Asian Economies Research Articles

Investigating capital flight in South Asian countries: The dual influence of terrorism and corruption.

This specific research initiative aims to intricately examine the intricate dynamics connecting terrorism, corruption, and capital flight within the context of South Asian economies, encompassing countries including Bangladesh, India, Pakistan, and Sri Lanka. The principal objectives of this study entail a comprehensive investigation into the synergistic impacts of terrorism and corruption on the prevalence of capital flight. To realize these objectives, the study employs longitudinal data from 1990 to 2019, adopting the portfolio choice framework as its theoretical underpinning. In terms of methodology, the empirical inquiry uses the Generalized Method of Moments (GMM) estimation technique. The empirical findings derived from this analysis distinctly establish a statistically noteworthy and positive correlation between terrorism, corruption, and the occurrence of capital flight across multiple South Asian nations. In light of these discerning outcomes, it is strongly recommended that the governments of South Asian countries prioritize and actively pursue the fortification of their institutional governance mechanisms. This strategic approach is deemed crucial in efficaciously counteracting the escalation of capital flight. Specifically, a targeted focus on augmenting institutional governance practices, fostering transparency, fortifying anti-corruption measures, and intensifying counterterrorism efforts could collectively contribute to reducing capital flight tendencies. By undertaking these recommendations, South Asian governments can foster an environment of enhanced economic stability, attractiveness for investment, and sustainable growth, thereby deterring the adverse impact of capital flight while concurrently combatting the underlying challenges posed by terrorism and corruption.

Enterprise risk management in the insurance industry: Trends and future directions

The research aims to describe the state of enterprise risk management (ERM) in the insurance sector. It highlights emerging trends in the application of risk management in the insurance sector and thereby reports the prominent research gaps and new avenues for research in ERM. The research adopts a systematic literature review (SLR) approach, using 187 research papers spanning 44 years (1977–2021). The paper identifies the fact that most ERM and insurance sector research is performed in North America and Europe, while developing economies in Asia and Africa lag. The paper establishes a three-way relationship between ERM, risk management (RM) and risk-based capital (RBC) where RM is a subset of ERM and RBC is a driver of ERM. The research shows that very few studies are conducted on risk culture, three lines of defence and the role of chief risk officers. The determinants of ERM identified are board, firm size, audit and risk management committee and corporate governance. The determinants identified for firm value are return on assets, return on equity, profit, Tobin's Q, among others. This research provides a way for academicians, practitioners and policy makers to design effective strategies for implementing ERM in organisations.

Retraction Note: The shadow economy in South Asia: dynamic effects on clean energy consumption and environmental pollution

Retraction Note: The shadow economy in South Asia: dynamic effects on clean energy consumption and environmental pollution

The role of foreign direct investment in east and Southeast Asia: Evidence before and after 2009 global financial crisis

This research investigates the influence of Foreign Direct Investment (FDI), domestic physical stock, and the human capital index on labor productivity across 17 East and Southeast Asian economies. In the period from 1980 to 2009 (pre-global financial crisis), the study reveals that, initially, FDI stock independently contributes little to productivity. It underscores the necessity of specific human capital thresholds for FDI to enhance productivity by facilitating technology diffusion from source to host economies. While most economies in our sample surpass these thresholds, Cambodia, Laos, and Myanmar do not, indicating unexploited potential for productivity enhancement via FDI. In the post-2009 era, following the financial crisis, FDI emerges as the primary driver of labor productivity in these economies, rendering the previously mentioned human capital thresholds less critical across all 17 economies. The study also observes a significant, mutually intensifying crowding-out effect between FDI stock and domestic physical capital, which notably escalated around the 2009 financial crisis. Despite this, the influence of FDI stock on labor productivity substantially surpasses that of domestic physical capital, especially after 2009. These insights underscore the critical need for policymakers to strategically balance the influx of foreign investment with domestic capital investment to optimize economic growth in the aftermath of the 2009 crisis.

Did economic cooperation encourage trade in essential medical goods? Empirical evidence from the Asia–Pacific during COVID‐19

AbstractOur paper empirically investigates the role of economic cooperation involving trade in coronavirus disease (COVID‐19)‐related essential medical goods—vaccines and their value chains, personal protective equipment, and diagnostic test kits—across 29 Asia and the Pacific economies. The paper incorporates vaccines and their global value chain products trade for the first time in the empirical literature. We further investigate whether trade facilitation, proxied by membership in regional trade agreements (RTAs), can help mitigate any adverse impact on trade in essential medical goods, applying a structural gravity framework. The results confirm that while trade is critical for Asian economies, its nature differs. Low‐income economies are largely dependent on imports, whereas selected middle‐ and high‐income economies are part of two‐way trade and engaged in the low end of the vaccine value chain. We find that the onset of the pandemic has hurt exports of these goods. This adverse effect is found to be lowered for economies engaged in RTAs. This emphasizes the role of governments in committing to RTAs and implementing trade facilitation measures.

Technological and Institutional Space, Entrepreneurial Activities and Innovation in Asian Economies

The East Asian region has shown increased innovation performance over the past 20 years. At the same time, individual economies within the region have shown divergent performance. This article investigated the relationship between institutional potentials, entrepreneurial activities and innovation in 12 Asian economies in order to address the question of why innovation performance in Asian economies has been dynamic as well as divergent. We empirically examine the question in the following two steps. First, we apply a multiple factor analysis to a range of indicators of multiple institutional domains that are relevant to a technological system, and we show that there can be diversity of institutional space underlying a technological architecture. Second, we investigate how and to what extent technological and institutional dimensions—derived from multiple factor analysis (MFA)—affect innovation performance by using an ordered logit model. We find that there is a diversity of technological and institutional systems available for innovation activities, leading to different innovation systems, and that entrepreneurial activity is essential for a technological and institutional potential to be linked with innovative activity. The positive synergy between innovation, technological and institutional potentials and entrepreneurial activities results in different trajectories for Asian economies to lead to increasing innovation performance. This finding implies that there can be multiple ways for emerging economies to be able to develop innovative capabilities. It also contributes to innovation policy, because it allows policymakers in emerging economies to understand how to build a synergy between institutional spaces and entrepreneurs’ activities for innovation performance.

Impact of fintech readiness, natural resources, and business freedom on economic growth in the CAREC region

The CAREC region, particularly Central Asian economies, traditionally rely on mineral resources. However, there is an increasing awareness of the significant potential and growing interest in financial technology, and supportive business regulations. Hence, this study investigates the pivotal role of fintech, natural resources, and economic freedom in shaping the economic growth trajectory of the CAREC region between 2000 and 2020. So far, no publicly available fintech index exists for this region. This study constructed a comprehensive index considering digitalization and financial development to analyse fintech readiness. It applies fixed and random effect models to examine the relationships between these variables. To account for non-linearity stemming from structural shifts and global financial shocks, it employs method of moment quantile regression (MMQR). The findings from the fixed effect models substantiate the positive impact of fintech, economic freedom, and natural resources on economic growth, albeit with varying degrees of marginal influence. A one-percentage-point improvement in fintech, economic freedom, and natural resources yields economic growth boosts by 0.102%, 0.903%, and 0.176%, respectively. Parallel results emerge from the random effect models with differing magnitudes and parameter significance levels. The MMQR outcomes consistently highlight the potency of fintech and economic freedom, with their impact being more pronounced at higher and lower quantiles of economic growth, respectively. This suggests that countries in the CAREC region experiencing higher growth levels stand to gain more from Fintech adoption, while those with lower growth levels can reap greater benefits from enhanced economic freedom. This study sheds light on the multifaceted interplay of these factors, offering valuable insights for policymakers and stakeholders in the CAREC region.

From darkness to light: Unveiling the asymmetric nexus between energy poverty and environmental quality in South Asia

Energy poverty alleviation has emerged as a critical economic problem in recent years. Given the enormous number of people without essential energy services, a crucial concern is whether providing universal access to electrification will considerably affect environmental quality. The present research evaluates the asymmetric energy poverty-environmental quality nexus in South Asian economies. Previous works adopted panel data techniques, resulting in distinctive conclusions about the energy poverty-environmental quality nexus, irrespective of the truth that several nations could not establish such a correlation separately. This research, conversely, applies the Quantile-on-Quantile methodology, which enables independent determinations of time-series interconnection in all nations to offer worldwide yet economy-particular evidence concerning the relationship between the variables. The results indicate that energy poverty degrades environmental quality in most selected economies at particular data distribution quantiles. Moreover, the findings disclose that the ranks of asymmetries between the variables change by country, emphasizing the requirement of governments to take special care when accepting policies linked to energy poverty and environmental quality.

Innovation and Economic Growth in the Top Five Southeast Asian Economies: A Decomposition Analysis

Innovation has the potential to act as a double-edged sword in impacting economic growth. While it serves as a powerful driver of economic advancement, it also carries risks alongside its benefits. Recognizing this duality, our study aims to fill the identified gap and add comprehensiveness to the literature by assessing the individual impact of innovation indicators on economic growth in the top five Southeast Asian countries based on GDP: Indonesia, Thailand, Singapore, Malaysia, and Vietnam. The innovation aspect comprises 21 indicators from the Global Innovation Index (GII), grouped into seven categories: institution, human capital and research, infrastructure, market sophistication, business sophistication, knowledge and technology outputs, and creative outputs. Both panel analysis and country-specific assessments consistently conclude that innovation significantly influences economic growth. However, delving into the categorized indicators reveals intriguing insights. While all the indicators demonstrate a notable impact, most of them are found to hinder rather than foster economic growth. This compelling empirical evidence underscores that innovation in the selected countries has yet to be optimized, highlighting the urgent need to implement innovation-friendly policies, including removing innovation barriers, targeting investment in key sectors, and fostering education and skills development. This holistic approach aims to cultivate an environment conducive to innovation, thereby solidifying innovation's role as one of the primary drivers of economic growth.

The Prodigious Need for Fueling South Asian Economies through Sustainable Energies

South Asia is one of the fastest growing regions in the world during the last two decades. This growth momentum has been fuelled by carbon-intensive fossil fuels as reflected through the expansion in fossil fuel utilization in the total energy mix of 60.5 per cent on average for the period 1996-2000 to 70.3 per cent by 2011-2015. Against this backdrop, the study intended to identify the relationship between energy consumption and economic growth in South Asia to recognize the feasibility of promoting low-carbon economic progress in the future. The study employed annual data for the period from 1971-2014 for five selected South Asian countries. The unit root test results indicate that all the variables are stationary at their first difference and the four statistics of the Pedroni cointegration test indicate the existence of a long-run relationship between the variables. The FMOLS estimator implies the significance of the energy consumption in economic growth in the region where one per cent increase in energy consumption leads to a 0.78 per cent increase in economic growth. The study finds a strong bi-directional relationship between the core variables which illustrates the necessity to shift towards sustainable energy sources to achieve an undisrupted economic expansion with a minimum carbon footprint. Thus, the study lays the foundations to identify the aforementioned relationships and encourage the derive of sustainable energy solutions to fuel the growth in the region.

Measuring the International Influence of the RMB and its Regional Heterogeneity: Theory and Evidence from the Global FX Market Network

ABSTRACT This study assesses the global and cross-regional influence of China’s currency, the renminbi (RMB). We first develop a theoretical framework to determine the channel through which progress in RMB internationalization can be mapped onto the market influence of the RMB exchange rate on that of other currencies. Using a volatility connectedness approach, we then construct a series of spillover indices reflecting the international influence of the RMB. We find that the RMB’s influence is worldwide but is smaller than that of major international currencies, such as the US dollar. Overall, the RMB has basically become a peripheral currency in Greater China, Central Asia, Eastern Europe, and some South Asian economies. Because of the Belt and Road initiative, regionalization of the RMB has also progressed in developing economies; however, China still has far to go in fully achieving internationalization of its currency.

The asymmetric impact of oil market shocks on the time-varying connectedness and spillover of financial stress

ABSTRACT Applying a novel time-varying parameter VAR (TVP-VAR) extended joint connectedness approach this study first examines the connectedness and spillover of financial stress among twelve large Asian economies. The finding shows that the usually high connectedness of the financial stress among these economies was further elevated during the Asian financial crisis and global financial crisis but not significantly during COVID-19 pandemic. The direction of spillover depends on the level of economic development. Developed economies such as South Korea, Singapore and Hong Kong are significantly net transmitters of financial stress to other Asian economies whereas countries such as Pakistan and Indonesia are significantly net receivers. Applying linear and non-linear Markov-switching models this study further examines the impact of oil-supply, and consumption- and speculation-led oil-demand shocks on the dynamic connectedness of financial stress indexes. In the linear model only a speculation-led increase in demand for oil increases the connectedness. However, the Markov-switching model reveals that in the high-volatility regime all types of oil shocks influence the connectedness of the financial stress among these economies. This emphasizes the elevated role of oil market in transmitting financial stress across economies during the time of economic turmoil.

The macroeconomic effects of COVID-19 vaccinations in five Asian countries

COVID-19 vaccines were released en masse globally in 2021 and were regarded by policy makers as crucial in dealing with the coronavirus pandemic. An important question is thus to understand the benefits of the vaccines beyond the direct effects of reducing mortality and morbidity. Using available epidemiological evidence on the effectiveness of vaccines we estimate the economic benefits of vaccination in five important Asian economies – India, Indonesia, South Korea, the Philippines and Vietnam – by applying a dynamic multi-country general equilibrium model. This framework captures the direct and indirect effects of vaccination. Our results show net benefits in terms of GDP for all five economies ranging from 0.16% (India) to 1.1% (South Korea); these depend on the degree of vaccination amongst the population. South Korea shows the most significant benefits while other countries experience smaller benefits. Our findings are consistent with other studies estimating the economic benefits of vaccination.

The challenges to circular economy in the Indian apparel industry: a qualitative study

Purpose In recent years, researchers and practitioners have paid a great deal of attention to the circular economy (CE) due to its potential social and environmental benefits. However, limited attention has been devoted in the literature to studying the barriers to CE implementation in the apparel retail industry in emerging and developing nations besides China. Consequently, the purpose of this paper is to analyse the barriers to implementing CE in the Indian garment retail market. Design/methodology/approach This exploratory study uses a comprehensive literature analysis to identify the micro-level impediments to CE adoption in India's garment retail industry. The study aims to identify these barriers using a Delphi process, consisting of three stages. The first stage involves literature reviews and expert opinions, while the second and third stages involve survey methods with 14 industry professionals and academics. The use of the two primary data sources allows for triangulation of the data, which improves the validity of the findings and enables broader conclusions to be drawn from the results. Findings This study indicates that the top three challenges to implementing CE principles in the Indian apparel retail industry are “standards and regulation barriers” (84%), “strategic barriers” (82%) and “supply chain management and technology barriers” (79%). Strategies for overcoming these obstacles include gaining top management support, coordinating supply chain components, training and employee motivation. Research limitations/implications This study considers only Indian apparel retail industry, and the practical implications could potentially limit the study to emerging Asian economies. Originality/value To the best of the authors’ knowledge, this is the first research of its type to explore CE obstacles at the organizational level in the Indian garment retail business. Thus, it contributes to a greater understanding of the topic and enables practitioners to develop effective policies and business strategies for CE and sustainability.

How Does Renewable Energy Respond to Financial Globalization and Information and Communications Technology Trade?

Policymakers are looking at renewable energy as a substitute for traditional fossil fuels due to the growing concern about climate change and sustainable development. However, in the case of Asian countries, nothing is known about how ICT trade and financial globalization affect renewable energy consumption. To fill this gap, we have gathered data across 24 Asian economies, and a dynamic panel data approach known as GMM panel VAR is applied. The key outcomes of the GMM panel VAR underscore that ICT trade, financial globalization, and GDP favorably impact the current renewable energy consumption. Furthermore, the panel causality results indicate bidirectional causality between ICT trade, financial globalization, and renewable energy consumption. These findings have policy-relevant implications, highlighting the significance of financial liberalization and ICT-enabled trade in promoting renewable energy usage in Asian nations.

Asia's Leading Percentage Share of Global GDP (2000-2022): Trends, Drivers, and Implications

This study explores the intricate correlation between Gross Domestic Product (GDP) and exports in the top ten Asian economies from 2000 to 2022. Employing a quantitative research approach, the investigation utilizes extensive secondary data to discern patterns and dynamics impacting economic output within international trade. The analysis presents statistically significant connection between export potential and GDP across the sampled countries. According to the study, Asia's percentage share of global GDP has been growing steadily since 2000, indicating sustained economic growth in the region. Factors such as economic reforms, globalization, and technological advancements emerge as pivotal contributors to Asia's evolving role in the global economic landscape. Acknowledging limitations, including presumptions of a linear relationship and the exclusion of country-specific contextual factors, underscores the necessity for prudent interpretation. By amalgamating these findings with a comprehensive research methodology encompassing data collection, statistical analyses, and hypothesis testing, this study furnishes a holistic understanding of the multifaceted interactions shaping the economic trajectories of these nations.

Global renewable energy trade network: patterns and determinants.

The renewable energy product trade is critically important to global economic prospects and its rapid development, making it a key issue in international economics of much interest to scholars. Previous studies have paid attention to bilateral trade, yet we still know little about the patterns of renewable energy product trade and its evolution from the whole industry perspective. Based on bilateral trade data, complex network, as well as ERGM and TERGM, we build global renewable energy trade networks (GRETNs) during 2000-2018 and explore the patterns and determinants. The results show that (1) the GRETNs expand during 2000-2018, characterized by a small-world, reciprocity, degree disassortative, and export volume heterogeneity. (2) The GRETNs form four communities, and the community patterns greatly fluctuate over time. (3) Economies in North America, Europe, and Asia play dominant roles, while the USA, Germany, and China are the cores of the GRETNs. (4) Endogenous structure of reciprocity, structural embeddedness, and out-degree popularity are essential parts of the evolving patterns of GRETNs. Most trade relationships are developed between economies located within the same continent, participating in APEC or WTO, or having similar areas. There is heterophily in GDP and per capita income, and Matthew effects in GDP, urbanization, and industrialization rate. Countries that share a common geographic border, language, religion, or currency, being former colonies of the same colonialists, and having signed regional trade agreements are more likely to trade in renewable energy products.

Does information and communication technology improve labor productivity? Recent evidence from the Southeast Asian emerging economies

AbstractThe comprehension of the textbook and augmented Solow growth model has been studied to picture the consequences of workforce growth and capital. In the age of digitalization, Information and Communications Technology (ICT) is also the first necessity identified factors affecting labor productivity. This paper revisits the augmented Solow growth equation by integrating ICT as an explanator that improves labor productivity in Southeast Asian emerging economies. We used a Two‐Way Random‐Effects Model to regress the impact of workforce growth rate, physical capital, and human capital on labor productivity. The results show that using human capital is essential to improve output in emerging market countries rather than only using physical capital. According to our adjusted ICT factors, our analysis reveals that using the Internet and mobile cellular significantly boosts labor productivity. Moreover, the analysis of total factor productivity shows that most Southeast Asian economies highly depend on implementing ICT, especially the contribution of Internet usage and mobile cellular. Therefore, this study contributes to further studies and policy recommendations in improving the introduction of Internet usage and installation, especially for the emerging Southeast Asian.

The effect of structural reforms on employment and the trade–labour link: Robust evidence from Europe and Central Asia

AbstractWe use Bayesian model averaging techniques to assess the role of different types of structural and institutional variables and their interaction with specific characteristics of the economy, as determinants of employment dynamics for 30 economies in Europe and Central Asia. We find that, once short‐run dynamics are controlled for, common structural determinants for the employment rate emerge, including tax rates, human capital, availability of technology, labour market regulation and trade openness. The results show that the effect of labour market regulation on employment outcomes is affected by other characteristics, such as trade openness. Focusing on the trade–labour link, we find that labour market reforms toward a more flexible labour market have a positive impact on employment ratios, and this effect is stronger for economies characterised by relatively low level of trade barriers. In addition, the positive employment effects from labour market regulation reforms are stronger; the less flexible is the initial labour market regulatory framework. These findings bring important policy insights related to the employment potential of further structural reforms and trade integration for the countries in the region.

Book review: Kung-Chung Liu, IP Laws and Regimes in Major Asian Economies: Combing Through Thousand Threads of IP to Peace in Asia (Routledge, Abingdon 2022) 256 pp.

Book review: Kung-Chung Liu, IP Laws and Regimes in Major Asian Economies: Combing Through Thousand Threads of IP to Peace in Asia (Routledge, Abingdon 2022) 256 pp.