Negative Bubbles and Unpredictability of Financial Markets: The Asian Currency Crisis in 1997

We obtain the three following conclusions. First, business cycles depend on prices of stocks and primary commodities such as crude oil. Second, stock prices and oil prices generate psychological cycles with different periods. Third, there exist cases of "negative bubble" under certain conditions. Integrating the above results, we can find a role of a government in financial market in developing countries.

Winner-Take-All Contention of Innovation under Globalization: A Simulation Analysis and East Asia's Empirics

This paper sets out to examine how innovation enhances export competitiveness: The proposition that export volume becomes enhanced as more productivity-enhancing innovation is captured by the exporting economy is the focus of this study. From a Schumpeterian perspective, innovation can be characterized by continuous creation and subsequent diffusion of newer technologies on the basis of the exporters' existing capital stock. Then we highlight the theoretical possibility that concentration of innovative activities in a small group of "winner" economies would lead to larger shares of "winner" economies' exports of innovation-active commodities than those commodities for which technology involved is already mature. The world's export data corroborates this theoretical prediction overall, and a focus upon East Asia has revealed the region's increasing resort to technology-intensive commodity sectors, which has presumably been enabled through attracting technology-bearing inward foreign direct investment. Considering the overall gains from innovation, acceleration of full "cycle" of innovation and imitation might be a desirable option.

Trade, Foreign Investment and Myanmar's Economic Development during the Transition to an Open Economy

Throughout the 1990s and up to 2005, the adoption of an open-door policy substantially increased the volume of Myanmar's external trade. Imports grew more rapidly than exports in the 1990s owing to the release of pent-up consumer demand during the transition to a market economy. Accordingly, trade deficits expanded. Confronted by a shortage of foreign currency, the government after the late 1990s resorted to rigid controls over the private sector's trade activities. Despite this tightening of policy, Myanmar's external sector has improved since 2000 largely because of the emergence of new export commodities, namely garments and natural gas. Foreign direct investments in Myanmar significantly contributed to the exploration and development of new gas fields. As trade volume grew, Myanmar strengthened its trade relations with neighboring countries such as China, Thailand and India. Although the development of external trade and foreign investment inflows exerted a considerable impact on the Myanmar economy, the external sector has not yet begun to function as a vigorous engine for broad-based and sustainable development.

Evaluation of Non-Survey International IO Construction Methods with the Asian-Pacific Input-Output Table

This paper presents four non-survey methods to construct a full-information international input-output table from national IO tables and international import and export statistics, and this paper tests these four methods against the semi-survey international IO table for nine East-Asian countries and the USA, which is constructed by the Institute of Developing Economies in Japan. The tests show that the impact on the domestic flows of using self-sufficiency ratios is small, except for Singapore and Malaysia, two countries with large volumes of smuggling and transit trade. As regards the accuracy of the international flows, all methods show considerable errors, of 10%-40% for commodities and of 10%-70% for services. When more information is added, i.e. going from Method 1 to 4, the accuracy increases, except for Method 2 that generally produces larger errors than Method 1. In all, it seems doubtful whether replacing the semi-survey Asian-Pacific IO table with one of the four non-survey tables is justified, except when the semi-survey table itself is also considered to be just another estimate.

Development of Border Economic Zones in Thailand: Expansion of Border Trade and Formation of Border Economic Zones

In the wake of economic globalization and development in Thailand, movement of people and commodities at the Thai borders is also becoming pronounced. Economic interdependence between Thailand and neighboring countries is growing through border customhouses. As a policy, Thailand is trying to stimulate trade and investment with neighboring countries following the ACMECS (Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy) scheme. In this report, first, movement of people and goods at the borders will be examined. Second, clarification of where and how development is proceeding will be presented. Last, this study will attempt to review the perspectives of policies on neighboring countries after Thaksin.

Trade Coefficients and the Role of Elasticity in a Spatial CGE Model Based on the Armington Assumption

The Armington Assumption in the context of multi-regional CGE models is commonly interpreted as follows: Same commodities with different origins are imperfect substitutes for each other. In this paper, a static spatial CGE model that is compatible with this assumption and explicitly considers the transport sector and regional price differentials is formulated. Trade coefficients, which are derived endogenously from the optimization behaviors of firms and households, are shown to take the form of a potential function. To investigate how the elasticity of substitutions affects equilibrium solutions, a simpler version of the model that incorporates three regions and two sectors (besides the transport sector) is introduced. Results indicate: (1) if commodities produced in different regions are perfect substitutes, regional economies will be either autarkic or completely symmetric and (2) if they are imperfect substitutes, the impact of elasticity on the price equilibrium system as well as trade coefficients will be nonlinear and sometimes very sensitive.

Growth strategies in a greener world

Two new developments in the global landscape - growing concerns towards global warming and the rising prices of commodities – require countries to craft new growth strategies. These recent developments in the global market offer fresh industrial opportunities as well as difficulties for developing countries embarking on industrialization. In this paper, we examine current developments in global market that would affect industrialization prospects in East Asia and explores development strategies that are suitable for development based on export oriented manufacturing industries in a green world.

Market efficiency of commodity futures in India

This paper aims to examine the market efficiency of the commodity futures market in India, which has been growing phenomenally for the last few years. We estimate the long-run equilibrium relationship between the multi-commodity futures and spot prices and then test for market efficiency in a weak form sense by applying both the DOLS and the FMOLS methods. The entire sample period is from 2 January 2006 to 31 March 2011. The results indicate that a cointegrating relationship is found between these indices and that the commodity futures market seems to be efficient only during the more recent sub-sample period since July 2009.

Status and constraints of costly port rejection : a case from the Vietnamese frozen seafood export industry

While the rising exports have been the source of growth for many developing countries in recent years, the rate of commodities rejected at the ports of developed countries has also been high. Yet why it has remained so despite the costs involved is mostly unknown. This paper takes a case of the frozen seafood export industry in Vietnam and examines the current status of port rejection, roles played by various stakeholders along the value chains, and the constraints faced by the Vietnamese producers and exporters. It concludes with some policy implications, including strengthening the enforcement mechanism of standards compliance particularly at the upstream of the value chain and providing public testing labs for small-scale producers.

The middle-income trap from the viewpoint of trade structures

In this study, we try to elucidate the middle-income trap from the viewpoint of international trade. We conduct regression analyses on the relationship between income level and net export ratios for different types of goods for trapped and non-trapped samples separately. Our findings indicate that industrial upgrading appears to occur exactly as depicted by the flying-geese model for non-trapped countries while trapped countries tend to depend on the export of primary commodities, and industrialization appears to be driven by forward linkages to processed goods and a narrow base. The results of our analyses suggest that the middle-income trap is a form of Dutch disease or a 'resource curse' in the middle-income stage.

Rice flows across regions in Madagascar

Although spatial disintegration of rice markets in Madagascar has been well documented, little is known about actual rice flows across regions. Using weekly collected unique data from rice markets in 22 regional capital cities for one year, this study explores the physical distribution of rice in Madagascar and reveals that rice flows from sufficient regions to deficit regions, along with geographical proximity, have positive effects on rice flow. In contrast, season factors, such as harvest/non-harvest periods and weather conditions have a negligible effect on rice flow. These findings suggest that rice flows generally follow a rational pattern despite the fact that market indicators indicate that rice trade across regions is underdeveloped.

Understanding traders' regional arbitage : the case of rice traders in Antananarivo, Madagascar

Many studies find that agricultural markets in developing countries are poorly integrated spatially. Traders' regional arbitrage plays a key role in integrating markets across space. We investigate the performance of regional arbitrage and the associated obstacles for rice traders in Antananarivo, Madagascar. On the basis of a trader-level biweekly survey spanning 2012–2013, we find that traders are not fully exploiting the regional arbitrage opportunities: most of them fail to purchase from the cheapest district and are paying higher prices than those in the cheapest district. One apparent obstacle is obtaining price information from many different regions. To reduce search costs, we provided regional price information via SMS to randomly selected traders, but found that this had a null-effect on improving arbitrage performance. Traders tend to concentrate on trading with a few fixed districts, even if they are informed about cheaper prices in other new districts, because they worry about quality uncertainty and the trustworthiness of new partners. These findings suggest that not only transmission of price information but also issues related to produce quality and matching prevent the performance of arbitrage and market integration.

Food quality awareness : cases from shrimp producers in Thailand and vegetable producers in Vietnam

The high number of import rejections of food commodities suggests that producers in exporting countries are not complying with established standards. To understand why this is the case, we explore the behavior of producers and consumers in developing countries. First, we examine the successful transformation of production practices adopted by shrimp producers in Thailand. In support of the dramatic change in practices, we observe an important role played by the public sector in providing a means to visualize chemical residues and to control processes upstream of the supply chain via a registration system and a traceability system called Movement Document. Furthermore, very active information sharing by the private sector contributes to the dissemination of useful technical and market information among producers. We also examine the knowledge and perceptions of consumers with respect to food safety in Vietnam. We find that consumers in Hanoi and Ho Chi Minh City behave differently toward the third-party certification VietGAP, probably owing to differences in the history of market mechanisms between the two cities.