nep-sea New Economics Papers
on South East Asia
Issue of 2018‒01‒29
eighteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Trends in Globalization of Select Asian Countries By Mishra, SK
  2. The Minimum Wage, Exports, and Firm Performance: Evidence from Indonesia By Bin Ni; Kyosuke Kurita
  3. Is electricity affordable and reliable for all in Vietnam? By Minh Ha-Duong; Hoai-Son Nguyen
  4. Retained Earnings versus Bank Financing in Intra-industry Firm Progress in East Asia: A Regional Development Model of Capitalism By Andriesse, Edo; Mamoon, Dawood
  5. Health Practices of Children and Women with Disabilities By Reyes, Celia M.; Reyes, Charina Cecille M.; Arboneda, Arkin A.
  6. Globalization and Support for Unemployment Spending in Asia By Sijeong Lim; Brian Burgoon
  7. Impacts of Institutions on the Performances of Enterprises in Vietnam By Thi Mai Phuong, Chu
  8. The Political Boundaries of Ethnic Divisions By Bazzi, Samuel; Gudgeon, Matthew
  9. Forecasting and risk management in the Vietnam Stock Exchange By Manh Ha Nguyen; Olivier Darné
  10. Firms and Regional Favoritism By Tien Manh Vu,; Hiroyuki Yamada
  11. Project Brief: Strengthening Agricultural Research and Development Towards ASEAN Integration By SEARCA
  12. Assessment of the BUB Program: Improving Access of Local Communities to Basic Services and Strengthening Social Capital By Manasan, Rosario G.; Tolin, Lovely Ann C.; Adaro, Catharine E
  13. From central planning toward a market economy: The role of ownership and competition in Vietnamese firms’ productivity By Fabio Pieri; Le Manh-Duc; Enrico Zaninotto
  14. Electricity in Vietnam: where does it come from, how to make it greener ? By Minh Ha-Duong
  15. Case Studies: Research Collaboration between Research Institutions, LGU, and NGAs By SEARCA
  16. Recent Developments in Trade, Investment and Finance of China’s Belt and Road By Alicia Garcia-Herrero; Jianwei Xu
  17. In which countries and schools do disadvantaged students succeed? By Francesco Avvisati
  18. Thailand's 'limited order trap' : a critical application of North, Wallis and Weingast By Gwendoline Promsopha; Antoine Vion

  1. By: Mishra, SK
    Abstract: In this study we have constructed a composite index of globalization of select Asian countries during 1970-2014 by minimizing the Euclidean norm of Shapley values of indicator variables contributing to the overall index. As a consequence, the mean expected marginal contributions of constituent variables to the overall index are approximately equal and thus, the overall composite index represents the constituent variables optimally. We call this index the Almost Equal Marginal Contribution (AEMC) index. We find that AEMC index and the KOF index of globalization are highly correlated (Pearson’s r=0.982). We find that Singapore, Cyprus, Israel, Qatar, Malaysia, Jordan, Lebanon, Turkey, Kuwait, Bahrain and Japan have done very well and scored above 0.7. At the other end, Yemen, Tajikistan, Bangladesh, Bhutan, Iran, Nepal and Myanmar have scored below 0.5. Trends in globalization are increasing in general, but the rate of globalization, which accelerated after 1991, lost is momentum after 2007. Disparities in globalization, as measured by Gini coefficient over the countries under study, were more or less constant up to 1985 but after that they started declining. We have found that the index of globalization goes well with other socio-economic measures such as Economic Freedom Index, International Innovation Index, Social Progress Index, Human Development Index and Corruption Perception Index, showing high values of Kendall’s Tau and Spearman’s Rho. Its association with Democracy Index is rather weak but positive. It is almost uncorrelated with the Gender Gap Index. We observe, therefore, that globalization index is moving well with the indices of socio-economic condition in the Asian countries.
    Keywords: Globalization; Synthetic index; Asian countries; Shapley values; Equi-marginal contribution, Lee thesis
    JEL: C43 C71 F02 O53
    Date: 2017–11–18
  2. By: Bin Ni (Faculty of Business Administration, Toyo University); Kyosuke Kurita (School of Economics, Kwansei Gakuin University)
    Abstract: This paper examines the interrelationship between changes in the provincial minimum wage, firms' export behavior, and firms' performance in Indonesia. In this regard, we apply two-stage least squares regression analysis to detailed firm-level data of manufacturing enterprises between 2002 and 2014. We find that an increase in the minimum wage is associated with decreases in a firm's employment rate, its probability of exporting, and its overall performance in terms of productivity and markup. We also use the 2012 minimum wage reform in Indonesia to conduct a combined propensity score matching and difference-in-difference analysis to mitigate the potential endogeneity of minimum wage regulation. Our findings are generally robust to alternative estimation methods. Moreover, the findings suggest that Indonesian exports and the country's comparative advantage in international markets are not negligibly affected by higher labor costs through minimum wage growth.
    Keywords: minimum wage, firm performance, Indonesia, difference-in-difference
    JEL: F14 F16 L25 J88
    Date: 2018–01
  3. By: Minh Ha-Duong (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique); Hoai-Son Nguyen (ABIèS - Ecole doctorale - INA P-G - Institut National Agronomique Paris-Grignon, CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi, CIRED - Centre International de Recherche sur l'Environnement et le Développement - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Access to clean and affordable energy for all is the seventh sustainable development goal. This manuscript examines the state of access to electricity for all in Vietnam, based on national households surveys conducted in the time period 2008-2014. Our theoretical contribution to debates on energy poverty is to account for the human dimension by using an self-reported satisfaction indicator. We argue that subjective energy poverty indicators –designed from surveys asking people if they had enough electricity to meet their households needs– are as relevant as objective indicators –from engineering or economic data. While objectivity is laudable, development is not only about technology and money: measuring human satisfaction matters. We find that in Vietnam, the problem of providing access to clean energy for all is largely solved for now: the fraction of households without access to electricity is below two percent, the median level of electricity usage in 2014 was 100 kWh per month per household, and the fraction of households declaring unsatisfied electricity needs is below three percent. We also find that electricity is becoming a heavier burden in Vietnamese households’ finances. In 2010, the electricity bill exceeded 6% of income for 2.4% of households, but in 2014 that number reached 5.5% of households. Electricity is affordable for all in Vietnam today, but this could be compromised if electricity tariffs increase in order to finance further clean development of the energy system. We quantify how this problem could be attenuated by making the retail tariff of electricity much more progressive. We define a more progressive block tariff that provides free access to 30 kWh basic need per household, while increasing the cost for other blocks. This could increases the revenue for EVN by 15% and at the same time decrease the electricity bill for the 28% of households who use less than 80 kWh per month.
    Keywords: sustainable development goal,electricity,Vietnam,Indicators of sustainable development
    Date: 2017–08–01
  4. By: Andriesse, Edo; Mamoon, Dawood
    Abstract: The Varieties of Capitalism approach, relatively new in comparative political economy, has generated a number of studies investigating national capitalist systems and economic performances of developed countries. This approach offers a useful analytical model as it enables to study the institutional relations of firms and relations between these institutions, the so-called institutional complementarities. The most common result of the approach is the dichotomy between Liberal Market Economies, notably the United States and the United Kingdom, and Coordinated Market Economies, notably Germany, France and Japan. In this paper an attempt is made to apply the Varieties of Capitalism approach to the regional level of scale in developing countries. The province of Satun in Southern Thailand and the state of Perlis in Northern Malaysia, two bordering and peripheral regions within their respective national space economies, have been chosen as research areas. Using a modified analytical model of the Varieties of Capitalism approach, this paper tries to reveal whether and how firms cooperate with each other and how firms find access to finance. Moreover, it is investigated what institutional complementarities can be identified. It should be noted that this paper does not address institutional relations between the private and public sector. The paper starts with an outline of the Varieties of Capitalism approach and a modification for analysis at the regional level of scale in developing countries. This is followed by an economic geographical overview of Satun and Perlis. The next two sections concern the main topics: inter-firm relations and access to finance. Obviously this paper ends with some concluding remarks. Results of firm surveys in each region indicate that inter-firm relations are relatively strong in Satun, coupled with a relatively important role for banks. These results contrast with the Perlis’ case where inter-firm relations are much weaker and owners and shareholders of firms are important providers of financial capital.
    Keywords: Capitalism, Intra industry firm behavior, East Asia
    JEL: L1 L16 P11 P17
    Date: 2017–11–14
  5. By: Reyes, Celia M.; Reyes, Charina Cecille M.; Arboneda, Arkin A.
    Abstract: Persons with disabilities (PWDs) in the Philippines generally face several difficulties in getting hold of a much needed medical attention, including transportation and other barriers to access, and financial difficulties, among others. This study is an offshoot of the joint project of the Philippine Institute for Development Studies and the Institute of Developing Economies that focuses on the health conditions of PWDs, both adult women and children, in Mandaue City and San Remigio, Cebu, Philippines. Using primary data collected through survey and key informant interviews with various stakeholders, the study highlights the lack of access to appropriate services for PWDs and that out-of-pocket expenditures on health cover a significant portion of their income. Some recommendations include the provision of early detection and intervention, routine monitoring of programs, the expanded utilization of medical and nursing students in the communities in providing preventive care services, the expanded coverage for medications and nursing/caregiver support, and the increased training on health-care providers and personnel, particularly in the communities.
    Keywords: Philippines, health, person with disability, PWD, Cebu, Mandaue City, health practices, access to health care, San Remigio
    Date: 2017
  6. By: Sijeong Lim (UvA - University of Amsterdam [Amsterdam]); Brian Burgoon (UvA - Universiteit van Amsterdam)
    Abstract: Scholars of international political economy have long debated whether economic globalization increases citizen support for welfare policies to compensate for or insure against the economic risks posed by globalization. The vast majority of what we know about such issues, however, is gleaned from study of Western and industrialized polities; we know very little of such dynamics in Asia, the continent harboring much of the world's population and having experienced the most extensive development in economic globalization. The present paper tries to remedy this silence by focusing on public opinion in Asian countries to identify whether and under what conditions exposure to globalization generates support for welfare spending. We argue that globalization's effects are moderated by two conditions widely seen to distinguish Asian experiences from those in Western polities: 1) levels of economic development that influence who wins and loses from globalization and 2) existing social policy institutions that influence whether globalization's losers look to public as opposed to more private forms of compensation. We find support for our expectations using five rounds of the Asiabarometer survey covering twenty-eight Asian countries.
    Keywords: Globalization,Unemployment,Liberalism
    Date: 2017–06
  7. By: Thi Mai Phuong, Chu
    Abstract: SECO Working Paper 23/2017 by Chu Thi Mai Phuong
    Abstract: This paper investigates the impacts of institutions on the performances of enterprises in Vietnam. The results obtained from the quantitative research method show that the criteria on institutions do not affect the performances of enterprises in Vietnam; while some criteria have positive impacts, others negatively affect them. Moreover, the improvement in the quality of economic institutions will lead to the differences in performance among different types of enterprises. More specifically, improving economic institutional quality will result in higher increases in the revenues and added values of state-owned enterprises than those of FDI enterprises. Similarly, the improvement also leads to the higher increase in private enterprises' revenues but lower increases in their added values and added value ratios compared to those of FDI enterprises. However, there is no difference in the impact of institutional quality improvement on the before-tax earnings of different types of enterprises. Based on the research's result, the paper proposes some suggestions to improve the quality of economic institutions, and thus improve enterprises' performances and success, on all three aspects including "rules", "players" and "implementation procedures".
    Date: 2018–01–19
  8. By: Bazzi, Samuel; Gudgeon, Matthew
    Abstract: Policymakers in diverse countries face the persistent challenge of managing ethnic divisions. We argue that redrawing subnational political boundaries can fundamentally reshape these divisions. We use a natural policy experiment in Indonesia to show that changes in the political relevance of ethnic divisions have significant effects on conflict in the short- to medium-run. While redistricting along group lines can increase social stability, these gains are undone and even reversed in newly polarized units. Electoral democracy further amplifies these effects given the large returns to initial control of newly created local governments in settings with ethnic favoritism. Overall, our findings show that the ethnic divisions underlying widely-used diversity measures are neither fixed nor exogenous and instead depend on the political boundaries within which groups are organized. These results illustrate the promise and pitfalls of redistricting policy in diverse countries where it is not feasible for each group to have its own administrative unit.
    Keywords: conflict; Decentralization; Ethnic Divisions; Polarization; Political Boundaries
    JEL: D72 D74 H41 H77 O13 Q34
    Date: 2018–01
  9. By: Manh Ha Nguyen (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - UN - Université de Nantes); Olivier Darné (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - UN - Université de Nantes)
    Abstract: This paper analyzes volatility models and their risk forecasting abilities with the presence of jumps for the Vietnam Stock Exchange (VSE). We apply GARCH-type models, which capture short and long memory and the leverage effect, estimated from both raw and filtered returns. The data sample covers two VSE indexes, the VN index and HNX index, provided by the Ho Chi Minh City Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX), respectively, during the period 2007 - 2015. The empirical results reveal that the FIAPARCH model is the most suitable model for the VN index and HNX index.
    Keywords: Vietnam Stock exchange,volatility,GARCH models,Value-at-Risk.
    Date: 2018–01–09
  10. By: Tien Manh Vu, (Asian Growth Research Institute); Hiroyuki Yamada (Faculty of Economics, Keio University)
    Abstract: We examine formal firm behavior in response to regional favoritism by top-ranked politicians using a balanced panel of 444 rural districts (yearly observations) in Vietnam during 2000 to 2011 and census microdata of firms, politicians' home towns, and climate and population microdata. The study finds that the number of firms and aggregated employment of firms increase in the home town districts of politicians after they resume office. The findings suggest that regional favoritism in a single-party system maintains the continuous development of firms in politicians' home town districts and widens the gaps among rural districts.
    Keywords: Firms, Favoritism, Politician,Vietnam
    JEL: D22 H72 R11
  11. By: SEARCA
    Abstract: The Association of Southeast Asian Nations (ASEAN) established the ASEAN Economic Community (AEC) in 2015 to “transform ASEAN into a single market and production base, a highly competitive economic region, a region of equitable economic development, and a region fully integrated into the global economy.†The broad goal of economic integration implies cooperation in specific areas, including human resource development and a region-wide recognition of professional qualifications. One of the critical dimensions of human resource enhancement is the capacity to do research and development, not only in terms of pushing the frontiers of science and knowledge but also as an integral part in the educational process. Â
    Keywords: asean, Southeast Asia
    Date: 2017
  12. By: Manasan, Rosario G.; Tolin, Lovely Ann C.; Adaro, Catharine E
    Abstract: The Aquino administration through the Human Development and Poverty Reduction Cluster and Good Governance and Anti-Corruption Cluster launched the bottom-up budgeting (BUB) exercise in 2012 in time for the preparation of the 2013 National Expenditure Program. The BUB process is one of the major reform initiatives of the Aquino administration and has been tagged as such from several perspectives. Previous studies of the BUB program focused on the process rather than the results/outcomes of the BUB. In contrast to the previous assessment of the BUB, this study aims to assess the results/outcomes of the BUB in terms of: (i) how well the poverty alleviation objective of the BUB has been addressed and (ii) how well the BUB contributed to the strengthening of social capital. Assessing the poverty alleviation aspect of the BUB through a comparison of per capita incomes using the Family Income and Expenditure Survey revealed that the BUB is not associated with greater increase in per capita household income at the provincial level. However, the household respondents had positive perception of the BUB projects implemented in their communities in terms of having directly benefited from the projects. In particular, respondents noted improvement in their access to transport services and water and sanitation through the BUB projects. Among the civil society organizations (CSOs), the overall sentiment toward the BUB is one of enthusiasm and optimism. The BUB process helped ensure broader and more inclusive CSO participation, particularly in local government unit (LGU) planning and budgeting. BUB is also seen as an avenue for CSOs to identify government projects that will improve their lives and to be more active in LGU affairs, thus becoming more empowered.
    Keywords: Philippines, bottom-up budgeting, civil society organizations, local governance, assessment, BUB, CSOs, participation, social capital
    Date: 2017
  13. By: Fabio Pieri; Le Manh-Duc; Enrico Zaninotto
    Abstract: This paper examines the role of ownership and market competition in Vietnamese firms’ total factor productivity (TFP) from 2001 to 2011. Making use of a large panel dataset of Vietnamese manufacturing firms, we find that, on average, both foreign-owned enterprises(FOEs) and state-owned enterprises (SOEs) have performed better than privately owned enterprises (POEs) in terms of their TFP levels. However, while FOEs ranked the highest in terms of TFP in the period 2001-2006, SOEs "closed the gap" with FOEs in the period 2007–2011. SOEs’ good performance may be the result of the state-led development policies undertaken during the 2000s. We also find that market competition has been effective in enhancing average firm productivity and reducing the gaps in efficiency across firms of different ownership types. Based on these results, we compare Vietnam’s transition path with those followed by other countries.
    Keywords: Ownership, market competition, TFP, Vietnamese manufacturing, transition economies
    JEL: D24 L33 O53 N60 P27
    Date: 2018
  14. By: Minh Ha-Duong (CleanED - Clean Energy and Sustainable Development Lab - USTH - University of sciences and technologies of hanoi, CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - AgroParisTech - EHESS - École des hautes études en sciences sociales - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement)
    Keywords: electricity, electricity production
    Date: 2017–08–04
  15. By: SEARCA
    Abstract: As part of the project funded by the Department of Agriculture-Bureau of Agricultural Research (DA-BAR) titled, Strengthening Agricultural Research and Development towards ASEAN Integration, case studies were conducted to show the collaboration of an agricultural research institute with a local government unit (LGU) and other national government agencies (NGAs). The case study research collaboration was selected based on the previous benchmarking activity conducted for the agricultural research and development (ARD) institutions of the country. In the said benchmarking activity, eight regions were selected. In each selected region, two state universities and colleges (SUCs) and the research division of DA’s Regional Field Office were interviewed. A questionnaire to assess the collaboration of the research institutions was developed. From the results of the benchmarking activity, two case studies of research collaboration were selected based on the list of SUCs, where the focus group discussions (FGDs) were conducted. The SUCs identified are a representation of a high research output university on high-value crops like vegetables, in the case of Benguet State University (BSU), and a low research output university on traditional crops like rice, in the case of Bulacan Agricultural State College (BASC). The case studies focused on the collaboration between BASC and the LGU of San Ildefonso, Bulacan, and BSU with NGAs in CAR.
    Keywords: ASEAN, Southeast Asia, Philippines
    Date: 2017
  16. By: Alicia Garcia-Herrero (Chief Economist for Asia Pacific, NATIXIS; Department of Economics , The Hong Kong University of Science and Technology; Institute of Emerging Market Studies, The Hong Kong University of Science and Technology); Jianwei Xu (Beijing Normal University)
    Abstract: This paper makes a mid-term assessment for China’s Belt and Road Initiative (BRI) from the perspective of trade, investment and finance, respectively. We will discuss the economic progress of the Belt and Road Initiative from the trade, investment and financial perspectives, respectively. Trade is most accessible field for China to breakthrough as it can be instantly affected by short-term policies such as removing tariff or non-tariff barriers. Our findings also confirm the rapid progress in trade, though the development was not equally distributed in the area, with the ASEAN, Middle East, South Asia and Russia constitute the largest trade share with China. Our analysis on the BRI’s spillover effect on the US and the EU reveals that the BRI plan poses actually very little substitution effect but under some scenarios even positive impact on the EU-China trade. We especially assess the impacts on the EU, which sits at the other end of the BRI area, and find that better connectedness within the BRI area will bring higher economic benefits to the EU than free trade agreements.
    Date: 2018–01
  17. By: Francesco Avvisati (OECD)
    Abstract: PISA 2015 data show that, on average across OECD countries, as many as three out of four students from the lowest quarter of socio-economic status reach, at best, only the baseline level of proficiency (Level 2) in reading, mathematics or science. While in Canada, Denmark, Estonia, Finland, Germany, Hong Kong (China), Ireland, Japan, Korea, the Netherlands, Norway, Singapore, Slovenia and Viet Nam, more than 30% of disadvantaged students scored at Level 3 or above in all PISA subjects in 2015, and can thus be considered “academically resilient”. Students who perform at Level 3 begin to demonstrate the ability to construct the meaning of a text and form a detailed understanding from multiple independent pieces of information when reading. They can work with proportional relationships and engage in basic interpretation and reasoning when solving mathematics problems; and they can handle unfamiliar topics in science. Such skills are the foundations for success and further learning later in life. PISA data collected over a decade (in 2006, 2009, 2012 and 2015) show that several countries have been able to increase the share of academically resilient students among those in the bottom quarter of socio-economic status.
    Date: 2018–01–29
  18. By: Gwendoline Promsopha (LEST - Laboratoire d'économie et de sociologie du travail - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique); Antoine Vion (LEST - Laboratoire d'économie et de sociologie du travail - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Development economics seems to rediscover the importance of domesticating violence as a condition of democratic empowerment. According to the theoretical framework developed by North, Wallis and Weingast (NWW), developing countries are defined as limited access orders that reduce the violence potential of powerful elite organizations through the manipulation of economic rents and the negotiation of more or less stable elite coalitions. NWW's framework must be credited for reintroducing social orders in economics' research agenda; allowing for different paths to development, and highlighting violence and conflict as a central force in societies. In this paper, we first go back to the discussion of two main challenges in NWW's theory and methodology. The first one is their pluralist understanding of open access societies. The second is the way they link micro-level behavior to macro-political changes. We show here that, though alternative strategies could be followed, the methodological problem underlined by critics is somehow inevitable. We then apply the alternative frameworks we designed to Thailand, which has been through what observers may call a " failed democratization process " in the last decades, in order to bring out the key challenges to build up analytical frameworks of failed processes. 2
    Date: 2017–09–15

This nep-sea issue is ©2018 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.