bluuebunny/crossref_metadata_2025 huggingface dataset:
Do intellectual property rights play a role in the economic growth of petro-states?: Some empirical evidence from the GCC countries
Authors: Al-Mawali Nasser
Published: August 2015

The existing literature on the relationship between the strength of a country’s intellectual property rights and rate of growth is still inconclusive. The previous studies on IPRs and economic growth, although quite comprehensive, overlooked the resource-based economies. The role of IPRs in innovation and economic growth in the GCC is expected to be different from that in non-resource-based economies, this is because that the resource-based economies of GCC countries exhibit the characteristics of the “rentier states”. The present study contributes to the ongoing debate over the relationship between intellectual property rights (IPRs) protection and economic growth by providing new empirical evidence from the Gulf Co-operation Council (GCC) petro-states, namely Saudi Arabia, Oman, Bahrain, United Arab Emirates (UAE), Kuwait and Qatar. The present study employs the basic determinants of economic growth as postulated by various economic growth theories and then augmented with measurement of IPRs. To ensure the robustness of the empirical results, the study employs three different approaches of estimations: constant coefficient approach (ordinary least squares (OLS)), the fixed effects approach, and the between effects approach. The analyses in this study utilizes panel data from cross-sectional data on all GCC countries over a span of six years (2008 to 2013). The IPRs index used in this study was developed in 2007 by Property Rights Alliance (USA). All other explanatory variables (initial GDP per capita, inflation, human capital, population, openness, and investment) are from the World Bank’s World Development Indicators (2012). The empirical findings confirm the expectations relating to “traditional” sources of economic growth. However, what is important is that the study does not find any empirical validations with respect to the role of IPRs in promoting economic growth in the GCC petro-states. The study also did not find that stronger IPRs protection in GCC countries reduces economic growth, as the variable of IPRs has a positive sign but is not statistically significant in the three specified models of the study. The insignificant relationship between IPRs and economic growth in the case of GCC countries might be related to the fact that GCC countries are “rentier states” in which IPRs per se are not sufficient to ensure technological progress and innovations. The results suggests that for IPRs to promote innovations and economic growth, a coherent set of complementary policies are required, and that the governments of the GCC countries need to play a positive role in inducing technology acquisition and creation.
Analysing the role of union instrumentality in women’s participation in trade unions: A study of Indian manufacturing sector
Authors: Ghosh Piyali , Ragini Ragini , Rai Alka
Published: August 2015

Number of women in formal employment in India is significantly lower than that of men, and few women join and participate actively in trade unions in India. This paper attempts to study the factors influencing participation of women workers in unions in India. It is based on the assumption by Klandermans (1984) that the willingness to participate in an activity is the weighted sum of goal motives, social motives and reward motives. Goal and reward motives of participating in union may be related to union instrumentality, whereas social motives may be linked to approval for union participation from family, colleagues and employer. Willingness to participate is the weighted sum of these motives. Convenience in participating in union-related activities is another determinant of union participation. We propose that union instrumentality moderates the relationship of women’s participation in trade unions with approval and convenience as independent variables. Women’s participation in trade unions was measured with four indices of worker participation in union activities from the scale originally used by Chacko (1985) and a self-developed item. Convenience and approval were measured by five-item and four-item self-developed Likert-type scales respectively. The construct of union instrumentality has been evaluated by using a seven-item Likert-type scale with items derived from union instrumentality questionnaires available in literature.Data from a sample of 214 women workers of 8 manufacturing units across 5 public sector organisations was subject to hierarchical regression analysis. Findings lend support to the moderating effect of union instrumentality. Our study sheds light on the nature of relationship of convenience of women workers and approval of their family, peers and employer on their participation in trade unions, and shows a positive relationship between these constructs. The findings add to existing literature that examines the antecedents of workers’ participation in trade unions, especially in context of women. Moreover, our research has illustrated union instrumentality as a moderator in the relationship of convenience and approval with participation in trade unions. We may hence deduce that women workers who have convenience as well as approval from their peers, employers and family members are more likely to participate positively in union-related activities.
Does FDI lead to a deterioration of income distribution?: Evidence from Malaysia
Authors: Mukaramah-Harun Mukaramah-Harun , Mat Siti Hadijah Che , Zalina-Zainal Zalina-Zainal
Published: August 2015

Income inequality has long been a frustrating feature of Malaysian economic development. The country income inequality, represented by the Gini Coefficient has decreased only slightly to 0.41 in 2014 from 0.51 in 1970. This income inequality, however, was accompanied by rapid economic growth. Gross Domestic Product (GDP) has grown by an average of more than 7 percent per year for 25 years or more. The expectations that the high economic growth would accompany low income inequality as hypothesized by the inverted ‘U-shaped’ Kuznets curve have not come true for Malaysia. Why did it occur? Unlike many other conventional studies which look at the relationship between growth and income inequality to explain this phenomenon; this study intent to looks at the foreign direct investment (FDI) relationship with income inequality. Since 1990s, FDI has been an important source of economic growth for Malaysia, bringing in capital investment, technology and management knowledge needed for economic growth. FDI had increased almost thirty-fold during 1970s to 2000s. There is a heated debate on the effects of FDI on income distribution. While FDI may have been good for development this masks the facts that not all types of workers necessarily gain from FDI to some extent. FDI induced skill specific technological change where it can be associated with skill-specific wage bargaining or skill-intensive sectors. This study presents an attempt to evaluate the impact of foreign direct investment (FDI) on income distribution among labors. The Malaysia’s Social Accounting Matrix (SAM) is constructed as a framework for the analysis. In this SAM the detail framework of the component of FDI in various sectors, production sectors and labor groups are essential to analyse different effects from different component of FDI on the labor’s income distribution among different labor group. This structure of SAM would answer the question of either and which component of FDI will benefit the most to the low income. The study finds that the FDI expansion has impacted negatively on the distribution of income across different labor groups, where it has increased the high-low or skilled-unskilled income inequality. It also indicates that there are differences in the composition of the FDI that impacts income distribution among labor. The apparent differences in the magnitude of the effects of the different FDI components suggests that variations in the FDI allocations among sectors should be considered as a possible policy variable to achieve income equality goals.
The impact of FDI inflows on real GDP in Estonia: Evidence from a cointegration approach and causality test
Authors: Kisswani Khalid M. , Kein Alar , Shetty Shekar T.
Published: August 2015

Theoretically, it is believed that FDI is a principal factor supporting and accelerating economic enhancement of an economy over the years. FDI boosts the productivity of host countries and promotes economic development, as FDI may not only provide direct capital financing, but may also create positive externalities via the adoption of foreign technology and know-how. In this paper we focus our attention on Estonia, as a (former) transition economy. Estonia stands out as one of the most successful ones in terms of economic growth and institutional changes among former command economies, as in less than two decades Estonia has been able to build functioning market-economy-institutions virtually from scratch and has joined the European Union (EU) and the Euro-zone. This paper, using cointegration methodology for the period of 1994:Q1-2013:Q2 focuses on the causal relationship between FDI and real GDP in Estonia. The real GDP data is obtained from Eurostat (2005 = 100) while the FDI data is obtained from the Bank of Estonia. Exploring the cointegration test is done through two methods: the residual-based test of Engle and Granger (1987) and Johansen’s methodology. The cointegration tests require that series to be integrated of order one. For this reason we first test for the existence of a unit root using Augmented Dickey Fuller unit root test (ADF, 1979, 1981), and Kwiatkowski et al . (KPSS, 1992). We further investigate the causal relationship using Granger Causality analysis and Vector Error Correction Model (VECM). The stationarity tests show that the variables are integrated of order 1, confirming that FDI and GDP are not stationary. The Engle-Granger method shows that FDI and real GDP are not cointegrated. Continuing with Johansen Cointegration Test, which is more generally applicable than the Engle-Granger method, the findings indicate that both the real GDP and FDI series are cointegrated, hence, the variables have long term relationship in that they will not deviate arbitrarily from each other and that their deviations from long run equilibrium path are corrected. Finally, Granger Causality test provides evidence that GDP does respond to changes in FDI in the long run but not in the short run, besides FDI does Granger cause real GDP. Our findings demonstrate that FDI can be very useful for Estonia, and it will be interesting to examine whether such findings are essentially due to large share of FDI in the banking sector and/or due to large share of FDI from high-income countries.
The determinants of vertical intra-industry trade in SITC 8: The case of ASEAN-5 and China
Authors: Chin Mui-Yin , Yong Chen-Chen , Yew Siew-Yong
Published: August 2015

The bilateral trade between Asia and United States (US) was diluted since the 1997 Asian Financial Crisis. On the other hand, trade ties between Asia and China has been strengthened as China has emerged as the regional and global manufacturing powerhouse attributable to her abundance of labor and aggressiveness of open door policies. In light of the rapid development of regional production networks, vertical intra-industry trade (VIIT) has become increasingly important in Asia. The dynamic changes of Asia’s trade networking have reinforced ASEAN-5’s (Indonesia, Malaysia, Philippines, Singapore and Thailand) desire to boost the development of VIIT with China in manufactured products. This study seeks to identify the determinants for VIIT between ASEAN-5 and China in the miscellaneous manufacturing sector (SITC 8). The VIIT indices, computed using the decomposition type threshold method, were subjected to panel data analysis using spatial panel model. The explanatory variables consists of ASEAN-5’s FDI in China (FDI), differences in GDP between each ASEAN-5 country and China (DGDP), trade openness (TO) and spatial interaction effect of VIIT (SVIIT). Spatial panel model is adopted in this study as it is strongly believed that spillover effects among ASEAN-5 countries are present. The data used comprise annual statistics from 1993 to 2009. The econometric results show that trade openness is the significant determinant of VIIT as it reduces trading costs and service costs and provides greater opportunity for production fragmentation and results in greater intensity of VIIT between ASEAN-5 and China. The econometric results also confirm the presence of spatial interaction effects among ASEAN-5 as SVIIT is significant. The negative coefficient of SVIIT signifies intense competition among ASEAN-5 countries on VIIT with China in SITC 8. To transform the competition into complementation, ASEAN Economic Community can play a pivotal role as it is a good channel for each ASEAN-5 country to leverage their comparative advantage respectively, and sustain the bilateral trade with China in SITC 8.
Correlates of self-rated health status in the context of Sri Lanka
Authors: Kulkarni Veena S.
Published: August 2015

Sri Lanka owing to its high levels of achievements in arena of social indicators such as life expectancy, infant mortality rate or school enrollment rate relative to its income levels poses a paradox in the developing world. There is however near non-existent research examining correlates of self-rated health status in Sri Lanka. Self-rated health status has been accepted as a valid predictor of physical well- being and mortality. Present study, by investigating relative roles of demographic and socioeconomic characteristics, health care utilization pattern and level of satisfaction with the health care services in predicting self-rated health status in Sri Lanka, contributes to the growing literature on assessing subjective health measures in the context of developing countries. The analyses employ World Health Survey (WHS) data collected and disseminated by the World Health Organisation (WHO). The WHS was conducted in 2002-2003 for 69 countries and the data for the various countries was made available at varying points after the year 2006. The dependent variable, self–rated health status is a three pronged categorical variable, ‘very good/good’, ‘moderate’, ‘bad/very bad’. The independent variables are measures of demographic characteristics, socioeconomic status, health service utilization and level of satisfaction with health care services. The multivariate regression model employs the ordinal logistic technique and is estimated using maximum likelihood. Findings suggest that while ‘traditional’ factors like age, gender, education are important, access to modern types of cooking fuel and level of satisfaction with the health care system are significant. With respect to educational attainment, the greatest change in self-rated health status occurs when educational status changes from ‘primary school not completed’ to ‘primary school completed’. Also, individuals who utilized health services most recently are more likely to perceive their health as ‘moderate’ or ‘bad/very bad’ relative to ‘very good/good’ implying a correlation between objective and subjective health assessments. Further, estimates indicate that independent variables are more significantly associated with the change between self-rated health status categories of ‘moderate’ versus ‘good/very good’ status rather than between ‘very bad/bad’ versus ‘moderate’. Programs encouraging people to complete primary schooling, improve access to modern types of fuel and enhance quality of health care system will help in improving levels of self-rated health status.
An investigation of work-life conflict in regional Australia: Empirical evidence from an Australian regional university
Authors: Samad Ataus , Reaburn Peter , Ahmed Ezaz
Published: August 2015

Work-life conflict is a form of inter-role conflict that arises by reason of simultaneous occurrence of workloads and other aspects of life. Compliance with one may limit an individuals’ ability to meet the demands of the other domain. Work-life conflict has been examined by a number of discipline with varied methodological approaches. This resulted in a literature base with inconsistent findings. The extant research of work-life conflict literature mostly focused on the issues related to people living in non-regional areas; however, there is some scope of research into work-life conflict issues in some regional areas. The purpose of this study is to examine the work-life conflict among academics and general staff in a regional Australian university. The study will, therefore, explore how total work-hour and associated variables such as strain and social support affect work-life conflict among university employees. One way to examine work-life conflict more rigorously is by applying an occupational stress model such as the demanded-control-support (DCS) model that has a dedicated measurement tool and a clear theoretical framework. However, the DCS model only focuses on issues such as job demand, job control and social support. It does not consider the total work-hour that may have adverse implication for work-life conflict. This study therefore, applied an extended demanded-control-support (DCS) model for measuring work-life conflict among university employees. Both academic (n=132) and general (administrative) staff members (n=149) were surveyed through a web-based survey method, i.e. Survey Monkey, which was designed to measure each of the variables. Total work-hour of academics (48 hours) has been significantly greater than that of general staff (38 hours) ( p <0.05). The result suggests that total work-hour significantly affects the experience of work-life conflict for both the academics and general staff. However, further analysis reveals that academics experience significantly more ( p <0.05) work-life conflict than the general staff do. It is found that there is no significant difference between these two cohorts as regards the experience of strain. Finally, the study finds that the general staff experience a significantly ( p < 0.05) greater level of work related social support. The study puts forward practical implications for management of academics in regional university in Australia and guidelines for future research.
A double-hurdle analysis of the gender earnings gap for working children in Bangladesh
Authors: Alam Imam M. , Amin Shahina , Rives Janet M.
Published: August 2015

Child labor continues to be pervasive throughout the developing world. Although the number of child workers has declined, the ILO’s 2010 estimate remained at 215 million children. An estimated 100 million girls are involved in child labor, often for low pay. Girls are often engaged in some of the worst forms of child labor, sometimes in illegal activities such as prostitution. Studies regarding the gender earnings gap among adults are abundant, but there is very little economic research on girls’ unequal treatment in the labor market in terms of pay. In this paper, we measure and analyze the gender earning gap between working boys and girls in Bangladesh, those who are paid as well as those who receive no pay. In order to investigate the gender gap in the earnings of children, we use the 2002-03 National Child Labour Survey of Bangladesh and limit our analysis to children ages 5 through 14, yielding 50,263 cases. Of these children, 6,668 performed market work; 2,283 were paid for their work and 4,385 were unpaid workers. We present descriptive statistics and then apply the Double-Hurdle model to adjust for selectivity bias and to include the working children who do not earn a wage. We then estimate Mincerian earnings equations for a pooled sample of children who perform market work, using four alternative models. We find evidence of a significant gender earnings gap in the overall child labor market in Bangladesh with a raw earnings gap of 36 percent. We specify four alternative Double-Hurdle regression models in which we include alternative sets of independent variables. All four models show a statistically significant wage gap ranging in magnitude from 31 percent to 29 percent. The magnitude of the gap is large, due mainly to a greater proportion of girls in unpaid work. A child’s own characteristics, family characteristics, as well as industrial segregation play important roles in explaining the gap. Girls’ earnings remain well below boys’ earnings even when all measured characteristics are included in the analysis. Our results show that the concentration of girls’ in unpaid work contributes to the earnings gap, yet we understand the importance of part-time (often unpaid) work in allowing girls to pursue their education. Policies are needed that encourage both educational and employment opportunities for girls in safe environments.
Foreign direct investment and welfare nexus in sub Saharan Africa
Authors: Fauzel* Sheereen , Seetanah Boopen , Sannassee RV
Published: August 2015

Governments of developing countries have been targeting poverty alleviation and deprivation as their main goal and thus have been working for pro poor growth. It is observed that African countries need considerable amount of investment in order to help their economies to prosper. African countries can benefit from growth through foreign investment which is seen as an important source of capital flows. However, even if growth is important for an economy, it is not a good indicator of social development. Welfare can be worsen if growth attained by a country is not pro poor and can also result in an increase in inequality gap. In this regards, this study is based on the investigation on FDI and poverty alleviation or welfare maximization in selected Sub Saharan African countries. The present paper takes a different approach in analyzing the impact of FDI on poverty reduction. In the context of selected Sub Saharan African countries and over the period 1990-2010, a dynamic Panel vector error correction model is adopted. In effect the Vector autoregressive model or the vector error correction model is of great importance in showing the dynamic behavior of economic time series and for forecasting. Also, it often provides better forecasts and describes theory-based simultaneous equations models. Thus, given the endogeneity and causality issues, using such a model can prove to be highly beneficial. The main variables used are FDI net inflows and poverty headcount index. Other variables used in this study include the unemployment rate, inflation, openness, government debt and government expenditure, education level and GDP per capita. The results suggest that indeed FDI is an efficient tool in fighting poverty both in the short run and long run with the sample of countries considered. Moreover, the results favor a uni directional relationship between FDI and social welfare (poverty reduction) and a bi directional causality between FDI and economic welfare (Economic growth). According to this study, foreign investment is an important ingredient for both economic and social development for Sub Saharan African countries. Hence, the government should devise appropriate policies to attract such capital flows. These can be in terms of an improvement in institutional capacity and easier administrative procedures which would surely favor the entrance of foreign firms in the host countries.
Households’ characteristics and the modes of remittances in Bangladesh
Authors: Chowdhury Mehdi
Published: August 2015

Bangladesh is one of the leading economies of the world in term on international labor migration. It is well known that remittances from international migrants is a major source of income of many Bangladeshi households. However many Bangladeshi households also depends on internal remittances received from the family members residing in other parts of the country. Therefore, the modes of remittances of households in Bangladesh can be categorized as ‘No Remittances’, ‘Internal Remittances’ and ‘International Remittances’. It can be hypothesized that these mode of remittances are associated with the basic characteristics of the households in Bangladesh. The paper empirically invistigates this association. As the mode of remittances can be classified in 3 categories, the paper utilizes Multinomial Logit Model (MNL) to investigate the association between Households’ characteristics and the modes of remittances. The data have been obtained from the Household Income and Expenditure Survey (2010) conducted by the Bangladesh Bureau of statistics. The data depicts that almost 78% households of Bangladesh received no remittances, about 12% received internal and about 9% received international remittances. The paper runs MNL regressions associating the data on households characteriscs such as rural-urban locations, religion, age, sex of houholds’ heads, expenditure shares etc. with these 3 categories. The study reveals that household level variables such as rural-urban locations, age and sex of the households heads, religion, ratio of male, adult and young members etc. are potentially significant in households’ orientation to remittances. Importantly, the results shows positive association of rural location with both internal and international remittances. It also surprisingly shows that the households with female heads are more likely to receive both internal and international remittances compared to the households headed by male. In addition, Muslim households are more likely to receive international remittances. The study however has found insignificant association between higher education and the mode of remittances. The paper contributes to the policy analysis through revealing the association between the households’ characteristics and the various modes of remittances. The finding will provide guidelines in policy debates and future research linking migration, remittances and economic development.
Pakistan’s potential export flow: The gravity model approach
Authors: Abbas Shujaat , Waheed Abdul
Published: August 2015

Pakistan is facing a chronic trade deficit due to highly concentrated nature of its international trade. The exports are dependent on the few lower value added agriculture and manufacturing industries, and are directed toward few trading partners. The highly concentrated nature of exports result in higher vulnerability and dependence of the economy. Pakistan signed regional and bilateral free trade agreements for diversification of its exports and markets. These free trade agreements significantly distorted the trade balance due to relatively lower specialization level of Pakistan. The trade theories and empirical studies urge achievement of competitive specialization in diversified exports and markets. This study attempts to investigate the macroeconomic behavior of export flow and export potential of Pakistan with its bilateral trading partners employing the augmented gravity model using panel data from 40 trading partners for the period 1991-2011. The dependent variable is merchandise exports flow, which is explained by the domestic supply capacity, demand potential of trading partners, relative price level and binary variables for free trade agreements, common language and common border. The model is then used to investigate potential markets for exports by Pakistan and provides a framework for export and market diversification. The annual data for this study is available in Statistical Year Book of Pakistan, World Development Indicators and International Financial Statistics. The results show that Pakistan’s export is positively determined by its supply capacity and partner country’s demand potential as well as market size, whereas negatively determined by the geographical distance. The domestic supply capacity shows the highest possible effect. The relative price shows significant positive, but less elastic impact. The common language shows significant positive impact while common border shows negative impact. The free trade agreements of Pakistan show negative insignificant impact. The result of export potential shows that the Pakistan has higher export potential with India, Philippines, Japan, Singapore, Malaysia and Indonesia, in Asia. Morocco, Egypt and Tanzania, in Africa. New Zealand and Australia, in Oceana. Hungary, Austria, Switzerland, Finland, Norway, Denmark and Sweden, in Europe. The Europe emerged as the most potential region for Pakistan’s exports. The policy implications of this study are that Pakistan needs to develop and diversify its industries targeting market fundamentals of potential economies, and revisit its regional and bilateral free trade agreements with a view to improving the trade balance and achieving sustainable economic development.
Social expenditure and economic growth: Evidence from Australia and New Zealand using cointegration and causality tests
Authors: Khan Habibullah , Bashar Omar K M R
Published: August 2015

Developed nations, especially Nordic countries such as Iceland, Sweden, Norway, Denmark and Finland allocate a sizeable portion of their budget for social welfare. On the contrary, developing counties’ allocation for social welfare has been negligible. The question is: can state intervention through social welfare provisions ensure sustained economic growth? In other words, do social expenditures promote economic growth? This study seeks to answer this question by establishing links between social expenditures and economic growth in Australia and New Zealand, and draw lessons for fast developing ASEAN economies as they aspire to be developed nations soon. Using annual data from 1980 to 2012, we deploy cointegration and error correction methods for establishing long-run relationship between social expenditures and economic growth. We conduct Granger causality tests for testing short-term direction of causality among the variables. For Australia, economic growth is found to have three main determinants- education, health and social expenditures. For New Zealand, health and social expenditures have been found as the main determinants of growth. However, no long-run relationship could be established among the variables when we included budget deficit in our model. The Granger causality tests indicate that one way causality running from economic growth to health expenditure, and social expenditure to economic growth in Australia. In case of New Zealand, on the other hand, one-way causality runs from education expenditure to economic growth, health expenditure to education expenditure, economic growth to health expenditure, and education expenditure to budget deficit. Social welfare expenditures also Granger cause economic growth. Our findings suggest that social expenditures promoted growth in Australia and New Zealand. The fast developing economies such as Singapore and Malaysia, which aim to achieve the developed country status by 2020 and usually do not allocate sizeable portion of their budget for social welfare, should adopt more ‘generous’ social policies for the sake of a balanced development.
Relative deprivation and the working poor: An empirical analysis
Authors: Rahman Mustafa A.
Published: August 2015

In developing countries, we observe a new class of workers who work but live in poverty. Not only they are lowly paid but also deprived of opportunities available in the society. A person’s feeling of deprivation arises from incomes that are higher than his own income. Sen in his 1976 work on poverty measurement brought the term deprivation into focus. He posited that an individual’s level of deprivation in the income scale is an increasing function of the number of persons who are better off than the person in question, or, alternatively, the share of the given population that is better off. In a society where distribution of resources is unequal, deprivation of a particular group of workers is not unlikely. The idea behind deprivation theory is that merely lack of some goods and opportunities do not create a sense of deprivation among the workers. There are other factors that cause and perpetuate deprivation of the workers. This paper is an attempt to identify the factors and examine deprivation of the workers based on a sample survey conducted in Bangladesh in 2008-09. Findings of the study suggest that deprivation is acute among the uneducated aged workers with large household size predominated by low paid casual workers owning small landholding. Deprivation and age of the workers displayed a U-shaped curve indicating that deprivation increases with the increase of age. Deprivation is more pronounced among female workers compared to male workers. Food and health expenditure contributes significantly to reducing deprivation of the workers. Obviously, owners of better dwelling houses are less deprived than those owning poor dwelling houses. Interestingly, manufacturing workers have been found to be more deprived than other sectors under study.
Business environment and investment potentials in selected Pacific island countries
Authors: Gani Azmat , Clemes Michael D.
Published: August 2015

Recent literature on foreign direct investment (FDI) indicates increasing levels of FDI inflows can benefit the recipient countries such as through the absorption of domestic labour, transfer of useful technology and improved long-term growth. This phenomenon is noticeable in the Pacific Island countries in recent times. Official statistics on FDI in the Pacific Island countries reveals an increasing level of inflows particularly in the post-2005 period. A contributory factor to this trend is likely to be an improved business environment, amongst others. Long-term Investors usually give priority to choosing investment locations where ease of doing business favours their investment objectives. This study provides an assessment of Pacific Island countries business environment in terms of attracting foreign direct investment (FDI). Several measures of business indicators for the period 2003-2011 are used to assess the attractiveness of the Pacific Island countries business environment. Numerical data for the period 2003-2011 on several business indicators from the World Bank: starting a business, building a warehouse, enforcing contracts, registering a property, paying taxes, trading across borders, and investor protection are chosen in order to qualitatively assess the achievements in the business environment. This study also attempts to empirically ascertain if the business environment matters for FDI inflows on the basis of Dunning’s (1988) theoretical framework. The estimation phase pools the data across nine Pacific Island countries. The estimation framework based on panel data estimation methodology is formulated so that key influences on FDI are unfolded. Our findings show that Pacific Island countries have a business environment that is much better than the average for the low and middle-income category of countries but falls short to that of New Zealand. Our analysis reveal some significant achievements in various countries. For example, the cost of business start-up procedures is many times lower in Samoa than those of the other Pacific Island countries and that Kiribati, Samoa, Solomon Islands and Vanuatu made the most significant progress in terms of reducing their cost of business start-up procedures. The study also provides empirical support that the time required to resolve insolvency; the time required to build a warehouse; and the strength of legal rights are important determinants of FDI. The implication of this study is that policy makers should formulate strategies to facilitate several improvements in the business environment so as to continue attracting investments from abroad. The reform of the business environment can deliver positive payoffs in the long-run.
Bank integration and systemic risk: Panacea or pandemic?
Authors: Lim Priscilla Yin-Pheng , Khong Roy W. L. , Tan Hui-Boon
Published: August 2015

The increasing integration of banks in the Asia-Pacific region is often associated with the banking sector’s vunerability to adverse shocks and financial instability. As the main financial intermediaries in the region, banks play an important role in mediating the region’s vast savings and capital flows. In light of the increasing interconnectedness between banks and the rising threat of financial volatility, this study aims to determine whether bank integration mitigates cross-border systemic risk or acts as a conduit for systemic risk. The effect of the business cycle and the real interest rate in facilitating the spread of systemic risk is also examined. In addition, we investigate the long-term effect of bank integration on systemic risk resulting from habit-persistence in bank lending behaviour. The sample consists of 36 country-pairs and covers the period from Q4 1997 to Q1 2010. Using daily returns from the national banking sector stock indices, the cross-border systemic risk measure is computed as the conditional covariance from a bivariate GARCH constant conditional correlation model. Meanwhile bank integration is measured using confidential data from the Bank of International Settlements. Panel data regression methods are employed to examine the impact of bank integration, the business cycle and the real interest rate on cross-border systemic risk in the region. A panel 2-stage least squares instrumental variable estimation is then used to examine the long-term effect of bank integration on systemic risk. We present strong empirical evidence that intensified bank integration increases cross-border systemic risk between a country-pair. An adverse economic environment and high real interest rate in the reporting country tends to exacerbate cross-border systemic risk between a reporting and vis-à-vis country-pair. The study also finds that banks in vis-à-vis countries become more vulnerable to the macroeconomic environment of the reporting country as bank integration between the country-pair increases. Bank integration also has a longer-term effect on systemic risk. The results confirm our suspicion that habit-persistence in bank lending behaviour causes cross-border systemic risk to be accumulated over time and manifest only at a later period. The findings from this study alerts the region’s policy makers to the need to develop a sustainable framework for effective cross-border bank supervision and regulation. Further financial co-operation in the region needs to be discussed with regard to the provision and protection of lines of liquidity that bank integration offers from the risks that threaten it.
Determinants of debt across sectors: Evidence from Chinese a-share listed firms
Authors: Yang Ying , Hassan Che Hashim Bin , Al-Baity Mohamed , Zou Xiang
Published: August 2015

Almost all studies carried out so far in China regarding debt examinations do not recognize difference among business sectors. China completed the second split share structure reform of listed firms by the end of 2007, which converted 97% non-tradable shares into tradable shares. However, there has been no study conducted to analyze whether determinants of debt have changed since the reform. Therefore, this study aims to find determinants of debt of listed firms in China by analyzing data after the completion of reform across sectors. Data sample used in this study includes all A-share listed firms in China from 2008 to 2012. After deleting missing values, there are in total 547 firms with 2,735 observations, which are taken as the initial full data sample. The method employed by the study is a panel data model, because it has the advantage of taking both cross-section and time series into consideration. In addition, a Hausman test is employed to identify whether a model with fixed effects or random effects should be used for analysis. The main findings are: (1) Total debt is mainly dominated by short-term debt, while long-term debt is lowly financed. During 2008 - 2012, total debt as well as long-term debts increase, but short-term debt decreases; (2) Determinants have different effects on long-term and short-term debts; (3) The effects of determinants are different across different sectors, indicating that specific sectorial factors are at work; (4) The debt decision tends to follow the static trade-off theory with consideration for effects of non-debt tax shield and profits. In general, both long-term and short-term debts are affected positively by profits at different levels. Firm size is the most important determinant and is positively related to long-term debt, while non-debt tax shield contributes negatively to short-term debt. This paper presents an in-depth understanding of debt decision in listed firms in China using a joint model to test the interaction between employee productivity and debt. It, therefore, provides a new perspective on investigations of debt decisions of firms across sectors.
Stock market and tax revenue as determinants of economic growth: Panel data evidence from developing Asia
Authors: Colombage Sisira R.N. , Maslyuk Svetlana , Taha Roshaiza
Published: August 2015

Traditional growth literature advocated the role of fiscal policy in establishing economic growth (Mckinnon, 1973; Schumpeter, 1911; Shaw, 1973; Solow, 1956; Zagler and Durnecker, 2003), but it did not consider the role of the stock market and the financial intermediation as the potential determinants of growth. Among those few economic theories explaining the stock market and taxation as joint determinants of the economic growth are the Levine’s (1991) endogenous growth models (EGM), which suggests that economic growth is strongly influenced by the stock market and tax policy, and the Laffer - Khaldun curve, which demonstrates that reduced tax rates on investment income would stimulate economic growth which in turn generate more tax revenue and possibly even compensate for tax incentives given on investment. We investigate ten Developing Asia nations over the period 1990 to 2008. To study differences among the countries, the study sub-divides Developing Asia into East Asia Pacific (China, Thailand, Malaysia, Indonesia, Taiwan, Philippines) and South Asia (Bangladesh, India, Pakistan, Sri Lanka). Our motivation to choose these particular countries has been influenced by the rapid expansion of the stock markets and the rise in economic growth over the entire sample period. We employ panel unit root tests, Pedroni cointegration tests and panel Granger causality tests to estimate both short and long run causal relationships between stock market, tax revenue and economic growth. Data used included logged values of GDP to proxy economic growth, total tax revenue and stock market capitalization taken as a percentage of GDP to proxy tax revenue and stock market respectively. Findings provide evidence in support of Laffer-Khaldun curve and the Levine’s (1991) EGM: stock market and tax revenue do have an impact on economic growth even though the impact might be somewhat small or in some cases even negative. This can be due to country- specific characteristics that make a successful transition from stock market and tax revenue to economic growth more difficult (i.e., corruption, difficulties in obtaining credit at the personal level, inflation). In the short run results demonstrate the existence of causal linkages (varying directions) for the countries in East Asia Pacific and South Asia. In the long run, for all the examined sub-samples the direction of relationship runs from i) economic growth and tax revenue to stock market; and ii) economic growth and stock market to tax revenue. For policy implementation, these results indicate that in order to promote economic growth, governments of ten Developing Asia should improve the channels between the stock market, taxation policy and economic growth by developing stock market liquidity and by identifying growth-oriented tax reform strategies.
An initial review of the implementation of the Malaysian minimum wage order: A case for a win-win intention, implementation and enforcement
Authors: Ghee Teh Chee , Mooi Sum Kum , Sang Michelle Lee Meng
Published: August 2015

This paper revisits the issues and concerns associated with the implementation of the Malaysian Minimum Wage Order (MWO), 2012 and its impact on the various stakeholders on the cost of doing business. While it is aimed to facilitate the transformation of the Malaysian economy to become a high-income nation, it has generated multifaceted issues. There is a dilemma in MWO implementation if it not applicable to foreign workers, there is notion that employers would have more incentive to displace local workers with foreign labor. In compliance with International Labour Organisation’s convention, the minimum wage policy covers all workers, and with the definition of wages which excludes most of the allowances, businesses were impacted by rising cost of doing business. Using results of two surveys undertaken by two trade associations, this paper revisits the issues and concerns associated with the minimum wage (MW) order and its impact on the various stakeholders on the cost of doing business. Based on the Small and Medium-sized Enterprises (SMEs) Survey 2013 conducted by the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) in 2013 with 772 respondents and the impact assessment survey conducted by the Malaysian Plastics Manufacturers Association (MPMA) in early 2014. This study focuses on the impact of the increase in the labor cost, a major component of production cost, as a result of MW implementation. Malaysia has among the highest minimum wage rates in the ASEAN region, along with Philippines and Thailand. The multiplier effects of the minimum wage that poses upside risk to another cost-push factor, leading to higher cost of living, hence defeating the goals of the minimum wage policy. It is timely to re-address the dilemma issue of minimum wage setting from the real business situation. Malaysian Government should establish some benchmarks or studies on the minimum wage effects on the cost of doing business and its interaction with other policies or fundamental changes such as the implementation goods and sales tax (GST) in 2015, the rationalisation of subsidies and the cash hand-outs schemes to reduce the people’s burden of subsidy reductions. Review or readjustment of minimum wage rate should be actual evidence, or substantiation from reliable industry findings and with more balanced approach taking into cognizance the productivity and readiness of the business sector to comply with the minimum wage mandate.