|
on South East Asia |
| By: | Yung Chul Park (Asian Development Bank Institute (ADBI)); Chi-Young Song |
| Abstract: | The purpose of this paper is to reexamine the exchange rate policy of the Republic of Korea, and its role in promoting financial and monetary cooperation in East Asia in the wake of the 2008 global financial crisis. The Republic of Korea would not actively participate in any discussion of establishing a regional monetary and exchange rate arrangement as it is expected to maintain a weakly managed floating regime. The People’s Republic of China (PRC) has been fostering the yuan as an international currency, which will lay the groundwork for forming a yuan area among the PRC; the Association of Southeast Asian Nations JEL Classification : F3, F4 (ASEAN); Hong Kong, China; the PRC; and Taipei,China. Japan has shown less interest in assuming a greater role in East Asia’s economic integration due to deflation, a strong yen, slow growth, and political instability. Japan would not eschew free floating. These recent developments demand a new modality of monetary cooperation among the Republic of Korea, Japan, and the PRC. Otherwise, ASEAN+3 will lose its rationale for steering regional economic integration in East Asia. |
| Keywords: | exchange rate policy, Monetary cooperation, financial cooperation, Republic of Korea, East Asia |
| JEL: | F3 F4 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:23222&r=sea |
| By: | Yung Chul Park (Asian Development Bank Institute (ADBI)); Chi-Young Song |
| Abstract: | The purpose of this paper is to reexamine the exchange rate policy of the Republic of Korea, and its role in promoting financial and monetary cooperation in East Asia in the wake of the 2008 global financial crisis. The Republic of Korea would not actively participate in any discussion of establishing a regional monetary and exchange rate arrangement as it is expected to maintain a weakly managed floating regime. The People’s Republic of China (PRC) has been fostering the yuan as an international currency, which will lay the groundwork for forming a yuan area among the PRC; the Association of Southeast Asian Nations JEL Classification : F3, F4 (ASEAN); Hong Kong, China; the PRC; and Taipei,China. Japan has shown less interest in assuming a greater role in East Asia’s economic integration due to deflation, a strong yen, slow growth, and political instability. Japan would not eschew free floating. These recent developments demand a new modality of monetary cooperation among the Republic of Korea, Japan, and the PRC. Otherwise, ASEAN+3 will lose its rationale for steering regional economic integration in East Asia. |
| Keywords: | exchange rate policy, Monetary cooperation, financial cooperation, Republic of Korea, East Asia |
| JEL: | F3 F4 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:eab:macroe:23222&r=sea |
| By: | C. Fred Bergsten (Asian Development Bank Institute (ADBI)); Marcus Noland; Jeffrey J. Schott |
| Abstract: | This paper examines the prospect of realizing regional economic integration via the mechanism of a Free Trade Area of the Asia-Pacific (FTAAP). The FTAAP initiative represents a politically ambitious, high potential benefit option for achieving Asian regional integration. Among its desirable attributes, the FTAAP initiative could help revive and promote a successful conclusion of the Doha Round negotiations; constitute a “Plan B†hedge if Doha fails; short-circuit the further proliferation of bilateral and sub-regional preferential agreements that create substantial new discrimination and discord within the Asia-Pacific region; defuse the renewed risk of “drawing a line down the middle of the Pacific†as East Asian, and perhaps the Western Hemisphere, initiatives produce disintegration of the Asia-Pacific region rather than the integration of that broader region that the Asia-Pacific Economic Cooperation (APEC) forum was created to foster; channel the People’s Republic of China (PRC)-United States economic conflict into a more constructive and less confrontational context; and revitalize APEC, which is of enhanced importance because of the prospects for Asia-Pacific and especially the PRC-US fissures. An incremental approach to the FTAAP, explicitly embodying enforceable reciprocal commitments, offers the best hope delivering on the concept’s abundant benefits. |
| Keywords: | Regional Economic Integration, free trade area, the Asia-Pacific, Asian regionalism, APEC |
| JEL: | O16 O53 R11 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:23200&r=sea |
| By: | Amitav Acharya (Asian Development Bank Institute (ADBI)) |
| Abstract: | This paper argues that the collective action in Asia by its regional organizations has historically suffered from a “capability–legitimacy gap†: a disjuncture between the capability (in terms of material resources) of major Asian powers to lead regional cooperation on the one hand and their political legitimacy and will as regional leaders on the other. Successful collective action requires leadership with both capability (as suggested by rationalist theories) and legitimacy (as suggested by constructivist approaches). A central point of the paper is that the putative or aspiring leaders of Asian regionalism throughout the post-war period never had both. Actors who were materially capable of providing leadership and direction (the United States [US]1 and Japan) have lacked the necessary legitimacy, while those who have possessed legitimacy (India and the People’s Republic of China [PRC])2 in the 1940s and 1950s, the Association of Southeast Asian Nations (ASEAN) since 1967, and Indonesia in the context of Asia as a whole) have lacked the necessary resources. The result has been that while the ASEAN-led Asian institutions have made a significant normative contribution to regional order, they have not proved to be effective instruments of regional problem solving. But the capability-legitimacy gap has both costs and benefits. While Asian regional institutions remain weakly institutionalized and attract criticism as “talk-shops,†they have helped to ensure that Asia does not degenerate into a hegemonic order or a concert of power. It remains to be seen whether regionalism in an era of a rising PRC and India could bridge this gap. It is theoretically possible that the PRC and India could develop and possess both the resources and political will and standing to provide collective goods and lead Asian regionalism, but their mutual rivalry might prevent this. |
| Keywords: | ASEAN, regional cooperation, collective action, Asian regionalism, capability–legitimacy gap |
| JEL: | F50 F51 F53 F54 F55 F59 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:23192&r=sea |
| By: | Arslan Razmi (Asian Development Bank Institute (ADBI)); Gonzalo Hernandez |
| Abstract: | Many developing countries have attempted to pursue the East Asian growth model in recent decades. This model is widely perceived to have been based on export-led growth. Given that developed countries are likely to grow at a slower rate and be less willing to run trade deficits in the post-financial-crisis world, can this growth model be sustained? Using panel data for Asian countries, this paper contributes to addressing this question by distinguishing between different kinds of export- and tradable-led growth in order to more precisely identify the nature of growth in the pre-crisis decades. We find in particular that, among our variables of interest, the proportion of a country's manufactured exports that is destined for industrialized countries is the one most robustly associated with output growth. The results have implications for continued post-crisis growth in Asian developing countries. |
| Keywords: | export-led growth, Asian developing countries, post-crisis, global crisis |
| JEL: | F43 O11 O53 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:eab:develo:23207&r=sea |
| By: | Arslan Razmi (Asian Development Bank Institute (ADBI)); Gonzalo Hernandez |
| Abstract: | Many developing countries have attempted to pursue the East Asian growth model in recent decades. This model is widely perceived to have been based on export-led growth. Given that developed countries are likely to grow at a slower rate and be less willing to run trade deficits in the post-financial-crisis world, can this growth model be sustained? Using panel data for Asian countries, this paper contributes to addressing this question by distinguishing between different kinds of export- and tradable-led growth in order to more precisely identify the nature of growth in the pre-crisis decades. We find in particular that, among our variables of interest, the proportion of a country's manufactured exports that is destined for industrialized countries is the one most robustly associated with output growth. The results have implications for continued post-crisis growth in Asian developing countries. |
| Keywords: | export-led growth, Asian developing countries, post-crisis, global crisis |
| JEL: | F43 O11 O53 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:eab:tradew:23207&r=sea |
| By: | Venkatachalam Anbumozhi (Asian Development Bank Institute (ADBI)); Mari Kimura; Kumiko Isono |
| Abstract: | As an integral part of sustainable development, the impacts from climate change, including increasing water stress, more extreme weather events, the potential for high levels of migration and the disruption of international markets are critical challenges for all Asian countries. With rapid economic growth and modernization, the countries in the region are increasing production and consumption, calling for critical adaption measures. With the Asian countries and the energy sector exceedingly accounting for a large share of CO2 and GHG emissions, businesses in Asia need to increase efficiency in energy use, offset emissions, and use more low carbon or renewable energy resources. Businesses are no longer considered part of the environmental problem as they are progressively becoming part of the solutions, and if furthered by an ideal regulatory disposition this would encourage corporations to strive for zero emissions. To address these issues, this paper reviews selected initiatives taken by Asian countries to comply with emerging global sustainability standards, reporting, and management systems, and tracks the response of Asian businesses to global environmental concerns, examines market based innovations including new regulations that augmented corporate excellence, and identifies future directions for business that lead low carbon society. It recommends governments and business to join forces in supporting low carbon initiatives, drawing upon market mechanisms through reconfiguring national environmental policies and strategies. |
| Keywords: | sustainable development, Climate change, Asian countries, environmental policies, environmental strategies |
| JEL: | M19 Q3 Q48 Q56 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:eab:develo:23201&r=sea |
| By: | Gregory Chin (Asian Development Bank Institute (ADBI)) |
| Abstract: | This paper examines the evolving dynamics between economic globalization and Asian regional interdependence, and asks whether and how the global financial crisis impacted Asian regionalism. The analysis suggests that the global crisis did trigger advances in regional policy cooperation from 2007 onwards, especially in the area of financial and monetary cooperation. Although the first order response of Asian countries was to join the broader global effort to contain financial freefall at the world level, there emerged a second order response at the level of regional institutional building, specifically to “multilateralize†the Chiang Mai Initiative, and to develop a regional trust fund to help strengthen Asian bond markets. This finding reconfirms the theoretical proposition in historical institutionalism that financial crises have a catalytic effect in stimulating regional innovation. At the same time, we see evolution in the pattern of Asian regionalism in two respects : first, the recent advances in Asian regionalism are being driven primarily, at this stage, by the rise of the PRC and India—although each in their own way, and to varying degrees. The current advance in regionalism also builds on momentum provided by pre-existing programs of regional financial cooperation, namely the Chiang Mai Initiative, and “regional connectivity†programs that have also been championed by Japan and ASEAN countries, such as the GMS, CAREC, and BIMSTEC initiatives. Second, Asian economies appear to be pursuing inclusive regionalism, which attempts to strike a balance between helping themselves and helping the global economy. Asia is striving for modes of regional cooperation that are, on balance, complementary with the current global macroeconomic rebalancing agenda of the G20, and supportive of global integration and openness. The main policy findings are that Asia’s future standing in an increasingly multi-centered world economy will be determined by its effectiveness in advancing a multi-layered international cooperation agenda. Yet achieving such international gains will depend on Asia’s willingness to make serious advances in regional collective action and global leadership, especially in areas of financial and monetary cooperation. |
| Keywords: | Economic Globalization, Asian regionalism, Asian regional interdependence, global financial crisis, regional cooperation |
| JEL: | F15 F33 F36 F51 F53 F55 F59 H87 O53 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:23193&r=sea |
| By: | Natasha Hamilton-Hart (Asian Development Bank Institute (ADBI)) |
| Abstract: | Since the financial crises of 1997, East Asia has made modest but nonetheless significant steps towards greater regional integration and cooperation in the areas of finance and trade, accompanied by progress on institution-building at the regional level. Monetary cooperation, however, has not proceeded to anything like even the modest levels registered for other functional areas of cooperation. This paper investigates this discrepancy. It asks whether monetary cooperation is simply an unattractive proposition because it promises fewer net gains than cooperation on other issues, or whether there are other explanations for the absence of monetary cooperation in the region. Based on a review of estimates of the aggregate economic gains and losses arising from monetary cooperation, the paper argues that there is a prima facie puzzle to be explained : monetary cooperation does hold out the prospect of real gains and, although these gains are not cost-free, neither is the status quo. The paper then turns to the domestic level of the major East Asian countries, in order to assess the relative strength of the domestic economic interests that are likely to be either advocates or opponents of monetary cooperation. It shows that domestic distributional politics—the processes by which gains and losses within countries are distributed—are a plausible reason for the low priority placed on regional monetary cooperation to date. International-level political concerns and the potential supply of institutional solutions to collective action problems are additional reasons for the lack of monetary cooperation, but the domestic demand for such cooperation is analytically prior to these more conventional explanations for the lack of cooperation in East Asia. |
| Keywords: | Regional Integration, regional cooperation, Monetary cooperation |
| JEL: | E5 F3 F5 |
| Date: | 2011–12 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:23204&r=sea |
| By: | Carolan, Terrie; Mora, Jesse; Singh, Nirvikar |
| Abstract: | We examine the composition of bilateral trade between the United States and eight Asian Pacific economies from 1962 to 1992. Two complementary time series analyses of individual commodities at the SITC four-digit level indicate that significant changes occurred in trade composition during this period. We use a measure of normalized trade balances, developed by Gagnon and Rose (1995). For the eight bilateral trade relationships, commodities representing from fifty to seventy percent of 1992 dollar trade have shown statistically significant changes in the magnitude and, in some cases, in the direction of normalized trade balances, over the thirty-year period. Results support the conclusion that changes in trade patterns in both low-tech industries, such as textiles and clothing, and more high-tech industries, such as electronic parts and electronic goods, were important in the development of the East Asian economies. |
| Keywords: | international trade flows; time series; ADF; KPSS; trends; economic development |
| JEL: | F17 F02 F14 O14 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:37124&r=sea |
| By: | Peter J. Morgan (Asian Development Bank Institute (ADBI)) |
| Abstract: | The adoption of quantitative easing (QE) policy by the United States (US) Federal Reserve Bank since early 2009 has aroused widespread concerns in Asia and elsewhere regarding its possible impact in terms of the weakening of the US dollar and stimulating capital outflows to emerging economies that might increase inflationary pressures in them. This report investigates possible impacts of US quantitative easing policy on Asian economies and financial markets. Our basic approach is to take the period of November 2009–October 2010, when no quantitative easing took place, as a baseline period against which we can compare the effects of quantitative easing on monetary flows during the “QE1†and “QE2†periods. We estimate that about 40% of the increase in the US monetary base in the QE1 period leaked out in the form of increased gross private capital outflows and about one-third leaked out during the first two quarters of the QE2 period. An excess private financial capital inflow to Emerging Asia of $9 billion per quarter was estimated for the first two quarters of the QE2 period, which was relatively consistent with the estimated amounts of the excess increases in foreign exchange reserves and the monetary base in the region during that period. However, this amount is small, and hence was unlikely to have a significant impact on financial markets, economic activity or inflation. We also investigate the impacts of QE policy on regional bond yields and exchange rates using event window analysis, and find that the greatest impacts were a stronger Korean won and lower bond yields in Indonesia. |
| Keywords: | financial markets, capital outflows, quantitative easing, the US, Emerging Asia |
| JEL: | E43 E52 E58 F31 F32 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:eab:financ:23215&r=sea |
| By: | Mario Lamberte (Asian Development Bank Institute (ADBI)); Peter J. Morgan |
| Abstract: | The increasing occurrence of national, regional, and global financial crises, together with their rising costs and complexity, have increased calls for greater regional and global monetary cooperation. This is particularly necessary in light of volatile capital flow movements that can quickly transmit crisis developments in individual countries to other countries around the world. Global financial safety nets (GFSNs) are one important area for monetary cooperation. This paper reviews the current situation of regional and global monetary cooperation, focusing on financial safety nets, with a view toward developing recommendations for more effective cooperation, especially between the International Monetary Fund (IMF) and regional financial arrangements (RFAs). A GFSN should have adequate resources to deal with multiple crises, should be capable of rapid and flexible response, and should not be encumbered by historical impediments such as the IMF stigma that would limit its acceptance by recipient countries. Oversight of a GFSN needs to be based on cooperation between global and regional forums, for example, the G20 and ASEAN+3 or East Asia Summit (EAS). Such a GFSN should include the IMF and RFAs at a minimum, and it is highly recommended to find ways to include central banks as providers of swap lines and multilateral banks as well. The basic principles governing the cooperation of IMF and RFAs include rigorous and even-handed surveillance; respect of independence and decision-making processes of each institution and regional specificities; ongoing collaboration as a way to build regional capacity for crisis prevention; open sharing of information and joint missions where necessary; specialization based on comparative advantage; consistency of lending conditions and conditionality, although with flexibility; respect of the IMF as preferred creditor; subsidiarity; avoidance of moral hazard; and transparency. |
| Keywords: | regional, global, Monetary cooperation, ASEAN |
| JEL: | F33 F34 F36 F53 F55 |
| Date: | 2012–02 |
| URL: | http://d.repec.org/n?u=RePEc:eab:financ:23190&r=sea |
| By: | Fukunari Kimura (Asian Development Bank Institute (ADBI)); Ayako Obashi |
| Abstract: | Production networks in East Asia, particularly in the manufacturing and machinery industries, are well recognized as the most advanced in the world, in terms of their magnitude, extensiveness, and sophistication. This paper tries to link various economic studies on related topics, to see how much we understand about production networks in East Asia. After providing a brief overview of international trade statistics, the paper reviews a number of academic papers concerning (i) the structure and mechanics of production networks, (ii) the conditions for production networks, and (iii) the properties and implications thereof. |
| Keywords: | production network, East Asia, manufacturing, machinery |
| JEL: | F14 F15 F23 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:eab:microe:23216&r=sea |
| By: | Reza Siregar (Asian Development Bank Institute (ADBI)) |
| Abstract: | New lessons, challenges, and debates have emerged from the subprime crisis in the United States. While the macroeconomic orientation is not new and has always been among the classic toolkits of central banks for ensuring financial stability, the current explicit articulation and specification of such a tool as a global standard is new. The objective of this study is to review and analyze the steps taken by the central banks and monetary authorities of select Asian countries to strengthen their prudential regulations, mainly the macro-prudential component of such regulations. |
| Keywords: | Banking Regulation, Macro-prudential approache, prudential regulations, Financial Stability, central banks, Asia |
| JEL: | E52 E58 G28 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:eab:financ:23211&r=sea |
| By: | Joshua Aizenman (Asian Development Bank Institute (ADBI)) |
| Abstract: | This paper takes stock of recent research dealing with the degree to which the trilemma choices of Asian countries facilitated a smoother adjustment during the global crisis of 2008– 2009, and the way the region has been coping with the adjustment to the postcrisis challenges. We point out that emerging Asia has converged to a middle ground of the trilemma configuration : limited financial integration, a degree of monetary independence, and controlled exchange rate buffered by sizable international reserves. This configuration, with the proper management of balance sheet exposure and public finances, facilitated a smoother adjustment of emerging Asia to the crisis, and was instrumental in inducing the rapid resumption of growth. The swings of financial flows, from large deleveraging of foreign positions in 2008 to the renewed inflows in 2010, validate the insight of the public finance approach to financial integration : the gains from deeper financial integration should be balanced against the costs of growing exposure to turbulences. A key lesson of the crisis is the need to apply a comprehensive cost/benefit approach to prudential policies, to the regulation of external borrowing and of domestic financial intermediation, and to the accumulation and use of international reserves. We illustrate these results in the context of the challenges facing emerging Asia’s adjustment during the global financial crisis, and the postcrisis policy stance dealing with the renewed inflows of capital. |
| Keywords: | Financial Stability, emerging Asia, financial integration, monetary independence, controlled exchange |
| JEL: | F31 F32 F33 F36 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:eab:govern:23219&r=sea |
| By: | Mumbunan, Sonny; Ring, Irene; Lenk, Thomas |
| Abstract: | A region of ecological importance which generates uncompensated cross-territorial positive spillovers has a comparatively higher fiscal need due to the direct and indirect costs it incurs for nature conservation. In order adequately to acknowledge fiscal needs relating to nature conservation, we propose an indicator based on protected area as a means of distributing general-purpose transfers and model the consequences of this for Indonesia's current system of fiscal transfer from the national to the provincial level. The results suggest that about a third of the country's provinces would benefit from the new transfer regime and that the equalizing effect of the transfers increases as the proportion of protected area increases. -- |
| Keywords: | ecological fiscal transfers,intergovernmental fiscal transfer,biodiversity conservation,protected areas,fiscal equalization,Indonesia |
| JEL: | H77 Q57 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ufzdps:062012&r=sea |
| By: | Kodrat Wibowo (Department of Economics, Padjadjaran University); Astia Dendi (The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ)); Zulhanif (Department of Statistics, Padjadjaran University) |
| Abstract: | Theoretically, according to Shah (1994), the specific purpose transfer fund suited for correcting inefficiencies in financing of public facilities with externalities (spillovers) to communities outside the recepient regions. Various types of matching grant: open-ended and closed-ended are in fact not intended to address the fiscal imbalance or insufficiency of fiscal capacity among regions. The central government of Indonesia prefers the closed-ended specific purpose transfer (specific grant) fund, so called Dana Alokasi Khusus (DAK) in its inter-governmental balancing fund system considering that problem of moral hazard occured in open-ended approach. By definition, the DAK is a fund sourced from the central budget revenues allocated to specific regions in order to help funding, also specific activities that are of regional affairs and in accordance with national priorities. In fact, the number of the DAK-funded priority areas has been increasing from only 5 fields at the beginning of the year 2003 and became 14 fields in 2010. Moreover, the number of DAK recipient regions always reaches almost 90% of total regions in Indonesia in the same period. There appears a question of how the essential of ‘specificness’ of DAK can be evidenced from these facts? This study will use the 2003-2009 DAK fund allocation of 33 provinces in Indonesia and ultilize statistics analysis to analyze the ‘specificness’ of DAK. Based on the evaluation during the period 2003 – 2010 the essence of specificness is drowned out by more sightings of the essence of 'equalization' fiscal capacity both horizontally and vertically which are more functions of the block grant (DAU) and Revenue Sharing Transfer (DBH). The results of our study also shows that the pattern and magnitude of DAK allocation is applied over the years, do not contribute significantly to the goals (outcomes and impact) of national development. |
| Keywords: | Public Finance, Transfer Fund, Fiscal Decentralization |
| JEL: | H0 H7 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:unp:wpaper:201109&r=sea |
| By: | Andrew K. Rose (Asian Development Bank Institute (ADBI)) |
| Abstract: | This paper analyzes the causes of the 2008–2009 financial crisis together with its manifestations, using a Multiple Indicator Multiple Cause (MIMIC) model. The analysis is conducted on a cross-section of 85 economies; I focus on international financial linkages that may have both allowed the crisis to spread across economies, and/or provided insurance. The model of the cross-economy incidence of the crisis combines 2008–2009 changes in real gross domestic product (GDP), the stock market, economy credit ratings, and the exchange rate. The key domestic determinants of crisis incidence that I consider are taken from the literature, and are measured in 2006 : real GDP per capita; the degree of credit market regulation; and the current account, measured as a fraction of GDP. Above and beyond these three national sources of crisis vulnerability, I add a number of measures of both multilateral and bilateral financial linkages to investigate the effects of international financial integration on crisis incidence. I ask three questions, with a special focus on Asian economies. First, did the degree of an economy’s multilateral financial integration help explain its crisis? Second, what about the strength of its bilateral financial ties with the United States and the key Asian economics of the People’s Republic of China, Japan, and the Republic of Korea? Third, did the presence of a bilateral swap line with the Federal Reserve affect the intensity of an economy’s crisis? I find that neither multilateral financial integration nor the existence of a Fed swap line is correlated with the cross-economy incidence of the crisis. There is mild evidence that economies with stronger bilateral financial ties to the United States (but not the large Asian economies) experienced milder crises. That is, more financially integrated economies do not seem to have suffered more during the most serious macroeconomic crisis in decades. This strengthens the case for international financial integration; if the costs of international financial integration were not great during the Great Recession, when could we ever expect them to be larger? |
| Keywords: | financial integration, financial crisis, financial linkage, Asian economies |
| JEL: | E65 F30 |
| Date: | 2012–01 |
| URL: | http://d.repec.org/n?u=RePEc:eab:financ:23195&r=sea |
| By: | Kodrat Wibowo (Department of Economics, Padjadjaran University); Bagdja Muljarijadi (Department of Economics, Padjadjaran University); Rullan Rinaldi (Department of Economics, Padjadjaran University) |
| Abstract: | As one of central government’s tools to equalize fiscal disparities between regions in Indonesia, current allocation mechanism of intergovernmental grant has been a major issue in regional public finance. Specifically, specific grant (DAK) was proven not much more specific than general block grant (DAU). Furthermore, the effectiveness of the specific grant allocation mechanism on poverty alleviation, economic growth, unemployment, and several others specific indicator has not met the desirable condition of the program’s outcome. This paper tries to propose alternatives on the allocation mechanism of specific grant that could effectively fulfill the objectives of affecting the local policy of poverty alleviation, economic growth, and unemployment. Employing sub national data at city and district level, we perform a simulation utilizing panel data regression of 458 cities/districts during period of 2001-2007. The result shows that existing DAK allocation on public investment program has not been able to meet development objectives in the long term economic development. Specifically, specific grant (DAK) was proven not much more specific than general block grant (DAU). This study also provides an efficiently simple, matching grant allocation mechanism which is conditional open-ended matching grants, along with intensive ongoing evaluation and monitoring to align the allocation of funds to regions with regional macroeconomic targets and promoting the level of community welfare; and at a certain level, using a bottom-up approach where the allocation of the fund should was based on local government interests and initiatives. The study consider that DAU per capita is a better main criteria for determining which areas are considered eligible as a recipient of DAK is districts that have a low fiscal capacity (general criteria). The simulation provides better estimation result than one from existing mechanism; the expected sign of DAK toward economic growth, poverty rate, and unemployment are in accordance with the theory and common knowledge. This brings consequences that DAK should be give to less region with higher amounts. |
| Keywords: | Allocation Mechanism, Transfer, Sub National, Public Finance |
| JEL: | H0 H7 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:unp:wpaper:201108&r=sea |
| By: | F. Ted Tschang (Asian Development Bank Institute (ADBI)) |
| Abstract: | This paper examines three software and/or information technology enabled services (ITES) industries—two in the early stages of development (in the People’s Republic of China [PRC] and the Philippines) and one mature one (in India). Being latecomers to offshoring work, the PRC and the Philippines have developed this industry in cooperation with multinational enterprises (MNEs). PRC firms have worked with and upgraded within MNEs’ value chains within the PRC market, while the Philippines has relied on MNEs to come in and set up facilities, with domestic firms setting up facilities where lower (knowledge) barriers to entry prevail. The paper also explores the ITES industries’ implications for economic growth and poverty reduction. ITES industries can contribute to overall economic growth and exports, but due to their small size, will generally tend to have more observable impacts on the cities in which they are located. From the limited case data available, it appears that the ITES industries impact on overall employment and other economic sectors to varying degrees, relative to other sectors. As these industries do not help the more impoverished or less educated, they cannot be said to be a solution for the less employable or impoverished, let alone to the problem of rural poverty. |
| Keywords: | Industrialization path, outsourcing industries, PRC, The Philippines, India |
| JEL: | L52 L86 O14 |
| Date: | 2011–10 |
| URL: | http://d.repec.org/n?u=RePEc:eab:tradew:23223&r=sea |