nep-sea New Economics Papers
on South East Asia
Issue of 2018‒03‒05
twenty-one papers chosen by
Kavita Iyengar
Asian Development Bank

  1. This paper examines the role of Indonesia-ASEAN trade as one of the opportunities for the Indonesian government to realise food security in the country. Focusing on four market share criteria–competitiveness effect, initial country/regional market effect, initial product/commodity effect, and adaptation/world growth effect–the Constant Market Share (CMS) analysis investigates trading activity between Indonesia and ASEAN before and after the global food crisis during 2007-08. Results show that trading activity between Indonesia and other ASEAN member countries experienced different structures and patterns in terms of the above market share criteria. The results recommend for the Indonesian government to develop an effective trade strategy by analysing the track record of their products, particularly their products’ competitiveness, trade value growth and market share. This paper also suggests that Indonesian government should conduct policy harmonisation, in the form of trade facilitation, tariff reduction and elimination, as well as services and trade liberalisation, to optimise the food security achievement in Indonesia. By Eo, Yunjong; Morley, James
  2. The involvement in global value chains and its policy implication in Vietnam By Taguchi, Hiroyuki
  3. The Effects of Ethnic Chinese Minority on Vietnam’s Regional Economic Development in the Post-Vietnam War Period By Masami Imai; Tuan Anh Viet Nguyen
  4. Indonesia; 2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Indonesia By International Monetary Fund
  5. To the ones in need or the ones you need? The Political Economy of Central Discretionary Grants − Empirical Evidence from Indonesia By Gerrit J. Gonschorek; Bambang Suharnoko Sjahrir; Guenther G. Schulze
  6. The impact of petty corruption on firm innovation in Vietnam By Nguyen, Ngoc Anh; Doan, Quang Hung; Nguyen, Ngoc Minh; Tran-Nam, Binh
  7. Tax corruption and private sector development in Vietnam By Nguyen, Ngoc Anh; Doan, Quang Hung; Tran-Nam, Binh
  8. Impact Evaluation and Implications for Korea's ODA Evaluation System By Hur, Yoon Sun; Jeong, Ji Sun; Lee, Juyoung; Yoo, Aila; Yoon, Sang Chul; Lee, Jong Wook
  9. Indonesia; Selected Issues By International Monetary Fund
  10. Urban and Rural Households' Energy Use: Sets, Shocks, and Strategies in the Philippines By Dacuycuy, Connie B.; Dacuycuy, Lawrence B.
  11. Body Weight and Hypertension Risk in a Developing Country By Dang, Thang
  12. Business Formalization in Vietnam By Brian McCaig, Jordan Nanowski
  13. Information Spillover across International Real Estate Investment Trusts: Evidence from an Entropy-Based Network Analysis By Qiang Ji; Hardik A. Marfatia; Rangan Gupta
  14. Quantifying the Impact of the November 2014 Shanghai-Hong Kong Stock Connect By Richard C. K. Burdekin, Pierre Siklos
  15. GVCS and centrality: Mapping key hubs, spokes and the periphery By Chiara Criscuolo; Jonathan Timmis
  16. The Impact of Protective Measures in Integration Associations on International Trade By Baeva, Marina; Knobel, Alexander; Zaytsev, Yuriy; Loshchenkova, Anna
  17. Impacts of an Ice-Free Northeast Passage on LNG Markets and Geopolitics By Schach, Michael; Madlener, Reinhard
  18. Bilateral Capital Flows: Transaction Patterns and Gravity By Rogelio Mercado Jr.
  19. A New Smartphone for Every Fifth Person on Earth: Quantifying the New Tech Cycle By Benjamin Carton; Joannes Mongardini; Yiqun Li
  20. Impacts of an Ice-Free Northeast Passage on LNG Trading: Transport Routes and Optimal Capacity Planning By Schach, Michael; Madlener, Reinhard
  21. Pros and Cons of the Impact Factor in a Rapidly Changing Digital World By Michael McAleer; Judit Olah; Jozsef Popp

  1. By: Eo, Yunjong; Morley, James
    Keywords: Indonesia, ASEAN, Regional Trade, Food Security, Global Food Crisis, Competitiveness, Food Policy
    Date: 2017
  2. By: Taguchi, Hiroyuki
    Abstract: This article examines the involvement pattern in global value chains (GVCs) with its policy implication in Vietnam, in comparison with those of the other Asian countries, by using the OECD value-added-trade data. The study first identified the “smile curve” as the average pattern of the Asian GVCs development paths in total manufactures, in which the domestic value share to exports declines at the early development stage and regains itself at the later stage with the turning point being at 2,015 US dollars as per capita GDP. The study then found that the Vietnamese economy stood at the critical position in its GVCs development path, such that the Vietnamese current per capita GDP is very close to 2,015 US dollars, the Asian average turning point in total manufactures. The sectoral analysis in Vietnam also implied that sophisticated manufacturing sectors needs to be transformed from only assembling activities toward developing domestic capacities to produce parts and components. The Government policies in Vietnam thus matter to nurture local productive capacities, and the “enterprise clustering” and “linkages development” should be the key strategies to facilitate technological transfers from international firms to local ones in line with the GVCs involvement.
    Keywords: Global value chains, Vietnam, Value-added-trade data, Manufactures, Local productive capacities
    JEL: F14 L60 O53
    Date: 2018–02
  3. By: Masami Imai; Tuan Anh Viet Nguyen
    Abstract: This paper examines the impact of the Hoa, an ethnically Chinese, economically dominant minority, on regional economic development in Vietnam. To address the endogeneity of the geographical distribution of the Hoa, we use an important historical episode: the rapid deterioration in Sino-Vietnamese diplomatic relationship that led many ethnic Chinese to flee abroad, particularly to the refugee camps in the Guangxi province of China, in 1979. We find that the effects of proximity to the refugee camps on the share of ethnic Chinese in 1989 were more pronounced for provinces that had a larger presence of the ethnic Chinese population in 1979. We also find strong correlations between the 1989 share of ethnic Chinese (instrumented) and contemporary indicators of economic performance. The results suggest that the ethnic Chinese minority had positive economic impacts on Vietnam’s regional economies and that the post-Vietnam War exodus of ethnic Chinese was likely to have had long-term negative economic impacts.Length: 55 pages
  4. By: International Monetary Fund
    Abstract: The Indonesian economy continues to perform well. Economic growth has stabilized at near 5 percent, inflation has moderated, the current account deficit is manageable, and systemic risks are contained. Indonesia is in a good position to address its socio-economic challenges. Creating sufficient jobs for its young and growing population and reaping the benefits of the demographic dividend requires higher sustainable and inclusive growth and economic diversification.
    Date: 2018–02–06
  5. By: Gerrit J. Gonschorek; Bambang Suharnoko Sjahrir; Guenther G. Schulze (Department of International Economic Policy, University of Freiburg)
    Abstract: We analyze the allocation of discretionary grants from the central government to local governments in Indonesia. Using OLS and Fixed Effects models on an unbalanced panel data set for more than 400 Indonesian districts covering the period 2005-2013, we investigate whether the allocation of the grants is determined by the need of a district, by political alignment of the central government with the local district heads, or by reelection motives of the incumbent president. We find that grant allocations are not determined by need characteristics and that political considerations matter significantly. Districts with low support for the president received significantly more than the core supporting districts, especially in the year of national elections. This effect is limited to the first term of the president. In the second term, after which reelection is impossible, political considerations were largely absent. This pattern is consistent with the view that the incumbent president considers discretionary grants as an instrument to increase reelection probabilities. Unlike the evidence for most countries, we find no effect for political party alignment with local district heads. Our results are robust to the inclusion of a number of other variables capturing competing motives.
    Keywords: Intergovernmental transfer, Discretionary grants, Political alignment, Core/Swing voter, Fiscal decentralization, Indonesia
    JEL: D72 H72 H77
    Date: 2018–01
  6. By: Nguyen, Ngoc Anh; Doan, Quang Hung; Nguyen, Ngoc Minh; Tran-Nam, Binh
    Abstract: Corruption has been found to have complex effects on firm innovation.Limited theoretical and empirical evidence to date has been rather inconclusive. This study employs econometric estimation techniques to analyze data from small and medium manufacturing enterprises in Vietnam to assess the impact of petty corruption on firm innovation. The empirical results tend to support the "greasing" impact of corruption on innovation. Specifically, informal payments by Vietnamese firms are shown to encourage overall innovation, product improvement, innovation and new innovation. In view of the commonplace business practice of paying small informal fees to speed up transactions in the inefficient public sector in Vietnam, this finding is not entirely unexpected, though troubling.
    Keywords: Corruption, Viet Nam, Innovation
    JEL: O17 O3
    Date: 2016–06
  7. By: Nguyen, Ngoc Anh; Doan, Quang Hung; Tran-Nam, Binh
    Abstract: This article aims to examine the impact of tax corruption on private sector development in Vietnam. It is motivated by two separate but related considerations. First, despite the seriousness of the phenomenon of corruption, there is a paucity of rigorous empirical research of corruption, particularly tax corruption, in Vietnam. Secondly, ineffective control of corruption is viewed as a cause of Vietnam’s recent total factor productivity (TFP) slowdown or its poor industrial policy, both of which may hamper Vietnam’s progress as a low middle-income country. Without some understanding on the impact of tax corruption on the economy, it may not be possible to devise the most effective anti-corruption policy and measures. After a brief literature review that focuses on tax corruption, various conceptual issues relating to tax corruption are discussed and clarified. The extent of petty tax corruption in Vietnam is then discussed, followed by a review of findings and implications of recent studies on how tax corruption impacts on private sector development in Vietnam. Despite perceptions and evidence of widespread petty tax corruption, Vietnam ranks very highly both in terms of tax collection and tax effort.Not unexpectedly, the impact of tax corruption is mixed in the sense that empirical evidence lends credence to both 'sanding the wheels' and 'greasing the wheels' hypotheses. Finally, some broad policy recommendations for combating tax corruption are offered.
    Keywords: tax corruption, unofficial/informal payments, private sector, Vietnam
    JEL: H20 H26 H29
    Date: 2017–12
  8. By: Hur, Yoon Sun (Korea Institute for International Economic Policy); Jeong, Ji Sun (Korea Institute for International Economic Policy); Lee, Juyoung (Korea Institute for International Economic Policy); Yoo, Aila (Korea Institute for International Economic Policy); Yoon, Sang Chul (Yonsei University); Lee, Jong Wook (University of Minnesota)
    Abstract: The goal of this study is to examine the trends, policies and issues of impact evaluation, and to draw policy implications for the introduction of impact evaluation in Korea's ODA evaluation system. To achieve this goal, this study first compares and analyzes the policy, evaluation system and various cases of impact evaluation from other donor agencies such as the World Bank, ADB, USAID, MCC, and JICA. Second, we analyze the major issues related to impact evaluation in details. Three issues are raised and analyzed: evaluability assessment, methodology design, and feedback of the result. Third, we conduct an impact evaluation using clustered-RCT to assess the performance of a health project supported by the Korean government in Vietnam. Finally, we analyze the tasks for introducing impact evaluation into Korea's ODA evaluation system at the level of an ODA-integrated evaluation system and implementing agency. This study also proposes a mid- to long-term roadmap to reform Korea’s ODA evaluation system.
    Keywords: ODA; Impact; Evaluation
    Date: 2018–02–08
  9. By: International Monetary Fund
    Abstract: Selected Issues
    Date: 2018–02–06
  10. By: Dacuycuy, Connie B.; Dacuycuy, Lawrence B.
    Abstract: The paper aims to analyze the determinants of household energy portfolio in urban and rural areas and to determine how price shocks and weather variabilities affect energy use in the Philippines. It confirms that energy switching is observed among high-income urban and rural households while energy stacking is observed among rural households---a response to heat index deviation and LPG price shock. The paper also finds that households’ energy portfolios have components comprising of modern sources as energy anchors and a component that is most likely to adjust in response to price and weather-related shocks.
    Keywords: Philippines, energy portfolio, energy stacking, energy switching, energy anchors, energy shocks
    Date: 2018
  11. By: Dang, Thang
    Abstract: This study provides a first causal inference of the link between body weight and the risk of hypertension among adults in a developing country, Vietnam. The study uses biological offspring’s body weight as an instrument for exogenous changes in parents’ body weight to address the potential problem of endogeneity and applies the instrumental variable approach to estimate the relationship of interest. The paper finds that on average an addition BMI unit causally increases the likelihood of being hypertensive by about 5.1–7.3% points for men and 5.6–8.2% points for women. The paper also shows that the impacts of body weight on the risk of hypertension are different with various age intervals. Furthermore, overweight or obesity causally enlarges the risk of hypertension compared to underweight or normal weight.
    Keywords: Body weight; Hypertension; Causal effect; Vietnam
    JEL: I1 I14 I18
    Date: 2017–12–06
  12. By: Brian McCaig, Jordan Nanowski (Wilfrid Laurier University)
    Abstract: We estimate the impact of business formalisation using nationally representative panel data on businesses in Vietnam. Our data allows us to observe businesses for two surveys prior to obtaining a license and hence to control for differential trends before formalisation. We find that obtaining a license is not associated with an increase in profits or other business outcomes such as revenue, expenses, and employment once we control for differential trends. Controlling for trends is crucial, as estimates that ignore trends consistently find a larger positive association between becoming licensed and business performance. Our results suggest that inducing more businesses to register is unlikely to bring about large-scale changes for these businesses.
    Keywords: Informal, Formalization, Asia, Vietnam, Household business
    Date: 2018–02–01
  13. By: Qiang Ji (Center for Energy and Environmental Policy research, Institutes of Science and Development, Chinese Academy of Sciences, Beijing, China and School of Public Policy and Management, University of Chinese Academy of Sciences, Beijing, China); Hardik A. Marfatia (Department of Economics, Northeastern Illinois University, Chicago, USA); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, South Africa)
    Abstract: In this study, we unveil information spillover between international real estate markets using an entropy-based network approach for real estate investment trusts (REITs). Our novel approach is simple and yet flexible enough to accommodate the nature and extent of information spillover among several components of the global housing network. For a network of nine leading industrial economies, we unveil static and time-varying information spillover of REIT returns using total transfer entropy, pairwise net transfer entropy and directional (“From”, “To”) transfer entropy. Evidence suggests that the greatest pairwise transfer entropy is from the US to Australia, whereas France, the Netherlands, New Zealand and Singapore are the largest information recipients in the network. The time-varying evolution of total transfer entropy also exhibits a declining trend, supporting the decoupling hypothesis for the global housing market network. The extreme value analysis shows the changing role of US and UK housing markets.
    Keywords: REIT, Entropy transfer, Information spillover, Market integration
    JEL: R30 R33 G14
    Date: 2018–02
  14. By: Richard C. K. Burdekin, Pierre Siklos (Wilfrid Laurier University)
    Abstract: The November 2014 Shanghai-Hong Kong Stock Connect represented an important step in China’s capital account liberalization, allowing relatively free movement of investor funds between the two markets for the first time. We offer a quantification of the effects of the new program, examining Northbound and Southbound flows of funds over the first two years of the Stock Connect. While controlling for other sentiment and liquidity effects, we test how these flows may have affected the extent of the premium seen for local A-share listings in Shanghai relative to the prices accruing to the same companies in Hong Kong market trading.
    Keywords: Capital account liberalization; Stock returns; Sentiment; Shanghai; Hong Kong
    JEL: G15
    Date: 2018–01–30
  15. By: Chiara Criscuolo; Jonathan Timmis
    Abstract: This paper uses “centrality” metrics to reflect position with Global Value Chains (GVCs). Central sectors reflect those that are highly connected (both directly and indirectly) and influential within globalproduction networks, whereas peripheral sectors exhibit weak linkages and are less influential. Applying these metrics to OECD ICIO data, reveals there have been profound changes in the structure of GVCs over the period 1995-2011. Whilst some activities remain clustered around the same key hubs as was the case at the start of the period (e.g. motor vehicles), for others there have been dramatic changes in the geography of economic activity (e.g. IT manufacturing), whereas other activities have become more influential for value chains almost universally (e.g. IT services). Several emerging economies and their industries have become more central to global production networks. We find this is particularly true of most peripheral industries of Eastern European countries, with their growing importance coinciding with the timing of their EU accession. Asian value chains have also undergone substantial reorganisation. In particular, the centrality of Japanese industries has fallen from an initial position of being the key hub within Asian value chains and the bulk of this fall does not appear to be due to the decline in size of the Japanese economy over this period. This is in contrast with trends in foreign value added content of exports of these Japanese industries, which increased over the same time period, illustrating that the centrality measure does not seem to simply reflect features captured by existing GVC metrics.
    Keywords: centrality, global value chains, input-output tables, international trade, network analysis
    JEL: C67 F12 F14 O57
    Date: 2018–02–23
  16. By: Baeva, Marina (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Knobel, Alexander (Gaidar Institute for Economic Policy, Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Zaytsev, Yuriy (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Loshchenkova, Anna (Russian Foreign Trade Academy, Gaidar Institute for Economic Policy)
    Abstract: In this paper, we consider the introduction of measures to protect the domestic market (anti-dumping, countervailing and special protective measures) by countries, conduct appropriate investigations, and introduce sanitary and phyto-sanitary measures against a specific trading partner in 1995-2015. The paper analyzes the theoretical aspects and assesses the consequences of the introduction of protective measures by the member countries of integration associations such as NAFTA, MERCOSUR, ASEAN, the Pacific Alliance, the EAEC, the TTP (signatory countries) and the TAP (negotiating countries), against the partners in the merger and third countries. In addition, the work separately examines the protective measures imposed by and against Russia.
    Date: 2017–02–12
  17. By: Schach, Michael (RWTH Aachen University); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: We examine the relevance of an ice-free Northeast Passage as a shipping route, especially for LNG-supplying and -consuming countries. Four aspects are considered in-depth: (1) Develop-ments in natural gas production in the Russian Arctic; (2) Trends and strategies of major Asian LNG-consuming countries; (3) Geopolitical significance of the Northeast Passage; (4) Geo-graphical and climatic particularities of the Arctic. The analysis also comprises an assessment of the competitiveness of Russian LNG exports along the Northeast Passage, a discussion of the impacts on LNG transport routes and markets, and an evaluation of the geopolitical impli-cations of this new shipping route. We find that an ice-free NEP is relevant for maritime bulk and particularly LNG shipping, and thus of great geopolitical importance and strategic interest for countries such as Russia, the US, China, Japan, and South Korea.
    Keywords: LNG Markets; Geopolitics; Northeast Passage; Arctic; Russia; Asia
    JEL: Q30 Q40
    Date: 2017–04
  18. By: Rogelio Mercado Jr. (South East Asian Central Banks (SEACEN) Research and Training Centre)
    Abstract: Holdings of cross-border bilateral assets are highly responsive to information frictions, market size, transaction costs, and trade ties. But empirical support using transactions data are constrained by the lack of comprehensive bilateral capital flows data covering large sample of economies for several years across investment and investor types. One expects that as information frictions weaken, transaction costs decline, and trade links strengthen, financial transactions between two economies will rise. This paper tests this hypothesis. Using bilateral Financial Accounts data from the Regional Balance of Payments Statistics of 10 advanced economies—yielding an unbalanced panel with 182 country pairs—for 2000-2016, the results provide strong evidence on the significance of information frictions, bilateral trade, transaction costs, and market size on bilateral capital flows. However, the findings show varying sensitivities of domestic and foreign investors to information asymmetries and trade ties. Moreover, investors appear to be more responsive to domestic transaction costs and foreign market size effects, than the converse. This study demonstrates an application of using bilateral capital flows data in revealing the patterns of international financial market segmentation still prevailing in cross-border financial transactions.
    Keywords: bilateral capital flows, gravity, asset trade, information frictions
    JEL: F21 F36 G11
    Date: 2018–02
  19. By: Benjamin Carton; Joannes Mongardini; Yiqun Li
    Abstract: The enormous global demand for smartphones in recent years has created a new global tech cycle. In 2016 alone, global smartphone sales reached close to 1.5 billion, one for every fifth person on earth. In turn, this has engendered complex and evolving supply chains across Asia. We show that the new tech cycle cannot be captured by standard seasonality, but depends on smartphone product release dates. Decomposing cycle from trend, we also show that the sale of smartphones may have peaked in late 2015. Asia, however, continues to gain in importance as the global tech manufacturer.
    Date: 2018–01–24
  20. By: Schach, Michael (RWTH Aachen University); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: We analyze the significance of an ice-free Northeast Passage (NEP) as a shipping route for LNG, and the impacts on alternative transport routes and -capacities. The following aspects are considered: (1) Trends in LNG production, particularly in the Russian Arctic; (2) Developments in the Asian LNG consumer market; (3) Specifics and prospects of Arctic shipping. The major LNG trade flows between producers and the Asian consumer market are modeled. Methods from Operations Research are contrasted and the Cycle-Cancelling Algorithm applied to the transportation problem, in order to achieve a cost-optimal capacity allocation. The impacts of demand variations and a chokepoint shutdown on transport routes and -capacities are considered. Concepts from competition theory are used to model the effects on LNG pricing. The key finding is that an ice-free NEP is highly relevant for shipping activities of Russian LNG producers. It constitutes a competitive advantage and notably impacts the supply competition and pricing on the Asian LNG market. A discussion of results and a conclusion critically reflect upon the research undertaken, providing an outlook and suggestions for future research.
    Keywords: LNG; Northeast Passage; Arctic Shipping; Logistics; Cycle-Cancelling Algorithm
    JEL: Q30 Q40
    Date: 2017–09
  21. By: Michael McAleer (Asia University, Taiwan; University of Sydney Business School, Australia; Erasmus University Rotterdam, The Netherlands); Judit Olah (University of Debrecen, Hungary); Jozsef Popp (University of Debrecen, Hungary)
    Abstract: The purpose of the paper is to present arguments for and against the use of the Impact Factor (IF) in a rapidly changing digital world. The paper discusses the calculation of IF, as well as the pros and cons of IF. Editorial policies that affect IF are examined, and the merits of open access online publishing are presented. Scientific quality and the IF dilemma are analysed, and alternative measures of impact and quality are evaluated. The San Francisco declaration on research assessment is also discussed.
    Keywords: Impact Factor; Quality of research; Pros and Cons; Implications; Digital world; Editorial policies; Open access online publishing; SCIE; SSCI
    JEL: O34 O31 D02
    Date: 2018–02–16

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