Template-Type: ReDIF-Article 1.0 Author-Name: Tulus Tambunan Author-Workplace-Name: Faculty of Economics, University of Trisakti, Jakarta, Indonesia Title: The ASEAN-China free trade zone : challenges and opportunities for ASEAN Abstract: This paper assesses the implication of “ASEAN plus China” on ASEAN inter- and intra-trade. Based on secondary data analysis and survey of key literature, it shows a number of interesting findings. First, despite the establishment of the ASEAN Free Trade Area, regions outside ASEAN are still the most important markets for individual member countries, for both export and import. Second, recent data show that after the United States, the European Union, and Japan, China tends to become ASEAN’s largest trading partner; trade between China and ASEAN continues to increase, and its rate tends to accelerate. Third, based on various analytical approaches, the implementation of ASEAN plus China will most likely lead to trade diversion (TD), at least to some member countries. The paper concludes, therefore, that the ASEAN-China free trade zone will most likely generate higher trade volume between China and ASEAN at the cost of ASEAN intra-trade. Classification-JEL: F13, F15 Keywords: ASEAN, ASEAN-China free trade, ASEAN intra-trade, ASEAN inter-trade Journal: Philippine Review of Economics Pages: 1-30 Volume: 43 Issue: 1 Year: 2006 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/234/623 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:43:y:2006:i:1:p:1-30 Template-Type: ReDIF-Article 1.0 Author-Name: Seiji F. Naya Author-Workplace-Name: University of Hawaii at Manoa Author-Name: Michael G. Plummer Author-Workplace-Name: John Hopkins University, SAIS-Bologna, Italy Title: The enterprise for ASEAN initiative in the emerging Asia-Pacific context : a politico-economic assessment Abstract: Although economic integration under the rubric of the Asia-Pacific Economic Cooperation (APEC) has been relatively lackluster, bilateral and regional accords in the Asia-Pacific region have been proceeding at an unprecedented pace. This paper considers the economics and political economy of the US-ASEAN Enterprise for ASEAN Initiative (EAI) in the context of the rapidly changing policy environment in Asia. The paper gives an extensive review of the ASEAN Economic Integration and “ASEAN Plus Three” Initiatives, in addition to a statistical and econometric treatment of the US-ASEAN economic relationship and the implications of the EAI. It concludes that the EAI makes sense for the United States and ASEAN from both economic and politico-economic perspectives. Classification-JEL: F15 Keywords: economic integration, ASEAN, US-ASEAN economic relations, gravity model Journal: Philippine Review of Economics Pages: 31-49 Volume: 43 Issue: 1 Year: 2006 Month: June File-URL:http://pre.econ.upd.edu.ph/index.php/pre/article/view/235/615 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:43:y:2006:i:1:p:31-49 Template-Type: ReDIF-Article 1.0 Author-Name: Dyah Wulan Sari Author-Workplace-Name: Faculty of Economics, Airlangga University, Surabaya, Indonesia Title: China’s trade performance and its impacts on Asian economies Abstract: In 2001, China joined the World Trade Organization (WTO), and its economy has since opened up through domestic reform. The Chinese government has also since tried enthusiastically to lure a lot of investors—and succeeded. As a consequence, China’s exports have boomed, and China has become a most enthusiastic importer. This development has brought great opportunities for the Asian economy, with interregional trade being the principal contributor to China’s steady export growth. Chinese imports have been more accurately termed “imports from the integrated Asian regional economy”. Classification-JEL: F14 Keywords: WTO accession, China’s trade, integrated Asia Journal: Philippine Review of Economics Pages: 51-61 Volume: 43 Issue: 1 Year: 2006 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/236/612 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:43:y:2006:i:1:p:51-61 Template-Type: ReDIF-Article 1.0 Author-Name: Pham Thai Quoc Author-Workplace-Name: College of Economics, Vietnam National University, Hanoi Title: The rise of China: opportunities and challenges for ASEAN from a Vietnamese perspective Abstract: After nearly thirty years of instituting reforms, China has become a potent global economic force, and its emergence as a superpower has become a source of both anxiety and high hopes for countries constituting the Association of Southeast Asian Nations (ASEAN). On the one hand, the rise of China provides opportunities for ASEAN to increase exports and diversify export markets. On the other, there are territorial disputes between China and some ASEAN member countries in the South China Sea. This paper argues that the rise of China is inevitable and unstoppable. Nonetheless, ASEAN member countries can be better-off by strengthening cooperation with China. At the same time, however, ASEAN should strengthen its economic and political ties with other countries to provide a counterweight to China’s growing influence in the region. By instituting reforms and opening and integrating itself with the world economy, especially after accession to the World Trade Organization, China boosted its economic power. The rise of China has brought both opportunities and challenges for many countries in Asia and the world. This research paper focuses on opportunities and challenges for ASEAN and Vietnam in view of China’s emergence as an economic power. Classification-JEL: F00 Keywords: China’s emergence, China-ASEAN cooperation, China-ASEAN tension Journal: Philippine Review of Economics Pages: 63-72 Volume: 43 Issue: 1 Year: 2006 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/237/613 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:43:y:2006:i:1:p:63-72 Template-Type: ReDIF-Article 1.0 Author-Name: Yumiko Okamoto Author-Workplace-Name: Doshisha University, Japan Title: China and India : challenges and opportunities for ASEAN from Japanese perspectives Abstract: The rise of China and India as industrial powers is now regarded as an opportunity rather than a threat for member countries of the Association of Southeast Asian Nations (ASEAN). The paper shows that whether or not this view is consistent with the underlying economic forces depends on the country in question. Singapore and Malaysia seem to gain through inter- and intra-industry specialization if a free trade agreement (FTA) is formed between ASEAN and China. Thailand appears to gain significantly through intra-industry specialization vis-à-vis China. An FTA between ASEAN and China may significantly impact Japan as well, since Japanese companies have heavily invested in these two regions for the past three decades. The promotion of economic cooperation between ASEAN and India, on the other hand, may make sense in the long run, but its immediate impact on both sides as well as on Japan still seems to be limited. Classification-JEL: F14, F23 Keywords: FTA, inter-industry trade, intra-industry trade Journal: Philippine Review of Economics Pages: 73-96 Volume: 43 Issue: 1 Year: 2006 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/238/616 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:43:y:2006:i:1:p:73-96 Template-Type: ReDIF-Article 1.0 Author-Name: Bernadette Robiani Author-Workplace-Name: Faculty of Economics, Sriwijaya University, South Sumatera, Indonesia Title: The impact and prospects of trade between South Sumatera and China Abstract: Trade relations between South Sumatera and China began as far back as 800 AD, during the period of the Sriwijaya Kingdom, known as South Sumatera’s ancient city. To this day, South Sumatera has continued that trade relationship, even during the years when relations between Indonesia and China had been restricted by the Indonesian government for political reasons. Globalization and the thrust toward decentralization are pushing South Sumatera to improve its international trade performance in a bid to increase provincial revenue. Statistics show an increase of as much as 67 percent in South Sumatera’s exports for the period 2002-2004. China’s contribution to that increase is 35.8 percent in 2002, rising to 42.9 percent in 2004. The major commodities being exported to China are rubber, plywood, crude kernel palm oil, and refined bleached deodorized (RBD) stearin. South Sumatera’s imports from China during the same period also show an increase of about 28 percent. This paper analyses the impact and prospects of South Sumateran trade with China. It is hoped that the increasing export to China would stimulate local economic activities, such as increasing the number of various commodities, labor absorption, and local and foreign investment, to boost the province’s economic growth and improve revenue. On the other hand, the increase in importation from China can be a threat to local industries in South Sumatera in terms of the amount of production and labor absorption. Classification-JEL: F14, F59 Keywords: export, import, labor absorption Journal: Philippine Review of Economics Pages: 97-108 Volume: 43 Issue: 1 Year: 2006 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/239/617 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:43:y:2006:i:1:p:97-108 Template-Type: ReDIF-Article 1.0 Author-Name: Ragayah Haji Mat Zin Author-Workplace-Name: Institute of Malaysian and International Studies, Universiti Kebangsaan Malaysia, Selangor, Malaysia Title: China and India : challenges and opportunities for poverty eradication and moderating inequality in Malaysia Abstract: Malaysia has employed the mechanism of growth with equity in an effort to eradicate poverty and ameliorate inequality. During the New Economic Policy period, the government intervened extensively to ensure that all levels of society benefited from economic development and thereby maintain social cohesion. However, the increasing pace of liberalization coupled with developments in the region, such as the rise of China and India, has eroded the government’s ability to ensure the equitable sharing of the economic pie. The objective of this paper is to look at the challenges as well as opportunities posed by the rise of China and India with respect to poverty eradication and reducing income inequality. The challenges include competition for markets with the Malaysian small and medium producers, and competition for foreign direct investment. This has serious implications on employment opportunities and efforts at eradicating poverty and narrowing income disparity. On the other hand, the rise of these two giants also gives Malaysia opportunities in its effort to tackle poverty and inequality through the “prosper thy neighbour” effects, as there will be spillover from their growth and wealth accumulation. Furthermore, as China becomes integrated into the multinational regional production network, it will contribute to the improvement of trade through increased intra-trade, thus expanding exports and growth. Classification-JEL: I38, D63 Keywords: poverty, inequality, growth, trade intensity, non tariff barriers, foreign direct investment Journal: Philippine Review of Economics Pages: 109-130 Volume: 43 Issue: 1 Year: 2006 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/240/618 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:43:y:2006:i:1:p:109-130 Template-Type: ReDIF-Article 1.0 Author-Name: Nguyen Thang Author-Workplace-Name: Centre for Analysis and Forecasting, Vietnam Academy of Social Sciences, Hanoi, Vietnam Author-Name: To Trung Thanh Author-Workplace-Name: Department of Economics, National Economics University, Hanoi, Vietnam Author-Name: Vu Hoang Dat Author-Workplace-Name: Centre for Analysis and Forecasting, Vietnam Academy of Social Sciences, Hanoi, Vietnam Title: Productivity analysis for Vietnam’s textile and garment industry Abstract: The study uses firm-level panel data to study the technical efficiency performance of Vietnam’s textile and garment firms in the period 1997-2000, as well as its determinants. The model used is that of Battese and Coelli [1995]. The average estimated technical efficiency of the two subsectors is relatively high. In the textile subsector, medium-old, South-based, private, export-oriented, and highly equipped firms are found to be more technically efficient than those with differing characteristics. In the garment subsector, large or old-medium, south-based, and high external capital firms have higher technical efficiency. Meanwhile, small, old, and highly equipped firms have lower technical efficiency than firms with other characteristics. The total factor productivity (TFP) picture of the textile subsector is mixed, whereas the TFP growth of the garment subsector is positive, although this growth decreases. Classification-JEL: O47, O33 Keywords: technical efficiency, total factor productivity, Vietnam’s textile and garment Journal: Philippine Review of Economics Pages: 131-166 Volume: 43 Issue: 1 Year: 2006 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/241/622 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:43:y:2006:i:1:p:131-166 Template-Type: ReDIF-Article 1.0 Author-Name: Mahendhiran Nair Author-Workplace-Name: School of Business, Monash University Sunway Campus, Selangor, Malaysia Author-Name: Deviga Vengedasalam Author-Workplace-Name: School of Business, Monash University Sunway Campus, Selangor, Malaysia Author-Name: Karunagaran Madhavan Author-Workplace-Name: Universiti Teknologi MARA, Malaysia Author-Name: V.G.R. Chandran Govindaraju Author-Workplace-Name: Universiti Teknologi MARA, Malaysia Title: The rise of China’s manufacturing sector : challenges and opportunities for ASEAN-5 Abstract: This study investigates the trends of manufacturing export from China and ASEAN-5 (Indonesia, Malaysia, Philippines, Thailand, and Singapore). The Balassa revealed comparative advantage (RCA) method was used to study the trade flows from these nations. The strength of the export specialization of the countries was measured using the Spearman’s rank correlation coefficient. The study was conducted using the Standard International Trade Classification (SITC) product categories at three-digit level for the period 1993-2004. The results showed that China is not only active in labor and resource-based industries, but is also moving up in the innovation value chain—that is, it is increasing its presence in technology and knowledge-intensive industries as well. The dual-strategy adopted by China has serious implications on the manufacturing industries in ASEAN-5. The paper discusses the strategies and policies to enhance the competitiveness of the manufacturing sector in ASEAN-5. Classification-JEL: F14, L60, N60, N65 Keywords: manufacturing sector, competitiveness, ASEAN-5 and China Journal: Philippine Review of Economics Pages: 167-203 Volume: 43 Issue: 1 Year: 2006 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/242/624 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:43:y:2006:i:1:p:167-203 Template-Type: ReDIF-Article 1.0 Author-Name: Abdul Mongid Author-Workplace-Name: STIE Perbanas, Surabaya, Indonesia Title: The economic convergence in ASEAN and prospects for a monetary union Abstract: ASEAN countries have deliberated on the feasibility of a monetary union that seeks to set a common currency in the region. This is in accordance with the second declaration of the Bali Concord reaffirming the intention toward economic cooperation and integration. This study investigates the possibility of convergence of economic and monetary variables among ASEAN member countries by using cointegration methodology on economic data. The study found that most monetary data are not converged. Based on the results, monetary union in the form of a currency union is not yet feasible. However, ASEAN countries should start to apply a loose monetary union and dare to step onward and act consistently. Classification-JEL: F15, F33, F36 Keywords: exchange rate, inflation rate, industrial production, base money and cointegration test, monetary union Journal: Philippine Review of Economics Pages: 205-219 Volume: 43 Issue: 1 Year: 2006 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/243/621 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:43:y:2006:i:1:p:205-219 Template-Type: ReDIF-Article 1.0 Author-Name: Shashank Bhide Author-Workplace-Name: National Council of Applied Economic Research (NCAER), New Delhi, India Author-Name: B.P. Vani Author-Workplace-Name: Institute for Social and Economic Change, Bangalore, India Author-Name: Meenakshi Rajeev Author-Workplace-Name: Institute for Social and Economic Change, Bangalore, India Title: Business process outsourcing : the Indian experience as an offshore location Abstract: Business process outsourcing (BPO) generally refers to the operation of letting out the task of performing particular functions of an enterprise to another, often a third party and, in some cases, its own subsidiary. Under the pressure of nonavailability of manpower in the country of origin, many multinational companies (MNCs) decided to outsource their business processes to remote locations during the initial phase of globalization. In the Indian context, this process could throw down sturdy roots due to the encouraging supply-and-demand factors in the country. This paper takes a close look at the BPO industry in India, the service lines in which the country has specialized, and India's comparative advantages vis-à-vis competitor countries, e.g., China and the Philippines. The paper highlights the strengths and weaknesses of the Indian industry operating in this segment. Classification-JEL: L86 Keywords: BPO, knowledge process outsourcing, IT-enabled services, call center Journal: Philippine Review of Economics Pages: 221-236 Volume: 43 Issue: 1 Year: 2006 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/244/619 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:43:y:2006:i:1:p:221-236 Template-Type: ReDIF-Article 1.0 Author-Name: J. Xavier Gonzales Author-Workplace-Name: Universal Storefront Services Corporation Title: Business process outsourcing : the Philippine experience Abstract: This paper seeks to benchmark the Philippines and India in a global outsourcing space for information technology (IT) and IT-enabled services (ITES) to elicit lessons learned from national competitive positioning and strategy execution. It characterizes the ITES industry's size, share of economic output, and growth prospects. Because the ITES industry has high labor value-added, the paper explores the quality of the human resources and its impact on industry growth, specifically citing the Philippines as a case example. Next, it examines the interplay of geography and demographics in generating industry scale, using as an example the emergence of Megamanila as a concentrated conurbation for BPO and call center activity, with analogies created to the Indian regional economies. Finally, it assesses the externalities of public-private sector cooperation, multinational impetus, and market access to the end-user markets in fostering industry growth. Classification-JEL: L86 Keywords: business process outsourcing, call center industry Journal: Philippine Review of Economics Pages: 237-247 Volume: 43 Issue: 1 Year: 2006 Month: June File-URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/245/614 File-Format: Application/pdf Handle: RePEc:phs:prejrn:v:43:y:2006:i:1:p:237-247