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1. Enhancing Inter-Firm Linkages through Clusters and Digitalisation for Productivity Growth

Author:
Vo Tri Tranh
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This paper examines the policies for industrial cluster development in Viet Nam. The first export processing zone was established in 1991. Since 1994, Viet Nam has focused more on developing domestic productive capacity and thus various types of industrial estates were established. The key actors in industrial cluster policy are the government, Prime Minister, ministries, provincial people’s committees, and management boards of industrial and economic zones. The choice of industrial estate is often determined by factors such as geographic location, land, labour, infrastructure, industry, business environment, and incentives. Viet Nam has provided various incentives to industrial estates of various types, but the scope and extent of preferential policy support for firms in general and those operating in industrial and economic zones are rather modest. The industrial estates have contributed significantly to attracting foreign direct investment, to exports, to productivity improvement, etc. Looking forward, Viet Nam needs further efforts on industrial cluster development, including development of statistics, analysis of cluster policy impacts, and provision of FTA-consistent incentives.
Topic:
Development, Industrial Policy, Governance, Leadership, and Management
Political Geography:
Asia and Vietnam

2. Effectiveness of Industrial Policy on Firms’ Productivity: Evidence from Thai Manufacturing

Author:
Juthatip Jongwanich and Archanun Kohpaiboon
Publication Date:
02-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This paper examines the role of industrial policy on firms’ productivity, using 3 years of panel data on Thai manufacturing as a case study. A range of industrial policy tools is defined – tariff measures, subsidies, and investment incentives through the Board of Investment (BOI) – which are the main tools used in Thailand. The effect on firm productivity of partial trade liberalisation undertaken through free trade agreements (FTAs) signed between Thailand and its trading partners is also examined. The key finding is that trade openness and research and development (R&D) are more crucial in fostering firms’ productivity than industrial policies. This is especially true for the narrow definition of industrial policy focusing on trade policy protection, measured by the effective rate of protection. In addition, the FTA-led trade liberalisation effect fails to add substantial competitive pressure and make firms improve productivity. Our results show that sectors benefiting from subsidies show noticeably lower productivity than others. Our study found weak support for investment promotion policy through the BOI, even when the domestic competitive environment is considered in our analysis.
Topic:
Industrial Policy, Manufacturing, and Productivity
Political Geography:
Asia and Thailand

3. Input Allocation Behaviour on Tariff Changes: The Case of Indonesia’s Manufacturing Industries

Author:
Samuel Nursamsu, Dionisius Narjoko, and Titik Anas
Publication Date:
02-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Can firms reallocate their imported inputs to domestic sources when faced with import tariffs? To answer this question, we analyse the input allocation behaviour of Indonesian medium and large-sized manufacturing firms in responding to the movement of import tariffs from 2000 to 2013 by utilising plant-level input data of Indonesian manufacturing. We find that an increase in tariffs only creates a weak substitution effect. Our findings indicate that firms reallocate their inputs towards domestic sources, although this is accompanied by a decrease in the firms’ value added. This implies that domestic inputs are worse substitutes for imported inputs and that firms’ capacity to switch over to domestic products is limited, suggesting that firms will immediately switch back to importing when the tariff is removed. We find no evidence that firms make any adjustment towards more domestic-oriented input composition over time; and heterogeneity exists within the result, as industries with a strong basis in the domestic market are more capable of adjusting.
Topic:
Industrial Policy, International Trade and Finance, Tariffs, and Manufacturing
Political Geography:
Indonesia and Asia

4. Learning-to-Export Effect as a Response to Export Opportunities: Micro-Evidence from Korean Manufacturing

Author:
Chin Hee Hahn and Yong-Seok Choi
Publication Date:
02-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This paper aims to investigate whether empirical evidence supports the learning-to-export hypothesis, which has received little attention in the previous literature. By taking full advantage of plant–product level data from the Republic of Korea during 1990–1998, we find some evidence for the learning-to-export effect, especially for innovated product varieties with delayed exporters: their productivity, together with research and development and investment activity, was superior to their matched sample. On the other hand, this learning-to-export effect was not significantly pronounced for the industries protected by import tariffs. Thus, our empirical findings suggest that it would be desirable to implement some policy tools to promote the learning-to-export effect, while tariff protection cannot be justifiable for that purpose.
Topic:
Industrial Policy, International Trade and Finance, Tariffs, Manufacturing, and Productivity
Political Geography:
Asia and South Korea

5. Assessment of Industrial Cluster Policies in Viet Nam: The Role of Special Economic Zones in Attracting Foreign Direct Investment

Author:
Nguyen Quynh Huong
Publication Date:
06-2020
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Special economic zones (SEZs) are considered as one of important regional industrial policies to attract foreign investment in developing countries such as Viet Nam. The review of SEZs development in Viet Nam including the comprehensive review of infrastructure and business environment in SEZs are presented in this paper for the first time. Moreover, the paper gives novel non-parametric evidence to indicate the positive causal linkage between the zoning policies and the attraction of foreign investment at district-level in the country during the period 2011–2015.
Topic:
Industrial Policy, Regional Cooperation, Foreign Direct Investment, and Industry
Political Geography:
Asia and Vietnam

6. Chinese Industrial Actors in Global Rule Making: A Preliminary Exploration

Author:
Honzhi Yu and Hongying Wang
Publication Date:
02-2019
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
In contrast to the growing profile of the Chinese government in global governance, the engagement of Chinese industrial actors in global rule making is quite limited and uneven. Some Chinese industrial leaders have shown an ambition to participate in global rule making in their respective realms; most of the others still lack interest or capacity. This policy brief identifies three plausible sources of variation among the Chinese industrial actors. It offers suggestions to Chinese industrial actors and to those concerned about China’s role in global governance, with the purpose of reducing misunderstanding and building trust between Chinese industrial actors and businesses, regulators, non-governmental organizations and stakeholders from other parts of the world in developing global standards for good governance.
Topic:
Development, Industrial Policy, and Governance
Political Geography:
China and Asia

7. Demand-Driven Youth Training Programs: Experimental Evidence from Mongolia

Author:
José Galdo, Bayarmaa Dalkhjavd, Altantsetseg Batchuluun, Soyolmaa Batbekh, and Maria Laura Alzúa
Publication Date:
08-2019
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
Because of its high incidence and potential threat to social cohesion, youth unemployment is a global concern. This study uses a randomized controlled trial to analyze the effectiveness of a demand-driven vocational training program for disadvantaged youth in Mongolia. Mongolia, a transitional country whose economic structure shifted from a communist, centrally planned economy to a free-market economy over a relatively short period, offers a new setting in which to test the effectiveness of standard active labor market policies. This study reports positive and statistically significant short-term effects of vocational training on monthly earnings, skills matching, and self-employment. Substantial heterogeneity emerges as relatively older, richer, and better-educated individuals drive these positive effects. A second intervention that randomly assigns participants to receive repetitive weekly newsletters with information on market returns to vocational training shows positive impacts on the length of exposure to and successful completion of the program. These positive effects, however, are only observed at the intensive margin and do not lead to higher employment or earnings outcomes.
Topic:
Development, Economics, Industrial Policy, Labor Issues, Employment, Youth, and Labor Policies
Political Geography:
Mongolia and Asia

8. The Impact of Economic Globalisation on Firm Performance and the Labour Market: Evidence from Japan

Author:
Keiko Ito
Publication Date:
10-2019
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
This paper summarises the major findings and arguments in the literature on the impact of globalisation on firm performance and the labour market, focusing on the case of Japan. Internationalised firms show better performance. Although offshoring has shifted labour demand towards skilled workers, thedirect contribution of globalisation to the widening wage gap is quite limited. The empirical evidence for Japan is more or less consistent with that for other developed countries, but some observations on Japan are worth pointing out. First, several empirical studies confirm a learning-by-exporting effect. Second, there is no strong evidence that increases in imports from China have reduced domestic employment. Increases in imports from China have a positive effect on value added growth in downstream industries, implying that imports from China are likely to be complementary to domestic production in Japan.
Topic:
Globalization, Industrial Policy, Labor Issues, Exports, and Imports
Political Geography:
Japan, China, and Asia

9. Made in China 2025 as a Challenge in Global Trade Governance: Analysis and Recommendations

Author:
Anton Malkin
Publication Date:
08-2018
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
This paper provides a reassessment of Made in China 2025 (MIC 2025) — China’s industrial policy framework aimed at helping the country overcome the much-maligned middle-income trap — in the context of global trade governance. It suggests that China’s industrial policies have been viewed too narrowly — without sufficient attention to longer-term global governance issues — by a large segment of the global business and policy-making community. The paper argues that the general aims of MIC 2025 and the policies that underpin them are not unreasonable, given the increasingly prevalent dilemmas in global trade that China’s leaders are grappling with. These include problems of international development arising from growing global industrial concentration — driven by the growth of the intangible economy — and China’s shrinking access to importing and developing technological components (such as semiconductor chips) that are increasingly characterized as “dual-use” by China’s trading partners. This suggests that resolving the concerns of China’s trading partners regarding China’s industrial policies requires global trade governance reform to ensure an equitable, rules-based global trading order that addresses the legitimate needs of developing and middle-income economies in acquiring foreign-owned technological components and know-how, for the purposes of economic development. The paper concludes by outlining specific recommendations for Canada’s policy makers in improving their economic relationship with China in the context of MIC 2025.
Topic:
Development, Industrial Policy, Science and Technology, Governance, and Free Trade
Political Geography:
China, Canada, Asia, and North America

10. How Effective are Environmental Regulations to Address Impacts of Industrial and Infrastructure Projects in India

Author:
Krithika A. Dinesh, Meenakshi Kapoor, Kanchi Kohli, Manju Menon, and Preeti Venkatram
Publication Date:
11-2016
Content Type:
Special Report
Institution:
Centre for Policy Research, India
Abstract:
People around the world live in areas that have been altered for industrial, infrastructure or mining projects. Their lives and occupations are being negatively impacted by problems of access, encroachment or pollution. Though governments in many countries have regulatory procedures for implementing environmental and social safeguards that are applicable to such projects so that problems can be minimised or mitigated, the qualitative difference of such regulatory systems depends on the efficacy of their compliance safeguards. Typically, in countries where compliance is low, projects meant for development have also resulted in substantial environmental and social costs. Governments and investors fear the implementation of environmental policies and claim that these are bottlenecks or speed breakers to growth. Several new studies show that stringent compliance of environmental policies will neither affect competitiveness nor slow down GDP growth. On the contrary, it may result in bottom line benefits at the level of projects as well as sustain economic growth by enhancing efficiency and innovation. India promulgated a series of environmental legislations between 1980 and 2005 to ensure that environmental and social impacts of land use change, infrastructure development and industrialisation are kept in check and timely mitigation is undertaken. The laws establish detailed procedures for assessing the environmental impacts of the proposed projects that are likely to cause land use change. The laws also involve the laying of conditions that are attached to the approvals granted to these projects. These conditions are meant to mitigate or prevent damage or impacts to the extent ascertained by the project proponents and the government or regulator. Since the time these laws were first designed, there have been numerous amendments to them to change the scope of applicability of these laws, the time taken by regulators for decision-making and the sharing of responsibility between state and central governments in implementing these laws. However, one aspect of these laws that has seen minimal change is in their monitoring and compliance regimes. What happens to the projects once they are granted approvals? Do they comply with all the conditions imposed on them for mitigating or minimising environmental and social impacts? Who oversees these processes and what is the extent to which compliance is achieved? This report is the outcome of a research project undertaken to understand the efficacy of conditional compliance, institutional monitoring and enforcement of environmental regulations to address the impacts faced by communities living around industrial and infrastructure projects. The project identified the institutions responsible for monitoring and compliance under various environmental laws, their procedures and practices by which these roles are realised. While it has been known that government agencies and regulatory bodies hold the formal duties of monitoring, the project also focused on how affected communities engage these institutions for greater compliance and remedies in case of environmental and social impacts of various kinds, such as encroachment or damage to common or private property, loss of livelihoods and loss of access to public spaces. By analysing the efforts made by affected parties to engage with environmental institutions to craft remedies for existing environmental impacts, this research aims to highlight regulatory ingredients that are necessary for sound environment regulation and better outcomes through compliance. If translated into concrete policy on environmental monitoring and compliance, these lessons could address the chasm between enforcement of environmental regulations and the ever-growing difficulties of meeting environmental challenges.
Topic:
Environment, Industrial Policy, Natural Resources, Infrastructure, and Legislation
Political Geography:
South Asia, India, and Asia