SOUTHEAST ASIAN JOURNAL OF ECONOMICS

COVID-19 Pandemic: Its Impacts on Economic Growth, Unemployment, and Poverty in Indonesia

Fri, 15 Nov 2024 00:00:00 +0700

The first COVID-19 case in Indonesia was discovered in March 2020. Since then, cases of COVID-19 infection have rapidly spread to all regions, albeit at varying intensities. The government responded with a variety of policies, including social restrictions, to prevent the spread of COVID-19 cases. This policy may eventually reduce the pandemic, but it has significant economic consequences. One of them is a recession in early to mid-2021. Will it have an effect on poverty and unemployment as well? This research aims to provide an answer to this question. The study’s goal is to determine how COVID-19 affects economic growth, unemployment, and poverty. Analytical methods used in this study include quadrant analysis and path analysis. According to quadrant analysis, COVID-19 has an impact on both economic growth and unemployment, whereas path analysis shows that COVID-19 has a negative impact on both economic growth and poverty.

Diversification Strategy and Bank Efficiency of Vietnamese Commercial Banks: Does Foreign Ownership and Bank Experience Matter?

Thy Le-Bao — Fri, 15 Nov 2024 00:00:00 +0700

This study aims to investigate the impact of diversification strategies on the efficiency of Vietnamese commercial banks from 2012 to 2022. It further explores the moderating roles of foreign ownership and bank experience in the nexus between diversification and efficiency. The study examines three dimensions of diversification strategy: asset diversification, income diversification, and funding diversification. The impact of diversification strategies varies depending on foreign ownership and bank age. The findings reveal that asset and funding diversification negatively impact bank efficiency. Additionally, both foreign ownership structure and bank age significantly influence bank efficiency. A comparison of foreign and domestic banks reveals that foreign-owned banks outperform their domestic counterparts. Surprisingly, even asset and funding-diversified domestic or foreign banks fail to improve bank efficiency, while large banks can mitigate the adverse effects of these strategies. These findings hold implications for researchers, policymakers, and bank managers in formulating more appropriate diversification strategies to ensure the stability of the entire banking system.

Financial Vulnerability, Resilience, and Willingness to Pay for Social Protection Schemes Among Gig Workers: Empirical Evidence from Malaysia

Jia Jia Ng, Shamzaeffa Samsudin, Siti Nurazira Mohd Daud — Fri, 15 Nov 2024 00:00:00 +0700

This study aims to identify the financial dynamics of gig workers in Malaysia, focusing on their financial vulnerability, resilience, and willingness to pay for social protection schemes. Employing logit analysis, the study analyzed responses from 452 gig workers across Malaysia using a structured questionnaire. The findings reveal that income, education, and being a full-time gig worker emerged as pivotal factors influencing short-term financial vulnerability, shedding light on the disparities within this workforce segment. Even though most can meet their basic needs, some gig workers may lack resilience toward financial and social shocks. Besides income, financial resilience was closely tied to financial literacy, emphasizing the role of financial education in enhancing economic stability. The willingness to pay for social protection was closely linked to one’s financial circumstances and literacy level, highlighting the necessity for personalized social protection strategies tailored to the unique needs of gig workers.

Income Inequality and Regional Development Policies in Bangladesh: Trends and Ways Forward

Princess Shahida Haque, Penn Collins Awah — Fri, 15 Nov 2024 00:00:00 +0700

Since the early 1990s, Bangladesh’s economic growth has been hampered by increasing income inequality and a steady gap between the rich and the poor. Using paneled data from 2001 to 2020, the trend of income inequality and regional development policies across 63 districts in Bangladesh was examined. Key indicators for estimating income inequality were employed, including the Gini coefficient and the Coefficient of Variation, to investigate temporal shifts in regional income inequality within Bangladesh. An empirical analysis was undertaken to ascertain the prevalence of any changes. Subsequently, the cumulative impact of the Bangladeshi government’s regional policies on regional income inequality was assessed, drawing upon the previously analyzed and estimated research findings. Finally, the overall changes in regional income inequality are summarized, highlighting the significant impact of the government’s regional policies and offering actionable policy recommendations for growth and ways forward.

Measuring determinants and potential exports of Indonesian agricultural commodities to ASEAN

Fri, 15 Nov 2024 00:00:00 +0700

This study was conducted to evaluate the efficiency, determining factors and exports opportunities of Indonesian agricultural commodities to ASEAN (Association of Southeast Asian Nations) for the 1997-2021 period using Stochastic Frontier Gravity Model (SFGM), followed with the Fixed Effect (FE) and Pseudo Poisson Maximum Likelihood (PPML) models to confirm the robustness of our model. The findings of this study showed that the GDP of Indonesia, as well as the GDP and population of importer countries, were stimulating factors in Indonesia’s agricultural exports to other ASEAN countries. Geographical distance and shared borders between Indonesia and importer countries have a negative impact on Indonesian exports. Other findings of this study showed that Indonesia’s agricultural commodities exports to the other 9 ASEAN member countries were inefficient, with an average TE value of 29.59%. The negative value of export potential indicates the unoptimized export performance of Indonesia’s agricultural commodities to other ASEAN countries. In the end, this study contributed to enriching the literature by evaluating efficiency and export potential, which were not widely studied in international trade economic studies As part of this study, policy recommendations for increasing Indonesia’s agricultural exports to other ASEAN countries were provided as well.

The Crowding-in Impact of Remittance Inflows on Private Investment in Developing Economies: Does Institutional Setting Matter?

Van Bon Nguyen, Thuy Tien Ho, Van Toan Ngo, Xuan Hang Tran — Fri, 15 Nov 2024 00:00:00 +0700

Remittance inflows play a vital role in fostering economic development in developing economies. They make substantial contributions by effectively addressing trade balance deficits, elevating the living standards of recipients, strengthening foreign exchange reserves, and reducing dependence on highinterest foreign capital. Moreover, institutional quality can further attract remittance inflows and enhance private investment. Does institutional quality harm the remittance inflows–private investment nexus? This study seeks answers by utilizing the two-step system GMM estimator and defactored instrumental variables estimators to examine the impacts of remittance inflows, institutional quality, and their interaction term on private investment in 91 developing economies from 2002 to 2020. The results present a counterintuitive pattern: remittance inflows increase private investment while institutional quality decreases it. However, the interaction term promotes private investment. Furthermore, economic growth, labor force, and inflation positively influence private investment. These findings provide some implications for the policymaking strategies of governments in developing economies.

Re-assessing the Environmental Kuznets Curve for the Human Development Index: Evidence from Emerging Asian Economies

Titiksha Das; Debasis Chakraborty — Fri, 15 Nov 2024 00:00:00 +0700

Environmental Kuznets Curve (EKC) postulates an inverted U-shaped relationship between environmental degradation and measures of economic growth such as GDP per capita or income per capita. This study attempts to re-assess EKC with an indicator of human development instead of economic growth with a cubic specification. An empirical analysis was conducted for ten emerging Asian economies from 1990 to 2018. Using fixed effects and random effects regression models, we found an N-shaped curve for human development and environmental degradation. In a unique attempt, the study also determined the percentage of observations lying between the turning points. Deploying energy-efficient and renewable energy technologies will ensure that higher HDI scores are ecologically sustainable for developing economies. Framing policies that encourage higher percentages of renewable energy in the current energy mix will help to reduce pollution and facilitate the decoupling of human development from non-renewable energy consumption such that their positive relationship does not recur.