nep-sea New Economics Papers
on South East Asia
Issue of 2018‒07‒16
28 papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Industrial Convergence in East Asia By Akira Kohsaka; Jun-ichi Shinkai
  2. Optimal Dynamic Path during the Transition of Exchange Rate Regime: Analysis of the People’s Republic of China (PRC), Malaysia, and Singapore By Yoshino, Naoyuki; Asonuma, Tamon
  3. China's economic integration with the Greater Mekong Sub-region: An empirical analysis by a panel dynamic gravity model By Shahriar, Saleh; Qian, Lu; Kea, Sokvibol
  4. Household Disaster Management in Disaster Prone II of Mt. Slamet By Diah Setyawati Dewanti
  5. Trade Linkages and Transmission of Oil Price Fluctuations in a Model Incorporating Monetary Variables By Taghizadeh-Hesary, Farhad; Rasoulinezhad, Ehsan; Yoshino, Naoyuki
  6. "Reinterpreting the Arbitration Legislation for Online Awards in Indonesia" By Rina Shahriyani Shahrullah
  7. Solutions for SMEs’ difficulties in accessing finance: Asian experiences By Yoshino, Naoyuki; Taghizadeh-Hesary, Farhad
  8. Developing local currency bond markets in South-East Asia By Shuvojit Banerjee
  9. Politics-Driven Exchange Rate Cycles : East Asia vs. Latin America By Arslan Razmi
  10. Natural Disasters, Public Spending, and Creative Destruction: A Case Study of the Philippines By Jha, Shikha; Quising, Pilipinas; Ardaniel, Zemma; Martinez, Jr., Arturo; Wang, Limin
  11. “Flying Geese” Paradigm: Review, Analytical Tool, and Application By Widodo, Tri; Setyastuti, Rini; Adiningsih, Sri
  12. The Long-Run and Gender-Equalizing Impacts of School Access: Evidence from the First Indochina War By Dang, Hai-Anh H.; Hoang, Trung X.; Nguyen, Ha
  13. The art of deterrence: Singapore’s anti-money laundering regimes By Tan, Veltrice
  14. Technology progress: Carpe Potestatem - Seize the opportunities for the region By Zhenqian Huang
  15. Exchange rate and trade balance linkage: sectoral evidence from Thailand based on nonlinear ARDL By Suwanhirunkul, Suwijak; Masih, Mansur
  16. Fostering Green Finance for Sustainable Development in Asia By Volz, Ulrich
  17. Aging population in Asian countries |Lessons from Japanese experiences | By Ai Oku; Eri Ichimura; Mika Tsukamoto
  18. Banking and Innovation: A Review By Lin, Chen; Liu, Sibo; Wei, Lai
  19. Alternatives to Bank Finance: Role of Carbon Tax and Hometown Investment Trust Funds in Developing Green Energy Projects in Asia By Yoshino, Naoyuki; Taghizadeh-Hesary, Farhad
  20. Global Market Power By De Loecker, Jan; Eeckhout, Jan
  21. International Remittances and Poverty Reduction: Evidence from Asian Developing Countries By Yoshino, Naoyuki; Taghizadeh-Hesary, Farhad; Otsuka, Miyu
  22. Effect of Microfinance on Poverty and Welfare: New Evidence from 9 provinces in Cambodia By Dina Chhorn
  23. Making effective use of fiscal space for sustainable development By Daniel Jeongdae Lee, Nixie Abarquez, Kiatkanid Pongpanich and Farzana Sharmin
  24. Swing in the Fed’s balance sheet policy and spillover effects on emerging Asian countries By Yves, Togba Boboy; Yoon, Seong-Min
  25. Fair Premium Rate of the Deposit Insurance System based on Banks’ Creditworthiness By Yoshino, Naoyuki; Taghizadeh-Hesary, Farhad; Nili, Farhad
  26. Leveraging private finance for sustainable development By Vatcharin Sirimaneetham
  27. Expanding the tax base By Athiphat Muthitacharoen; Vatcharin Sirimaneetham
  28. Vygotskianism and the Enhancement of Mobile Language Learners’ Argumentative Writing Skill By Danial Mehdipour Kolour; Kamal Khaksaran; Mohamad Bilal Ali

  1. By: Akira Kohsaka (Osaka School of International Public Policy, Osaka University); Jun-ichi Shinkai (Faculty of Business Administration Kinki University)
    Abstract: Despite generally solid growth in East Asia since the 1980s, there remain large differences in productivity across the economies. Focusing on convergence in industrial productivities, this paper examines their convergence processes. We decompose industrial productivity growth into intra-industry productivity growth and inter-industry reallocation of resources. We find that, as contrasting to ANIEs (Hong Kong, Korea, Singapore and Taiwan), ASEAN4 (Indonesia, Malaysia, Philippines and Thailand) have not shown persistent industrial productivity convergence nor persistent structural transformation toward industrialization, while China’s productivity growth shows some magnified version of those of Korea and Taiwan. In other words, we argue that ANIEs and ASEAN4 make two distinct groups in terms of aggregate and sectoral productivity convergence.
    Keywords: East Asia, productivity growth, structural transformation, sectoral productivity growth, inter-industry reallocation, productivity convergence.
    JEL: O4
    Date: 2018–07
  2. By: Yoshino, Naoyuki (Asian Development Bank Institute); Asonuma, Tamon (Asian Development Bank Institute)
    Abstract: We consider the optimal exchange rate regime transition policy for three East Asian countries: the People’s Republic of China (PRC), Malaysia, and Singapore. In contrast to two traditional approaches to exchange rate regimes in East Asia, we conduct a dynamic transition analysis. Based on a small, open-economy dynamic stochastic general equilibrium model applied to these three countries, we define transition policies from a dollar peg regime to either a basket peg or a floating regime and compare the welfare gains of these policies relative to maintaining the current dollar peg regime. The quantitative analysis using PRC, Malaysian, and Singaporean data shows that the PRC would be better off shifting gradually from a dollar peg to a basket peg. In response to the PRC’s shift, both Malaysia and Singapore would opt to shift gradually to a basket peg regime.
    Keywords: exchange rate; exchange rate regime; dynamic transition analysis; basket peg; dollar peg; floating regime; DSGE model
    JEL: F33 F41 F42
    Date: 2017–07–17
  3. By: Shahriar, Saleh; Qian, Lu; Kea, Sokvibol
    Abstract: The purpose of this study is to fill an existing gap in the literature by addressing the following research question: what are the major determinants of China's regional economic integration with the Greater Mekong Sub-regional countries (GMS), namely; Cambodia, Laos, Myanmar, Thailand and Vietnam? The author measures the economic integration in terms of bilateral trade and foreign direct investment (FDI). In accordance with the literature, the present study adopts a panel gravity framework method to analyze the significant factors affecting the bilateral aggregate exports flows of China with five economies of the Greater Mekong sub-region. Data were collected from both the Chinese national and the international sources over the period of 23 years, spanning from 1993 to 2016. The time period was chosen on the consideration of data availability. The result shows that the gravity model is econometrically fitted to our dataset. Among other factors GDP, bilateral exchange rate, and population have a positive impact on regional trade integration with the GMS. The author's second-stage regression analysis confirms that China's accession to the WTO impacts positively on the bilateral trade. China's accession to the WTO is a significant factor for facilitation of trade flows. As expected, distance hinders regional trade. Furthermore, the role of historical trade relationship between China and GMS countries is estimated in the dynamic model. The result shows that China's trade relationship with GMS countries is determined historically.
    Keywords: China,regional economic integration,dynamic gravity model,Greater Mekong Sub region (GMS),exports,panel data
    JEL: F14 F15
    Date: 2018
  4. By: Diah Setyawati Dewanti ("Faculty of Economics and Business Universitas Muhammadiyah Yogyakarta, Yogyakarta, Indonesia" Author-2-Name: Dusadee Ayuwat Author-2-Workplace-Name: "Department of Sociology, Faculty of Humanities and Social Sciences, Khon Kaen University, Khon Kaen, Thailand" Author-3-Name: Sekson Yongvanit Author-3-Workplace-Name: "Department of Economics Development, Faculty of Economics and Business Universitas Muhammadiyah Yogyakarta, Yogyakarta, Indonesia " Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: "Objective – This research aims to describe the factors influencing household disaster management of those living in the disaster prone II area of Mt.Slamet in Indonesia. The study focuses on the disaster prone II area surrounding Mt. Slamet, including five (5) villages from three (3) districts. Methodology/Technique – A quantitative research methods is employed in this study. A total of 538 households were selected for examination using a two-stage stratified and systematic sampling. To describe the direct and indirect factors supporting livelihoods, Path analysis using a Stata tool analysis was used. Findings – Multicollinearity was tested prior to the Path analysis. Among the 26 independent variables used, 12 independent variables had a statistical significance level of between 0.05 and 0.01. Labor force, transportation access, income, utilization of non-chemical fertilizer, transformation of process and structure, migration, livelihood changing, healthy household members, vehicle ownership, size of land for agriculture, access to electricity, and household networking to other parties located outside the village were the direct and indirect factors supporting disaster management of households living in the disaster prone II area of Mt. Slamet, Indonesia. Novelty – The Indonesian government has classified the disaster prone II area as the highest risk area in which households are allowed to build their settlements. The study ultimately concludes that the government and other sectors could support households to strengthen their ability to manage disaster. "
    Keywords: "Household Disaster Management; Disaster Prone; Path Analysis; Mt.Slamet; Indonesia. "
    JEL: D1 D10
    Date: 2018–06–28
  5. By: Taghizadeh-Hesary, Farhad (Asian Development Bank Institute); Rasoulinezhad, Ehsan (Asian Development Bank Institute); Yoshino, Naoyuki (Asian Development Bank Institute)
    Abstract: We attempt to ascertain how sharp oil price changes can affect oil-exporting and oil-importing economies. To this end, we applied a simultaneous equation model (SEM) through a weighted two-stage least squares estimation method to different countries with business relations from Q1 2000 to Q4 2015. In the case of oil-exporting countries—Iran, the Russian Federation, United Arab Emirates, Indonesia, and Kazakhstan—our findings revealed that they totally benefit from oil price increases. In the case of oil-importing countries, the effects are more diverse. To derive a better interpretation, we divided them into four groups: European Union (EU) members (Germany, Italy, the Netherlands, and Poland); East Asian economies (Japan; the People’s Republic of China; the Republic of Korea; Viet Nam; Taipei,China; Singapore; and Hong Kong, China); Commonwealth of Independent States (Ukraine and Belarus); and others (United States, India, and Turkey). Our results showed that all these countries importing oil face a negative supply shock, except Turkey, which benefits directly from an oil price shock. Furthermore, the indirect effect coefficient received through trade for all these countries was positive.
    Keywords: crude oil price; trade linkage; direct and indirect effect of oil shocks
    JEL: C30 E32 Q43
    Date: 2017–09–07
  6. By: Rina Shahriyani Shahrullah (Universitas Internasional Batam, Jalan Gajah Mada, 29442, Batam, Indonesia Author-2-Name: Elza Syarief Author-2-Workplace-Name: Universitas Internasional Batam, Jalan Gajah Mada, 29442, Batam, Indonesia Author-3-Name: Agustina Fitrianingrum Author-3-Workplace-Name: Universitas Internasional Batam, Jalan Gajah Mada, 29442, Batam, Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: "Objective –The use of online arbitration is more convenient for disputing parties as their submissions can be archived by automated document management systems and be reviewed from any location, at any time. Yet, the process of online arbitration in Indonesia remains uncertain due to the fact that Indonesian arbitration legislation does not contain any provisions relating to online arbitration. It is also questioned whether online arbitration awards are domestic or international under that legislation. In order to answer the questions, this research examines and reinterprets Indonesian arbitration legislation to argue for the status of online arbitration and its awards in Indonesia. Methodology/Technique – This study adopts normative legal research by examining existing legislation and literatures relating to arbitration. Findings – The findings of this study show that the legislation does permit online arbitration because Indonesian IT legislation facilitates the use of electronic communication and devices for this type of arbitration. However, the status of awards rendered in the online arbitration process remains uncertain. This is because Indonesia has not adopted the UNCITRAL Model Law. Consequently, the legislation merely categorizes online arbitration awards based on whether they are rendered within Indonesian territory (domestic awards) or outside of Indonesia (international awards). Originality/value – The use of technology has penetrated business transactions and in some cases can give rise to legal disputes. Therefore, those who engage in online transactions should consider the type of dispute resolution mechanism they employ. In the context of online businesses, it may be beneficial for disputing parties to settle their disputes through online arbitration due to its ability to transcend national boundaries, and the potential enforceability of its awards. "
    Keywords: Online Arbitration; Awards; Dispute Resolution; Arbitration Law; Indonesia.
    JEL: K2 K29
    Date: 2018–06–27
  7. By: Yoshino, Naoyuki (Asian Development Bank Institute); Taghizadeh-Hesary, Farhad (Asian Development Bank Institute)
    Abstract: Small and medium-sized enterprises (SMEs) are the backbone of the Asian economy. They make up more than 96% of all Asian businesses that provide 2 out of 3 private sector jobs in the continent. Therefore, it is vitally important for the Asian economies’ economic success that they have fully functioning support measures for SMEs. However, SMEs face major challenges in accessing cheap finance, mainly because there is an asymmetric information problem between suppliers and demanders of funds, which hinders their growth. We highlight the difficulties of SMEs in accessing finance, and provide remedies for mitigating them. The remedies proposed in here include the development of credit information infrastructures for SMEs to remedy the asymmetric information problem, utilization of credit rating techniques for SMEs, the development of a sustainable credit guarantee scheme, the development of specialized private banks for SME financing, and the introduction of new ways of providing community-based financing such as hometown investment trust funds. We will provide operational examples from developed Asian economies such as Japan and the Republic of Korea, and developing Asian economies such as Thailand with a view to them being implemented in the rest of Asia.
    Keywords: SMEs; Asian economies; credit rating; CRD; SME bank
    JEL: G21 G24 G32
    Date: 2017–08–04
  8. By: Shuvojit Banerjee (Macroeconomic Policy and Financing for Development Division, United Nations Economic and Social Commission for Asia and the Pacific)
    Abstract: Countries in South-East Asia, in common with those in other subregions, face the challenge of efficiently deploying financial resources to effectively pursue implementation of the 2030 Agenda. The private sector, particularly non-bank private institutions and individuals, can play a vital role in this regard. Fostering government and corporate bond markets can be an important avenue by which Governments and the corporate sector can diversify and increase their financing sources. Bond markets help to reduce excessive reliance on short-term funding from the banking sector. South-East Asia remains highly dependent on banks for private financing. It is estimated that commercial banks account for more than 80 per cent of the total financial institution assets in ASEAN. Moreover, development of local currency bond markets in the subregion can help mitigate currency and maturity mismatches.
    Date: 2018
  9. By: Arslan Razmi (Department of Economics, University of Massachusetts Amherst)
    Abstract: I develop the implications for real exchange rate cycles of different policy preferences, focusing in particular on broadly stylized features of major Latin American and East Asian economies. Recent political science literature has emphasized the role of factors such as the influence of the manufacturing sector and the nature of labor markets. I formalize some of these insights in a developing country framework with policy makers who inter-temporally optimize and voters/audiences that are incompletely informed. Given the choice between assigning greater weight to immediate worker purchasing power versus generating manufacturing employment and income over time, I show that countries where policy makers choose the former are more likely to experience cycles with overvaluation, current account deficits, and abrupt (postponed) devaluations.
    Keywords: Political business cycles, real exchange rate, capital accumulation, balance of payments
    JEL: O25 D72 F41 O14
    Date: 2018
  10. By: Jha, Shikha (Asian Development Bank Institute); Quising, Pilipinas (Asian Development Bank Institute); Ardaniel, Zemma (Asian Development Bank Institute); Martinez, Jr., Arturo (Asian Development Bank Institute); Wang, Limin (Asian Development Bank Institute)
    Abstract: Typhoons, floods, and other weather-related shocks can inflict suffering on local populations and create life-threatening conditions for the poor. Yet, natural disasters also present a development opportunity to upgrade capital stock, adopt new technologies, enhance the risk-resiliency of existing systems, and raise standards of living. This is akin to the “creative destruction” hypothesis coined by economist Joseph Schumpeter in 1943 to describe the process where innovation, learning, and growth promote advanced technologies as conventional technologies become outmoded. To test the hypothesis in the context of natural disasters, we look at the case of the Philippines—among the most vulnerable countries in the world to such disasters, especially typhoons. Using synthetic panel data regressions, we show that typhoon-affected households are more likely to fall into lower income levels, although disasters can also promote economic growth. Augmenting the household data with municipal fiscal data, we show some evidence of the creative destruction effect: Municipal governments in the Philippines helped mitigate the poverty impact by allocating more fiscal resources to build local resilience while also utilizing additional funds poured in by the national government for rehabilitation and reconstruction.
    Keywords: natural disasters; typhoons; poverty; household income mobility; foreign aid; fiscal transfers; municipalities; public spending; creative destruction
    JEL: H72 H75 H76 O53 Q54 R11
    Date: 2018–03–07
  11. By: Widodo, Tri; Setyastuti, Rini; Adiningsih, Sri
    Abstract: The paradigm of the "Flying Geese" (FG) industrialization pattern is often referred to in the process of industrialization in the Southeast Asia region. This paper consists of three main sections: literature study, empirical analytical tool, and application with the Southeast Asia case study. Firstly, the paper discusses the paradigm of FG industrialization starting from Akamatsu's early concept to the modern concept of "multi-sequentialist". Secondly, this paper proposes an empirical analysis tool ("Product Mapping") which is a combination of the main variables in the FG paradigm, dynamic comparative advantage and net-export or net-import. Two indicators of Revealed Symmetric Comparative Advantage (RSCA) and Trade Balance Index (TBI) are used. Thirdly, the empirical analysis tool is then applied to analyze the FG paradigm in the ASEAN region. We find that the flying geese paradigm have occurred in the ASEAN with the slow “catching up” process.
    Keywords: Flying geese, Comparative advantage.
    JEL: F10 F14 F17
    Date: 2018–06–04
  12. By: Dang, Hai-Anh H.; Hoang, Trung X.; Nguyen, Ha
    Abstract: Very few studies currently exist on the long-term impacts of schooling policies in developing countries. We examine the impacts—half a century later—of a mass education program conducted by the Democratic Republic of Vietnam in the occupied areas during the First Indochina War. Difference-in-difference estimation results suggest that school-age children who were exposed to the program obtained significantly higher levels of education than their peers who were residing in French-occupied areas. The impacts are statistically significant for school-age girls and not for school-age boys. We find beneficial spillover and inter-generational impacts of education: affected girls enjoyed higher household living standards, had more educated spouses, and raised more educated children. We discuss various robustness checks and extensions that support these findings.
    Keywords: education achievement,reading literacy,school policy,popular education,difference-in-difference,long-term impact,war
    JEL: H0 I2 O1 P3
    Date: 2018
  13. By: Tan, Veltrice
    Abstract: Purpose In light of the recent 1MDB Scandal in Singapore, this research paper aims to examine the deterrent effect of Singapore’s sanctions against money laundering within financial institutions. Design/methodology/approach Case laws and legislations are examined as are relevant reports by regulators. Findings Singapore’s anti-money laundering (AML) regimes may not act as an effective deterrent against money laundering activities within financial institutions. This is due to the overreliance on the theory of deterrence-based thinking, the lack of an “enforcement pyramid” and economic factors which influence regulators to be lenient towards financial institutions. Research limitations/implications There are limited data available in relation to regulators in Singapore and the prevalence of money laundering activities within Singapore’s financial institution. Any discussions within this article is based on the impressionistic observations of this author, which may not reflect the true state of affairs in Singapore. Practical implications Those who are interested in examining the relationship between money laundering and the deterrent effect of sanctions against financial institutions will have an interest in this topic. Originality/value The value of the paper is to demonstrate that Singapore’s AML regimes may not act as an effective deterrence against money laundering activities within financial institutions.
    Keywords: Singapore; Money laundering; Deterrence; Financial institutions; 1MDB Scandal; Anti-money laundering sanctions
    JEL: F3 G3
    Date: 2018
  14. By: Zhenqian Huang (Macroeconomic Policy and Financing for Development Division, United Nations Economic and Social Commission for Asia and the Pacific)
    Abstract: The high productivity growth in previous decades has enabled the Asia-Pacific region to make significant advances in economic development. Productivity in the region has grown faster than in other regions, yet growth is slowing.1 Technology development is critical to boost productivity growth and to sustain medium- to long-term economic resilience. The region has a great potential. However, technology advancement also brings risks of increasing inequality and adapting to the changing nature of work. Government policies could focus on strengthening fundamental infrastructure, providing knowledge and skills, introducing redistributive measures, supporting technology diffusion and enhancing regional and global cooperation. Recent ESCAP publications provide detailed insights into the topic. Please refer to Inequality in Asia And the Pacific in the Era of the 2030 Agenda for Sustainable Development and Frontier technologies for sustainable development in Asia and the Pacific.
    Date: 2018
  15. By: Suwanhirunkul, Suwijak; Masih, Mansur
    Abstract: Exchange rate has been managed to improve trade balance in many countries to increase economic growth. However, the relationship between exchange rate and trade balance is inconclusive both in the long-run and short-run. Thus, to improve trade balance effectively, the relationship needs to be studied. Therefore, this paper will examine the relationship in Thailand by applying novel approach NARDL which would give more robust result than former techniques. The paper finds that relationship exists, and that depreciation improves trade balance for the whole country in the long-run but have mixed results for different sectors due to elasticity of demand for import and export. However, trade balance is worsened in the short-run according to J-curve theory. These results imply that there is a tradeoff of depreciation between short-run and long-run, and between exporting sectors and importing sectors. Policymaker could moderately depreciate the currency to boost trade balance but needs to effectively manage the cost incurred.
    Keywords: exchange rate, trade balance, nonlinear ARDL, Thailand
    JEL: C22 C58 F1 F31
    Date: 2018–06–16
  16. By: Volz, Ulrich (Asian Development Bank Institute)
    Abstract: Placing the Asian economies onto a sustainable development pathway requires an unprecedented shift in investment away from greenhouse gas, fossil fuel, and natural resource intensive industries towards more resource efficient technologies and business models. The financial sector will have to play a central role in this ‘green transformation’. This study discusses the need for greening the financial system and the role of financial governance. It reviews the state of green lending and investment in Asia and provides an overview of green financial governance initiatives across Asia. It also identifies market innovations to increase green finance in Asia, barriers to green investments, and financial policy and highlights priority areas for policy makers.
    Keywords: green investments; green finance; sustainable development; green transformation; Asia
    JEL: G01 G02 G30 Q01 Q50
    Date: 2018–03–02
  17. By: Ai Oku (Policy Research Institute, Ministry of Finance); Eri Ichimura (Policy Research Institute, Ministry of Finance); Mika Tsukamoto (Policy Research Institute, Ministry of Finance)
    Abstract: Many Asian countries are facing a rapidly aging population. An aging population will cause social security expenditures in national budget to rise. Currently, fiscal conditions in Asian countries are relatively stable, but governments will be required to control social security expenditures to maintain fiscal soundness. Japan established universal health insurance and pension insurance systems in 1961. In 1973, the so called gfirst year of high-level social welfare h, free medical services for the elderly and the indexlinked pension system were started. Currently, in Japan, the aging rate, which measures the share of the population aged 65 years old or over, has reached 27%, while the country continues to face fiscal deficits and government debt has been accumulating. Other Asian countries have started to develop their countries f social security systems, so it is time to review the lessons that can be drawn from Japanese experiences relating to social security expenditures and national budget conditions. In this paper, we focused on Japanese social insurance systems, especially health insurance and pension insurance systems, and addressed some lessons to Asian countries. Lessons from health insurance system are: (1) It is important to determine public contributions f share of medical expenses not by patients f age, but based on their income and assets, (2) To establish universal health insurance system, it is important to ensure the stable financial revenues of insurers with subscribers who are unable to enroll with other insurers. Lessons from the pension insurance system are: (1) It is important for the government to manage sharp acceleration of inflation in such a way as to not increase pension benefits, thereby preventing the financial burdening of future generations, (2) The pension system should be designed based on the long-term projections of the population aging rate and total fertility rate, and policies should be adapted accordingly, (3) It would be preferable that the government take a gMacro-economic slide h pension system which is a fixed contribution schedule coupled with a mechanism to rebalance pension finances through automatic adjustment of benefits.
    Keywords: population aging, social security system, social benefit, health care, pension, Asia, Japan
    JEL: H60 I13 N15 O20
    Date: 2017–07
  18. By: Lin, Chen (Asian Development Bank Institute); Liu, Sibo (Asian Development Bank Institute); Wei, Lai (Asian Development Bank Institute)
    Abstract: We summarize the major findings of empirical studies that examine the effect of banking development on innovation and highlight their relative contributions to our understanding of the various roles the banking sector plays in determining innovation. We reassess the effect of banking development and innovation, extending the scope of analysis to more granular dimensions of innovation and to Asian economies where financial markets are less developed. We find that while theoretical implications are generally indefinite about the effect of banking development on innovation, empirical findings are less ambiguous given their distinct focus of sample firms and the underlying channels investigated. The development conditions of financial markets also matter in drawing implications for the effect of financial institutions on innovation. Specifically, when the stock market is relatively less developed, as in most Asian economies, banks play a significant role in financing and promoting innovation. Therefore, it seems plausible for policy makers in these regions to strengthen the development of the banking sector and to improve the depth of the credit market. In this survey, we will summarize the major findings of the empirical studies that examine the effect of banking development on innovation and highlight their relative contributions to our understanding about the various roles that the banking sector plays in determining innovation. Then, we will reassess the effect of banking development and innovation.
    Keywords: banking development; innovation; financial markets
    JEL: G02
    Date: 2018–03–05
  19. By: Yoshino, Naoyuki (Asian Development Bank Institute); Taghizadeh-Hesary, Farhad (Asian Development Bank Institute)
    Abstract: The main obstacle to developing green energy projects is lack of access to finance. For larger energy projects (e.g., large hydropower projects), insurance and pensions are sustainable financing alternatives. Large energy projects are long-term investment projects; banks are not able to provide long-term loans because their resources (deposits) are short- to medium-term. Pension funds and insurance companies hold long-term savings, so these institutions could be a proper alternative for financing mega-size energy projects. On the other hand, because electricity tariffs are often regulated by the government, to increase the investment incentives the spillover effects originally created by energy supplies need to be used, and tax revenues refunded to the investors in energy projects. For smaller-size green projects, the paper provides a theoretical model for combining utilisation of carbon tax and a new way of financing risky capital, i.e., hometown investment trust funds (HITs). Because of the Basel capital requirement, and because most green energy projects from the point of view of financers are considered risky projects, many financers are reluctant to lend to them or they lend at high interest rates. We show that by taxing carbon dioxide (CO2), sulphur dioxide (SO2), and nitrogen oxides (NOx) and allocating those tax revenues to HITs, green projects will become more feasible and more interesting for hometown investors; hence the supply of investment money to these funds will increase.
    Keywords: carbon tax; green energy; renewable energy; hometown investment trust funds; HITs
    JEL: E62 G21 Q21
    Date: 2017–07–11
  20. By: De Loecker, Jan; Eeckhout, Jan
    Abstract: To date, little is known about the evolution of market power for the economies around the world. We extract data from the financial statements of over 70,000 firms in 134 countries, and we analyze and document the evolution of markups over the last four decades. We show that the average global markup has gone up from close to 1.1 in 1980 to around 1.6 in 2016. Markups have risen most in North America and Europe, and least in emerging economies in Latin America and Asia. We discuss the distributional implications of the rise in global market power for the labor share and for the profit share.
    Date: 2018–06
  21. By: Yoshino, Naoyuki (Asian Development Bank Institute); Taghizadeh-Hesary, Farhad (Asian Development Bank Institute); Otsuka, Miyu (Asian Development Bank Institute)
    Abstract: International remittances represent the second most important source of external funding for developing countries after foreign direct investment (FDI). We examine the impact of international remittances on poverty reduction using panel data for 10 Asian developing countries. In terms of the dependent variables, we set three poverty indicators: poverty headcount ratio, poverty gap ratio, and poverty severity ratio. Results show that international remittances have a statistically significant impact on the poverty gap ratio and poverty severity ratio under the random effect model of ordinary least squares (OLS) estimates. A 1% increase in international remittances as a percentage of gross domestic product (GDP) can lead to a 22.6% decline in the poverty gap ratio and a 16.0% decline in the poverty severity ratio in the sample of 10 Asian developing countries from 1981 to 2014. In addition, results show that per capita GDP increase and trade openness can decrease poverty measures, and higher inflation rates may be one of the causes of the poverty.
    Keywords: remittances; poverty reduction; developing Asia
    JEL: I31 I32 I38
    Date: 2017–07–07
  22. By: Dina Chhorn
    Abstract: The most recent studies at national level give emphasis to the failure of microfinance services in Cambodia since the bad practice is subordinate to high interest rate, non-productive loan, over-indebtedness, landless and migration. This paper examines the effect of microfinance, also putting weight on access to formal and productive loans, by using cross-sectional data in 2015 of 411 households, who are beneficiaries of the Agriculture Cooperative (AC) community supported by the World Vision, in 9 provinces of Cambodia. The binary choice model as well as bivariate and censoring model along with addressing the endogenous treatment effect were applied. The findings show that access to microfinance services in every aspect reduces poverty and promotes household’s welfare, proxied by per capita income, except there is insignificant effect on per capita economic assets and expenditure on child’s well-being after the Wald test of exogeneity and the Newey’s minimum chi-squared estimator with the twostep option were computed. However, these results must be interpreted with caution because the data is subject to specific sample selection.
    Keywords: Microfinance, poverty, welfare, Cambodia
    JEL: D33 D63 F16 F15 I24 I3
    Date: 2018
  23. By: Daniel Jeongdae Lee, Nixie Abarquez, Kiatkanid Pongpanich and Farzana Sharmin (Macroeconomic Policy and Financing for Development Division, United Nations Economic and Social Commission for Asia and the Pacific)
    Abstract: Agenda for Sustainable Development, through its role in allocating resources to such critical areas as education, health and infrastructure, enhancing income distribution and addressing externalities, both positive and negative (e.g. Research and Development versus pollution). For fiscal policy to support development priorities in a sustainable manner, attention is needed to debt sustainability and other measures of fiscal space. This policy brief assesses how much fiscal space countries in the Asia-Pacific region have, and whether that space is being used effectively.
  24. By: Yves, Togba Boboy; Yoon, Seong-Min
    Abstract: This paper investigates the effects of the Fed’s balance sheet policy at the zero lower bound on the macroeconomic and financial variables of emerging Asian countries. Based on a heterogeneous structural panel VAR model using monthly data from eight emerging Asian countries, we find evidence of cross-border spillover effects on long-term bond yields, GDP, prices, stock market index, local currency, and real credit. However, the quantile responses show that there is substantial heterogeneity among countries’ responses to Fed shocks. Accordingly, these effects vary across countries and horizons depending on their macroeconomic fundamentals, financial openness, and intensity of macroprudential regulations.
    Keywords: Quantitative easing; Unconventional monetary policy; International transmission mechanism, Structural panel VAR model; Quantile response.
    JEL: C31 C32 E44 E58 F41
    Date: 2018–05–14
  25. By: Yoshino, Naoyuki (Asian Development Bank Institute); Taghizadeh-Hesary, Farhad (Asian Development Bank Institute); Nili, Farhad (Asian Development Bank Institute)
    Abstract: Deposit insurance is a key element in modern banking, as it guarantees the financial safety of deposits at depository financial institutions. It is necessary to have at least a dual fair premium rate system based on the creditworthiness of financial institutions, as a singular premium system for all banks will have a moral hazard. In this paper, we develop a theoretical as well as an empirical model for calculating dual fair premium rates. Our definition of a fair premium rate is a rate that can cover the operational expenditures of the deposit insuring organization, provides it with sufficient funds to enable it to pay a certain percentage share of deposit amounts to depositors in the case of bank default, and provides it with sufficient funds as precautionary reserves. To identify and classify healthier and more stable banks, we use credit rating methods that employ two major dimensional reduction techniques. For forecasting nonperforming loans, we develop a model that can capture both macro shocks and idiosyncratic shocks to financial institutions in a vector error correction model. Our results show that deposit insurance premium rates need to vary in relation to banks’ creditworthiness.
    Keywords: deposit insurance premium rate; forecasting nonperforming loans; idiosyncratic shocks
    JEL: E44 G21 G28
    Date: 2017–07–05
  26. By: Vatcharin Sirimaneetham (Macroeconomic Policy and Financing for Development Division, United Nations Economic and Social Commission for Asia and the Pacific)
    Abstract: Achieving the Sustainable Development Goals (SDGs) will require a substantial increase in financial investments. For all developing countries worldwide, it is estimated that investment requirements to achieve SDGs would need to increase by $2.5 trillion per year during the period 2015-2030, based on the annual investment needs of about $3.9 trillion and current spending at $1.4 trillion. Studies that are focused only on infrastructure also suggest that the amount of required financial investments far exceeds the prevailing trends. For example, the infrastructure investment needs in a group of 26 Asia-Pacific least developed countries, landlocked developing countries and small island developing States are estimated at 10.5 per cent of GDP on average per year during the period 2016-2030, which exceeds their current infrastructure spending trend of 4-7.5 per cent of GDP.
  27. By: Athiphat Muthitacharoen (Assistant Professor, Faculty of Economics, Chulalongkorn University); Vatcharin Sirimaneetham (Macroeconomic Policy and Financing for Development Division, United Nations Economic and Social Commission for Asia and the Pacific)
    Abstract: Actual tax collections have fallen short of their potential levels in the Asia-Pacific region. An ESCAP study estimated the tax potential in the region, based on each country’s economic structure, including such factors as agricultural value added, GDP per capita level and the degree of trade openness. The analysis showed that actual tax collection levels were below their potential levels in 17 Asia-Pacific economies with available data. Such tax gaps are estimated to be more than 6 per cent of GDP in such countries as Afghanistan, Bangladesh, Bhutan and Maldives. To narrow the tax gap, countries could consider (a) enhancing the quality of tax administration, and (b) expanding the tax base. This policy brief focuses on policies aimed at broadening the tax base.
  28. By: Danial Mehdipour Kolour (University of Technology Malaysia); Kamal Khaksaran (Iran University of Medical Sciences); Mohamad Bilal Ali (University of Technology Malaysia)
    Abstract: Willy-nilly, vast numbers of ESL learners, who today adopt mobile devices in their learning practices, will be obliged to make rich arguments when writing academic articles or sitting for standard exams during their academic life. However, due to the linear learning that language learners commonly experience through mobile applications, Mobile Language Learners (MLL) would not be able to create rich arguments. This paper maintains a theoretical stance on a psychological theory named social constructivism emanated from Vygotsky and explains that how higher order thinking skills flavored with a social constructivist framework can have a bearing on the way MLLs bring reasons and make conclusions to form valid and rich arguments culminating in knowledge construction in the on-the-go environment. The expected implication would be the diminution of MLLs’ proclivity of being a passive knowledge recipient usually induced by sailing through mobile learning environment.
    Keywords: mobile language learners, mobile andragogy, critical thinking, argumentative writing, constructivism
    Date: 2018–05

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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.