nep-sea New Economics Papers
on South East Asia
Issue of 2022‒09‒26
nine papers chosen by
Kavita Iyengar
Asian Development Bank

  1. The impact of foreign direct investment on financial development in Asian countries By Tran, Viet Nhu Anh; Huynh, Cong Minh
  2. Building portfolios of sovereign securities with decreasing carbon footprints By Gong Cheng; Eric Jondeau; Benoit Mojon
  3. Working Conditions, Export Decisions, and Firm Constraints-Evidence from Vietnamese Small and Medium Enterprises By Phan, Trang Hoai
  4. The Impacts of Crises on the Trilemma Configurations By Joshua Aizenman; Menzie D. Chinn; Hiro Ito
  5. Transitional Safeguard Measures under the CPTPP (Japanese) By TSURUTA Hitoshi
  6. Benchmarking New Zealand's frontier firms By Guanyu Zheng; Hoang Minh Duy; Gail Pacheco
  7. Influenza Mortality in French Regions after the Hong Kong Flu Pandemic By Florian Bonnet; Hippolyte d'Albis; Josselin Thuilliez
  8. Key features of illicit economies in African conflicts: Insights from the reports of UN Panels of Experts By Vorrath, Judith; Zuñiga, Laura Marcela
  9. THE EXPORT POTENTIAL OF LAOS AGRI-FOOD TO THE EU MARKET By Thipphavong, Viengsavang; Vanhnalat, Bounlert; Vidavong, Chanhphasouk; Bodhisane, Somdeth

  1. By: Tran, Viet Nhu Anh; Huynh, Cong Minh
    Abstract: This paper empirically studies the impact of foreign direct investment (FDI) on financial development from 37 Asian nations covering the period 2001-2020 from a panel data set. The findings show that FDI has a positive impact on financial development, implying the spill-over effect of FDI in Asian financial markets. Furthermore, this study discovers that trade openness and population growth have a positive impact on financial development, while inflation affects financial development negatively. However, it is found that there is no relationship between government consumption and financial development in the Asian context.
    Keywords: Asian countries; Financial development; FDI; Panel data
    JEL: B22 F21 G20 O16 O53
    Date: 2022–08–24
  2. By: Gong Cheng; Eric Jondeau; Benoit Mojon
    Abstract: We propose a strategy to build portfolios of sovereign securities with progressively declining carbon footprints. Passive investors could use it as a new Paris-consistent benchmark to construct a "net zero" (NZ) portfolio while tracking closely the risk-adjusted returns of a business-as-usual (BAU) benchmark. Our strategy rewards sovereign issuers that have made stronger efforts in reducing carbon intensity, measured by total domestic emissions per capita. The NZ portfolio would have reduced carbon intensity by 41% between 2014 and 2019, by assigning higher weights to countries that have had lower carbon emissions. Among advanced economies, rebalancing leads to raising shares of France, Italy and Spain in the portfolio at the expense of the United States. And among emerging market economies, this leads to higher shares for Chile, the Philippines and Romania at the expense of China. Importantly, the NZ portfolio retains the same creditworthiness as the BAU benchmark without entailing materially higher foreign exchange risks.
    Keywords: carbon footprints, sovereign debt, portfolio rebalancing, portfolio optimisation, active share, tracking error
    JEL: G11 G24 Q56
    Date: 2022–09
  3. By: Phan, Trang Hoai
    Abstract: Better working conditions promote employee creativity and loyalty. Meanwhile, a stable and skilled workforce contributes to a firm’s sustainable growth. Therefore, providing favorable working conditions is one of the critical sustainable goals of many countries worldwide. However, some critics are concerned participating in international trade causes worsening employment conditions in developing countries. Driven by these concerns, the relationship between exports and labor conditions is worth illuminating. This study adopts the data from Vietnam’s small and medium-sized manufacturing enterprises (SMEs). The dataset was collected by the Ministry of Labour, Invalids and Social Affairs (MOLISA) and the University of Copenhagen, UNU-WIDER from 2011 to 2015. Unlike previous studies, this study clusters firms by export status, including four groups: non-exporting, consecutive exporting, start-exporting, and exit-exporting. Observing dynamic exports sheds light on the effects of export decisions more thoroughly than the static export. Another contribution, this study focuses on an essential aspect of working conditions: providing fringe benefits. Subsequently, the analysis is upgraded by controlling for firm constraints as interaction variables. A major constraint and financial constraint are adopted to proxy for a firm’s constraints. This work promotes assessments to be more accurate, thereby providing more valuable information to policymakers. Finally, a robustness test is applied to each type of fringe benefit. Instrumental variables are used to solve the problem of endogeneity. The results found that exporting firms provide better working conditions. Additionally, constrained firms have worse working conditions.
    Date: 2022
  4. By: Joshua Aizenman; Menzie D. Chinn; Hiro Ito
    Abstract: The “monetary trilemma” – the hypothesis that full monetary policy autonomy, exchange rate stability, and financial openness cannot simultaneously be achieved – has long been studied. Recently, holding international reserves (IR) has become an important policy instrument, insuring against liquidity shortages. We find that countries’ policy mixes are diverse, and have varied over time, sometimes in response to crises. We illustrate how the policy combinations changed drastically after the Asian Financial Crisis (AFC). In contrast, the Global Financial Crisis did not lead to a drastic change in the policy arrangements. We find that countries that faced large terms of trade shocks or negative economic growth during the crisis increased IR holding, post-AFC. Countries that had negative growth during the crisis also tended to pursue greater exchange rate flexibility and financial openness. This finding is true for commodity, but not manufactured goods, exporters. Countries with large current account deficits tend to be more sensitive to economic growth at the time of the AFC. Countries that are under IMF stabilization programs or those with sovereign wealth funds tended to hold more IR. In general, countries increased their IR holdings after the GFC, but did not otherwise respond concurrently to crisis conditions.
    JEL: F33 F38
    Date: 2022–08
  5. By: TSURUTA Hitoshi
    Abstract: Three years have passed since the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) entered into force on 30 December 2018. Since Japan's tariff elimination rate under the CPTPP is as high as 95%, there is concern that increased imports will cause serious injury to domestic industries, and there was a great deal of interest in safeguard (SG) measures. Currently transitional SG measures under the CPTPP may only be imposed on specific goods that have undergone staged tariff elimination (staging). For any goods for which the tariff is immediately eliminated upon effective date of the CPTPP, the transition period has already expired. In general, the more sensitive the goods are to the domestic industry, the longer the staging period is set, so it is considered that the need for transitional SG measures will increase as the staging progresses. It seems that there has been no move toward invoking the CPTPP transitional SG measures, but it is necessary to both be prepared to conduct a government investigation of the CPTPP transitional SG measures in a timely manner and to take transitional SG measures as necessary. In this paper, taking as an example the goods subject to the CPTPP preferential duty rate, where the increase in imports was particularly remarkable, some issues that may be encountered when conducting a government investigation of transitional SG measures will be extracted and possible solutions will be provided.
    Date: 2022–08
  6. By: Guanyu Zheng (Productivity Commission); Hoang Minh Duy (National University of Singapore); Gail Pacheco (Productivity Commission and AUT Work Research Institute)
    Abstract: New Zealand has experienced poor productivity performance over the last two decades. Factors often cited as reasons behind this are the small size of the domestic market and distance to international partners and markets. While the distance reason is one that is fairly insurmountable, there are a number of other small advanced economies that also face similar domestic market constraints. This study compares the relative performance of New Zealand's firms to those economies using novel cross-country microdata from CompNet. We present stylised facts for New Zealand relative to the economies of Belgium, Denmark, Finland, Netherlands and Sweden based on average productivity levels, as well as benchmarking laggard, median and frontier firms. This research also employs an analytical framework of technology diffusion to evaluate the extent of productivity convergence, and the impact of the productivity frontier on non-frontier firm performance. Additionally, both labour and capital resource allocation are compared between New Zealand and the other small advanced economies. Results show that New Zealand's firms have comparatively low productivity levels and that its frontier firms are not benefiting from the diffusion of best technologies outside the nation. Furthermore, there is evidence of labour misallocation in New Zealand based on less labour-productive firms having disproportionally larger employment shares than their more productive counterparts. Counter-factual analysis illustrates that improving both technology diffusion from abroad toward New Zealand's frontier firms, and labour allocation across firms within New Zealand will see sizable productivity gains in New Zealand.
    JEL: L25 O33 O47
    Date: 2021–02
  7. By: Florian Bonnet (INED - Institut national d'études démographiques); Hippolyte d'Albis (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Josselin Thuilliez (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Influenza mortality has dramatically decreased in France since the 1950s. Annual death rates peaked during two pandemics: the Asian flu (1956-57) and the Hong-Kong flu (1969-1970). This study's objective is to evaluate whether the second pandemic created a structural change in the dynamics of influenza mortality in France. We employ a new database on influenza mortality since 1950 at the subnational level (90 geographic areas) to estimate statistical models to find whether a structural change happened and to explain the differences in mortality rates across geographic areas. Influenza mortality increased between 1950 and 1969, and decreased from 1970 onward. The Hong-Kong flu is identified as the event of a structural break. After the break, geographical differences are less explained by regional characteristics such as income, density or aging ratio. Hong Kong flu was found to be associated with a major change in influenza mortality in France. Change in health practices and policies induced a decline in mortality that started in 1970, just after the pandemics. The health benefits are notably important for senior citizens and for the poorest regions.
    Date: 2022–08
  8. By: Vorrath, Judith; Zuñiga, Laura Marcela
    Abstract: There are currently a significant number of protracted armed conflicts worldwide. Illicit economies and their links to violent actors are frequently cited as reasons for their persistence. Drug cultivation, production, and trafficking in places as diverse as Afghanistan, Colombia, and Myanmar have been garnering attention recently since they can undermine peace processes and contribute toward rising levels of insecurity. Nevertheless, it is particularly difficult to grasp the situation in conflict zones and understand the networks of internal and external actors linked to illicit economies due to the limited information base. This also holds true for the violent conflicts in Mali, the Democratic Republic of Congo (DRC), and the Central African Republic (CAR) that have been going on for extended periods of time. However, since United Nations (UN) sanctions apply in all three contexts, there are extensive and regularly available sources of information provided by the reports of the UN Panels of Experts that moni­tor sanctions implementation. These investigative teams provide valuable insights into illicit economies in conflict zones and their links to peace and security. Looking at the reports for Mali, the DRC, and CAR from the last five years helps to identify some common patterns that defy simple solutions, but that can also show entry points for action.
    Date: 2022
  9. By: Thipphavong, Viengsavang; Vanhnalat, Bounlert; Vidavong, Chanhphasouk; Bodhisane, Somdeth
    Keywords: Agribusiness, Agricultural and Food Policy
    Date: 2022–03–01

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