nep-sea New Economics Papers
on South East Asia
Issue of 2021‒06‒14
sixteen papers chosen by
Kavita Iyengar
Asian Development Bank

  1. The palm tree: A cropscape of monoculture and devouring carbon sinks By Edakunny, Preeti
  2. Assessing the Economy-wide Impacts of Strengthened Bank Capital Requirements in Indonesia using a Financial Computable General Equilibrium Model By Arief Rasyid; Jason Nassios; Elizabeth L Roos; James Giesecke
  3. Do economic endeavors complement sustainability goals in the emerging economies of South and Southeast Asia? By Sharma, Rajesh; Sinha, Avik; Kautish, Pradeep
  4. Does financial development reinforce environmental footprints? Evidence from emerging Asian countries By Sharma, Rajesh; Sinha, Avik; Kautish, Pradeep
  5. How ASEAN Can Improve Its Response to the Economic Crisis Generated by the COVID-19 Pandemic: Inputs drawn from a comparative analysis of the ASEAN and EU responses By Antonio Fanelli
  6. Income inequality under Colonial Rule: Evidence from French Algeria, Cameroon, Tunisia, and Vietnam and comparisons with the British Empire 1920-1960 By Alvaredo, Facundo; Cogneau, Denis; Piketty, Thomas
  7. Transnational experience and high-performing entrepreneurs in emerging economies: evidence from Vietnam By Klingler-Vidra, Robyn; Tran, Ba Linh; Chalmers, Adam William
  8. Asia Africa Growth Corridor: Development Cooperation and Connectivity in the Indo-Pacific By Anita Prakash
  9. Forecasting Macroeconomic Variables in Emerging Economies: An Application to Vietnam By Le Ha Thu; Roberto Leon-Gonzalez
  10. Sovereign credit and exchange rate risks: Evidence from Asia-Pacific local currency bonds By Chernov, Mikhail; Creal, Drew; Hördahl, Peter
  11. Corruption and Extremism By Attila Gaspar; Tommaso Giommoni; Massimo Morelli; Antonio Nicolò
  12. The Role of Industrialisation and ICT in Africa’s Growth and Integration into Global Value Chains By Anita Prakash
  13. Bangladesh – Graduation from Least Developed Countries Status and Its Implications (Japanese) By USAMI Takashi; FUKUOKA Noriyoshi
  14. Turning up the heat exploring potential links between climate change and gender-based violence and harassment in the garment sector By Anderson Hoffner, Laurel.; Simpson, Joni.; Martinez-Fernandez, Cristina.; Patumtaewapibal, Aruch.
  15. Evolving public-private relations in the space sector: Lessons learned for the post-COVID-19 era By Marit Undseth; Claire Jolly; Mattia Olivari
  16. Regression-Adjusted Estimation of Quantile Treatment Effects under Covariate-Adaptive Randomizations By Liang Jiang; Xiaobin Liu; Peter C.B. Phillips; Yichong Zhang

  1. By: Edakunny, Preeti
    Abstract: India accounts for 17 per cent of world palm oil consumption. Palm oil was initially considered a potential nutrition and environment solution that would replace fossil fuel and trans-fats in the nutrition chain. That promise of replacing fossil fuels and trans-fats is far from met; palm tree monoculture has led to devastation of rainforests in Indonesia and Malaysia, which together account for 85 of global palm oil production. Symmetrical rows of palm trees have replaced once-dense irreplaceable habitats of trees and plants. The initial deforestation was induced by European innovation and consumption. India and China have now outstripped European buyers as the main buyers of palm oil. The global cropscape of the palm is reviewed in this paper in the Indian context. Policy appears to encourage palm oil imports in the face of India’s dire agricultural landscape, with negative returns for farmers, a growing nutritionally bereft food chain and exponential deforestation of tropical forests in Indonesia and Malaysia. The paper explores the inherently economically and the socially destructive substitution of ethnically produced and consumed seed oils such as mustard, sesame and coconut. Small farm holdings comprise nearly 85 per cent of India’s total cultivated area. This paper studies the global supply chain of the palm seed oil that potentially has multi-pronged externalities of destruction of farm income in the importing nation, disruption of nutrition needs and augmenting global emissions through deforestation .
    Date: 2019–12–09
  2. By: Arief Rasyid; Jason Nassios; Elizabeth L Roos; James Giesecke
    Abstract: After the 2008 global financial crisis, authorities across the globe stressed the importance of equity capital to absorb losses. While many countries have raised bank capital adequacy requirements (CARs), the comprehensive impact assessment of this policy for emerging economies remains largely unexplored. We use a financial computable general equilibrium (FCGE) model of Indonesia called AMELIA-F to investigate the economy-wide impact of a 100 basis points increase in the CAR of Indonesian banks. We find that this causes small negative consequences on the economy. Bank balance sheets contract as they move away from holding riskier assets. This reduces investment in both non-housing and housing sectors, as equity financing raises banks weighted average costs of capital (WACC). The fall in real investment decreases foreign financing needs.
    Keywords: Financial CGE model weighted average cost of capital capital adequacy ratio macro prudential policy Indonesia
    JEL: C68 D58 E17 E44 G21
    Date: 2021–05
  3. By: Sharma, Rajesh; Sinha, Avik; Kautish, Pradeep
    Abstract: The consistent performance on the economic front and alarmingly increasing air pollution in the eight emerging economies of South and Southeast Asia compelled us to scrutinize whether the association between per capita income and carbon dioxide (CO2) emissions remained nonlinear during the study period (1990-2015). Further, we intended to examine the long-run impacts of financial development, trade expansion, and nonrenewable energy consumption on CO2 emissions. Considering the possibility of the cross-sectional dependency, we employed a relatively new approach, i.e. the cross-sectional augmented distributed lag mean estimation. The simulation results of the study confirmed an N-shaped environmental Kuznets curve in the selected emerging economies. Further, the improvements in the financial sector, nonrenewable energy consumption, and trade expansion contributed to increasing the level of CO2 emissions in the long run. Based on the outcomes, we proposed the policy framework, which may help in achieving Sustainable Development Goals.
    Keywords: CO2 emissions; financial development; nonrenewable energy resources; South and Southeast Asian countries; CS-DL
    JEL: Q5
    Date: 2021
  4. By: Sharma, Rajesh; Sinha, Avik; Kautish, Pradeep
    Abstract: In the preceding two decades, the expansion of financial services has played a vital role in pursuing economic growth agendas in the developing Asian nations. However, its harmful effect on environmental quality cannot be denied. In this backdrop, in the present study, we investigated whether the financial sector development moderated the ecological footprint, carbon footprint, and land footprint in the eight developing nations of South and Southeast Asia from 1990-2015. In doing so, we included the per capita income, energy solutions, and trade expansions as determinants of the ecological indicators. The results of the second-generation unit root tests and Westerlund’s cointegration test reported the long-run stability and cointegration, respectively. To navigate the possible cross-country dependency, we employed the cross-sectional augmented autoregressive distributed lag approach (CS-ARDL). The results confirmed that per capita income, energy solutions, trade expansion, and financial sector development invigorated the ecological footprint, carbon footprint, and land footprint in the long run. Further, it is reported that the development in the financial sector has a significant moderating impact on the nexus between energy and environmental footprints. In other words, the financial sector development drove the association between the overall environmental quality and energy solutions in the long run. Similarly, we observed that the financial sector development worked as a significant mediator between environmental proxies and trade expansion. By including the ecological footprint, carbon footprint, and land footprint as environmental proxies, the study provides the wider environmental spectrum. Based on the outcomes of the study, we proposed a novel scheme, which may help to address the harmful environmental impacts of the financial sector development in the selected developing nations.
    Keywords: Ecological footprint; carbon footprint; land footprint, South Asian countries; Southeast Asian countries; per capita income; energy
    JEL: Q5
    Date: 2021
  5. By: Antonio Fanelli
    Abstract: This paper conducts a comparative review of the evolution of the economic crisis generated by the coronavirus disease (COVID-19) pandemic and the responses enacted by the Association of Southeast Asian Nations (ASEAN) and the European Union. It highlights differences and common elements in the strategic approaches, the intensity of the interventions, and governance structures. In the final section, it identifies short- and medium-term actions, inspired by the comparative analysis, which could contribute to improve the ASEAN response.
    Keywords: COVID-19, ASEAN, European Union, regional economic recovery, strategies
    JEL: P50
    Date: 2021–05–31
  6. By: Alvaredo, Facundo; Cogneau, Denis; Piketty, Thomas
    Abstract: In this article we assess income inequality across French and British colonial empires between 1920 and 1960. For the first time, income tax tabulations are exploited to assess the case studies of French Algeria, Tunisia, Cameroon, and Vietnam, which we compare to British colonies and dominions. As measured by top income shares, inequality was high in colonies. It fell after WWII, but stabilized at much higher levels than in mainland France or the United Kingdom in the 1950s. European settlers or expatriates comprised the bulk of top income earners, and only a minority of autochthons could compete in terms of income, particularly in Africa. Top income shares were no higher in settlement colonies, not only because those territories were wealthier but also because the average European settler was less rich than the average European expatriate. Inequality between Europeans in colonies was similar to (or even below) that of the metropoles. In settlement colonies, the post-WWII fall in income inequality can be explained by a fall in inequality between Europeans, mirroring that of the metropoles, and does not imply that the European/autochthon income gap was reduced.
    Keywords: Africa; Asia; Colonialism; inequality; Top incomes
    JEL: N3 N35 N37 O15 O53 O55
    Date: 2020–06
  7. By: Klingler-Vidra, Robyn; Tran, Ba Linh; Chalmers, Adam William
    Abstract: Do high-performing entrepreneurs in the technology sector in emerging economies have more, or different, transnational experience than the founders of high-performing non-technology businesses? Employing Vietnam as a case study, we find that they do; the founders of high-performing technology-oriented businesses are 15 times more likely to have transnational experience in the U.S. compared to their non-technology peers, and are 35 times more likely to be graduates of American universities compared to founders of high-performing, non-technology-oriented business. The founders of high-performing non-technology businesses are more ‘place-based’, as they have predominantly lived and studied in Vietnam. Our data and methods are comprised of a logistic regression analysis of the biographical details of Vietnam's 143 highest-performing entrepreneurs; the founders of the 76 Vietnam's (non-technology-based) companies with the highest market capitalizations and the 67 founders of Vietnam's highest performing technology-oriented companies, in terms of private equity fundraising, as of April 2020. The paper's theoretical contribution is the advance it makes in analytical explanations of why technology-based entrepreneurs have more transnational experience, especially in the U.S., than high-performing founders of businesses in other sectors; this helps extend theory on the relationship between social and human capital and entrepreneurial performance, specifically in the technology sector.
    Keywords: entrepreneurship; innovation; returnees; social capital; transnational experience; Vietnam; Impact Acceleration Account research grant
    JEL: R14 J01
    Date: 2021–08–01
  8. By: Anita Prakash (Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: Asia and Africa are conjoined by the Indian Ocean and the two regions provide a renewed opportunity for partnership for sustainable development. The conceptualisation of an Asia Africa Growth Corridor (AAGC) by Prime Ministers Shinzo Abe and Narendra Modi is the convergence of the Free and Open Indo Pacific (FOIP) and Act East Policy of the two countries. The AAGC will bring out the economic gains for Africa through its integration with India, South Asia, Southeast Asia, East Asia, and Oceania. It sets out a new paradigm of connectivity and cooperation in Indo Pacific region. AAGC draws on the strength of shared values, convergent interests, and complementary skills and resources, to promote economic and social development, capacity building, connectivity, and infrastructure development in the Indo-Pacific region. It is expected to be a model for inter-regional growth, propelled by mutual trust and cooperation amongst friends and partner countries in Asia, Oceania, and Africa.
    Date: 2021–08–09
  9. By: Le Ha Thu (National Graduate Institute for Policy Studies, Tokyo, Japan); Roberto Leon-Gonzalez (National Graduate Institute for Policy Studies, Tokyo, Japan)
    Abstract: Forecasting macroeconomic variables in the rapidly changing macroeconomic envi- ronments faced by developing and emerging countries is an important task for central banks and policy-makers, yet often presents a number of challenges. In addition to the structural changes in the economy, the time-series data are usually available only for a small number of periods, and predictors are available in different lengths and frequencies. Dynamic model averaging (DMA), by allowing the forecasting model to change dynamically over time, permits the use of predictors with different lengths and frequencies for the purpose of forecasting in a rapidly changing economy. This study uses DMA to forecast inflation and growth in Vietnam, and compares its forecast- ing performance with a wide range of other time-series methods. Some results are noteworthy. First, the number and composition of the optimal predictor set changed, indicating changes in the economic relationships over time. Second, DMA frequently produces more accurate forecasts than other forecasting methods for both the inflation and the economic growth rate of Vietnam.
    Keywords: Bayesian, dynamic model averaging, forecasting macroeconomic variables, Vietnam
    Date: 2021–06
  10. By: Chernov, Mikhail; Creal, Drew; Hördahl, Peter
    Abstract: We study the dynamic properties of sovereign bonds in emerging markets and their associated risk premiums. We focus on the properties of credit spreads, exchange rates, and their interaction. Relying on the term structure of local currency bonds issued by Asia-Pacific sovereigns, we find that local variables are significant in the dynamics of currency and credit risk, and the components of bond risk premiums reflecting these risks. Local currency bonds dramatically improve the investment frontier.
    Keywords: affine model; credit risk; currency risk; emerging bond markets; Twin Ds
    JEL: F31 G12 G15
    Date: 2020–07
  11. By: Attila Gaspar; Tommaso Giommoni; Massimo Morelli; Antonio Nicolò
    Abstract: This paper shows that corruption generates extremism, but almost exclusively on the opposition side. When the majority has greater ability to use corruption to obtain her favorite policy outcome from the minority, then the minority group has an incentive to select a more extreme representative because it is more unlikely that such a type will accept a bribe. On the majority side, on the other hand, the perception of more likely use of the corruption tool does not create any distortion in the choice of political representatives. We provide strong causal evidence for these novel predictions using two different types of corruption signals, in Indonesia and Brazil.
    Keywords: Corruption, Extremism, Delegation, elections
    JEL: D72 D73
    Date: 2021
  12. By: Anita Prakash (Economic Research Institute for ASEAN and East Asia (ERIA))
    Abstract: Industrialisation is important for Africa’s growth and sustainable development. Deepening the manufacturing sector and greater integration in global value chains will build more resilient economies. Industrialisation will harness Africa’s huge resources – in agriculture, mining, and maritime resources, as well as a youthful labour force. Suitable and focused policies can harness these resources. African countries can leverage digitalisation and information and communication technologies to further their goal of industrialisation. Industrial development will be the key to sustained and inclusive employment-led development.
    Date: 2019–07–30
  13. By: USAMI Takashi; FUKUOKA Noriyoshi
    Abstract: This paper discusses the implications and impacts of Bangladesh's graduation from the Least Developed Countries (LDC) status through an analysis of the country's economic and industrial structure, a summary of the event of graduation, and a survey and analysis of issues in relation to Japanese companies. Bangladesh is expected to graduate from the LDC in 2026. While graduation has some advantages, such as improvement of the country's external image, it also has some disadvantages, such as the inability to use the special preferential tariffs that are granted to countries with that status by the international community. The survey conducted by the authors demonstrates that Japanese companies that operate in Bangladesh and that benefit from special preferential tariffs have already begun to gather information and are even considering transferring their production bases. In order to avoid losing such foreign direct investment, Bangladesh is looking into free trade agreements (FTAs). However, in addition, we believe it is necessary for Bangladesh to develop a friendly business environment that is comparable to that of neighboring Southeast Asian countries, to strengthen its industrial competitiveness, and improve the level of trade diversification. The Japanese government also needs to make further efforts to deepen bilateral economic relations.
    Date: 2021–04
  14. By: Anderson Hoffner, Laurel.; Simpson, Joni.; Martinez-Fernandez, Cristina.; Patumtaewapibal, Aruch.
    Abstract: Violence and harassment are widespread issues within the garment sector in Asia (Better Work 2019a), and with the effects of climate change increasing, it is possible that these behaviours could escalate. Using Bangladesh as a case study, this working paper will highlight the intersection between climate change and gender-based violence and harassment by exploring how climate change, measured by increasing heat stress and extreme weather events, could lead to heightened violence being faced by the (mostly female) workers in the sector as a result of its impact on productivity. It is important to note that gender-based vio- lence in the world of work exists independently of climate change; however, evidence finds that violence in the garment sector can be linked to workplace intensity, which is likely to be further stressed by the impacts of climate change, should current trends continue. In addition, gender- based violence tends to increase with higher levels of socio-economic vulnerability, which climate change will also increase. Accordingly, while addressing harmful social norms is key to improving gender equality and reducing gender-based vi- olence and harassment in the world of work, this working paper will explore how climate change will fur- ther exacerbate the factors associated with the prevalence of such behaviours within the current context and how, if left unaddressed, this combination of factors could ultimately contribute towards heightened levels of violence and harassment within the garment sector.
    Date: 2021
  15. By: Marit Undseth (OECD); Claire Jolly (OECD); Mattia Olivari (OECD)
    Abstract: Where is the space sector headed? How can public and private actors work together to solve mutual challenges and sustain growth? What is the role of government programmes and funding? This paper addresses these and other questions by reviewing the evolving relationship between public and private actors in the space sector over the last two decades, based on case studies from North America, Europe and Asia. It provides new evidence for navigating the post-Covid-19 era, notably by exploring the range of government roles in supporting space sector innovation and expansion, from funder and developer of space programmes to partner and enabler of private sector growth.
    Keywords: COVID-19 impacts, innovation policies, public procurement, public-private partnerships, space sector
    JEL: F01 H57 O30 Q55
    Date: 2021–06–03
  16. By: Liang Jiang (Singapore Management University); Xiaobin Liu (School of Economics, Academy of Financial Research, and Institute for Fiscal Big-Data & Policy of Zhejiang University); Peter C.B. Phillips (Cowles Foundation, Yale University); Yichong Zhang (Singapore Management University)
    Abstract: This paper examines regression-adjusted estimation and inference of unconditional quantile treatment effects (QTEs) under covariate-adaptive randomizations (CARs). Datasets from ï¬ eld experiments usually contain extra baseline covariates in addition to the strata indicators. We propose to incorporate these extra covariates via auxiliary regressions in the estimation and inference of unconditional QTEs. We establish the consistency, limit distribution, and validity of the multiplier bootstrap of the QTE estimator under CARs. The auxiliary regression may be estimated parametrically, nonparametrically, or via regularization when the data are high-dimensional. Even when the auxiliary regression is misspeciï¬ ed, the proposed bootstrap inferential procedure still achieves the nominal rejection probability in the limit under the null. When the auxiliary regression is correctly speciï¬ ed, the regression-adjusted estimator achieves the minimum asymptotic variance. We also derive the optimal pseudo true values for the potentially misspeciï¬ ed parametric model that minimize the asymptotic variance of the corresponding QTE estimator. Our estimation and inferential methods can be implemented without tuning parameters and they allow for common choices of auxiliary regressions such as linear, probit and logit regressions despite the fact that these regressions may be misspeciï¬ ed. Finite-sample performance of the new estimation and inferential methods is assessed in simulations and an empirical application studying the impact of child health and nutrition on educational outcomes is included.
    Keywords: Covariate-adaptive randomization, High-dimensional data, Regression adjustment, Quantile treatment effects
    JEL: C14 C21 I21
    Date: 2021–05

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