Crisis in Japan and the Way Out: A Counterargument to Pessimistic Views

This paper focuses on a review of the present state of, and outlook for the Japanese economy. The paper is composed of three parts. The first describes the interrelation between the crisis-ridden East Asian economies and Japan. I argue that Japan did not cause the Asian currency crisis. The second part describes the current state of the Japanese economy after the bubble burst. I also discuss the medium- and long-term challenges that face the Japanese economy. The third part concentrates on the issue of the "liquidity trap" Japan is experiencing. I argue that the yen's exchange rate is more likely to appreciate than depreciate by pumping liquidity into the economy while interest rates cannot be lowered any further, and therefore a "helicopter money" policy is the only way to induce a positive inflation rate and escape from the liquidity trap.

Exchange Rate Stabilization and IMF High Interest Rate Policy: A Critical Reconsideration Using a Dynamic Model

This paper examines whether the IMF high interest rate policy was suitable for crisis-ridden East Asian economies. Using an "overshoot" model similar to that of Dornbusch's (1976), it shows that this sort of policy might cause an unnecessary deflationary adjusting process and have no effect on containing the real depreciation of exchange rates in the long run. The study also demonstrates that Thai economic data coincides quite well with the model presented here. Finally, it points out that the high interest policy itself might provoke high risk-premium, the existence of which, in turn, justifies the policy. This means that the policy has a self-fulfilling property. In conclusion, a "one-size-fits-all" adaptation of high interest rate policy in a currency crisis is very dangerous in general, and was inappropriate for East Asia. The desirable policy would have been to let currencies depreciate and keep interest rates stable.

The Garment Industry in Cambodia: Its Role in Poverty Reduction through Export-Oriented Development

Cambodia's export-oriented garment industry has contributed greatly to poverty reduction in the country through employment of the poor. This paper provides a statistical verification of this contribution based on firm-level data from 164 sampled companies collected in 2003. Its main conclusions confirm the substantial impact that employment in the garment industry has had on poverty reduction in Cambodia. Firstly, entry-level workers receive wages far above the poverty line. Secondly, females make up the predominant share of the main category jobs in the industry. Thirdly, barriers to employment and to promotions up to certain job categories are not high in terms of education and experience. Another important finding is that a typical sample firm exhibited high profitability, although there was wide variation in profitability among firms. This average of high profitability could be a good predictor of Cambodia's viability in the intensified competition since the phase out of the Multi-Fiber Arrangement (MFA) at the beginning of 2005. A point of note is that Cambodia's pattern of industrial development led by a labor-intensive industry is similar to that of neighboring countries in East Asia which earlier went through the initial stage of industrial development, except that Cambodia has lacked a strong government industrial promotion policy which characterized the earlier group.

Theoretical Models Based on a Flowchart Approach to Industrial Cluster Policy

This article examined the issue of whether or not the currency exchange rate, country risk, and cooperate tax rate affect decisions of multinational firms to invest in industrial clusters. First, if the exchange rate between a multinational company in an industry of diminishing returns to scale and a developing country is appreciated, then production in the developing country should increase. Second, if the investment period becomes longer, the currency exchange rate of a multinational company's country should be revalued more in order for it to further invest in the developing country. Third, if the investment period becomes longer, the developing country's risk should become less. Fourth, compensation for the developing country's high risk can be made by lowering its corporate tax rate.

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.

アジアは一つになれるか？: ASEAN型「統合」からの脱却の必要性

東アジア共同体の議論は、FTAが基礎になる。だが、FTA自体が本当の統合なのか疑問が残る。もし、アジアがEU型の本格的な深い統合を目指すなら、ASEAN中心主義や中国の深い関与が足かせになる。経済発展と民主化が一定水準に達したアジアやオセアニアの先進国による新たな統合の核が必要である。

輸出指向開発再論 ：後発発展途上国の労働集約的工業発展の可能性

東アジア経済は労働集約財輸出を中心とする輸出指向工業化によって経済発展を遂げた。その輸出指向工業化の成功の本質が、市場の歪みの小ささにあったのか、それとも政府の積極的な輸出促進政策にあったのか、という点については長く議論が闘わされてきたものの、世界銀行の『東アジアの軌跡』出版以来、後者の論理がより注目されてきた。 　現在の低所得国は、その多くがWTOに加盟しており、かつて東アジア経済が採用したような輸出促進政策を採用できないことから、低所得国の製造業品の輸出成長は期待できないという新輸出悲観論が広がっている。その中でバングラデシュやカンボジアは手厚い政府の促進政策なしに、労働集約財の代表である縫製品の輸出を伸ばしている。そこで本稿は、WTO時代にあって手厚い政府介入が行われなかったとしても、低所得国が低賃金を活用して工業化を進める可能性が十分あることを主張する。

開発戦略としてのPro-Poor Growth －貧困層への雇用創出－

本稿は、後発開発途上国においてpro-poor growthを達成する開発戦略を、産業政策との関連から研究したものである。アジアとアフリカの経済発展プロセスにおいて、貧困層にどの産業が雇用機会を提供するか、を研究した。その結果明らかになったのは、1970-90年代の典型的な東アジア高成長経済であるタイと台湾において、貧困層に最も大きな雇用機会を与えたのが農業部門であったのに対して、貧困層の雇用機会増に最も貢献したのが製造業部門であったということである。同様の傾向は、アフリカの輸出指向成長国であるモーリシャスについても観察された。一方、グローバリゼーションの活力が十分に生かされなかったマラウィ、南アフリカ、インドにおいては、製造業が同様の雇用機会を貧困層に提供できなかった。結論として導かれるのは、典型的な後発発展途上国においては、雇用に関して農業のシェアが製造業のシェアを上回るのが一般的であるものの、もし比較優位がグローバリゼーションの中で顕在化できるのであれば、貧困層の雇用機会増に関して、農業よりも製造業の貢献度が大きくなりうる、ということである。一国全体の経済発展という観点のみならず、貧困層に利益をもたらすpro-poor growthという文脈においても、製造業の果たす役割が無視し得ないことが明らかになった。

Institutional Development of Capital Markets in Nine Asian Economies

This paper is conducting a comparative analysis of the development of securities markets in nine Asian economies: Korea, Taiwan, Hong Kong, Singapore, Malaysia, Thailand, Indonesia, the Philippines, and China. This study focuses on two aspects: the history and institutional development of securities market, such as legal systems, payment systems, etc. From the analyses, this paper reveals several common features of the development of securities markets in nine Asian economies. First, most economies had an informal capital market in the early period of their history. Second, the background of the foundation of their official markets was influenced by experiences of colonization. Third, most governments recognized the importance of the capital market for economic development and had a positive attitude in promoting the market. Fourth, statistics clearly showed that most economies experienced several booms in their capital market from the late 1980s.

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.

Border Industry in Myanmar: Turning the Periphery into the Center of Growth

The Myanmar economy has not been deeply integrated into East Asia���s production and distribution networks, despite its location advantages and notably abundant, reasonably well-educated, cheap labor force. Underdeveloped infrastructure, logistics in particular, and an unfavorable business and investment environment hinder it from participating in such networks in East Asia. Service link costs, for connecting production sites in Myanmar and other remote fragmented production blocks or markets, have not fallen sufficiently low to enable firms, including multi-national corporations to reduce total costs, and so the Myanmar economy has failed to attract foreign direct investments. Border industry offers a solution. The Myanmar economy can be connected to the regional and global economy through its borders with neighboring countries, Thailand in particular, which already have logistic hubs such as deep-sea ports, airports and trunk roads. This paper examines the source of competitiveness of border industry by considering an example of the garment industry located in the Myanmar-Thai border area. Based on such analysis, we recognize the prospects of border industry and propose some policy measures to promote this on Myanmar soil.

Comparing the Networks of Ethnic Japanese and Ethnic Chinese in International Trade

In this paper I re-examined the trade enhancing effects of ethnic Chinese networks, found by Rauch and Trindade (2002), on a newer and extended data set. The effects are estimated by the gravity equation with the product of the population ratio (or absolute number) of the ethnic Chinese in both the importing and exporting countries, and are reaffirmed positive and statistically significant. I also compared the effects of two different ethnic Japanese networks, i.e., the networks of long-term Japanese stayers in foreign countries, and the networks of permanent Japanese residents in foreign countries. It is found that the former has stronger trade enhancing effects than the latter. This shows that the effects of ethnic networks on international trade can be generalized beyond the ethnic Chinese, and the ’cohesiveness’ of the ethnic network matters to the trade enhancing effects of the network.