nep-sea New Economics Papers
on South East Asia
Issue of 2018‒12‒24
fifteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. ASEAN rice market integration: findings from a feasibility study By Jared Greenville
  3. Definition Matters: Metropolitan Areas and Agglomeration Economies in a Large Developing Country By Bosker, Maarten; Park, Jane; Roberts, Mark
  4. Drivers of Growth in the Philippines By Markus Brueckner; Birgit Hansl
  5. Thailand; Technical Assistance Report-Government Finance Statistics By International Monetary Fund
  6. The Household Finance Landscape in Emerging Economies By Badarinza, Cristian; Balasubramaniam, Vimal; Ramadorai, Tarun
  7. Agro-food trade, GVCs and agricultural development in ASEAN By Jared Greenville; Kentaro Kawasaki
  8. Where has the money gone?: The case of Value Added Tax revenue performance in Indonesia By Iswahyudi, Heru
  9. The Educational and Fertility Effects of Sibling Deaths By Dhanushka Thamarapani; Marc Rockmore; Willa Friedman
  10. Budgeting for Performance in Malaysia By World Bank Group
  11. The Returns to Parental Health: Evidence from Indonesia By Dara Lee Luca; David E. Bloom
  12. Microfinance in Cambodia: Development, Challenges, and Prospects By Thath, Rido
  14. Macroeconomic Effects of Japan’s Demographics: Can Structural Reforms Reverse Them? By Mariana Colacelli; Emilio Fernández Corugedo
  15. Very Simple Markov-Perfect Industry Dynamics: Empirics By Abbring, Jaap H.; Campbell, Jeffrey R.; Tilly, Jan; Yang, Nan

  1. By: Jared Greenville (OECD)
    Abstract: This study explores feasibility of regional rice market integration by examining the impacts on production and trade, with a specific focus on the adjustment impacts for rice producers. It seeks to set out policy measures required to better integrate the rice markets of Association of Southeast Nations (ASEAN) countries and the role that trade policy can play to help the agricultural sector adjust to pressures created from freer trade in rice within this region. While regional rice market integration can deliver more rice at lower prices to the regions consumers, this study finds significant adjustments to the rice sectors will be required in Indonesia, Malaysia, and the Philippines. However, opportunities through lowering tariff barriers with existing key trading partners of free trade agreements has the scope to create more employment and value adding opportunities in all agricultural sectors to offset the losses from regional rice market integration. The study suggests a number of measures are necessary to build trust in regional markets to allow rice market integration to take place. This includes an agreement to ban export restrictions. Furthermore, while broader trade reforms will help create new opportunities for agricultural sectors across the ASEAN region, flanking policies and investments in the enabling environment are still required for the sectors to take full advantage of these opportunities.
    Keywords: agricultural trade, Agriculture, regional integration
    JEL: F14 F15 Q17 Q18
    Date: 2018–12–17
  2. By: Anastasia B. Likhacheva (National Research University Higher School of Economics); Hryhorii M. Kalachyhin (National Research University Higher School of Economics)
    Abstract: An idea of lagging Pivot, so that Russian Policy of Pivot to the East Asia cannot last successfully on a long-term basis keeping an extensive lag between political and economic dimensions of the Pivot, becomes widely spread in Russia and abroad. And one of the most inevitable and necessary conditions of bridging this gap together can be found among instruments of trade liberalization with FTAs ahead. Here we should shift our focus from Russian interests to Eurasian economic Union (EAEU) that has a privileged mandate on trade negotiations with third countries and blocs like ASEAN: Russia cannot sign any FTA on its own since 2015. However, this puzzle was relatively poorly studied both in Russia and abroad and this paper attempts to fill this gap. We briefly analyze the scope of trade between Russia and key Asian markets (which still remain mostly limited to North-East Asia) to define the most sensitive export markets for Russia, then we systematize existing barriers that could be potentially eliminated by international trade negotiations and compare them with existing international activity of the Eurasian Economic Commission (EEC). Results of our study clearly demonstrate an objective demand for more intensive EAEU activity on trade liberalization in Asia with a particular focus on non-tariff barriers.
    Keywords: Pivot to Asia, political economy, geoeconomics, FTA, integration, non-tariff barriers, Russia, North-East Asia, EAEU
    JEL: Z
    Date: 2018
  3. By: Bosker, Maarten; Park, Jane; Roberts, Mark
    Abstract: A variety of approaches to delineate metropolitan areas have been developed. Systematic comparisons of these approaches in terms of the urban landscape that they generate are however few. This paper aims to fill this gap. The paper focuses on Indonesia and makes use of the availability of data on commuting flows, remotely-sensed nighttime lights, and spatially fine-grained population, to construct metropolitan areas using the different approaches that have been developed in the literature. The analysis finds that the maps and characteristics of Indonesia's urban landscape vary substantially, depending on the approach used. Moreover, combining information on the metro areas generated by the different approaches with detailed micro-data from Indonesia's national labor force survey, the paper shows that the estimated size of the agglomeration wage premium depends nontrivially on the approach used to define metropolitan areas.
    Keywords: agglomeration economies; Indonesia; metro areas; urban definitions
    JEL: C21 O18 O47
    Date: 2018–12
  4. By: Markus Brueckner; Birgit Hansl
    Abstract: During the 2000s PPP GDP per capita growth in the Philippines was modest. Transitional convergence accounted for almost half of the growth in the Philippines during that time period. Reforms to the structure of the economy boosted growth by less than one percentage point per annum. The most significant structural reform was improvements in telecommunication infrastructure that lifted growth by over half a percentage point per annum. The decline of domestic credit to the private sector reduced growth by about one quarter of a percentage point per annum. Successful stabilization policies positively contributed to growth but the effect is small, about one half of a percentage point per annum. The paper discusses the growth performance of the Philippines relative to comparator countries: ASEAN, lower middle income countries, countries where migrant remittances are large relative to GDP, young democracies, structural peers, and regional peers. The main message from the analysis is that structural reforms were not as significant in the Philippines as in comparator countries. The Philippines lagged behind in structural reforms and this significantly contributed to the country's relatively modest growth performance.
    Date: 2018–04
  5. By: International Monetary Fund
    Abstract: The main purpose of this mission—undertaken with the support of the Government of Japan’s government finance statistics (GFS) project for selected Asian countries—was to improve the quality of the GFS for nonfinancial public corporations (NFPCs) in Thailand by designing a simpler, but more complete, compilation system for the GFS compilers in the Fiscal Policy Office (FPO) of the Ministry of Finance. The mission also discussed some specific general government GFS data compilation issues with the compilers and recommended some actions that would lead to further improvements in data quality as well as consistency with other macroeconomic statistics. In addition, the mission commended the recent momentum gained by the Public Debt Management Office (PDMO) on the reporting of timely, quarterly public sector debt statistics and encouraged them to continue with the regular, quarterly reporting.
    Date: 2018–12–03
  6. By: Badarinza, Cristian; Balasubramaniam, Vimal; Ramadorai, Tarun
    Abstract: We survey the household finance landscape in emerging economies. We first present statistics on household balance sheets from official micro-surveys in countries comprising 45% of the global population: China, India, Bangladesh, Philippines, Thailand, and South Africa. We contrast these patterns with those in data from advanced economies. We then survey the nascent literature on household finance in emerging economies and discuss areas of overlap with the more well-established literature on household finance in advanced economies, as well as the large body of literature on development finance. We highlight useful directions for future research.
    Keywords: credit; Development; emerging economies; household finance; Insurance; real estate
    JEL: D1 G00
    Date: 2018–11
  7. By: Jared Greenville (OECD); Kentaro Kawasaki (OECD)
    Abstract: The countries that compromise the Association of Southeast Asian Nations (ASEAN) have expanded their involvement in global agro-food trade through strong regional production growth and increasing consumer demands from population growth and higher incomes. Regional and international agro-food markets have thus become an important source of income and food for the regions producers and consumers. However, growth in trade has lessened in recent years with projections suggesting a further slowing over the medium term. This study explores the role that agro-food trade and participation in agro-food global value chains (GVC) has had on regional agro-food sectors and current barriers that are holding the region back from unlocking the full benefits of further integration into regional and global agro-food markets. It finds that although GVC engagement has increased regional agro-food growth between 2004 and 2014, gaps remain in the level of regional integration. Results from the analysis suggest that reducing the remaining tariff and non tariff barriers, and creating an enabling environment to allow agricultural producers to better access service inputs, will help spur sector growth and agricultural incomes.
    Keywords: agricultural trade, Agriculture, ASEAN, regional integration
    JEL: F14 F15 Q17 Q18
    Date: 2018–12–17
  8. By: Iswahyudi, Heru
    Abstract: Since its introduction in 1983, Value Added Tax (VAT) has played an increasingly important role as one of the major sources of revenue for the Indonesian government. In the last two and a half decades, however, there is declining trend in its collection performance as a percentage of Gross Domestic Product. This study aims to explore the determinants of this declining trend in VAT revenue using macroeconomic data. These determinants are decomposed into three broad categories: tax expenditure policy, taxpayers’ noncompliance, and the share of aggregate consumption in the economy. It finds that the performance of VAT collection could mainly be explained by tax expenditure policies and the extent of noncompliance with tax laws. It is proposed that avenues of approach for reform could be directed toward reducing the scope of VAT exemptions, establishing a systematic approach in data collection and analysis to closely monitor trends and changes in taxpayers’ behavior, simplifying the tax system by setting a single rate that is imposed on a single type of consumption tax, and improving audit effectiveness by building trust between tax authority and taxpayers.
    Keywords: Indonesia, Value Added Tax, Tax Expenditure, Tax Revenue, Tax Noncompliance
    JEL: H2 H20 H25 H26 H6
    Date: 2018–11–06
  9. By: Dhanushka Thamarapani (Department of Economics, California State University); Marc Rockmore (Department of Economics, Clark University); Willa Friedman (Department of Economics, University of Houston)
    Abstract: An emerging literature finds that childhood exposure to adverse events determines adult outcomes and behavior. We extend this research to understand the influence of witnessing a sibling death as a child on subsequent educational and fertility outcomes in Indonesia. Using panel data and a sibling fixed effects model, we identify this relationship based on variation in the age of surviving children within the same family. Our findings strongly support the importance and persistence of adverse childhood experiences. In particular, for surviving sisters, witnessing a sibling death reduces the years of completed education and the likelihood of completing secondary schooling. The effect on surviving brothers is more muted. A potential channel for this result is that women respond by changing their fertility behavior. While surviving the death of a sibling has little effect on desired fertility levels, we find evidence that surviving sisters start a family about 3-4 years earlier. This suggests that interventions targeted at early-life outcomes may have important ripple effects and that the full impact of health interventions may not be visible until decades afterwards
    Keywords: Child mortality, Siblings, Education, Fertility
    JEL: I10 J13 J16 O53
  10. By: World Bank Group
    Keywords: Public Sector Development - Public Financial Management Public Sector Development - Public Sector Expenditure Policy Macroeconomics and Economic Growth - Fiscal & Monetary Policy
    Date: 2018–03
  11. By: Dara Lee Luca; David E. Bloom
    Abstract: This paper investigates the economic returns to parental health. To account for potential endogeneity between parental health and child outcomes, we leverage longitudinal microdata from Indonesia to estimate individual fixed effects models. Our results show that the economic returns to parental health are high. We show that maternal health not only significantly affects her children’s health, but is also intrinsically linked to her spouse’s labor market status and earnings. Paternal health appears to be more linked to child schooling outcomes, especially for girls. When both parents are in poor health, the negative effects on their children are compounded. Additionally, the consequences of poor parental health are enduring. Longer-run effects of poor parental health manifest in a lower likelihood of high school completion, fewer years of schooling, and poorer adult health.
    JEL: I10 J13 J24
    Date: 2018–11
  12. By: Thath, Rido
    Abstract: Microfinance is considered one of the effective tools in reducing poverty. In the last two decades, Cambodian microfinance industry has made rapid growth in asset, loan and deposit. Microfinance institutions have extended their services to all corner of the country and some have transformed from a donor-assisted NGO program to a full-fledged commercial bank. During the process of the growth of the industry, many borrowers have benefited and been able to move out of poverty while other become over-indebted and lose their asset due to factors such as low financial literacy and the ease to access multiple sources of loan. At the national level, financing microfinance may crowd out the fund for financing small and medium enterprises, and other types of business. Various government response such as the initiative to improve financial literacy and the imposition of interest cap may help reduce the problem of over-indebtedness at the individual borrower level. However, for long run development, they also should consider addressing the trade-off between allocating scarce fund between micro businesses, and small and medium enterprises.
    Keywords: microfinance, Cambodia
    JEL: G21
    Date: 2018–03
  13. By: Hoang Anh Nguyen-Trinh (USTH - University of sciences and technologies of hanoi); Yorgos Rizopoulos (LADYSS - Laboratoire dynamiques sociales et recomposition des espaces - UP1 - Université Panthéon-Sorbonne - UP8 - Université Paris 8 Vincennes-Saint-Denis - UPN - Université Paris Nanterre - UPD7 - Université Paris Diderot - Paris 7 - CNRS - Centre National de la Recherche Scientifique)
    Date: 2018
  14. By: Mariana Colacelli; Emilio Fernández Corugedo
    Abstract: Yes, partly. This paper studies the potential role of structural reforms in improving Japan’s outlook using the IMF’s Global Integrated Monetary and Fiscal Model (GIMF) with newly-added demographic features. Implementation of a not-fully-believed path of structural reforms can significantly offset the adverse effect of Japan’s demographic headwinds — a declining and ageing population — on real GDP (by about 15 percent in the next 40 years), but would not boost inflation or contribute substantially to stabilizing public debt. Alternatively, implementation of a fully-credible structural reform program can contribute significantly to stabilizing public debt because of the resulting increase in inflation towards the Bank of Japan’s target, while achieving the same positive long-run effects on real GDP. If no reforms are implemented, severe demographic headwinds are expected to reduce Japan’s real GDP by over 25 percent in the next 40 years.
    Keywords: Asia and Pacific;Japan;Government expenditures and health;Structural reforms, demographics, OLG models, Forecasting and Simulation, General, General, Contracts: Specific Human Capital, Matching Models, Efficiency Wage Models, and Internal Labor Markets
    Date: 2018–11–28
  15. By: Abbring, Jaap H. (Tilburg University); Campbell, Jeffrey R. (Federal Reserve Bank of Chicago); Tilly, Jan (QuantCo, Inc.); Yang, Nan (National Univerrsity of Singapore)
    Abstract: This paper develops an econometric model of firm entry, competition, and exit in oligopolistic markets. The model has an essentially unique symmetric Markov-perfect equilibrium, which can be computed very quickly. We show that its primitives are identified from market-level data on the number of active firms and demand shifters, and we implement a nested fixed point procedure for its estimation. Estimates from County Business Patterns data on U.S. local cinema markets point to tough local competition. Sunk costs make the industry's transition following a permanent demand shock last 10 to 15 years.
    Keywords: demand uncertainty; dynamic oligopoly; firm entry and exit; nested fixed point; estimator; sunk costs; toughness of competition; counterfactual policy analysis; Markov process
    JEL: C25 C73 L13
    Date: 2018–07–24

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