nep-sea New Economics Papers
on South East Asia
Issue of 2019‒11‒11
sixteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Regionalization in East Asia-Pacific? An Elusive Process By Ojendal, Joakim
  2. Tree Plantations in the Philippines and Thailand Economic, Social and Environmental Evaluation By Niskanen, Anssi; Saastamoinen, Olli
  4. The Asian Currency Crisis Origins, Lessons, and Future Outlook By Chowdhury, Abdur R.
  5. VIETNAM SMEs' PARTICIPATION IN REGIONAL ECONOMIC INTEGRATION. Survey Results of Three Manufacturing Sectors By Nguyen Dinh Chuc; Anh Ngoc Nguyen; Nguyen Thi Kim Thai
  6. The macroeconomic effects of oil price and risk-premium shocks on Vietnam: Evidence from an over-identifying SVAR analysis By Pham, Thai-Binh; Sala, Hector
  7. Early Childhood Education and Cognitive Outcomes in Adolescence: A Longitudinal Study from Vietnam By Robert Rogers; Doan Hai Ma; Tra Nguyen; Anh Ngoc Nguyen
  8. "Geo-Political Economy & Culture" and Connected Life in Asian I&CT Markets By Kawamata, Takahiro
  9. Some Issues on the Vietnam Economic Growth By Phuong Le; Cuong Le Van; Anh Ngoc Nguyen; Ngoc Minh Nguyen; Phu Nguyen Van; Dinh-Tri Vo
  10. Dealing with Capital Inflows Are There Any Lessons? By Reinhart, Carmen M.; Dunaway, Steven
  11. Financial literacy and suboptimal financial decisions at older ages By Fong, Joelle H.; Koh, Benedict SK.; Mitchell, Olivia S.; Rohwedder, Susann
  12. Relationship of Over-the-top (OTT) Communications and Traditional Telecommunications Services: the Case of Thailand By Jirakasem, Monarat; Mitomo, Hitoshi
  13. How to increase the uptake of development interventions? Considering the Theory of Planned Behaviour By Kaplan, Lennart; Kuhnt, Jana; Richert, Katharina; Vollmer, Sebastian
  14. Complements and Substitutes between Chatbots and Humans: Corporate Perspectives By Sudtasan, Tatcha; Pitivaranun, Pantaree
  15. Social Funds in Stabilization and Adjustment Programmes By Cornia, Giovanni Andrea
  16. Remittances and Economic Growth: A Quantitative Survey By Cazachevici, Alina; Havranek, Tomas; Horvath, Roman

  1. By: Ojendal, Joakim
    Abstract: This is a state-of-the-art report prepared within the UNU/WIDER project The New Regionalism and the International System - Implications for Development and Security, covering East and Southeast Asia. The report constitutes an initial inventory study on regionalization incentives and prospects and is arranged around the three themes of economic development, regional security and ecological problems. It is basically a study of secondary material with an extensive bibliography.The aim of the report is, first, to provide a survey of recent literature regarding regionalization and regional cooperation in East Asia in general and in Southeast Asia in particular, and, second, to review a number of historical and contemporary debates in regard to the potential regionalization process in East Asia-Pacific in general and in Southeast Asia in particular. To satisfy these vast aims, the report therefore tries to give the reader advice on where to find further readings.The UNU/WIDER project mentioned above acknowledges a number of new features of regional cooperation in the world and the theoretical point of departure for this report - as well as for the larger research programme of which it is a part - is the new regionalism which, it is argues, goes beyond the more traditional debates on regional cooperation. It attempts to display signs of multidimensionality and 'from within approaches. These tendencies are explored and described through discussions on concepts such as open regionalism and new regionalism.The report takes note of recent literature on world regionalization before it lists the most important regional initiatives in East and Southeast Asia. It observes the current imbalance between drastically increased regional economic interactivity coupled with the absence of, or very low keyed, political mechanisms for handling this situation. It argues that there is a need for enhanced political/security cooperation in order to sustain the current transformation process in East and Southeast Asia. Increased regional cooperation on a wide range might be the answer to this question. The report elaborates here on what a maximalist and minimalist approach to regionalization would mean. A version of the maximalist approach could be a developed APEC, while the minimalist version is an extended ASEAN; it is likely that somewhere in between these poles, we will find a future, deepened, regional cooperation.The report reviews various East and Southeast Asian debates pertinent to the question of regionalization. The underlying factors for further regionalization are mentioned briefly for East Asia and, in somewhat more detail, for Southeast Asia before a number of scenarios are discussed and a tentative conclusion is drawn.The report concludes that there are hectic activities in terms of regionalization in East and Southeast Asia. There are, however, severe obstacles to institutionalized regionalization. This does not necessarily stop the process, but rather makes it uncertain in terms of its scope, depth and future direction. The conclusion also gives prominence to a number of key questions such as: the pivotal relation between the US and Japan, the relation between Japan and Southeast Asia, the extension of ASEAN to Indochina and the nature and degree of Asian exclusiveness in any East Asian regional cooperation formula.
    Keywords: International Development
  2. By: Niskanen, Anssi; Saastamoinen, Olli
    Abstract: The area of forest plantations in the tropics has increased for many reasons, but not the least as a result of natural forest depletion. Although forest plantations cannot qualitatively substitute the timber grown in natural forests, their importance in global forestry is steadily increasing. At the same time a heated public debate has been growing with them, focusing largely on the perceived negative environmental and social impacts of large-scale industrial plantations. This research report first discusses tropical plantations in global forestry. It emphasizes that tree plantations presently include much a wider range of categories, purposes, species variety and management forms than is commonly perceived. The study states that although industrial forest plantations are mainly established solely for economic reasons, private farm-forestry and governmental plantations more often have a variety of reasons for establishment. These reasons include expectations for positive social and environmental impacts of forest plantations, e.g. increased household security and soil conservation. Nevertheless the environmental and social impacts of plantations deserve much concern and the second part of the study widely reviews environmental and social but also economic impacts of plantations, all of which can be either negative or positive. One of the major problems in developing plantation forestry has been that the profitability analysis of plantations has based only on the economic criteria. Although financial profitability can be regarded as the most important single evaluation criteria for forest plantations in the tropics, the negative and positive social and environmental impacts should also be attempted to be included into the analysis. The focus of the empirical part of the work, therefore, has been to study to what extent it presently is possible to monetize the varying impacts of tree plantations and incorporate them into the "multilevel" profitability analysis. In two case study countries, Thailand and the Philippines, the profitability of industrial, community based and private reforestation was assessed for two most commonly used tree species in reforestation. The profitability assessments were aimed to be carried out at four different levels: based on comparisons between costs and benefits in market prices (financial profitability), economic efficiency prices (economic profitability), economic efficiency prices with the distributional weigh assessments (socio-economic profitability), and finally with including monetary valuation of environmental impacts into the economic analysis (environmental-economic profitability). For the environmental-economic profitability, the study evaluated the economic costs of transpiration and nutrient loss in harvesting, and benefits in erosion control and carbon sequestration. The results of the two case studies indicated that the economic profitability of reforestation is considerably higher than the financial profitability both in Thailand and the Philippines. It also became evident that the environmental-economic profitability was highly dependent on the environmental impact and valuation assessments; in this study, the environmental-economic valuation improved the economic profitability of reforestation. A conclusion derived from the socio-economic analysis was that the return to labour per hectare is very low in mechanized reforestation. The empirical basis of including environmental and social impacts into traditional profitability analysis of tree plantations requires much improvement and the work done still carries a character of methodological experiments. Nevertheless a conclusion is evident: if the social and environmental costs and benefits, evaluated in monetary terms, could properly be included into the solid framework of economic analysis, that would further encourage for environmentally and socially sensitive management practices in plantation forest development.
    Keywords: International Development
  3. By: Anh Ngoc Nguyen (Development and Policies Research Center (DEPOCEN), Hanoi, Vietnam); Nguyen Thi Tuong Anh (Foreign Trade University); Nguyen Ngoc Minh (Development and Policies Research Center (DEPOCEN), Hanoi, Vietnam); Nguyen Thi Phuong Mai (Development and Policies Research Center (DEPOCEN), Hanoi, Vietnam)
    Date: 2018–03
  4. By: Chowdhury, Abdur R.
    Abstract: What started in the summer of 1997 as a regional economic and financial crisis in East and Southeast Asia had developed into a global financial crisis within the span of a year. This crisis followed the crisis in the European Monetary System in 1992-3 and the Mexican peso crisis in 1994-5. However, unlike the previous two crises, the scale and depth of the Asian crisis surprised everyone. One obvious reason for this is East and Southeast Asia's track record of economic success. Since the 1960s, no other group of countries in the world has produced more rapid economic growth or such a dramatic reduction in poverty. Given so many years of sustained economic performance the obvious question is: how could events in Asia unfold as they did? This paper has three objectives. First, to explain what led to this crisis and how did it spread throughout the region; second, to analyze the lessons that can be learned from this crisis to prevent it from reoccurring in the future and; third, to evaluate the future outlook of the countries in this region. The paper shows that what led to the crisis was a fatal combination of several self­ reinforcing factors including external sector weaknesses, fragility in domestic financial markets due to inadequately administered financial liberalization, loss of confidence, and short-term capital flows, maturing within less than a year and denominated in unhedged dollars. Some of these factors were country-specific while others were common to the entire region. Asia's financial crisis will almost certainly lead to important changes in the international financial system, as countries try to find an appropriate balance between the benefits from gaining access to international capital flows and the potential for instability and other risks that also seem to be much greater in a world of large and highly mobile capital movement. The paper discusses important lessons from the crisis. Some are preventive, designed to reduce the probability of financial crisis in the future, while others are more fundamental in nature. After the analysis of what went wrong and what we can learn from the crisis, comes the analysis of what happens next as Asian countries try to find their way back to economic stability and growth. The recovery process for these countries can be broadly divided into three phases. In the first phase, policies designed to address the causes of the crisis need to be formulated. In the second phase, a recovery of private capital inflow can be expected. The third and final phase of the process will be reached when the recapitalization of the financial system has been largely accomplished and when the level of private consumption and private investment have reached the pre-crisis level.
    Keywords: International Development
  5. By: Nguyen Dinh Chuc (Center for Sustainable Urban Development); Anh Ngoc Nguyen (Development and Policies Research Center (DEPOCEN), Hanoi, Vietnam); Nguyen Thi Kim Thai
    Abstract: cognitive outcomes later in life. Few studies examine the impacts of time spent in ECE in developing countries. We use data from the Young Lives project in Vietnam with 2SLS regressions to estimate the impact of years spent in ECE on cognitive outcomes in adolescence. We find that one extra year in ECE corresponds to 21.8 percentage point (1.25 SD) and 30.8 percentage point (2.78 SD) increases in math and verbal cognition scores, respectively. Our estimates suggest that ECE is highly effective in Vietnam and is a potential strategy for bridging educational outcomes gaps.
    Date: 2018–02
  6. By: Pham, Thai-Binh; Sala, Hector
    Abstract: This paper studies the macroeconomic effects of oil price shocks in Vietnam. It expands Kilian’s (2009) framework to simultaneously consider risk-premium shocks and comprehensively assess their consequences on international competitiveness and the State Bank management of the monetary policy. Methodologically, this implies dealing with an over-identified structural vector autoregression (SVAR) model. Data wise, the analysis is performed on a unique dataset with variables defined at a monthly frequency running from 1998:01 to 2018:12. Demand-side, global-, and specific-oil price shocks determine inflation and international competitiveness, and play an essential role in explaining the long-run variations of several Vietnamese macroeconomic indicators (mainly the trade balance, three-month interest rates, and the inflation rate). Vietnam’s Dong pegging to the US Dollar results in a stronger impact of these shocks when real exchange rates and the rate of exports are modelled, than when real effective exchange rates and the trade balance are modelled. In the latter case, shock absorption is quicker given the multilateral trade context in which no single pegging holds. In association to the strong tie between Vietnam’s Dong and the U.S. dollar, we also uncover remarkable effects of risk-premium (or U.S. Federal Fund rate) shocks. Supply-side oil price shocks have little impact on inflation and international competitiveness but condition the monetary policy. Neglecting such influence in the past may have resulted in an excessively conservative monetary policy.
    Keywords: Oil price shocks; risk-premium shocks; SVAR; international trade; Vietnam
    JEL: F41 F62 Q41 Q43
    Date: 2019–05–12
  7. By: Robert Rogers (Development and Policies Research Center (DEPOCEN), Hanoi, Vietnam); Doan Hai Ma (Development and Policies Research Center (DEPOCEN), Hanoi, Vietnam); Tra Nguyen (Development and Policies Research Center (DEPOCEN), Hanoi, Vietnam); Anh Ngoc Nguyen (Development and Policies Research Center (DEPOCEN), Hanoi, Vietnam)
    Abstract: Previous research shows that Early Childhood Education (ECE) positively impacts cognitive outcomes later in life. Few studies examine the impacts of time spent in ECE in developing countries. We use data from the Young Lives project in Vietnam with 2SLS regressions to estimate the impact of years spent in ECE on cognitive outcomes in adolescence. We find that one extra year in ECE corresponds to 21.8 percentage point (1.25 SD) and 30.8 percentage point (2.78 SD) increases in math and verbal cognition scores, respectively. Our estimates suggest that ECE is highly effective in Vietnam and is a potential strategy for bridging educational outcomes gaps.
    Keywords: early childhood education; education outcomes; Vietnam; cognitive outcomes.
    Date: 2018–01
  8. By: Kawamata, Takahiro
    Abstract: Since the East Asian Miracle report was published by the World Bank in 1993, East Asian countries have achieved economic development with the "flying geese pattern" respectively, as well as advancements in informatization based on each political and cultural context. In particular, the revolution in information and communications technology (I&CT) drives commercial and social usage of the Internet throughout multiple devices such as personal computers, tablets, and smart-phones. East Asian cultural contexts thereby create commonalities over their territories, and maintain their distinctive characters as well. While telecommunications and media industries are under governmental control, with government regulations in most Asian countries, platform businesses, such as social network services (SNSs) have expanded across borders, demonstrating the principle of network externality and economy. In addition, cultural and/or social contents easily expand with identity and universality as high culture and with popularity as pop- and/or sub-cultures among younger generations within areas. This paper examines the potential of East and South East Asian markets including not only China, Korea, and Japan, but also Taiwan, Hong Kong, and Singapore, for mobile and wired communications, their technologies, services, content, and applications. It also describes the dynamism of networking among interested players over the next generation of information and communication technologies and their applications, such as SNSs and "FinTech", including mobile payment and e-commerce, as well as content including audio and visual content, and game software; in the context of the "Ecosystem" of I&CT business and the path-dependency of social shaping of technological trajectories as enhanced in each political and cultural territory. There may be a dramatic change occurring in the structure of the industry affecting not only telecommunications network components, terminal equipment vendors and software developers, but also network operators and service providers located in Asian territories. Therefore, our analysis places emphasis on the dynamic formulation of multi-tiered and multifaceted frameworks of "Geo-Cultural Informatics," which encapsulates the geo-politics and geo-economics associated with cultural informatics, within industrial clusters over Asian marketplaces...
    Keywords: Evolution of Technology,Ecosystem of industries,Geo-political economics,"Geo-cultural informatics",Path dependence of technology and institution,Social Networking Service (SNS),FinTech,Trust-based areas
    Date: 2019
  9. By: Phuong Le (Paris-Sud University); Cuong Le Van (IPAG Business School, PSE, CNRS, TIMAS (Vietnam)); Anh Ngoc Nguyen (Development and Policies Research Center (DEPOCEN), Hanoi, Vietnam); Ngoc Minh Nguyen (University of Nantes, DEPOCEN (Vietnam)); Phu Nguyen Van (BETA, CNRS & University of Strasbourg, TIMAS (Vietnam)); Dinh-Tri Vo (IPAG Business School, University of Economics Hochiminh City)
    Abstract: We first consider the question of the productivity of the economy of Vietnam at the macro level. With theoretical models and empirical data, we find out the Leontief production function, and its associated TFP (Total Factor Productivity). We show that the TFP is one of the main engines of Vietnam economic growth. However when we move to the micro level with the capital productivity of 2,835 State Owned Enterprises (SOEs), we discover there exists an over utilization of the physical capital and more importantly, diversion of the capital stock. This diversion may be due to a waste of capital stocks or to a special form of bribery we call "hidden overhead". To summarize, economic growth in Vietnam my be enhanced by investing in the founding components of TFP such as new technology, Human Capital, better organisational system, but also by fighting the bribery and the over utilization of the physical capital
    Keywords: Productivity; Production Function; TFP; Hidden Overhead.
    JEL: E60 O11 P21
    Date: 2019–01
  10. By: Reinhart, Carmen M.; Dunaway, Steven
    Abstract: We have now witnessed more than half a decade of relatively heavy capital inflows to a large group of highly heterogeneous developing countries and economies in transition in Asia, Eastern Europe, the Former Soviet Union, Latin America, and parts of Africa and the Middle East—in effect, we have already seen the reversal of these flows in a number of cases. In light of the richness of the country experiences and the continued relevance of the topic in a world of increasingly integrated capital markets, our aim in this paper is threefold: first, to chronicle the policies adopted in a broad range of countries, so as to document who did what and when; second, to try to assess to what extent such policies achieved their intended objectives and; lastly following from the previous two points, to draw lessons about which policies appeared to have been the most successful tools in coping with surging capital inflows, with emphasis on the 'policy mix' and how individual measures interact. In this retrospective review of the policy response to the surge in capital inflows we find crucial importance of the interaction of policies to either magnify or reduce the volume of inflows, affect their composition, and/or alter their macroeconomic consequences. For example, a combination of little or no short-term exchange rate uncertainty (as is the case when there is an implicit or explicit peg), sterilized intervention, which tends to prevent domestic short-term interest rates from converging toward international levels, and no binding impediments to capital inflows (through either taxation or quantitative constraints) is likely to maximize the volume of short-term capital inflows a country receives (this policy mix characterizes the Mexican experience during 1990-93 reasonably well). The pairing of little or no short-term exchange rate risk and relatively high domestic interest rates favors the short-term investor; for the long-term investor, there is always exchange rate risk since over longer horizons the probability of a realignment of the peg or a change in the exchange rate regime increases. Further, longer-term investments (such as foreign direct investment) tend to be less interest sensitive. Hence, it would not be surprising to see that if such a policy mix remains in place for any extended period of time it may end up skewing the composition of inflows toward the short end of the maturity spectrum. Similarly, it could be argued that the mix of sterilized intervention and controls on inflows may undermine the 'individual effectiveness' of these policies. The comparatively high interest rate differentials that usually accompany sterilization may act as an inducement to circumvent the capital controls (i.e. firms and banks may find ways of borrowing offshore). To the extent that they are successful in dodging the controls, this tends to offset some of the contractionary effects of the sterilization efforts (this is case of Brazil in 1994-95). Along the same lines, liberalizing controls on outflows as a policy aimed at reducing net capital inflows may backfire if domestic interest rates are high relative to international levels and/or if it is interpreted a positive signal of the future economic/policy environment. Indeed, several countries (Chile, Malaysia, and Thailand) liberalized outflows while at the same time engaging in substantive sterilization efforts.
    Keywords: International Development
  11. By: Fong, Joelle H.; Koh, Benedict SK.; Mitchell, Olivia S.; Rohwedder, Susann
    Abstract: Over the life-cycle, wealth holdings tend to be highest in the early part of retirement. The quality of financial decisions among older adults is therefore an important determinant of their financial security during the asset drawdown phase. This paper assesses how financial literacy shapes financial decision-making at older ages. We devised a special module in the Singapore Life Panel survey to measure financial literacy to study its relationship with three aspects of household financial and investment behaviors: credit card debt repayment, stock market participation, and adherence to age-based investment glide paths. We found that the majority of respondents age 50+ has some grasp of concepts such as interest compounding and inflation, but fewer know about risk diversification. We provide evidence of a statistically significant positive association between financial literacy and each of the three aspects of suboptimal financial decision-making, controlling for many other factors, including education. A one-unit increase in the financial literacy score was associated with an 8.3 percentage point greater propensity to hold stocks, and a 1.7 percentage point higher likelihood of following an age-appropriate investment glide path. The financial literacy score is only weakly positively linked with timely credit card balance repayment, both in terms of statistical significance and estimate size.
    Keywords: retirement,financial literacy,credit card debt,stock market nonparticipation,lifecycleinvestment,household portfolio
    JEL: D14 E21 G11 J32
    Date: 2019
  12. By: Jirakasem, Monarat; Mitomo, Hitoshi
    Abstract: This paper focuses on the relationship between over-the-top (OTT) and traditional communications services. Many analysts have stated OTT communications services might soon replace other communication services; however, the empirical study of this assumption is scarce, especially in the case of Thailand. This study thus aims to investigate the actual effects of OTT communications services on traditional communications services and whether OTT communications services can substitute or complement traditional communications services. The data used in this paper were collected in 2019 and comprised 1,052 observations. After the Probit analysis, the results stated the relationship between the two services depends on tariff type: they are complementary under a flat rate plan but substitutable under a use-dependent scheme. With respect to messaging feature, OTTs and short message services (SMS) and multimedia messaging services (MMS) are independent. The results contribute to the field of telecommunications and provide evidence of the substitution and guidelines for telecommunications policy makers in Thailand. Regulators and mobile operators should encourage the flat rate plan. For economic reasons, the regulation similar to traditional telecommunications might not be suitable; however, regulation regarding other issues should be addressed in further study.
    Keywords: Over-the-top (OTT) communications services,substitution,mobile telephony,messaging,Thailand
    Date: 2019
  13. By: Kaplan, Lennart; Kuhnt, Jana; Richert, Katharina; Vollmer, Sebastian
    Abstract: A crucial prerequisite for the success of development interventions is their uptake by the targeted population. We use the set-up of interventions conducted in Indonesia and Pakistan to investigate dis-/incentivising factors for a programme's uptake and support. Making use of a framework grounded on psychological theory - The Theory of Planned Behaviour - we consider three determinants for intervention uptake: personal attitudes; subjective norms (influenced by important others); and the perceived ease of performing the desired behaviour. As most development interventions are characterised by a cooperation between local and international agents, we investigate a potentially important dis-/incentivising factor further: the salience of the implementer's background. Our findings show that attitudes, subjective norms, and ease of use are indeed associated with increased uptake in our two culturally different settings. Conducting a framed field experiment in Indonesia, we go on to show that the study population in the Acehnese context exhibits higher levels of support for the project if the participation of international actors is highlighted. We find that previous experience with the respective actor is pivotal. To strengthen supportive behaviour by the target population for locally led projects, it is essential to foster local capabilities to create positive experiences. Hence, our results encourage development research and cooperation, first, to consider personal attitudes, subjective norms, and the perceived ease of use in the design of interventions in order to increase uptake. Second, and depending on the country context, implementers should consider previous experience with and attitude towards partners - either local or international - when aiming to achieve behavioural change.
    Keywords: Theory of Planned Behaviour,Framed Field Experiment,Implementation Research,Public Health
    Date: 2019
  14. By: Sudtasan, Tatcha; Pitivaranun, Pantaree
    Abstract: The aim of this study is to determine the perceptions of business on the abilities of human labor and robots or Artificial Intelligence, where different types of labors, human and AI, suit different types of job duties. Chatbot is selected as a case because it has passed the introduction stage of its life cycle. It is now widely accepted and has become one of the major trends in business and corporate utilization among advanced countries such as Japan, China and USA. The study focuses on service sector in the position of customer service, call center, and lecturer. The results show that corporates perceive Chatbot as potential opportunity to work as receptionist, operator, call center, customer service staff and lecturer. The results imply that with only the factors of efficiency, productivity, cost of time, wage, and cost of production there are going to be difficulties for human labors to work in these duties. Government, therefore, should revamp the system and scheme of education in Thailand which is support in both worker skills and working skills with more complex, creative, critical, and service orientation in order to differentiate and maintain balances between the uses of advanced technologies and human jobs.
    Keywords: Human worker,chatbot,corporate perspectives,complements,substitutes
    Date: 2019
  15. By: Cornia, Giovanni Andrea
    Abstract: Well before the introduction of adjustment-related Social Funds (SFs), many developing countries had developed a variety of safety nets comprising food subsidies, nutrition interventions, employment-based schemes and targeted transfers. Middle-income and a few low-income countries had also achieved extensive coverage in the field of social insurance. In countries committed to fighting poverty, these programmes absorbed considerable resources (2-5 per cent of GDP, excluding social insurance) and had a large impact on job creation, income support and nutrition: for instance, in 1983, Chile's public works programme absorbed 13 per cent of the labour force. Their ability to expand quickly depended on a permanent structure of experienced staff, good portfolios of projects, clear management rules, adequate allocation of domestic resources, supply-driven execution and, with the exception of food subsidies, fairly good targeting. SFs is a broad term which refers to a variety of programmes–Social Emergency Funds (SEFs), Social Investment Funds (SIFs) and Social Action Programmes (SAPs)–that evolved during the last ten years at the initiative of the Bretton Woods Institutions (BWI) to offset the increase in poverty by adjustment. SFs distinguished themselves from traditional programmes because: they had a strong short term anticyclical character; were mostly multisectoral; emphasized employment generation and human capital formation and not so much food subsidies and social insurance; relied mostly on demand-driven schemes; were run by temporary autonomous bodies; had fairly high costs per capita for both wage and non-wage items; focused mainly on the social groups affected by adjustment; and counter on greater visibility and external support than normal government programmes. As of late, SIFs increasingly started shifting towards permanent community-based programmes often supported by local and foreign NGOs focusing on the creation of social infrastructure in regions where state services were absent of deficient. SFs have been introduced in more than 70 countries. They have been extremely common in Latin America, very common in Africa, and rare but becoming more common in South Asia, the low-income economies in transition and, recently, South East Asia and East Asia. SFs counter on limited resources: 0.1-0.3 per cent of GDP (per programme year) in Africa, and 0.4-1.0 in Latin America. In 1997, the World Bank, the staunchest advocate of SFs, had a SF portfolio of only 1.3 US$ billion out of total commitments of 120 US$ billion. Preliminary 1998 data on South East Asia suggest higher amounts (between 2.5 and 7.5 per cent of GDP), though it is unclear over how many years these will be disbursed. In addition, SFs did not have an effect on the total social expenditure/GDP ratio, as in most cases the rise of the latter during the years of execution of the SFs was less than the drop that occurred during the years of crisis and adjustment. Notwithstanding the visibility they enjoyed, but not surprising given their low resourcing, SFs played a minor role in reducing the number of adjustment- and chronic-poor, and in reversing adverse shifts in income distribution. In most cases, the number of jobs added to the economy was less than 1.0 per cent of total employment. This was due partly to their limited funding, poor targeting and inadequate sequencing, as SFs were generally introduced after years of crisis and adjustment. While SFs were implemented more rapidly than government programmes, their unit costs were higher, making their replication at the national level impossible. Their sustainability improved with the introduction of SIFs which fostered low cost approaches to health and education with the help of village organizations, local governments, the private sector and foreign donors. Yet, while this approach has advantages in weak states and emergency situations, its effectiveness remains doubtful in countries where cost-effective social programmes exist or can be developed. Despite years of social expenditure cuts, even moderate size SFs could have brought about important welfare gains had their expenditure been allocated to the poorest groups and to high-efficiency programmes. However, SFs rarely focused on activities with the highest social rates of return but rather on activities that required little programme preparation and had large demonstration effects. Indeed, the targeting precision of SFs has been lower than that of most pre-adjustment safety nets which, as noted, also covered a greater share of the poor. While SFs targeted by objective criteria (low-income areas, female-headed households, etc.) more effectively reached the poor, targeting imbalances by region and social class were frequent. One of the causes of this phenomenon was their 'demand-driven' nature, as many projects were selected among the proposals submitted by municipalities and NGOs. While this may lead to the selection of project better responding to the needs of the populations affected, it often tends to short-circuit the very poor who have a limited capacity to articulate their demands and mobilize counterpart funds. All in all, SFs have proven to be no panacea. Many of them were formulated with the political objective to reduce domestic opposition to the adjustment process, and in particular of mollifying the influential groups affected by adjustment. Greater impact on poverty would have required much larger resources, more permanent relief structures, improved planning and targeting and, especially, better coordination and sequencing with the fiscal cuts entailed by macroeconomic adjustment, a fact underscored once more by the recent Indonesian experience. Always, ex ante macro policy decisions have had a greater impact on employment, incomes and poverty than ex post SFs. The key question then is whether alternative macro policies with a less marked social impact can be followed. Among others, a recent external evaluation of IMF-sponsored ESAFs concluded that there is some room for manoeuvre in the area.
    Keywords: International Development
  16. By: Cazachevici, Alina; Havranek, Tomas; Horvath, Roman
    Abstract: Expatriate workers’ remittances represent an important source of financing for low- and middle-income countries. No consensus, however, has yet emerged regarding the effect of remittances on economic growth. In a quantitative survey of 538 estimates reported in 95 studies, we find that approximately 40% of the studies report a positive effect, 40% report no effect, and 20% report a negative effect. Our results indicate publication bias in favor of positive effects. Correcting for the bias using recently developed techniques, we find that the mean effect of remittances on growth is still positive but economically small. Nevertheless, our results uncover noticeable regional differences: remittances are growth-enhancing in Asia but not in Africa. Studies that do not control for alternative sources of external finance, such as foreign aid and foreign direct investment, mismeasure the effect of remittances. Finally, time-series studies and studies ignoring endogeneity issues report systematically larger effects of remittances on growth.
    Keywords: remittances; economic growth; meta-analysis; publication bias; Bayesian model averaging
    JEL: D22 E58 F63 G21
    Date: 2019–11–05

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