nep-sea New Economics Papers
on South East Asia
Issue of 2019‒04‒22
thirteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. CPTPP: Implications for Malaysia’s Merchandise Trade Balance By BANGA, RASHMI
  2. Impacts of extreme events on technical efficiency in Vietnamese agriculture By Yoro Diallo; Sébastien Marchand; Etienne Espagne
  3. The (Lack of) Distortionary Effects of Proxy-Means Tests: Results from a Nationwide Experiment in Indonesia By Banerjee, Abhijit; Hanna, Rema; Olken, Benjamin A.; Sumarto, Sudarno
  4. Explaining a ‘development miracle’: poverty reduction and human development in Malaysia since the 1970s By M Niaz Asadullah; Norma Mansor; Antonio Savoia
  5. Impacts of Exchange Rate on Vietnam-Japan Trade Balance: A Nonlinear Asymmetric Cointegration Approach By Tran, Thi Ha
  6. Military-Technological Innovation in Small States: The Cases of Israel and Singapore By Bitzinger, Richard
  7. Youth Decision Making Autonomy and Test Performance By Nguyen, Bich Diep
  8. Global unanimity agreement on the carbon budget By Humberto Llavador; John E. Roemer
  9. A THIRD WAVE OF INTERNATIONAL STUDENT MOBILITY: Global Competitiveness and American Higher Education By Choudaha, Rahul
  10. Once bitten: new evidence on the link between IMF conditionality and IMF stigma By Andone, Irina; Scheubel, Beatrice
  11. The Long-Run Effects of Neighborhood Change on Incumbent Families By Baum-Snow, Nathaniel; Hartley, Daniel; Kwan Ok , Lee
  12. Electrical Bus Mobility in the EU and China: Technological, Ecological and Economic Policy Perspectives By Paul J.J. Welfens; Nan Yu; David Hanrahan; Benedikt Schmuelling; Heiko Fechtner
  13. Easy Come, Easy Go? Economic Shocks, Labor Migration and the Family Left Behind By André Gröger

    Abstract: A mega regional Free Trade Agreement like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has the potential to impact countries which are inside as well as those which are outside the agreement. This paper provides empirical estimates of potential changes in Malaysia’s merchandise balance of trade if it joins the CPTPP and compares it to its trade balance if it does not join this free trade agreement (FTA). A positive balance of merchandise trade is important for Malaysia as it is a net importer of services. However, since 2010, Malaysia’s merchandise imports have been growing much faster than its exports. Using SMART simulations, the estimates show that if Malaysia joins the CPTPP its imports will rise much more than its exports leading to a worsening of its trade balance by around US$2.4 billion per annum. Imports of vehicles from the CPTPP countries will increase including that of plastics and its articles. Exports to the CPTPP partner countries will rise only marginally as Malaysia already has free trade agreements with its top three export markets, i.e., Japan, Singapore and Australia, which together account for 84% of its exports to the CPTPP countries. Remaining out of the CPTPP will also adversely impact Malaysia’s exports to the CPTPP countries but this decline in exports is much smaller compared to the rise in its imports if it joins the CPTPP. The estimated tariff revenue loss to Malaysia of joining the CPTPP is estimated at US$1.6 billion per annum. The paper argues that along with the traditional indicators of trade competitiveness like trade balance developing countries now need to give importance to preserving their policy space in free trade agreements since the fourth digital industrial revolution is changing the ways products are manufactured and exported.
    Keywords: CPTPP; Malaysia and CPTPP; Balance of Trade; SMART Simulations
    JEL: F1 F13 F14 F17
    Date: 2019–03–25
  2. By: Yoro Diallo (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Sébastien Marchand (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Etienne Espagne (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech, AFD - Agence française de développement, CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The aim of this study is to examine farm household-level impacts of weather extreme events on Vietnamese rice technical efficiency. Vietnam is considered among the most vulnerable countries to climate change, and the Vietnamese economy is highly dependent on rice production that is strongly affected by climate change. A stochastic frontier analysis is applied with census panel data and weather data from 2010 to 2014 to estimate these impacts while controlling for both adaptation strategy and household characteristics. Also, this study combines these estimated marginal effects with future climate scenarios (Representative Concentration Pathways 4.5 and 8.5) to project the potential impact of hot temperatures in 2050 on rice technical efficiency. We find that weather shocks measured by the occurrence of floods, typhoons and droughts negatively affect technical efficiency. Also, additional days with a temperature above 31°C dampen technical efficiency and the negative effect is increasing with temperature. For instance, a one day increase in the bin [33°C-34°C] ([35°C and more]) lessen technical efficiency between 6.84 (2.82) and 8.05 (3.42) percentage points during the dry (wet) season.
    Keywords: Weather shocks,Technical efficiency,Rice farming,Vietnam
    Date: 2019–03–22
  3. By: Banerjee, Abhijit (Massachusetts Institute of Technology); Hanna, Rema (Harvard Kennedy School); Olken, Benjamin A. (Massachusetts Institute of Technology); Sumarto, Sudarno (TNP2K)
    Abstract: Many developing country governments determine eligibility for anti-poverty programs using censuses of household assets. Does this distort subsequent reporting of, or actual purchases of, those assets? We ran a nationwide experiment in Indonesia where, in randomly selected provinces, the government added questions on flat-screen televisions and cell-phone SIM cards to the targeting census administered to 25 million households. In a separate survey six months later, households in treated provinces report fewer televisions, though the effect dissipates thereafter. We find no change in actual television sales, or actual SIM card ownership, suggesting that consumption distortions are likely to be small.
    JEL: H31 I38 O12
    Date: 2018–12
  4. By: M Niaz Asadullah; Norma Mansor; Antonio Savoia
    Abstract: This paper provides a systematic assessment of the alleged exceptionality of Malaysia’s development progress and its likely explanations, in a comparative perspective. Using cross-country regressions and aggregate indices of education, health, poverty and gender equality outcomes, we offer three findings. First, we provide evidence supporting the hypothesis that Malaysia’s human development progress has been exceptional compared with that of countries with a similar level of economic development, primarily for the 1970s and 1980s, so showing that progress has early origins. Next, we show that such progress is explained by a combination of income-mediated and support-led mechanisms, including Malaysia’s early emphasis on education and health inputs and infrastructure development. Finally, we argue that an early advantage in state capacity, vis-à-vis other countries of similar income level, may be at the origin of Malaysia’s successful implementation of poverty-reduction and growth-enhancing policies.
    Date: 2019
  5. By: Tran, Thi Ha
    Abstract: The paper examines the impacts of exchange rate on Vietnam’s trade balance with Japan based on the employment of industry-level data in a set of linear and nonlinear auto-regressive distributed lag models. Results from the models indicate a degree of bias in regression when using aggregate data and a linear ARDL approach. Among 19 industries under consideration, the NARDL model presents different responses from 16 industries, which account for 40% of imports and 60% of exports between Vietnam and Japan, to exchange rate movements. The trade balance of each industry responds differently towards exchange rate and asymmetric reactions are found in 9 out of 16 industries affected by changes in exchange rate. The model using aggregate data shows that exchange rate positively affects Vietnam-Japan trade balance in case of currency depreciation, whereas currency appreciation has no impact on the trade balance between the two countries. Besides, results of the model using aggregate data reveal that the level of economic activity of Japan exerts positive impacts on Vietnam’s trade balance with Japan.
    Keywords: Trade balance, exchange rate, ARDL, NARDL
    JEL: E4 E5 F10 F3 F31
    Date: 2019–04–13
  6. By: Bitzinger, Richard
    Abstract: Israel and Singapore are both countries with small populations and no strategic depth, and both see technology as a crucial force multiplier when it comes to national security. Israel, however, has been much more successful than Singapore in developing a range of indigenous military-technological innovations. The reasons are both geostrategic and cultural. Israel faces a much more looming and imminent threat which demands more military-technological innovation. Moreover, Israel’s informal and anti-hierarchical society is much more supportive than Singapore’s when it comes to risk-taking and experimentation.
    Keywords: Social and Behavioral Sciences, Israel, Singapore, defense innovation, military-technological innovation, indigenous industry
    Date: 2018–05–30
  7. By: Nguyen, Bich Diep (University of Basel)
    Abstract: This paper investigates the relationship between youth participation in household decision making and test performance in three countries India, Peru, and Vietnam. Using Young Lives Surveys data, the study constructs autonomy indices using factor analysis and regresses test performance on each of these indices. Contrary to the hypothesis that autonomy may be less beneficial in collectivistic cultures, this study does not find a negative relationship between autonomy and test performance among 19-year-olds in all three countries. Youth unilateral decision making in Peru and joint decision making in Vietnam are associated with higher test performance. Parental unilateral decision making is associated with lower performance in both countries. Autonomy is not significantly related to performance in India. Robustness check suggests that participation in household decisions (buying household utilities, buying livestock, land and house) may be less important for the youths than participation in decisions directly relevant to them.
    Keywords: adolescent autonomy, household decision making, parent-child relationship, test performance
    JEL: D13 I21 O15
    Date: 2019–03–14
  8. By: Humberto Llavador; John E. Roemer
    Abstract: Carbon budgets are a useful way to frame the climate mitigation challenge and much easier to agree upon than the allocation of emissions. We propose a mechanism with countries agreeing on the global carbon budget, while the decision to emit is decentralized at the country level. The revenue is collected in a global fund and allocated according to endogenously defined weights proportional to the marginal cost of climate change. The proposal features a unanimous agreement of the national citizenries of the world and global Pareto efficiency. We run a simulation in the spirit of the Paris Agreement, with zero emissions after 2055. At the Global Unanimity Equilibrium, permits are priced at 90$/tC, yielding 1.3 trillion dollars annually. Africa, India and the less developed countries in Asia are the only net recipients, while the US and China are the largest net contributors.
    Keywords: carbon budget, emissions, international agreement, permits, climate change
    JEL: Q54 Q56 Q58 F53
    Date: 2019–04
  9. By: Choudaha, Rahul
    Abstract: International students are critical to the competitiveness of American higher education in terms of financial, intercultural, and educational contributions. However, recent data indicates that the U.S institutions enrolled 31,520 fewer international students in Fall 2017 as compared to Fall 2016. At average tuition and fees of US$ 25,000, higher education institutions are likely to lose potential revenue of US$ 788 million for the first year of studies alone. This paper examines the shifting landscape of international enrollment from the lens of three overlapping Waves spread over seven years and takes a deeper dive into implications for American universities. Wave I was shaped by the terrorist attacks in September 2001 and resulted in slower overall growth in international student enrollment of 11% between 1999 and 2006. Wave II has its origins in the global financial crisis which prompted universities to search for self-funded students and experienced overall robust growth of 44 percent in international student enrollment between 2006 and 2013. Finally, Wave III is shaped by the new political order and intensified competition from English-taught programs in Europe and Asia which will slow down the pace of projected growth in international enrollment to 18 percent between 2013 and 2020. In this current Wave of intensified global competition, overall international student enrollment is likely to flatten or decline for most universities. While the reputation and quality of American higher education is admired and emulated around the world, resting on its past laurels will not be sufficient for attracting international students in the Third Wave. This means that universities must get proactive and strategic in reaching, engaging and supporting international students throughout their educational lifecycle. Demand for studying abroad among international students remains robust, however, increasing competition and expectations for value for money will requires proactive and concerted efforts to maintain the global competitiveness of American higher education.
    Keywords: Education, International Students, Foreign Students, Enrollment, Student Mobility
    Date: 2018–04–23
  10. By: Andone, Irina; Scheubel, Beatrice
    Abstract: While the consequences and effectiveness of IMF conditionality have long been the focus of research, the possible negative impact of IMF conditionality on countries’ willingness to ask for an IMF programme – often termed ‘IMF stigma’ – has recently received attention particularly from policy circles. In this paper we investigate how countries' past experience with the IMF and their peers’ experience with the IMF affect their likelihood of entering a subsequent IMF arrangement. Our results indicate that, even when controlling for the success of past programmes, a country is less likely to approach the IMF for help if in the past it experienced an above-average number of disbursement-relevant conditions. We find hardly any impact of peers’ experience, except for Asian countries. JEL Classification: F33, F53, F55, H87
    Keywords: crisis resolution, financial arrangements, IMF MONA, reserves
    Date: 2019–04
  11. By: Baum-Snow, Nathaniel (University of Toronto); Hartley, Daniel (Federal Reserve Bank of Chicago); Kwan Ok , Lee (National University of Singapore)
    Abstract: A number of prominent studies examine the long-run effects of neighborhood attributes on children by leveraging variation in neighborhood exposure through household moves. However, much neighborhood change comes in place rather than through moving. Using an urban economic geography model as a basis, this paper estimates the causal effects of changes in neighborhood attributes on long-run outcomes for incumbent children and households. For identification, we make use of quasi-random variation in 1990-2000 and 2000-2005 skill specific labor demand shocks hitting each residential metro area census tract in the U.S. Our results indicate that children in suburban neighborhoods with a one standard deviation greater increase in the share of resident adults with a college degree experienced a 0.4 to 0.7 standard deviation improvement in credit outcomes 12-17 years later. Since parental outcomes are not affected, we interpret these results as operating through neighborhood effects. Finally, we provide evidence that most of the estimated effects operate through public schools.
    Keywords: Employment; Neighborhoods; Human capital; Households; Population
    JEL: D1 E24 R3
    Date: 2019–03–18
  12. By: Paul J.J. Welfens (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)); Nan Yu (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)); David Hanrahan (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)); Benedikt Schmuelling (Lehrstuhl für Elektromobilität und Energiespeichersysteme (EES), Bergische Universität Wuppertal); Heiko Fechtner (Lehrstuhl für Elektromobilität und Energiespeichersysteme (EES), Bergische Universität Wuppertal)
    Abstract: The analysis provides a hybrid techno-economic perspective on EU and China e-bus development dynamics. China is a leading global electric bus user – particularly in certain provinces. In Europe, the European Commission has started an electric bus initiative and several EU member countries have tried to achieve progress with regard to their own municipal e-bus fleets. While the economic analysis shows that e-bus innovation and diffusion dynamics can be influenced by government procurement policy, it is also obvious that certain pricing schemes in e-bus (mixed) municipal mobility networks are not successfully promoting clean e-bus expansion. A key issue is that various grant schemes depress the prices for used e-buses which in turn creates additional risk for e-bus leasing arrangements. Industrial policy aspects as well innovation policy face challenges in the e-bus context. China’s regional e-bus approaches have shown considerable success and part of China’s patent dynamics supports e-bus expansion perspectives. From a technological perspective, there are several alternative modes of e-bus mobility whose technological and economic advantages have to be explored in the context of the characteristics of local and regional bus routes. A very important technological element of e-mobility concerns technical aspects of battery charging – for example, cycle lifetime, power density, charging time and safety. The price dynamics of battery packs is rather high and should stimulate the expansion of e-bus mobility in Europe and China. One key problem faced by Europe and Asia is the challenge of common technical standards. As regards Germany’s and the UK’s position as a potential lead markets for e-bus mobility – or a similar positioning of a network of EU cities – much depends on adequate new policy initiatives. The emissions reductions which could be achieved by transitioning to 100% e-bus mobility in the EU would amount to an estimated 1.3% cut in terms of emissions of the transport sector (without aviation).
    Keywords: Sustainability, municipal transportation, e-bus, technology, EU, China
    JEL: N74 N75 Q55 Q56 R4
    Date: 2018–12
  13. By: André Gröger
    Abstract: This article investigates the impact of negative income shocks in migrant destination countries around the world on the domestic and international labor migration decisions of their family members left behind at origin. Exploiting differences in labor market shocks across and within destinations during the Great Recession, I find large and heterogeneous effects on both types of migration decisions. High remittance-dependent households reduced domestic and increased international labor migration in response to the shock. Low dependence ones remained largely unaffected. I provide a theoretical framework, which rationalizes this heterogeneity by the relative magnitudes of income and substitution effects caused by the shock. The results imply a deterioration in the skill selection of aggregate international migrant flows as high dependence households had below average skill levels. New international migrants targeted the same destinations as established ones from the same household, providing evidence of strong kinship migration networks. The results show that domestic and foreign migration decisions are interrelated and jointly determine aggregate migration flows.
    Keywords: international migration, domestic migration, migration selection, unemployment, Vietnam
    JEL: F22 J61 O15 R23
    Date: 2019–04

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