nep-sea New Economics Papers
on South East Asia
Issue of 2021‒01‒25
eighteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. Economic Capital, Health Crisis, and the Governmental Habitus in the Age of Covid-19 in Indonesia: A Critical Review By Rifa'i, Achmad; Tuba, Syahrul; Purwanto, Edy
  2. Nowcasting Indonesia’s GDP Growth Using Machine Learning Algorithms By Tamara, Novian; Dwi Muchisha, Nadya; Andriansyah, Andriansyah; Soleh, Agus M
  3. Structural Change and Regional Economic Growth in Indonesia By Andriansyah, Andriansyah; Nurwanda, Asep; Rifai, Bakhtiar
  4. New Assessment of Economic Integration in East Asia: Application of Industry-Specific G-PPP Model By KAWASAKI Kentaro; SATO Kiyotaka
  5. High but Fragile Growth: Fostering SMEs development to improve Cambodia’s economic resilience By Sam, Vichet
  6. Aspiring Indonesia—Expanding the Middle Class By World Bank
  7. The Background of Trumpism and its Main Economic Effects By Paul J.J. Welfens
  8. Geometric Brownian motion with affine drift and its time-integral By Runhuan Feng; Pingping Jiang; Hans Volkmer
  9. Vietnam National and Provincial Primary Health Care Scorecards By World Bank
  10. Household Pit Emptying and Reuse Practices in Rural Cambodia By World Bank
  11. Myanmar Rice and Pulses By World Bank
  12. Republic of Philippines By World Bank
  13. Conscription and Military Service: Do They Result in Future Violent and Non-Violent Incarcerations and Recidivism? By Wang, Xintong; Flores-Lagunes, Alfonso
  14. Determinants of Inclusive Growth in ASEAN By Victoriia Alekhina; Giovanni Ganelli
  15. Digital Payment - A Dream or Reality for Vietnamese in Rural and Remote Areas? By World Bank
  16. The Effects of Vietnam-Era Military Service on the Long-Term Health of Veterans: A Bounds Analysis By Wang, Xintong; Flores, Carlos A.; Flores-Lagunes, Alfonso
  17. Backwardness Advantage and Economic Growth in the Information Age: A Cross-Country Empirical Study By Khuong Vu; Simplice A. Asongu
  18. Obfuscation and Rational Inattention in Digitalized Markets By Janssen, Aljoscha; Kasinger, Johannes

  1. By: Rifa'i, Achmad; Tuba, Syahrul; Purwanto, Edy
    Abstract: Covid-19 turns out unprecedented shock globally. The impact is far above the shocks that have occurred previously such as the 2008 and 1998 crises. Indonesia is one of the countries affected by the spread of Covid-19. The highest policy is taken by the Indonesian government so far is through the implementation of Large-Scale Social Restrictions (PSBB) in handling Covid-19. However, At the same time as there is a higher burden on economies, there is also pressure on healthcare systems in all over Indonesia. This study uses a qualitative descriptives method by using secondary data and Pierre Bourdieu’s “Theory of Practice” on how Indonesian government policy dealing with Covid-19 in controlling economic growth and all the capital resources. This study is also seeking how the governmental habitus addressing the pandemic along with social institution and youth communities in helping public health sector. A sample of statistical evidence regarding the spread and impact of Covid-19 in the Society have offered various projections. The findings from the research reveal that the government still tends to embody the welfare on economic capital rather than health aspects. In the other hand, The government are struggling to mobilize social-community resources to address Covid-19 through a platform Called “Gugus Tugas” which is focused on the acceleration of handling Covid-19 by accumulating youth power and social institution agency. This Social capital developed by online-based government organization from all disciplinary backgrounds as the only capital strategy to maintain public health sector in Indonesia.
    Keywords: Economic, Health, Bourdieu
    JEL: H51 I15 I18
    Date: 2020–05–31
  2. By: Tamara, Novian; Dwi Muchisha, Nadya; Andriansyah, Andriansyah; Soleh, Agus M
    Abstract: GDP is very important to be monitored in real time because of its usefulness for policy making. We built and compared the ML models to forecast real-time Indonesia's GDP growth. We used 18 variables that consist a number of quarterly macroeconomic and financial market statistics. We have evaluated the performance of six popular ML algorithms, such as Random Forest, LASSO, Ridge, Elastic Net, Neural Networks, and Support Vector Machines, in doing real-time forecast on GDP growth from 2013:Q3 to 2019:Q4 period. We used the RMSE, MAD, and Pearson correlation coefficient as measurements of forecast accuracy. The results showed that the performance of all these models outperformed AR (1) benchmark. The individual model that showed the best performance is random forest. To gain more accurate forecast result, we run forecast combination using equal weighting and lasso regression. The best model was obtained from forecast combination using lasso regression with selected ML models, which are Random Forest, Ridge, Support Vector Machine, and Neural Network.
    Keywords: Nowcasting, Indonesian GDP, Machine Learning
    JEL: C55 E30 O40
    Date: 2020–06–26
  3. By: Andriansyah, Andriansyah; Nurwanda, Asep; Rifai, Bakhtiar
    Abstract: This paper investigates the relationship between structural change and regional economic growth in Indonesia. We utilize several measures of structural change, i.e. structural change index, norm absolute value index, shift-share method, and effective structural change index, for 30 provinces over the period 2005-2018. We show that the structural change has occurred across provinces, even though it is slowing, towards an agricultural-services transition. By employing dynamic panel data models, this study shows that structural change is a significant determinant of growth. However, structural change matters for growth only if there is an increase in productivity, not only a movement of labor across sectors. An improvement in productivity within sectors and a movement of labors to other sectors with better productivity lead to a better economic development.
    Keywords: Structural Change; Regional Growth; Indonesia; Productivity
    JEL: L16 O40 R11
    Date: 2020–08–07
  4. By: KAWASAKI Kentaro; SATO Kiyotaka
    Abstract: It is well known that intra-industry trade and cross-border production network have promoted economic growth and regional integration in East Asia. However, regional supply and production chains may have been differently formed across industries, reflecting different degree and scope of regional economic linkages at an industry level. The contribution of this paper is three-fold. First, to assess industry-level differences, this study adopts the Generalized Purchasing Power Parity (G-PPP) model using industry-specific producer prices. Second, the momentum threshold autoregressive (M-TAR) model is employed to allow for possible nonlinearity arising from dynamic nature of regional economic growth and development. Third, Granger causality test is also conducted to assess whether regional economies have autonomously integrated. The empirical results reveal that economic integration has progressed more autonomously in the electrical industry as well as transport equipment industry, as China and ASEAN countries have grown as the final destination market for finished products in these two industries.
    Date: 2020–12
  5. By: Sam, Vichet
    Abstract: Cambodia has recorded an impressive growth over the last two decades at around 8% per annum, but this progress remains fragile due to its export-led growth strategy with a narrow economic base, making the country highly expose to external shocks as seen during the global financial crisis in 2008-2009 and recent Covid-19 shock. This fragility can be costly for a sustainable development that requires a discussion of how to boost the resilience of the economy. Using data from various sources, this paper presents Cambodia’s economic achievements since 1999, why the kingdom is highly exposed to external risks, and suggests the development of SMEs as a key element to improve the economic resilience because a strong SME sector would stimulate domestic demand through job creation, attract FDI in higher value-added sectors and assure equitable income distribution. Conditional correlation analysis has proven, among ASEAN countries, a significant negative correlation between SME sectoral development and economic volatility, while a positive correlation with economic growth is also found, suggesting that SMEs development can promote a strong and resilient growth. To boost SMEs development, Cambodia has to put more efforts, among other factors, in the formalization of SMEs, skills development for youth, infrastructure development, digital transformation process, and promotion of national savings and riel usage, as discussed and demonstrated in this paper.
    Keywords: Economic development model, economic growth, economic volatility and resilience, SME development, correlation analysis.
    JEL: O10 O40
    Date: 2020–12–28
  6. By: World Bank
    Keywords: Poverty Reduction - Achieving Shared Growth Poverty Reduction - Employment and Shared Growth Poverty Reduction - Inequality Poverty Reduction - Poverty Lines Social Protections and Labor - Skills Development and Labor Force Training Urban Development - Urban Economic Development
    Date: 2019–09
  7. By: Paul J.J. Welfens (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW))
    Abstract: This book provides an innovative analysis of structural populism in the US, President Trump's economic policy approach and the international economic position of the US in terms of effective time of life income compared to France and Germany (or Western Europe). In addition, the study critically examines the US health insurance and broader health care system separately from a transatlantic comparative perspective; it also looks at the Singaporean health insurance system as a basic reference. While Trump suffered a fairly narrow defeat in the 2020 presidential election, the issue of structural populism in the US will remain a challenge for many years to come. I am very grateful to be able to publish Global Trump in 2019 in collaboration with Palgrave Macmillan, London - and with the support of leading American economists and economic historians (David Audretsch, Barry Eichengreen ), Jeffrey Sachs, and Richard Tilly; I presented the book at Georgetown University in Washington, D.C., and at the University of California, Berkeley, in February 2020 (a recording of my talk in California is available on YouTube at .com/watch?v=92TzUcljceg). The German version of the book was subsequently published by Springer in October 2020. the publication of key chapters of the book in Chinese in 2020 was made possible thanks to the great efforts and technical support of Ms. Tian Xiong of the European Institute for International Economic Relations (EIIW)/University of Wuppertal. The book presents many new insights about the US post-2016. Of course, part of the analysis also explains how the previous decades have been a step-by-step process towards the historical turning point of 2016, marked by the "Brexit" of Western Europe and the election of Donald Trump as the fifth populist president in the history of the United States. In the November 2016 election, Trump's surprise victory made him the 45th President of the United States. At the heart of his populist approach is an expansionary trade policy aimed primarily at China, yet his fiscal policy is partially contradictory: a high deficit-national income ratio during an economic upturn and a tax reform that has somewhat reinforced income inequality, so that one of the key structural problems in the US is further exacerbated. What are the key findings of this study? Populism in the US is largely linked to the rapid expansion of economic inequality, a process that has brought about a decline in the income share of low-income earners from 21% in 1981 to 13% in 2015 (in Western Europe, the respective income share declined only from 22% to 20%). In the survey results, a majority of Americans feel that these inequalities are indeed unfair, but at the same time a relative majority expect large US companies, not the government, to finally correct them. However, this is an illusory perception in an equity economy, so widespread voter frustration will remain high on the US political agenda, and international and technology-driven inequalities will be further exacerbated in the future. Meanwhile, the US spends 0.04% of national income on government support for retraining, compared to 0.2% in Switzerland, 0.25% in Germany and 0.6% in Denmark. Meanwhile, the Council of Economic Advisers claimed in a sceptical 2016 study that the US has a lead in per capita consumption relative to the Scandinavian countries, a conclusion that does not really exist if one considers not just a particular year, but lifetime effective income and lifetime effective consumption separately. Considering a comparison with Germany and France, this study shows that lifetime income is the same in both countries, in fact the same as in the United States. In addition, Western Europe has a lower infant mortality rate and a higher life expectancy than the United States. The fact that the US has a weaker health insurance system than either the EU countries or Singapore, while actually spending 1/3 more on health - relative to national income - than Germany and France, while performing exceptionally poorly on a range of key health indicators mentioned above, is inexplicable. Moreover, Trump's rather weak policy on the new crown epidemic certainly does not match what one would expect from a Western superpower. 2020's world recession due to the new crown is the first international crisis without clear US leadership; here, the new Biden administration in the US will bring about significant changes and renewed US support for the EU should be expected. In contrast to the Trump administration, the Biden administration will be more professional and supportive of multilateralism. Meanwhile, a populist equivalent of the Trump affair in the US is taking place in the UK, where Prime Minister Boris Johnson's government seems to be sparing no effort to try to disprove the famous Adam Smith quote that appears on every £20 note, that more trade brings greater economic prosperity. The governments of Cameron, May and Johnson have all strangely contradicted themselves (see my 2017 book The Accidental BREXIT (London: Palgrave Macmillan) for more on this). With regard to the economic and political relationship between the US, the EU and China at the beginning of the 21st century, we should not expect such cooperation to always be smooth sailing, but the potential for increased cooperation for mutual economic and ecological benefits is enormous. Such a partnership could not only be more fruitful, but could also benefit all parties involved in many ways, including trade and foreign direct investment, as well as scientific cooperation. However, there is also a need for extensive cooperation on climate change policy, and the EU's Emissions Trading System (ETS), launched in 2005 and covering CO2 emissions from industry and energy, has already played a leading role. California has copied this approach and upgraded it in 2015, extending the coverage of its ETS to more than 80% of CO2 emissions. Two Japanese prefectures, and South Korea, like China, adopted an ETS for the energy sector in 2020.Promoting a network of ETSs in the G20 countries, followed by integrating national ETSs into a global CO2 certificate trading system, would be an effective way for the world economy to achieve climate neutrality by around 2050. During 25 years of research on international economic relations, (un)integration, innovation, information and communication technologies, structural change, growth and sustainability, the European Institute of International Economic Relations has also served as an interface between top researchers, policy makers and the public in many countries and regions of the world economy. We value joint and comparative research, public debate on appropriate policy reforms, and the exchange of young talent. Researchers who have participated in the EIIW/University of Wuppertal exchange have been warmly received, including further research cooperation with the Schumpeter School of Business and Economics, while our researchers on foreign assignment have also benefited from the cooperation. The new Biden administration has only a few years to adopt the US innovation policy reform agenda and the EU, while encouraging the US, should adopt its own reform project on the one hand and focus on exporting the social market economy model to the world on the other. Of course, the West should also learn from Asian countries and from the economic development of +other regions. China is, of course, one of the key policy players in Asia and the world economy. I am grateful that some of my books and other publications have been translated into many foreign languages, both Chinese and Japanese; I have also had many professional exchanges with Chinese colleagues, especially economists from the Chinese Academy of Sciences in Beijing and Shanghai Jiao Tong University. Through these core chapters in my book Global Trump, I can provide an alternative contribution to the discussion of international economics and political economy in China and beyond. I hope that my analysis will contribute to fruitful international discussions and useful policy reforms in many countries.
    Date: 2020–12
  8. By: Runhuan Feng; Pingping Jiang; Hans Volkmer
    Abstract: The joint distribution of a geometric Brownian motion and its time-integral was derived in a seminal paper by Yor (1992) using Lamperti's transformation, leading to explicit solutions in terms of modified Bessel functions. In this paper, we revisit this classic result using the simple Laplace transform approach in connection to the Heun differential equation. We extend the methodology to the geometric Brownian motion with affine drift and show that the joint distribution of this process and its time-integral can be determined by a doubly-confluent Heun equation. Furthermore, the joint Laplace transform of the process and its time-integral is derived from the asymptotics of the solutions. In addition, we provide an application by using the results for the asymptotics of the double-confluent Heun equation in pricing Asian options. Numerical results show the accuracy and efficiency of this new method.
    Date: 2020–12
  9. By: World Bank
    Keywords: Health, Nutrition and Population - Disease Control & Prevention Health, Nutrition and Population - Health Economics & Finance Health, Nutrition and Population - Health Service Management and Delivery Industry - Health Care Services Industry
    Date: 2019–07
  10. By: World Bank
    Keywords: Health, Nutrition and Population - Health and Sanitation Water Resources - Water and Human Health Water Supply and Sanitation - Rural Water Supply and Sanitation Water Supply and Sanitation - Sanitation and Sewerage Water Supply and Sanitation - Wastewater Treatment
    Date: 2019–06
  11. By: World Bank
    Keywords: Agriculture - Agricultural Sector Economics Agriculture - Climate Change and Agriculture Agriculture - Crops & Crop Management Systems Agriculture - Food Security
    Date: 2019–06
  12. By: World Bank
    Keywords: Gender - Gender and Development Gender - Gender and Economic Policy Social Protections and Labor - Labor Markets Social Protections and Labor - Vocational & Technical Education
    Date: 2019–08
  13. By: Wang, Xintong (Slippery Rock University of Pennsylvania); Flores-Lagunes, Alfonso (Syracuse University)
    Abstract: Employing nonparametric bounds, we examine the effect of military service on incarceration outcomes using the Vietnam draft lotteries as a possibly invalid instrumental variable for military service. The draft is allowed to have a direct effect on the outcomes independently of military service, disposing of the exclusion restriction. We find: (i) suggestive but not strong statistical evidence that the direct effect of the draft increases the incarceration rate for violent offenses for a particular cohort of draft avoiders, and (ii) military service increases the incarceration rate for violent and nonviolent crimes of white volunteers and veterans in certain birth cohorts.
    Keywords: conscription, military service, incarceration, crime, nonparametric bounds
    JEL: K4 C31 C36
    Date: 2020–12
  14. By: Victoriia Alekhina; Giovanni Ganelli
    Abstract: Over the past decades ASEAN countries have experienced rapid economic growth accompanied by a dramatic fall in poverty rates, but income inequality has not retreated. This research aims at identifying factors which could contribute to more equally distributed growth in ASEAN. To measure inclusive growth, we use a variable integrating per capita income growth and an equity index. A cross-country panel analysis of the impact of macro-structural factors on inclusive growth and its two components suggests that fiscal redistribution, female labor force participation, productivity growth, FDI inflows, digitalization, and savings significantly drive inclusive growth. A scenario analysis based on our econometric results suggests that the implementation of fiscal redistribution and labor market-oriented structural reforms could help significantly accelerate inclusive growth in ASEAN.
    Keywords: Inclusive growth;Income inequality;Personal income;Income distribution;Fiscal redistribution;WP,income,ASEAN country,per capita income,GDP
    Date: 2020–07–03
  15. By: World Bank
    Keywords: Finance and Financial Sector Development - E-Finance and E-Security Finance and Financial Sector Development - Financial Structures Governance - E-Government Social Protections and Labor - Safety Nets and Transfers Social Protections and Labor - Social Protections & Assistance
    Date: 2019–07
  16. By: Wang, Xintong (Binghamton University, New York); Flores, Carlos A. (California Polytechnic State University); Flores-Lagunes, Alfonso (Syracuse University)
    Abstract: We analyze the short- and long-term effects of the U.S. Vietnam-era military service on veterans' health outcomes using a restricted version of the National Health Interview Survey 1974-2013 and employing the draft lotteries as an instrumental variable (IV). We start by assessing whether the draft lotteries, which have been used as an IV in prior literature, satisfy the exclusion restriction by placing bounds on its net or direct effect on the health outcomes of individuals who are non-veterans regardless of their draft eligibility (the "never takers"). Since we do not find evidence against the validity of the IV, we assume its validity in conducting inference on the health effects of military service for individuals who comply with the draft-lotteries assignment (the "compliers"), as well as for those who volunteer for enlistment (the "always takers"). The causal analysis for volunteers, who represent over 75% of veterans, is novel in this literature that typically focuses on the compliers. Since the effect for volunteers is not point-identified, we employ bounds that rely on a mild mean weak monotonicity assumption. We examine a large array of health outcomes and behaviors, including mortality, up to 40 years after the end of the Vietnam War. We do not find consistent evidence of detrimental health effects on compliers, in line with prior literature. For volunteers, however, we document that their estimated bounds show statistically significant detrimental health effects that appear 20 years after the end of the conflict. As a group, veterans experience similar statistically significant detrimental health effects from military service. These findings have implications for policies regarding compensation and health care of veterans after service.
    Keywords: veteran health, treatment effects, bounds, instrumental variables
    JEL: I12 C31 C36
    Date: 2021–01
  17. By: Khuong Vu (National University of Singapore, Singapore); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This paper seeks to gain insights into whether developing countries benefit more from the backwardness advantage for economic growth in the Information Age. The paper examines this concern through three complementary approaches. First, it derives theoretical grounds from the existing economic models to support the hypothesis that the internet, inter alia, enables developing countries to reap greater growth gains from technology acquisition and catch-up. Second, the paper uses descriptive evidence to show that the growth landscape has indeed shifted decisively in favor of developing countries in the Internet Age in comparison to the pre-internet period. Third, using rigorous econometric techniques with data of 163 countries over a 20-year period, 1996-2016, the paper evidences that developing countries on average reap significantly greater growth gains from internet adoption in comparison to the average advanced country. The paper discusses policy implications from the paper’s findings.
    Keywords: backwardness advantage; developing countries; internet; technology catch-up; GMM
    JEL: O40
    Date: 2020–01
  18. By: Janssen, Aljoscha (Singapore Management University, and); Kasinger, Johannes (Goethe University Frankfurt and Leibniz Institute for Financial Research SAFE)
    Abstract: This paper studies the behavior of competing firms in a duopoly with rational inattentive consumers. Firms play a sequential game in which they decide to obfuscate their individual prices before competing on price. Probabilistic demand functions are endogenously determined by the consumers' optimal information strategy, which depends on the firms' obfuscation choice and the consumers' unrestricted prior beliefs. We show that the game may result in an obfuscation equilibrium with high prices where both firms obfuscate and a transparency equilibrium with low prices and no obfuscation, providing an argument for market regulation. Lower information costs and asymmetric prior beliefs about prices reduce the probability of an obfuscation equilibrium. Using data on Sweden, we document a decrease in price complexity and corresponding prices in the market for mobile phone subscriptions in the last two decades. Our model rationalizes these changes and explains why complexity and high prices persist in some but not all digitalized markets.
    Keywords: Rational Inattention; Obfuscation; Price Competition; Digitalized Markets
    JEL: D11 D21 D43
    Date: 2021–01–20

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