nep-sea New Economics Papers
on South East Asia
Issue of 2020‒07‒13
fourteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Monetary Policy Rule and Taylor Principle in Emerging ASEAN Economies: GMM and DSGE Approaches By Taguchi, Hiroyuki
  2. Toward a Fairer Society: Inequality and Competition Policy in Developing Asia By Balisacan, Arsenio M.
  3. The persisting legacies of imperial elites among contemporary top-ranked Vietnamese politicians By Vu, Tien Manh; Yamada, Hiroyuki
  4. Impact of COVID-19 Pandemic on Agriculture Production in Southeast Asia: Reinforcing Transformative Change in Agricultural Food Systems By Rico C. Ancog; Glenn B. Gregorio
  5. Entrepreneurial Business Practices among FELCRA's Women Entrepreneurs By Ahmad Zamri Mansor
  6. Policy Imperatives to Promote Urban Agriculture in Response to COVID-19 Pandemic Among Local Government Units in the Philippines By Garry A. Hidalgo; Gerald Glenn F. Panganiban; Victorino Aquitania; Erlinda C. Creencia; Arlene B. Arcillas; Glenn B. Gregorio; Rico C. Ancog
  7. East Asia Decouples from the United States: Trade War, COVID-19, and East Asia's New Trade Blocs By Peter A. Petri; Michael G. Plummer
  8. The impact of interest rate changes on islamic home financing: Malaysia as a case study By Hashim, Norhaziah; Masih, Mansur
  9. Potret Kondisi Perekonomian Indonesia By Persada, Pena; Kristianto, Aloysius Hari; Nurcahyo, Azriel Christion
  10. Determinants of Global Value Chain Participation: Cross-Country Evidence By Ana Margarida Fernandes; Hiau Looi Kee; Deborah Winkler
  11. Agricultural Clusters Approach to Enhance Competitiveness of Smallholder Farms in Southeast Asia By Imelda L. Batangantang; Ma. Christina G. Corales; Rebeka A. Paller; Nikka Marie P. Billedo; Rico C. Ancog; Rodolfo V. Vicerra; Glenn B. Gregorio
  12. Lending to the Unbanked: Relational Contracting with Loan Sharks By Lang, Kevin; Leong, Kaiwen; Li, Huailu; Xu, Haibo
  13. Persistent legacy of the 1075–1919 Vietnamese imperial examinations in contemporary quantity and quality of education By Vu, Tien Manh; Yamada, Hiroyuki
  14. The Overnight Drift By Boyarchenko, Nina; Larsen, Lars C.; Whelan, Paul

  1. By: Taguchi, Hiroyuki
    Abstract: This paper aims to reassess the performances of inflation targeting adopted by emerging ASEAN countries, Indonesia, the Philippines and Thailand, by examining their monetary policy rules, both through generalized-method-of-moments (GMM) estimations of policy reaction functions and through Bayesian estimations of the New Keynesian dynamic-stochastic-general-equilibrium (DSGE) model. The main findings are summarized as follows. First, the GMM estimations identified inflation-responsive rules fulfilling the Taylor principle, with a forward-looking manner in Indonesia and Thailand and with a contemporaneous way in the Philippines. Second, the Bayesian estimations of the New Keynesian DSGE could reassure the GMM estimation results, as the former estimations produced consistent outcomes with the latter ones on the policy rate reactions to inflation with the Taylor principle.
    Keywords: Taylor principle; Inflation targeting; Emerging ASEAN; Generalized method of moments (GMM); New Keynesian dynamic stochastic general equilibrium (DSGE)
    JEL: E52 E58 O53
    Date: 2020–06
  2. By: Balisacan, Arsenio M.
    Abstract: Rising inequality poses a serious threat to sustained growth and poverty reduction in developing Asia. Many countries in the region have adopted competition policy—also known as antitrust—to promote economic welfare by protecting competitive processes, as well as in consideration of public interests, including social equity. This paper uses the Philippine experience to illustrate the conceptual and institutional issues in operationalising competition policy for development. Competition policy in the Philippines has historical roots in its struggle for economic and social reforms aimed at achieving inclusive development. Properly framing competition policy to stay close to its core guiding principle is key to its effectiveness in contributing to inclusive development. The paper concludes that, in the Philippine context, adhering to consumer welfare standards in competition policy promotes a fairer social outcome (i.e., reduction of income inequality and poverty) while improving economic efficiency.
    Keywords: Competition policy, antitrust, welfare, income distribution, economic development, Philippines
    JEL: I30 K21 L40 O15 O53 O57
    Date: 2020–01–29
  3. By: Vu, Tien Manh; Yamada, Hiroyuki
    Abstract: This study investigated how the legacies of Vietnamese elites continue to affect top-ranked politicians in Vietnam. We therefore compared a list of elites who passed the imperial examination (1075–1919) at the national level with a list of currently active Vietnamese top-ranked politicians (1930–2020) by matching their home districts. We used the average distance from each district to imperial test venues as instrumental variables for estimating possible connections at the district level. Results showed strong and persistent imperial legacies based on these home districts. This suggests the existence of persistent transmissions via informal institutions and channels of home favoritism.
    Keywords: Legacy; Elite; Imperial elite; Politician, Vietnam
    JEL: J62 N35 N45 P26
    Date: 2020–06–03
  4. By: Rico C. Ancog; Glenn B. Gregorio
    Abstract: How will the COVID-19 pandemic affect the agriculture sector in Southeast Asia? Clearly, any disruptions in the agricultural food systems would create supply and demand shocks that would redound to the agriculture sector's immediate and long-term economic performance and food security contribution. Overall, the COVID-19 pandemic is estimated to result in 3.11 percent reduction in aggregate volume of agricultural production (29.58 million tons) in Southeast Asia due to decline in agricultural farm labor affecting 100.77 million individuals. Overall, this could translate to 1.4 percent decrease in GDP (USD 3.76 billion) of the Southeast Asian region. Ensuring a systemic transformation of the agricultural systems into resilient, sustainable, productive, and inclusive food systems would be critical for the future of Southeast Asia.
    Keywords: COVID 19, Southeast Asia
    Date: 2020
  5. By: Ahmad Zamri Mansor (Centre of Education Leadership and Policy, Faculty of Education, UKM Bangi, Malaysia Author-2-Name: Norasmah Othman Author-2-Workplace-Name: Centre of Education Leadership and Policy, Faculty of Education, UKM Bangi, Malaysia Author-3-Name: Mohd Maliki Kamarul Zaman Author-3-Workplace-Name: Faculty of Education, UKM Bangi, Malaysia 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 - Women play a significant role in Malaysian economic development. FELCRA is a corporate organization wholly owned by the Malaysian government agency entrusted with the initiative to increase the participation of women in the socio-economic sector. This study aims to explore this issue to address the following research questions: (1) How do they recruit new staff? (2) What are their criteria for hiring new staff? and (3) how do women entrepreneurs train their staff? Methodology/Technique - This study employs a qualitative approach using in-depth interview. The participants of this study include 6 women entrepreneurs, their ages range from 57 to 62 and all of them are employed in the food industry. Findings & Novelty - There are six emerging themes: (1) Reaching out to personal network; (2) Passive candidate sourcing; (3) Disciplined; (4) Personal integrity; (5) Hands-on approach; and (6) Business-specific practical solutions. The findings of this study are beneficial to entrepreneurs and other stakeholders in relation to adapting to good business practices. Type of Paper - Empirical.
    Keywords: Malaysia; entrepreneurship; Malaysian Women; Women Entrepreneurs.
    JEL: M13 L26
    Date: 2020–06–02
  6. By: Garry A. Hidalgo; Gerald Glenn F. Panganiban; Victorino Aquitania; Erlinda C. Creencia; Arlene B. Arcillas; Glenn B. Gregorio; Rico C. Ancog
    Abstract: What policy interventions are necessary to promote urban agriculture (UA) as a way of life? The likes of COVID-19 pandemic do not just spur interest in implementing a household-level urban agriculture set-up, but it also clearly highlights an ongoing phenomenon where people would want to grow their own food, to have ensured access to enough safe and nutritious food, and to rediscover the joy of planting as a way of life. To institutionalize urban agriculture, the Local Government Units in the Philippines must take active leadership in mainstreaming urban agriculture, integrate in the formulation of the Comprehensive Land Use Plan (CLUP), and Local Climate Change Adaptation Plan (LCCAP), and complement existing programs of the Philippine Department of Agriculture.
    Keywords: Philippines
    Date: 2020
  7. By: Peter A. Petri (Peterson Institute for International Economics); Michael G. Plummer (Johns Hopkins University)
    Abstract: The deepening US-China trade war and nationalist reactions to the COVID-19 pandemic are reshaping global economic relationships. Alongside these developments, two new megaregional trade agreements, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP), will refocus East Asia's economic ties in the region itself. The new accords are moving forward without the United States and India, once seen as critical partners in the CPTPP and RCEP, respectively. Using a computable general equilibrium model, we show that the agreements will raise global national incomes in 2030 by an annual $147 billion and $186 billion, respectively. They will yield especially large benefits for China, Japan, and South Korea and losses for the United States and India. These effects are simulated both in a business-as-before-Trump environment and in the context of a sustained US-China trade war. The effects were simulated before the COVID-19 shock but seem increasingly likely in the wake of the pandemic. Compared with business as before, the trade war generates large global losses rising to $301 billion annually by 2030. The new agreements offset the effects of the trade war globally, but not for the United States and China. The trade war makes RCEP especially valuable because it strengthens East Asian interdependence, raising trade among members by $428 billion and reducing trade among nonmembers by $48 billion. These shifts bring regional ties closer to institutional arrangements proposed in the 1990s and incentivize greater cooperation among China, Japan, and South Korea.
    Keywords: RCEP, CPTPP, East Asia, Regional Economic Integration, CGE Modeling
    JEL: F13 F14 F15 F5 F6
    Date: 2020–06
  8. By: Hashim, Norhaziah; Masih, Mansur
    Abstract: This paper investigated the impact of interest rate changes, specifically the base lending rate (BLR) on the demand for Islamic home financing in a dual banking system. Malaysia is taken as a case study. Theoretically, any increase in the interest rate (base lending rate), would lead customers who are guided by the profit motive to substitute Islamic home financing for conventional bank home loans and vice versa. Using a 109 monthly data series covering ten years, the study found that an increase in the base lending rate would trigger customers to obtain financing from Islamic banks. Conversely, any decrease in the base lending rate would induce customers to shift to the conventional home loans. The paper concludes that because customers are profit motivated, Islamic banks in the dual banking system, such as in Malaysia are exposed to interest rate risks despite operating on an interest free principle.
    Keywords: Islamic financing, Bai-Bithaman Ajil, interest rates, base lending rates, Malaysia
    JEL: C22 C58 E44 G21
    Date: 2018–06–30
  9. By: Persada, Pena; Kristianto, Aloysius Hari; Nurcahyo, Azriel Christion
    Abstract: Konsep mengenai preferensi likuiditas pertama kali dikembangkan oleh John Maynard Keynes dalam memahami dasar daripada pasar uang. Teori ini mengupas mengenai motif pelaku ekonomi dalam memegang uang seperti motif transaksi, motif berjaga-jaga dan motif spekulasi. Motif transaksi menjelaskan mengenai bagaimana perilaku pelaku ekonomi dalam kegiatan rutin harian untuk memenuhi kebutuhan hidup dengan faktor yang mempengaruhinya adalah income amount, time gap dan spending habit. Motif berjaga-jaga menjelaskan mengenai perilaku pelaku ekonomi menyimpan beberapa pendapatan untuk keperluan waktu yang akan datang yang sewaktu-waktu diperlukan. Yang dipengaruhi oleh income amount dan personality type. Motif terakhir adalah motif spekulasi lebih ke manfaat dan keuntungan dalam menyimpan uang, motif ini sangat dipengaruhi oleh tingkat suku bunga biasanya diimplementasikan dalam bentuk obligasi, saham dan bentuk investasi jangka menengah dan panjang. Juga dikupas mengenai kondisi jaringan telekomunikasi pra dan pasca krisis moneter 1998 yang dapat mempengaruhi perekonomian hingga sekarang pembahasan tersebut mengupas perubahan jaringan dari tahun 1998 hingga tahun 2020 seperti : 1). Keterlibatan sistem informasi dalam dunia industri, 2). Infrastruktur jaringan pasca krisis moneter 1998 dan, 3). Pemanfaatan teknologi sebelum dan sesudah krisis moneter 1998. Buku ini lebih mengupas mengenai teori preferensi likuiditas dalam bentuk permintaan uang dengan melihat dan menganalisa kondisi perekonomian sebelum dan sesudah krisis moneter tahun 1998 dengan variabel ukurannya adalah pendapatan nasional riil, dan tingkat suku bunga dalam negeri, serta memaparkan pula hasil analisis kondisi permintaan uang sebelum dan sesudah krisis moneter. Masih banyak kekurangan dalam penulisan buku ini maka kedepan akan terus dikaji lebih mendalam dan luas.
    Date: 2020–04–07
  10. By: Ana Margarida Fernandes; Hiau Looi Kee; Deborah Winkler
    Abstract: The past decades witnessed big changes in international trade with the rise of global value chains. Some countries, such as China, Poland, and Vietnam rode the tide, while other countries, many in the Africa region, faltered. This paper studies the determinants of participation in global value chains, based on empirical evidence from a panel data set covering more than 100 countries over the past three decades. The evidence shows that factor endowments, geography, political stability, liberal trade policies, foreign direct investment inflows and domestic industrial capacity are very important in determining participation in global value chains. These factors affect participation in global value chains more than traditional exports.
    Keywords: global value chain, factor endowments, trade policy, foreign direct investment, institutions
    JEL: F13 F14 F23 O20
    Date: 2020
  11. By: Imelda L. Batangantang; Ma. Christina G. Corales; Rebeka A. Paller; Nikka Marie P. Billedo; Rico C. Ancog; Rodolfo V. Vicerra; Glenn B. Gregorio
    Abstract: The agriculture-based small and medium enterprises (SMEs) in developing countries are continuously affected by globalization. An agricultural cluster—organized either through horizontal and vertical linkages, is a strategic approach to operationalize the appropriate channels at a scale necessary for it to have enhanced competitive strength to connect with national and international markets. Analyzing selected case studies in Southeast Asia, this policy paper demonstrates several models of cluster farming and how it is being implemented on the ground.
    Keywords: Southeast Asia
    Date: 2020
  12. By: Lang, Kevin (Boston University); Leong, Kaiwen (Nanyang Technological University, Singapore); Li, Huailu (Fudan University, China); Xu, Haibo (Tongji University)
    Abstract: We study roughly 11,000 loans from unlicensed moneylenders to over 1,000 borrowers in Singapore and provide basic information about this understudied market. Borrowers frequently expect to repay late. While lenders do rely on additional punishments to enforce loans, the primary cost of not repaying on time is compounding of a very high interest rate. We develop a very simple model of the relational contract between loan sharks and borrowers and use it to predict the effect of a crackdown on illegal moneylending. Consistent with our model, the crackdown raised the interest rate and lowered the size of loans.
    Keywords: illegal lending, enforcement, relational contract
    JEL: K42 L14
    Date: 2020–06
  13. By: Vu, Tien Manh; Yamada, Hiroyuki
    Abstract: We investigated the impact of individuals who passed the Vietnamese imperial examinations (1075–1919) on the present-day quantity and quality of education in their home districts. We layered the 2009 Population and Housing Census and the 2009 National Entrance Exams to University (NEEU) test scores on the geographical distribution of imperial test takers’ home districts. We constructed a novel instrumental variable representing the average distance between the examinees’ home districts and the corresponding imperial examination venues. We found a persistent legacy in the average years of schooling, literacy rate, school attendance rate, NEEU test scores, and primary school dropout rate.
    Keywords: Education; Human Capital; Imperial Examination; Historical Legacy; Vietnam
    JEL: I25 N35 O15
    Date: 2020–05–03
  14. By: Boyarchenko, Nina; Larsen, Lars C.; Whelan, Paul
    Abstract: Since the advent of electronic trading in the mid 1990's, U.S. equities have traded (almost) 24 hours a day through equity index futures. This allows new information to be incorporated continuously into asset prices, yet, we show that almost 100% of the U.S equity premium is earned during a 1-hour window between 2:00 a.m. and 3:00 a.m. (ET) which we dub the "overnight drift". We study explanations for this finding within a framework a la Grossman and Miller (1988) and derive testable predictions linking dealer inventory shocks to high-frequency return predictability. Consistent with the predictions of the model, we document a strong negative relationship between end of day order imbalance, arising from market sell offs, and the overnight drift occurring at the opening of European financial markets. Further, we show that in recent years dealers have increasingly offloaded inventory shocks at the opening of Asian markets and exploit a natural experiment based on daylight savings time to show that Asian offloading shifts by one hour between summer and winter.
    Keywords: Equity Risk; Intraday Immediacy; Inventory management; Overnight Returns
    JEL: G13 G14 G15
    Date: 2020–03

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