey data and the five latest waves (2009–2013). For the United States, the data comes from the Panel Study of Income Dynamics and covers the years 2009, 2011, and 2013. To ensure comparability between the two countries, we restrict our sample to household heads between 35 and 65 years old and currently working. In a first step, we calculate the Gini coefficient of labor income for the two samples. We find that the Gini coefficient of labor income is higher in the United States (0.453) than in Japan (0.329), corroborating well-established previous findings. In a second step, we decompose the income inequality in both countries by using a comparable set of variables. Our results show that differences in the number of years of education and marital status explain the largest part of income inequality in Japan. In the United States, education and working hours are the strongest contributors to unequal income distribution. Finally, when introducing additional, country-specific variables, we find that working for a large company and being an irregular worker are important drivers of inequality in Japan. For the United States, lower wages for African Americans appears to contribute 5%–10% to income inequality.
    Keywords: income inequality; regression-based decomposition; japan; united states
    JEL: D33 O51 O53
    Date: 2017–02–10
  25. By: Yoshino, Naoyuki (Asian Development Bank Institute); Aoyama, Naoko (Asian Development Bank Institute)
    Abstract: Since 1998, sales channels for investment trusts have expanded in Japan. We expected this to result in greater demand for investment trusts but these expectations have yet to be met. The underlying causes of investment trusts’ slow growth may be due to negative net returns to individual investors during the economic downturn—i.e., after deducting costs from dividends. When the Japanese economy is sluggish, asset management companies should invest in high-growth Asia, among other regions, rather than the domestic market. And when domestic financial markets are strong, companies should invest more in Japanese markets. Investment trusts are the vehicle for seizing world economic trends. However, the performance of Japan’s investment trusts has not been as good as that of the United States (US). To further enhance demand for investment trusts, their fee structure must be changed so that asset management companies, distributors, and individual investors seek the same goals. In other words, the interest of distributors and asset management companies would need to be better aligned.
    Keywords: investment trusts; fee structure; sales load; asset management
    JEL: E44 G11
    Date: 2017–02–06
  26. By: LA, Meeryung (Korea Institute for International Economic Policy)
    Abstract: Korea Abstract: 2017년 1월 30일 미국이 환태평양경제동반자(TPP) 협정에서 공식적으로 탈퇴함에 따라 협정 발효 가능성이 불투명해지면서 아태 역내 주요 메가 FTA인 역내포괄적경제동반자(RCEP) 협정에 대한 관심이 높아지고 있다. 전 세계적으로 보호무역주의 움직임이 확산되고 있어 RCEP이 갖는 의미는 더 없이 중요하다고 하겠다. 본 연구는 GVC 분석을 통해 역내 글로벌 가치사슬이 심화되었음을 확인하고, RCEP 협정을 통한 역내 무역장벽 인하 및 규범의 조화가 갖는 중요성을 설명하였다. 또한 역내 가치사슬의 효율적 활용의 관점에서 RCEP 협상방향에 시사점을 제시하고자 하였다. English Abstract: The Regional Comprehensive Economic Partnership (RCEP) is an ongoing multilateral trade agreement involving ASEAN member states, Australia, China, India, Japan, South Korea and New Zealand. With the global trade slowdown, the importance of the RCEP including various dimensions, such as trade in goods, trade in services, investment, trade facilitating measures, competition, intellectual property, e-commerce, is increasing. In this study, I conduct GVC analysis to identify the intra -regional trade and production network of RCEP-participating countries (RPCs). This study provides a number of indicators that capture the RCEP value chains, and provides a picture of the economic integration within the region. Through this work, we can identify the economic significance of the comprehensive multilateral agreement amid growing complexity of production networks. This study also investigates the level of liberalization in tariffs of ASEAN+1 FTAs, then provides specific policy implications for RPCs to leverage engagement in RCEP value chains.
    Keywords: RCEP; GVC; RPCs
    Date: 2017–10–24
  27. By: Wang, Xiaohu (The Chinese University of Hong Kong); Yu, Jun (School of Economics, Singapore Management University)
    Abstract: This paper develops the asymptotic theory of the ordinary least squares estimator of the autoregressive (AR) coefficient in various AR models, when data is generated from trend-stationary models in different forms. It is shown that, depending on how the autoregression is specified, the commonly used right-tailed unit root tests may tend to reject the null hypothesis of unit root in favor of the explosive alternative. A new procedure to implement the right-tailed unit root tests is proposed. It is shown that when the data generating process is trend-stationary, the test statistics based on the proposed procedure cannot find evidence of explosiveness. Whereas, when the data generating process is mildly explosive, the unit root tests find evidence of explosiveness. Hence, the proposed procedure enables robust bubble testing under deterministic trends. Empirical implementation of the proposed procedure using data from the stock and the real estate markets in the US reveals some interesting findings. While our proposed procedure flags the same number of bubbles episodes in the stock data as the method developed in Phillips, Shi and Yu (2015a, PSY), the estimated termination dates by the proposed procedure match better with the data. For real estate data, all negative bubble episodes flagged by PSY are no longer regarded as bubbles by the proposed procedure.
    Keywords: Autoregressive regressions; right-tailed unit root test; explosive and mildly explosive processes; deterministic trends; coefficient-based statistic; t-statistic.
    JEL: C12 C22 G01
    Date: 2017–09–22
  28. By: Su, Liangjun (School of Economics, Singapore Management University); Ura, Takuya (Department of Economics, University of California Davis); Zhang, Yichong (School of Economics, Singapore Management University)
    Abstract: This paper studies non-separable models with a continuous treatment when the dimension of the control variables is high and potentially larger than the effective sample size. We propose a three-step estimation procedure to estimate the average, quantile, and marginal treatment effects. In the first stage we estimate the conditional mean, distribution, and density objects by penalized local least squares, penalized local maximum likelihood estimation, and penalized conditional density estimation, respectively, where control variables are selected via a localized method of L1-penalization at each value of the continuous treatment. In the second stage we estimate the average and the marginal distribution of the potential outcome via the plug-in principle. In the third stage, we estimate the quantile and marginal treatment effects by inverting the estimated distribution function and using the local linear regression, respectively. We study the asymptotic properties of these estimators and propose a weighted-bootstrap method for inference. Using simulated and real datasets, we demonstrate the proposed estimators perform well in finite samples.
    Keywords: Average treatment effect; High dimension; Least absolute shrinkage and selection operator (Lasso); Nonparametric quantile regression; Nonseparable models; Quantile treatment effect; Unconditional average structural derivative
    JEL: C21 I19
    Date: 2017–09–28
  29. By: Su, Liangjun (School of Economics, Singapore Management University); Wang, Wuyi (School of Economics, Singapore Management University); Zhang, Yichong (School of Economics, Singapore Management University)
    Abstract: In this paper we prove the strong consistency of several method based on the spectral clustering techniques that are widely used to study the community detection problem in stochastic block models (SBMs). We show that under some weak conditions on the minimal degree, the number of communities, and the eigenvalues of the probability block matrix, the K-means algorithm applied to the eigenvectors of the graph Laplacian associated with its rst few largest eigenvalues can classify all individuals into the true community uniformly correctly almost surely. Extensions to both regularized spectral clustering and degree-corrected SBMs are also considered. We illustrate the performance of different methods on simulated networks.
    Date: 2017–10–20

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