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2. Exploring Digital Economic Agreements to Promote Digital Connectivity in ASEAN
- Author:
- Sarah Y. Tong, Yao Li, and Tuan Yuen Kong
- Publication Date:
- 07-2021
- Content Type:
- Research Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- This paper explores modules and articles on cooperation concerning the digital economy that are applicable for Association of Southeast Asian Nations (ASEAN) countries under certain circumstances. It investigates the progress of and obstacles to ASEAN’s digital connectivity, as well as features of existing Digital Economic Agreements and digital economy-related articles in other agreements. We propose the use of a differentiated strategy and steps to promote integration for ASEAN countries covered in this research.
- Topic:
- Economics, Globalization, International Trade and Finance, Digital Economy, and Digitalization
- Political Geography:
- Asia and Southeast Asia
3. Effective Rates of Protection in a World With Non-Tariff Measures and Supply Chains: Evidence from ASEAN
- Author:
- Ben Shepherd
- Publication Date:
- 08-2021
- Content Type:
- Research Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- The concept of effective rate of protection expresses protection on a sector’s final output relative to protection affecting its inputs. As such, it is well adapted to analysing the effects of trade policy from a supply chain standpoint. This paper makes two contributions to the literature on effective rates of protection. First, it draws on the literature on trade in value added to highlight an alternative to the traditional measure that better accounts for supply chain trade by considering both direct and indirect input use. Second, it includes data on ad valorem equivalents of non-tariff measures, which are increasingly important as trade policy instruments. In an analysis covering 17 aggregate goods sectors, I find that average tariff only effective rates of protection in ASEAN averaged 6.9% and ranged from zero to 23.4% in 2018. By contrast, effective rates including non-tariff measures averaged 14.0% and ranged from –6.2% to 44.0%. While patterns of escalation and even effective taxation differ substantially across sectors, most countries practice a tariff and NTM trade policy that is broadly neutral between input and output sectors, but which causes low to moderate isolation from world markets. Given the complexity of tariffs and NTMs from a supply chain perspective, there would likely be reductions in economic waste accompanying substantial simplification.
- Topic:
- Economics, Globalization, International Cooperation, International Trade and Finance, Protectionism, Non-Tariff Measures, and Supply Chains
- Political Geography:
- Asia and Southeast Asia
4. The EU–China Comprehensive Agreement on Investment: Lessons Learnt for Indonesia
- Author:
- Yan Lili Ing and Junianto James Losarili
- Publication Date:
- 08-2021
- Content Type:
- Research Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- The European Union (EU) and China have recently reached an agreement: the EU–China Comprehensive Agreement on Investment (CAI). As one of the most recent investment agreements concluded by the EU, the paper aims to assess specific concessions made in the agreement, and provides lessons learnt for Indonesia on the ongoing negotiations of the Indonesia–EU free trade agreement, the Comprehensive Economic Partnership Agreement (IEU CEPA). The paper will present an overview of the main areas covered under the CAI, assess the potential impacts of the CAI on EU investment into Indonesia, and set out lessons that can be learnt from the CAI.
- Topic:
- Economics, International Cooperation, International Trade and Finance, European Union, and Investment
- Political Geography:
- China, Europe, Indonesia, and Asia
5. The Trade Restrictiveness Index and Its Impact on Trade Performance in Selected East Asian Countries
- Author:
- Norlin Khalid, Muhamad Rias K.V. Zainuddin, Tamat Sarmidi, Sufian Jusoh, Faliq Razak, and Mohd Helmi Ali
- Publication Date:
- 09-2021
- Content Type:
- Research Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- This paper aims to investigate the effect of non-tariff measures (NTMs) on trade in selected East Asian countries. In doing so, we first estimate the ad valorem equivalent (AVE) of NTMs and construct an augmented trade restrictiveness index (ATRI) by measuring the overall external regulations imposed by importing countries. Second, we analyse the effect of the AVE and trade restrictiveness index (TRI) of importing nations on the exports of various sub-sector products for each country in selected East Asian countries. Based on a standard gravity model framework, we perform a Poisson pseudo maximum likelihood (PPML) regression at the sectoral level (Harmonized System 2-digit) for total exports and major sub-sectors (agri-food, health, logistics, and manufacturing). The findings show that the ATRI has a negative and significant relationship towards bilateral exports for total exports, manufacturing, and logistics sub-sectors. The negative impacts of the ATRI also highlight that trade barriers play a significant role in bilateral exports. NTM restrictions (proxied by the calculated AVE of NTMs) imposed by importing countries have mixed results for technical and non-technical measures. Where technical measures have negative and significant impacts on bilateral exports for total exports, manufacturing, and health sub-sectors. This implies that implementation of technical NTMs such as sanitary and phytosanitary (SPS) and technical barrier to trade (TBT) measures in importing nations adversely affect bilateral exports for these sub-sectors. This is in line with our hypothesis, as exporters may face difficulties in meeting the current NTM specifications, leading to lower bilateral exports. In addition, the results show that most trade agreements have a positive and significant relationship with ASEAN and East Asia countries’ bilateral exports, suggesting that free trade agreements enhance trade between countries.
- Topic:
- Economics, Globalization, International Trade and Finance, and Non-Tariff Measures
- Political Geography:
- East Asia and Asia
6. Regulatory Distance, Margins of Trade, and Regional Integration: The Case of the ASEAN+5
- Author:
- Chandran Govindaraju, Neil Foster-McGregor, and Evelyn Shyamala Devadason
- Publication Date:
- 09-2021
- Content Type:
- Research Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- This paper measures regulatory distance in non-tariff measures (NTMs) to examine the regulatory distance patterns and how the margins of trade respond to regulatory distance for the ASEAN+5 economies (the 10 Association of Southeast Asian Nations Member States plus Australia, China, India, Japan and New Zealand). It decomposes the margins of trade and regulatory distance by sector (agriculture and manufacturing) and NTM type (technical, non-technical, sanitary and phytosanitary (SPS), technical barriers to trade (TBTs), and pre-shipment inspections and other measures) for the 15 countries. At the country level, the results indicate a varying regulatory distance amongst the ASEAN+5 countries. Regulatory implementation also varies by sector and by the type of measure. Within sectors, SPS regulatory distance is higher in the agriculture sector, while for manufacturing, the regulatory distance in TBTs is higher. Notably, few countries recorded a higher regulatory distance for non-technical measures and pre-shipment inspections. Interestingly, for the ASEAN region, there seems to be no evidence supporting a reduction in regulatory distance from 2015 to 2018, despite efforts to harmonise NTMs since 2015. The results indicate that regulatory distance largely has a trade-reducing effect along the trade margins within ASEAN+5 bilateral trade. Technical measures have a greater trade-reducing effect than other measures along extensive and intensive trade margins – specifically SPS in the agriculture sector and TBTs in the manufacturing sector. Notably, there is also evidence of non-technical measures and pre-shipments and other formalities impacting trade along extensive margins, despite efforts to establish trade facilitation. The paper also describes some policy implications.
- Topic:
- Economics, International Cooperation, International Trade and Finance, Regulation, and Regional Integration
- Political Geography:
- Asia and Southeast Asia
7. The Global Economic Impact of the COVID-19 Pandemic: The Second Wave and Policy Implications
- Author:
- Gyeong Lyeob Cho, Minsuk Kim, and Yun Kyung Kim
- Publication Date:
- 09-2021
- Content Type:
- Research Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- This paper examines the macroeconomic impact of the COVID-19 pandemic through the Computable General Equilibrium model. Due to a second wave and a subsequent delay in economic recovery, the pandemic could lead to a permanent shock in capital accumulation and productivity. This implies that the shock may not merely affect the short-term growth rate but also negatively impact the future economic growth path from its pre-pandemic trend. Through simulations, in the mild scenario, countries lose 0.10% to 0.31% of their future economic growth rates; in the severe scenario, they lose 0.21% to 0.69%.
- Topic:
- Economics, Globalization, International Trade and Finance, Public Health, Pandemic, and COVID-19
- Political Geography:
- Global Focus
8. Spillover Effects of Social and Economic Interactions on COVID-19 Pandemic Vulnerability Across Indonesia’s Regions
- Author:
- Ernawati Pasaribu, Puguh B. Irawan, Tiodora H. Siagian, Ika Yuni Wulansari, and Robert Kurniawan
- Publication Date:
- 10-2021
- Content Type:
- Research Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- This research study focuses on measuring the possible spillover effects of socio-economic interactions on COVID-19 pandemic vulnerability across Indonesia’s regions by utilising a spatial simultaneous model. The COVID-19 pandemic vulnerability level here is used to indicate the extent to which a region is susceptible to the spreading COVID-19 pandemic, as determined by not only the region’s COVID-19 related epidemiological factors but also by its relevant socio-demographic and economic aspects, housing, environmental health, and availability of health facilities. High COVID-19 pandemic vulnerability levels were mostly found in districts in Java Island and southern Sumatera, suggesting high population density and mobility in both regions. It was revealed that 31 districts have low COVID-19 risk levels (from epidemiological indicators-related measurements), but they have high COVID-19 vulnerability levels (from epidemiological and socioeconomic indicators-based measurements). Labour productivity was found to have a reciprocal relationship with COVID-19 vulnerability, proving that the COVID-19 pandemic has a significant impact on labour productivity and vice versa. On the other hand, regional independence affects COVID-19 vulnerability, but this does not apply the other way around. Moreover, this study has also proven that COVID-19 pandemic vulnerability levels have socio-economic spillover effects on neighbouring areas in Indonesia.
- Topic:
- Economics, International Cooperation, Pandemic, COVID-19, Socioeconomics, and Economic Integration
- Political Geography:
- Indonesia and Asia
9. Achieving an Integrated Electricity Market in Southeast Asia: Addressing the Economic, Technical, Institutional, and Geo-political Barriers
- Author:
- Yanfei Li and Shigeru Kimura
- Publication Date:
- 12-2016
- Content Type:
- Research Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- The research is divided into four interdependent research clusters. Clusters 1 and 2 apply case studies on the BIMP countries (Brunei-Indonesia-Malaysia-Philippines) using different methods. Cluster 1, led by the Institute of Energy Economics, Japan, conducts dynamic linear programming model to simulate the development of power infrastructure, interconnection, and exchange of power in this subregion of ASEAN. It emphasises the economic rationale and feasibility of electricity market integration in the region. Cluster 2, led by the Brunei National Energy Research Institute, focuses on the regulatory, institutional, and technical barriers in BIMP, and develops a road map to solve these issues. This study thus gives some insight regarding regional specific barriers or issues for other regions based on an established understanding of the common issues in principle from previous studies. Cluster 3 is conducted jointly by the Economic Research Institute for ASEAN and East Asia and the Energy Research Institute at Nanyang Technological University. The study mainly refers to the Nordic and European cases of electricity market integration and analyses both their business models and overall market design for grid interconnection and cross-border trading of electricity. In doing so, the study eventually tries to deliver implications on the possible business model and market design for ASEAN. The Cluster 4 study, carried out by a researcher from the University of Western Australia, discusses political and institutional barriers to the formation of an integrated ASEAN electricity market and derives several practical strategies in addressing such barriers as policy implications.
- Topic:
- Economics, International Trade and Finance, and Business
- Political Geography:
- Southeast Asia