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2. Structural Transformation and Economic Resilience: The Case of Malaysia
- Author:
- Cassey Lee
- Publication Date:
- 05-2024
- Content Type:
- Working Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- Exports have been a critical source for the resilience of the Malaysian economy during the COVID-19 pandemic and post-pandemic period. Long-term structural change in intersectoral production networks could have reduced this resilience. Stronger domestic intersectoral linkages and declining participation in backward global value chain participation are likely to reduce the impact of positive export shocks on the country’s economy. The services sector has become increasing important over time. Consumption in the services sector is clearly an important driver of growth. A positive export shock is enhanced by higher domestic intersectoral linkages in the services sector but not in manufacturing.
- Topic:
- Economy, Exports, Macroeconomics, Services, Resilience, and COVID-19
- Political Geography:
- Malaysia, Asia, and Southeast Asia
3. Have Dynamic Spillovers and the Connectedness of Trade Policy Uncertainty Changed During the COVID-19 Pandemic and Sino–US Trade Frictions?
- Author:
- Chien-Chiang Lee and Farzan Yahya
- Publication Date:
- 03-2024
- Content Type:
- Working Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- In this paper, we examine the spillover and connectedness between the trade policy uncertainty (TPU) of the United States (US), China, Japan, and the Republic of Korea (henceforth, Korea) under global geopolitical risk (GPR), infectious disease equity market volatility (EMVID), and GPR from North Korea (GPRNK) using a relatively novel time-varying parameter vector autoregression (TVP-VAR) approach. Additionally, method of moments quantile regression is utilised to estimate the asymmetric effect of GPR, GPRNK, and EMVID on TPU. Our findings suggest that there is a high total and directional spillover amongst underlying variables during Sino–US trade friction that further elevated during the coronavirus disease (COVID-19) pandemic period. The US is a net receiver of spillover from the TPU of all economies, while the Chinese TPU receives spillover from EMVID. The results further confirm that both the TPU of China (TPUCN) and the TPU of the US (TPUUS) are vulnerable to EMVID, but the effect is stronger for Chinese TPU in the higher quantiles. Although Japanese TPU is less vulnerable to GPR and EMVID, it is significantly exposed to GPRNK. Korean trade shows resiliency and immunity to pandemic-induced volatility and GPRNK.
- Topic:
- Trade Wars, Trade Policy, COVID-19, and Spillovers
- Political Geography:
- Japan, China, Asia, South Korea, and United States of America
4. The Effect of COVID-19 on Firms’ Behaviour: The Case of Japan
- Author:
- Yuting Chen and Bin Ni
- Publication Date:
- 03-2024
- Content Type:
- Working Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- Since the onset of the coronavirus disease (COVID‐19) pandemic, social distancing practices and government‐mandated lockdowns have become the norm. These have cut off interaction amongst people, firms, and society, triggering an even larger decline in economic activity. In this study, we apply annual Japanese foreign affiliate data to quantify how COVID-19 has affected firms’ behaviour in various aspects. The estimation results show that both the revenue and purchasing behaviour of Japanese foreign affiliates were affected during COVID-19. This negative impact is mainly through the channel of stringent regulations imposed by host countries where affiliates are located. The general result we can derive from these findings is that COVID-19 negatively affects Japanese firms engaged in overseas activities. This leaves us with the question of when external shocks such as COVID-19 stand in the way of firms’ overseas activities, and what role the government should play to achieve a balance between safety and economic revival.
- Topic:
- Trade, COVID-19, Performance Evaluation, and Firms
- Political Geography:
- Japan and Asia
5. COVID-19 and Firm Response: Evidence from China
- Author:
- Dongmin Kong, Chen Liu, and Mengxu Xiong
- Publication Date:
- 02-2024
- Content Type:
- Working Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- This paper explores the effects of the coronavirus disease (COVID-19) pandemic on firm response. Using a novel COVID-19 sentiment index, our estimation shows that the pandemic significantly reduced the overseas revenue and profits of firms listed on the Chinese A-share market. Moreover, we observe that an increase in loans, and a drop in debt financing cost and trade credit, were prominent during the pandemic. We contend that reduced cash flows, which damaged firm operations; government support, which provided more financing channels; and increased default risks, which placed barriers on trade credit, are the plausible mechanisms through which the COVID-19 pandemic affects firm performance. Profit contraction was more pronounced for firms with a lower ratio of domestic content in exports and state-owned enterprises, while external financing was easier for firms subject to stringent financial constraints despite their lowered trade credit.
- Topic:
- Trade, COVID-19, and Firms
- Political Geography:
- China and Asia
6. Agricultural Production as a Coping Strategy during the Covid-19 Pandemic? Evidence from Rural Viet Nam
- Author:
- Hai-Anh Dang and Cuong Viet Nguyen
- Publication Date:
- 01-2024
- Content Type:
- Working Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- We examine the Covid-19 pandemic-induced negative effects on household welfare in rural Viet Nam. Analysing recent Viet Nam Household Living Standard Surveys spanning 2016–2021, we find robust evidence that lockdown measures resulted in a 3.9% reduction in per capita income and a 2.6 percentage-point increase in the headcount poverty rate of rural households. It also had severe effects on rural households’ wages and self-employed non-farm income, but rural households appeared to have relied on farm income to cope with the lockdowns. Each additional month under lockdown reduced wage income and non-farm income by 2.8% and 6.3% respectively but increased crop income by 9.5%, livestock income by 7.1%, and other farm income by 12.2%.
- Topic:
- Agriculture, Rural, COVID-19, and Production
- Political Geography:
- Asia, Vietnam, and Southeast Asia
7. Geographical Simulation Analysis for CADP 3.0
- Author:
- Ikumo Isono, Satoru Kumagai, and Keita Oikawa
- Publication Date:
- 01-2023
- Content Type:
- Policy Brief
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- The economic impact of the development of transport and digital infrastructure and the adoption of energy-saving technologies envisaged in the Comprehensive Asia Development Plan 3.0 (CADP 3.0) was analysed using the Institute of Developing Economies (IDE) and Economic Research Institute for ASEAN and East Asia (ERIA) geographical simulation model (IDE/ERIA-GSM). This infrastructure development and technology adoption will affect all industries and change the structure of the economy as the basis for rejuvenated and advanced industries such as agriculture, automotives, medicine, and pharmaceuticals. By combining this infrastructure development and technology adoption, the Association of Southeast Asian Nations (ASEAN) and East Asia could achieve high economic impacts and geographical inclusiveness. The Lao People’s Democratic Republic will obtain the greatest economic impact as it transitions from a landlocked to a land-linked country. Cambodia will also reap significant benefits from upgrading information and communication technology. The simulation results thus recommend the implementation of the CADP 3.0 strategy for both ASEAN and individual Member States.
- Topic:
- Science and Technology, Innovation, ASEAN, COVID-19, and Simulation
- Political Geography:
- Southeast Asia
8. The Global Economic Outlook and the State of Indonesia
- Author:
- Ivana Markus and Pyan Amin Muchtar
- Publication Date:
- 01-2023
- Content Type:
- Policy Brief
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- The global economy is facing a perfect storm as a result of the coronavirus disease (COVID-19) pandemic, prolonged geopolitical tensions, soaring inflation, and tightening monetary policy. A darkening future has been projected and the worst is yet to come. Amid global uncertainty, governments have become less aggressive in their budget spending, while high inflation has led many central banks to tighten their monetary policy. Furthermore, the pandemic has left widespread scarring effects, such as unemployment, poverty, and inequality, particularly on vulnerable groups. Global challenges and lower economic growth of the major economies will also affect Indonesia’s economic conditions, as the country may experience slower growth as a spillover from its major trading partners. It is important for the world and Indonesia to address these challenges, particularly the scarring effects, through multilateral solidarity and better maintenance of prudent fiscal policy.
- Topic:
- Monetary Policy, Geopolitics, Economy, Investment, Trade, and COVID-19
- Political Geography:
- Indonesia and Southeast Asia
9. The COVID-19 Pandemic and World Machinery Trade Network
- Author:
- Kozo Kiyota
- Publication Date:
- 08-2023
- Content Type:
- Working Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- In light of the importance of the machinery trade in global trade, this study examines whether the patterns of machinery exports changed significantly after the COVID-19 pandemic. Frameworks of network analysis and structural break analysis are applied to monthly level bilateral export data from January 2016 to March 2022. The main findings are threefold. First, positive structural change is found in exports in major machinery-exporting countries. Second, negative structural change in centrality is found in Japan and some ASEAN Member States (AMS), which implies a decline in the relative importance of these countries in the global machinery network. Third, the decline in Japanese centrality was not caused by the decline in export values or number of destination countries. Rather, it is attributable to the decline in the centrality of Japan’s export destination countries such as AMS. Noting that Japan has a relatively strong trade relationship with AMS, these results together suggest that the negative shock of the pandemic spread throughout the supply chain, which led to the decline in the relative importance of some countries – such as Japan – in the global machinery trade network.
- Topic:
- Exports, Trade, ASEAN, and COVID-19
- Political Geography:
- Japan, Asia, and Southeast Asia
10. The Effects of the United States-China Trade War During the COVID-19 Pandemic on Global Supply Chains: Evidence from Viet Nam
- Author:
- Duc Anh Dang and Ngoc Anh Tran
- Publication Date:
- 08-2023
- Content Type:
- Working Paper
- Institution:
- Economic Research Institute for ASEAN and East Asia (ERIA)
- Abstract:
- The trade war between the United States (US) and China has affected their bilateral trade as well as that with other countries. This study investigates how Vietnamese firms performed during the COVID-19 pandemic under the shadow of this trade war. The change in the log of Vietnamese exports to the US from 2017 to 2020 is used to measure the impact of the trade war, and the change in the log of Chinese exports to the US is then used as an instrument for the Vietnamese export change during the same period. It is found that firms that faced more trade war exposure increased their investment, profit, and value added, which may be due to the market exit of unproductive firms. Moreover, the trade war impact is more pronounced for large firms. Foreign-invested firms gained less from trade war exposure. The pandemic weakened the trade war effect on firm performances; however, it exacerbated the trade tension effect on foreign-trade firms.
- Topic:
- Bilateral Relations, Investment, Trade, and COVID-19
- Political Geography:
- China, Asia, North America, and United States of America