Service liberalization in Lao PDR

Service liberalization is emerging as a high-priority issue in various parts of the world for mega free trade agreements as well as national policy. Lao PDR is no exception. To examine the level of service liberalization in Lao PDR, we first compare the Hoekman Indices of Lao PDR, Cambodia, and Vietnam on the ASEAN Framework Agreement on Services (AFAS 8). Lao PDR has lower commitment in many subsectors. In particular, we list the sectors in which Lao PDR made a lower commitment than Cambodia and Vietnam in Mode 3 (supply of services through commercial establishments abroad). Second, a simulation analysis using the Geographical Simulation Model (IDE-GSM) from the Institute of Developing Economies at the Japan External Trade Organization (IDE-JETRO) reveals how service liberalization benefits the economic development of Lao PDR. The two analyses clearly reveal that it is essential for Lao PDR to promote further service liberalization since such liberalization will contribute to the country's development.

Diverging Development Paths of the Electronics Industry in Korea and Taiwan

This paper examines the process and mechanism of economic development in the Republic of Korea and Taiwan through a comparative analysis of the electronics industry in each country. The paper will show that in its initial stage of development, the electronics industry in both economies had the same type of dual structure: a domestic demand sector based on the protected domestic market, and an export sector intended to capitalize on low-wage labor for the international market. However, this dual structure in the two economies faded away after the mid-1970s as their respective indigenous export-oriented enterprises began to develop. But the primary industrial players in each economy were very different. In Korea they were comprehensive electronics manufacturers affiliated with chaebols, and in Taiwan they were small and medium-size enterprises. Differences in the two economies' development mechanisms have brought about this divergence in development paths. In Korea this mechanism has been characterized by the government's positive role and the chaebol's readiness to react to the government's leadership. In Taiwan the development mechanism has been based on the private sector independent from the government. As an extension of such diverged development paths, ICs and personal computers showed spectacular growth in Korea and Taiwan after the 1980s. The development of ICs in Korea was primarily the result of a decisive role played by the chaebol's sizable financial resources, while the competitiveness in personal computers largely reflected the agility and flexibility of Taiwanese small and medium-size enterprises.

Industrialization Policies of Korea and Taiwan and Their Effects on Manufacturing Productivity

In this paper the total factor productivity (TFP) of the manufacturing sectors in Taiwan and the Republic of Korean was measured and compared using the growth accounting method. Through descriptive analysis, inefficiency in the Korean manufacturing sectors was revealed, especially for the period prior to 1986. Also for the period posterior to 1986, it was found that TFP tended to contribute more to the value-added growth in both countries. An econometric analysis with industrialization-related variables revealed a contrast in the structure of TFP growth between the two countries. Import penetration, capital intensity, and growth of real output were estimated to exert a positive productivity impact in Taiwan, reflecting Taiwan's flexibility and superiority in factor utilization compared with Korea. It was estimated that the export ratio did not have any major productivity impact in both countries, in contrast with the results reported by the World Bank (The East Asian Miracle: Economic Growth and Public Policy, New York: Oxford University Press, 1993).

Is Group Lending A Good Enforcement Scheme for Achieving High Repayment Rates?: Evidence from Field Experiments in Vietnam

Microfinance institutions employ various kinds of incentive schemes but estimating the effect of each scheme is not easy due to endogeneity bias. We conducted field experiments in Vietnam to capture the role of joint liability, monitoring, cross-reporting, social sanctions, communication and group formation in borrowers’ repayment behavior. We find that joint liability contracts cause serious free-riding problems, inducing strategic default and lowering repayment rates. When group members observe each others’ investment returns, participants are more likely to choose strategic default. Even after introducing a cross-reporting system and/or penalties among borrowers, the default rates and the ratios of participants who chose strategic default under joint liability are still higher than those under individual lending. We also find that joint liability lending often failed to induce mutual insurance among borrowers. Those who had been helped or who had repaid a little in the previous round were more likely to default strategically and repay a little again in the current round and those who paid large amounts were always the same individuals.

The Impact of United States Sanctions on the Myanmar Garment Industry

The United States imposed trade sanctions against the military regime in Myanmar in July 2003. The import ban damaged the garment industry in particular. This industry exported nearly half of its products to the United States, and more than eighty percent of United States imports from Myanmar had been clothes. The garment industry was probably the main target of the sanctions. Nevertheless, the impact on the garment industry and its workers has not been accurately evaluated or closely examined. The purpose of this paper is to evaluate the impact of the sanctions and to further understand the present situation. This is done using several sources of information, including the author's field and questionnaire surveys. This paper also describes the process of selection and polarization underway in the garment industry, an industry that now has more severe competition fueled by the sanctions. Through such a process, the impact was inflicted disproportionately on small and medium-sized domestic firms and their workers.

Stunted and Distorted Industrialization in Myanmar

More than 15 years have passed since Myanmar embarked on its transition from a centrally planned economy to a market-oriented one. The purpose of this paper is to provide a bird-eye's view of industrial changes from the 1990s up to 2005. The industrial sector showed a preliminary development in the first half of the 1990s due to an "open door" policy and liberalization measures. However, a brief period of growth failed to effect any changes in the economic fundamentals. The industrial sector still suffers from poor power supplies, limited access to imported raw materials and machinery, exchange rate instability, limited credit, and frequent changes of government regulation. Public ownership is still high in key infrastructure sectors, and has failed to provide sufficient services to private industries. What the government must do first is to get the fundamentals right.

Theory of a Flowchart Approach to Industrial Cluster Policy

A flowchart approach to industrial cluster policy emphasizes the importance ofthe ordering of policy measures. The flow of policy implementation is to establish an industrial zone, to invite an anchor company, and to promote its related companies to invest in the industrial zone. This article delineated "a flowchart approach to industrial cluster policy" by proposing sufficient conditions for forming industrial clusters typical in the manufacturing industry in Asia to enhance regional economic growth. The typical industrial cluster policy was theorized by defining an industrial zone as "quasi-public goods", and it was shown that the policy enhances economic growth under a production function of "increasing returns to scale" of an anchor company. Critical amounts of the production of "scale economies" that are used by the related companies to decide whether or not to invest in clusters were also shown.

The First Universal Suffrage Election, at County (Gewog) Level, in Bhutan

Following a Royal Edict to adopt universal suffrage in election for local government institutions, maiden elections were held in 199 gewogs (counties) in Bhutan in 2002 to elect their chief executives. This paper gives an account of this first time event in a country where most villagers had never seen secret ballots and poll booths. It synthesizes detailed data, mostly qualitative, collected soon after the election was over, and assesses aspects of electoral participation that His Majesty the King of Bhutan has introduced steadily to deepen democracy. Beginning with a glance at the territorial organization of the Bhutanese state within which the counties are embedded, the paper compares the electoral results with the relevant election rules.

International Competitiveness of Manufacturing Firms in sub-Saharan Africa

As the success of East Asian countries has shown, labor-intensive industry is recognized to lead economic growth in the early stages of development, utilizing relatively low labor costs. This same growth process has already started in South and South East Asian LDCs since the mid-1990s. However, the manufacturing sector in sub-Saharan Africa has been underdeveloped and manufacturing exports, in particular labour-intensive goods, have stagnated. This paper investigates the international competitiveness of the African manufacturing sector and its determinants through an analytical survey of empirical studies and a comparison with Asian low income countries. Empirical evidences indicate that primary factors of competitiveness, namely productivity, labour cost and exchange rate are unfavorable in sub-Saharan Africa. Representative arguments attribute the weak competitiveness to problems in the business environment, factor endowment, and the exchange rate. However, careful review shows that labour cost is beyond the range explained by endowment and misalignment of exchange rates have been reduced in Africa. Moreover, comparison with Asian low income countries which have competitiveness in labour-intensive goods shows no difference in the quality of business environment, while the labour cost is significantly lower than sub-Saharan African countries. Although results should be considered tentative, high labour cost beyond endowment and conservative investment behavior emerge as important factors for the weak competitiveness in sub-Saharan Africa when controlling income level.

Distribution System of China's Industrial Clusters: Case Study of Yiwu China Commodity City

This paper discusses the issue of upgrading industrial clusters from the perspective of external linkages. It is taken for granted that in most developing countries, due to the limited domestic market and poor traditional commercial networks, industrial clusters are able to upgrade only when they are involved in global value chains. However, the rise of China’s industrial clusters challenges this view. Historically, China has had a lot of industrial clusters with their own traditional commercial networks. This fact combined with its huge population resulted in the formation of a unique external linage to China’s industrial clusters after the socialist planning period ended. In concrete terms, since the 1980s, a traditional commercial institution . the transaction market . began to appear in most clusters. These markets within the clusters get connected to those in the cities due to interaction between traditional merchants and local governments. This has resulted in the formation of a powerful market network-based distribution system which has played a crucial role for China’s industrial clusters in responding to exploding domestic demand. This paper explains these features in detail, using Yiwu China Commodity City as a case study.

Factors Underlying the Formation of Industrial Clusters in Japan and Industrial Cluster Policy: A Quantitative Survey

The purpose of this report is to use information provided by a questionnaire survey to analyze the factors and processes underlying the formation of industrial clusters in Japan. The study, based on questionnaire surveys, forms part of an "Industrial Cluster Project". The Japanese government has implemented policies for industrial clusters so as to enable Japanese industries to maintain competitive power in global markets, and to aid the self-sufficient expansion of local industries. The government's project goes under the heading "Industry Agglomeration for the Recovery of Local Industries with respect to so-called "Industry Clusters." The authors aim to identify what expectations are held of government by the enterprises that make up industrial clusters. As part of our investigation, we used the results of a survey conducted by UNDP in 2004. Tsuji's study, published by the Osaka School of International Public Policy, surveyed 1198 small or medium sized manufacturing companies located in O ward, Tokyo and Higashi Osaka city, Osaka prefecture. The outcome of the present study, together with data from Tsuji's work on IT usage by SMEs in Japan, is meant to form the basis for policy design and implementation.

Patent policy and public health in developing countries: lessons from Japan

The introduction of pharmaceutical product patents in India and other developing countries is expected to have a significant effect on public health and local pharmaceutical industries. This paper draws implications from the historical experience of Japan when it introduced product patents in 1976. In Japan, narrow patents and promotion of cross-licensing were effective tools to keep drug prices in check while ensuring the introduction of new drugs. While the global pharmaceutical market surrounding India today differs considerably from that of the 1970's, the Japanese experience offers a policy option that may profitably be considered by India today. The Indian patent system emphasizes the patentability requirement in contrast to the Japanese patent policy which relied on narrow patents and extensive licensing. R&D by local firms and the development of local products may be promoted more effectively under the Japanese model.