Trade Credits under Imperfect Enforcement: A Theory with a Test on Chinese Experience

It is widely recognized that trade credit is an important financial mechanism, particularly in developing economies and transition economies where institutions are weak. This paper documents theoretical analysis and empirical accounts on what facilitates an effective supply of trade credit based on original surveys conducted in P.R. of China. Our theory predicts that trade volume and trade credit are increasing function of cash held by the buyer and enforcement technology of the seller. Furthermore, if the state sector’s enforcement technology is high, it has positive external effect to expand the volumes of trade credit and trades in the whole economy. From the data, we found that government made active commitment in enforcement of trade credit contract and the government owned firms are main supplier and receivers of trade credit, which suggest that enforcement by government and state sector were effective against presumptions in the previous literatures.

NEW ROLE OF COOPERATIVES IN ETHIOPIA: THE CASE OF ETHIOPIAN COFFEE FARMERS COOPERATIVES

Since 1991, policies of economic liberalization in Ethiopia have been effective in releasing the economy from rigid state control. At the same time, they have also exposed Ethiopian people to domestic and international free market competition. In African countries, the retreat of governments from rural development due to economic liberalization policies has led to the re-evaluation of the role of cooperatives. Since 1999, in Ethiopia, several coffee farmers cooperative unions have been established to support peasants who are handicapped by their lack of negotiating power in the global economy. Coffee cooperatives have become market-oriented and are now relatively democratic compared to the former Marxist cooperatives of the previous regime. Thus far, these coffee cooperatives have provided higher profits to coffee farmers than have private traders. The actual volume of purchase, however, is limited　due to financial constraints. Because of this, the majority of cooperatives continues to rely on conventional marketing channels rather than on unions. Considering their weak financial condition, it is too early to judge the sustainability of the cooperatives because international prices have been high recently, and it is not yet clear how they would survive a downward international price trend.

From authoritarianism to upheaval : the political economy of the Syrian uprising and regime persistence

The ensuing bloodshed and deteriorating humanitarian crisis in Syria, the failure of the United Nations Security Council to reach a consensus on what action to take, and the involvement of contending external actors partially reflect the complexity of the current impasse. Despite the importance of regional and international factors, however, this papers attempts to argue that the domestic dynamics of the Syrian crisis have been vitally important in determining the course of the popular uprising and the regime’s response. In this, Syria’s crisis belongs with the Arab Spring the trajectories and prospects of which have been shaped by dynamics within regimes. It will be seen that the formal and informal institutional structure of the Ba‘thist regime in Syria has been critical to its resilience and ability to stay united so far while attempting to crush a peaceful popular uprising that turned into insurgency in the face of the regime’s violent crackdown.

Democratization and Financial Reform in Taiwan: The Political Economy of Bad-Loan Creation

This study shows that many bad loans now burdening Taiwan's financial institutions are interrelated with the society's democratization which started in the late 1980s. Democratization made the local factions and business groups more independent from the Kuomintang government. They acquired more political influence than under the authoritarian regime. These changes induced them to manage their owned financial institutions more arbitrarily and to intervene more frequently in the state-affiliated financial institutions. Moreover they interfered in financial reform and compelled the government to allow many more new banks than it had originally planned. As a result the financial system became more competitive and the qualities of loans deteriorated. Some local factions and business groups exacerbated the situation by establishing banks in order to funnel funds to themselves, sometimes illegally. Thus many bad loans were created as the side effect of democratization.

Migration and Wellbeing at the Lower Echelons of the Economy: A Study of Delhi Slums

This paper based on a primary survey of households (2004-05) in the slum clusters of Delhi examines whether migrants are likely to experience upward mobility in their place of destination or alternatively, if they merely transfer their poverty from rural areas to large cities. First, a simple bifurcation of population in terms of poor and non-poor sub-groups is examined along with the incidence of poverty across different categories of occupations and non-workers. Then, an explanation of the variations in per capita expenditure across households is provided, and a binomial logit model (poor/non-poor) is developed identifying the variables which raise (or reduce) the probability of being non-poor (or poor). Next, an estimate of the wellbeing (deprivation) index is derived from factor analysis of a large number of variables including demographic and economic aspects of households. Empirical findings suggest that while duration of migration and the wellbeing index do not have a definite relationship, migrant households who have been in the city for a very long time have a higher wellbeing index on average than those who migrated in the last ten years. This tends to support the view that migrants do not merely transfer rural poverty to urban areas, and further that population mobility yields improvement in the living standard, if only in the very long term. Implementation of "employment-cum-shelter" support schemes in the urban areas may contribute to their wellbeing.

Outward FDI from and intraregional FDI in ASEAN : trends and drivers

Developing-country transnational corporations (TNCs) are increasing in importance in the global economy. Outward FDI from developing countries is a proxy indicator to measure how much of an important role enterprises of developing countries have played in the world market and how they benefit from globalization where border barriers are reduced. This study finds that ASEAN enterprises have extended their business activities within ASEAN, East Asia, and then to the world, as both regional and global players.

Is Learning by Migrating to a Megalopolis Really Important? Evidence from Thailand

We examine the effects of learning by migrating on the productivity of migrants who move to a "megalopolis" from rural areas using the Thailand Labor Force Survey. The main contribution is to the development a simple framework to test for self-selection on migration decisions and learning by migrating into the urban labor market, focusing on experimental evidence in the observational data. The role of the urban labor market is examined. In conclusion, we find significant evidence for sorting: the self-selection effects test (1) is positive among new entrants from rural areas to the urban labor market; and (2) is negative among new exits that move to rural areas from the urban labor market. Further, estimated effects of learning by migrating into a "megalopolis" have a less significant impact. These results suggest the existence of a natural selection (i.e. survival of the fittest) mechanism in the urban labor market in a developing economy.

Are Job Networks Localized in a Developing Economy? Search Methods for Displaced Workers in Thailand

Effects of localized personal networks on the choice of search methods are studied in this paper using evidence of displaced workers by establishment closure in Thailand Labor Force Survey, 2001. For the blocks/villages level, there is less significant evidence of local interactions between job-seekers and referrals in developing labor markets. The effects of localized personal networks do not play an important role in the probability of unemployed job-seekers seeking assistance from friends and relatives. Convincing evidence from the data supports the proposition that both self-selection of individual background-like professions and access to large markets determine the choice of job search method.

Changes in the foreign trade structure of the Russian Far East under the process of transition toward a market economy

Under the process of transition toward a market economy, the economic connections of the Russian Far East (RFE) with external regions changed from a division of labor among the regions of the USSR (Russia) to an international division of labor. This happened due to factors including the liberalization of the trade system away from a state monopoly, the presence of rich natural resources and of developed industries related to these resources, the advantage of geographically proximity to Asia-Pacific countries, and the political and economic division of the once unified national economic space during the process of transition. The economic connections of RFE with external economies changed radically under the transition toward the market economy. First, the value of foreign trade increased dramatically and the importance of foreign trade for the RFE economy increased enormously. Second, however, different territories of RFE traveled along different trajectories, due to factors involving their industrial structure and geographical conditions. Third, in recent years connections with China, in the areas of both exports and imports, have grown. Fourth, the share within exports of "fuel, mineral resources and metal" increased radically from the end of the 1990s, and the share of "machine, facilities and transportation means" increased from 2002 year within imports. Under this situation, especially since 2002, there has been a major change in the structure of foreign trade.

The Feasibility of Cuban Market Economy: A Comparison with Vietnam

In spite of the difficulties incurred by its people, Cuba has maintained a centrally planned economy with single party system. On the contrary, Vietnam has introduced a market economy under communist rule, and succeeded in generally improving living standards. The factors that contributed to the introduction of Vietnamese-style reforms are (1) severe economic crisis, (2) demonstration effects from neighboring countries, (3) poor social policy, (4) initiatives by ex-conservative leader/s, and (5) weak state capacity. The conditions to sustain high economic growth are (1) social sectors familiar with capitalist economics, (2) abundant labor forces with relatively low labor cost, and (3) investment by exiles. This paper analyzes to what extent Cuba meets these conditions.

The Cuban Economy: A Current Evaluation and Proposals for Necessary Policy Changes

Politicians, social scientists and general readers have noted in both Cuban and international academic forums and periodicals that the well-being enjoyed by the Cuban people in the 1980s has been seriously compromised since the economic crisis of the 1990s. Even for the most skeptical of observers it is clear that this worsening of conditions can be attributed not only to external factors, such as the breakup of the international socialist system, the tightening of the US blockade, and the worldwide economic crisis suffered by underdeveloped countries, but also to internal factors that have kept the country from taking full advantage of the human and material potential available on the island. Although Cuba is currently experiencing an economic recovery from the collapse in GDP in the mid 1990s following the collapse of its ties with the Socialist Bloc, it continues to maintain high import coefficients due to longstanding structural.

Related Lending and Bank Performance: Evidence from Indonesia

After the Asian financial crisis of 1997, it was confirmed that banks lend to their related parties in many countries. The question examined in this article is whether related lending functions to alleviate the problems of asymmetric information or transfers profits from depositors and minority shareholders to related parties. The effects of related lending on the profitability and risk of banks in Indonesia are examined using panel data from 1994 to 2007 comprising a total of 74 Indonesian banks. The effects on return on asset (ROA) varied at different periods. Before and right after the crisis, a higher credit allocation to related parties increased ROA. In middle of the crisis, it turned to negative; and this has also been the case in the most recent period as the Indonesian economy has normalized. Effects of related lending on bank risk measured by the Z-score and non-performing loan is not clear. After undergoing bank restructuring, related lending has decreased and the profit structure of banks has changed.

Critical connections : Islamic politics and political economy in Indonesia and Malaysia

This article explores Islamic politics in two Muslim-majority countries in Southeast Asia, Indonesia and Malaysia, by linking their trajectories, from late colonial emergence to recent upsurge, to broad concerns of political economy, including changing social bases, capitalist transformation, state policies, and economic crises. The Indonesian and Malaysian trajectories of Islamic politics are tracked in a comparative exercise that goes beyond the case studies to suggest that much of contemporary Islamic politics cannot be explained by reference to Islam alone, but to how Islamic identities and agendas are forged in contexts of modern and profane social contestation.

Chapter 5 Industrial Policy, Structure, and Locations during the Transition toward a Market-oriented Economy in Myanmar

This paper examines Myanmar's industrial policy, structure, and locations during the transition from a centrally planned economy to a market-oriented one throughout the 1990s and up to the present. After the military government assumed power in 1988, it abandoned the socialist centrally planned economic system and began instituting a market-oriented one through a series of liberalization and deregulation measures, although most of which have stalled since 1997 and remain half-way implemented. Against this background, it is rather surprising that the impact of these new policies of international trade, finance, regulations, licensing and ownership requirements on industrial structure and location in Myanmar has been poorly documented and examined to date. Some key issues to understanding the impact and effectiveness of the market-oriented policies during the last two decades in Myanmar remain to be answered: Have the new trade and industrial policies changed the industrial structure and organizational behavior in Myanmar? Have they improved the performance of Myanmar's industrial sector? Have they had any impact on industry location in Myanmar? This paper reviews the series of liberalization programs implemented under the military government?the State Law and Order Restoration Council (SLORC) and the State Peace and Development Council (SPDC)?and assesses their impact on industrial structure and its spatial distribution.

Chapter 3 Knowledge Exchanges and Innovation in Connected Firms: Evidence from Upstream-Downstream Relationships

This paper proposes evidences for linking innovation and knowledge exchanges in developing economies towards a comprehensive theory of new economic geography in the knowledge based spatial economy. Firms which dispatched engineers to customers achieved more innovations than firms which did not. Mutual sharing of knowledge also stimulates innovations. A just-in-time relationship is effective for dealing with upgrading production process. But such strong complementarities with partners are not effective for product innovation.. These evidences support the hypothesis that face-to-face communication and complementarities among production linkages have different roles in knowledge creation.