Behind-the-Border Trade Facilitation in Asia-Pacific: Cost of Trade, Credit Information, Contract Enforcement and Regulatory Coherence

This paper evaluates the potential contribution of both trade and business facilitation measures to trade and export competitiveness, as well as the potential gains from adopting a more integrated and coherent approach to trade and business (investment) facilitation. The analysis confirms that measures aimed at reducing the behind and at-the-border cost of exporting, such as reduction in customs and port fees and charges and improvement in transport infrastructure and logistics services can be expected to have a significant impact on trade. However, it also reveals that improving the domestic business (investment) environment may have an impact on export competitiveness of a magnitude similar to the trade and transport facilitation measures. The study also finds evidence that achieving similar performance levels across the range of trade and business facilitation areas, i.e., having a more integrated approach to trade and business facilitation, could significantly increase trade competitiveness. Overall, the study suggests that trade officials should actively develop cooperation and communication channels with other ministries and institutions in charge of different types of business regulations - in particular, those related to credit information and contract enforcement.Trade facilitation, Ease of Doing Business, Regulatory Environment, Export Competitiveness

Behind the Border Trade Facilitation in Asia-Pacific: Cost of Trade, Credit Information, Contract Enforcement and Regulatory Coherence

This paper evaluates the potential contribution of both trade and business facilitation measures to trade and export competitiveness, as well as the potential gains from adopting a more integrated and coherent approach to trade and business (investment) facilitation.Behind the Border, Trade Facilitation, Cost of Trade, Credit Information, Contract Enforcement, Regulatory Coherence, Asia-Pacific

Technological Capability as a Determinant of FDI Inflows: Evidence from Developing Asia & India

This paper contributes to the empirical literature on determinants of FDI by addressing the question: Why do some developing countries from Asia continue to receive more FDI, while others from the region have fallen behind? It finds R&D-based innovative capacities, and the ability to apply such capacities through modern IT-based techniques, as the two key determinants explaining FDI inflows to developing Asian economies. These traits are found significant for inward FDI in India too with more technology intensive sectors receiving greater FDI. The findings of the paper suggest that in the absence of strong technological foundations and well-developed communications infrastructure, liberal policies alone are not enough for drawing FDI, once initial advantages, like cheap labour, fizzle out. For developing countries like India, strong thrust on R&D and innovative skills is needed for attracting FDI in technology-intensive exports. Therefore, policy actions would have to go further than a broad-based opening up of sectors to FDI, and increasing the limit of such investment in these sectors, for sustained inflows of FDI.FDI inflows, technology and technological capabilities, locational advantages, IT-based communication facilities

A Note on the Competitiveness Debate

This article deals with the concept of competitiveness. Competitiveness is technically a firm-level concept. However, it is oftentimes extended to the national level--the idea of a country's 'international competitiveness' with the following analogies: market share-->export share of country; price-->real effective exchange rate or unit labor cost; profitability-->long-run economic growth. The concept of national competitiveness is faulty, in the words of Paul Krugman it has become a 'dangerous obsession.' However, national or government policies do have an impact on firm level competitiveness. The only concept related to firm level competitiveness that can be extended to the national level without ambiguity is technological capability. Since technological capability is at the heart of competitiveness, countries must address this issue squarely. One course of action is to adopt a strategic approach to foreign direct investment--as opposed to a passive strategy--similar to what Malaysia and Singapore did.competitiveness, technology capability

Technological Capability as a Determinant of FDI Inflows - Evidence from Developing Asia & India

During 2006-07, FDI inflows into India were more than double than those in 2005-06. Indeed, during April-January 2006-07, inward FDI into India at US$16.4 billion, was far higher than the annual average inflow of US$2-3 billion during the late 1990s. In recent years, India has also emerged as one of the leading FDI destinations in Asia. On the whole, the pattern of FDI inflows to developing Asia itself has changed significantly over the years. Some leading Southeast Asian economies (for example, Malaysia, Indonesia, Thailand and Philippines) no longer attract as much FDI as they used to in the past. Thisis in sharp contrast to some East and Southeast Asian economies that continue to draw large FDI (for example, China, Hong Kong and Singapore). In the above context, this paper attempts to explain the country-wise variations in the pattern of FDI flows to developing Asian economies by empirically identifying location specific features influencing such flows. The paper argues that some countries in the region, which have developed long term sources of comparative advantages in the form of superior technological capabilities and supporting infrastructure have consistently attracted greater volumes of export-oriented FDI. These attributes are also crucial for explaining the steady improvement in FDI flows to India. The paper finds that with production processes becoming increasingly complex and technology-intensive, developing countries like India, must devote greater attention to the development of R&D and frontier technologies, failing which, they might lose out in the race for FDI.FDI inflows, technology and technological capabilities, locational advantages, IT-based communication facilities

e-Quarterly Research Bulletin (Vol. 5, No. 1)

[Excerpt] Macro financial risk propagation and its implications on financial stability have emerged as major concerns of governments and financial institutions, particularly those with large financial asset pools. The global financial crisis in 2008–2009 was essentially centered on credit risk involving money markets, and the propagation of such risk across and among financial institutions and sovereigns is related to how connected they are. To understand the concept of connectedness, Merton provides a brief review of the concepts of credit, credit risk, and guarantees. He asserts that risk- free credit is essentially risky credit coupled with a guarantee of payment in the event of a default. That is, risky debt is nothing but risk-free debt less a guarantee of repayment. We note that in complete contingent markets, the holder of debt always has the option to purchase insurance on the debt, pretty much like the credit default swaps that are available in advanced financial markets today. The guarantee could be issued by a financial institution or a sovereign government, and effectively transfers the risk of default from the borrower to the guarantor. From the perspective of the lending institution, however, the instrument or asset it is holding is now essentially risk-free debt. Merton stresses that the guarantees attached to risky debt are in fact insurance on the risk of default, and are akin to put options on assets of borrowers, with maturities similar to those of the debt instrument being guaranteed and a strike price equivalent to the promised payment of debt

Impact of Trade Facilitation on Export Competitiveness: a Regional Perspective

The factors that affect export competitiveness are complex. From a firm's perspective, an appropriate trading environment in which the firm can conduct its business plays an important role in the creation of competitiveness. Thus, a trade-enabling environment, based on (a) adequate trade policies; (b) an efficient trade and customs administration system; and (c) good infrastructure, is critical for enterprises to compete effectively in the global economy.Export, Competitiveness, Trade, Facilitation, Asia, custom, regional

Why paper mills clean up : determinants of pollution abatement in four Asian countries

The authors find strong evidence that despite weak or nonexistent formal regulation and enforcement of environmental standards, many plants in South and Southeast Asia are clean. At the same time, many plants are among the world's worst polluters. To account for the extreme variation among plants, the authors review evidence from a survey of pollution abatement by 26 pulp and paper plants in four countries: Bangladesh, India, Indonesia, and Thailand. They incorporate 3 sets of factors affecting pollution intensity: plant characteristics, economic considerations, and external pressure from the government and private stakeholders. They find that the level of pollution abatement is positively associated with scale and competitiveness, negatively associated with public ownership, and unaffected by foreign links (in ownership or financing). Informal regulation, or community pressure on plants works to abate pollution, with high income being a powerful predictor of effectiveness. Privatization, to the extent that it increases plant efficiency, can significantly improve environmental performance. To prevent environmental injustice in poor or marginalized communities, the authors conclude, governments may want to consider strategies for improving their participation, and may want to target regulation to address pollution problems among them.Environmental Economics&Policies,Water and Industry,Water Conservation,Pollution Management&Control,Sanitation and Sewerage,Environmental Economics&Policies,Water and Industry,Pollution Management&Control,Sanitation and Sewerage,TF030632-DANISH CTF - FY05 (DAC PART COUNTRIES GNP PER CAPITA BELOW USD 2,500/AL

Achieving Skill Mobility in the ASEAN Economic Community: Challenges, Opportunity, and Policy Implications

Despite clear aspirations by the Association of Southeast Asian Nations (ASEAN) to create an effective and transparent framework to facilitate movements among skilled professionals within the ASEAN by December 2015, progress has been slow and uneven. This report examines the challenges ASEAN member states face in achieving the goal of greater mobility for the highly skilled, including hurdles in recognizing professional qualifications, opening up access to certain jobs, and a limited willingness by professionals to move due to perceived cultural, language, and socioeconomic differences. The cost of these barriers is staggering and could reduce the region’s competitiveness in the global market. This report launches a multiyear effort by the Asian Development Bank and the Migration Policy Institute to better understand the issues and develop strategies to gradually overcome the problems. It offers a range of policy recommendations that have been discussed among experts in a high-level expert meeting, taking into account best practices locally and across the region

Probing the position of the Jakarta metropolitan area in global inter-urban networks through the lens of manufacturing firms

This paper presents an analysis of the position of the Jakarta metropolitan area (JMA) in global inter-urban networks. Our starting point is our aim to provide a more nuanced understanding of the JMA’s connectivity in world city networks (WCNs). To this end, we steer clear of top-down approaches, which tend to analyze cities in singular taxonomies of global prominence, and instead propose a framework that is attuned to the JMA’s contexts to provide an alternative and complementary reading of how the JMA has been inserted into the WCN. To this end, by drawing on the interlocking network model, which helps to proxy inter-urban networks based on the multi-locational operations of manufacturing firms, we examine the JMA’s network positionality on the global and national scales. The results provide evidence of the JMA’s global inter-city relations being strongly geared toward East Asian cities. In addition, the results suggest that the JMA cannot be detached from its national geography, as evidenced by its strong connections with cities located on the island of Java