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This study develops a simple spread model to explain whether market dealers behave strategically when using electronic broking services. Our spread model stresses the role of an unexpected liquidity imbalance and its volatility for inventory risk, which contrasts sharply with previous studies that emphasised price volatility as the inventory risk. To capture a dealer's strategic behaviour, we introduce a new concept of a strategic weighted spread and test this new spread using the full information maximum likelihood method with the GARCH (1,1) process. Daily spread data from 1 January 2006 to 20 December 2016 is used to explore strategic spreading at the end of a trading day in East Asia. Different effects on strategic spreads of liquidity depth in Asian financial markets are also investigated by comparing strategic spreads between the thin and deep markets. The evidence provides support for our hypothesis that a dealer behaves strategically to avoid the unexpected inventory risk, and that the magnitude of this influence depends on the depth of the financial market. [ABSTRACT FROM AUTHOR]

Taiwan has been referred to by the World Bank as one of the East Asia's "economic miracles". Many quantitative models on Taiwan's economic growth have been conducted by neo-classical mainstream economists. However, none of them investigates in detail the thinking of those policy-makers who work behind the economic success of Taiwan. Li Kuo-Ting is generally regarded as the architect of Taiwan's economic "miracle". In this paper, an evolutionary perspective has been used to understand the economic management of Li Kuo-Ting in particular and the learning government in Taiwan in general. It will be argued that a policy change is a matter of learning, experimenting, and a process of trial and error, involving subjective aspects such as the policy-makers' perception, vision and experiences, and objective factors such as environmental, geographical or international constraints. Furthermore, Taiwan has been able to succeed because its policy-makers are willing to learn and unlearn. Though the right policy has not always been adopted, Taiwan's policy-makers are willing to experiment with a new policy in a pragmatic way. Policies that did not work were either modified or abandoned. Policies that did work were adopted. This paper concludes that Taiwan's economic "miracle" has been the result of a long-term evolutionary process of entrepreneurial vision by the government, careful policy experimentation and market selection. [ABSTRACT FROM AUTHOR]

This paper assesses the relative merits and demerits of different East Asian models by placing them in a historical perspective. It re-interprets Gerschenkron's model of late industrialization, and extends it to compare East Asian economies in view of substituting and complementing models, ft then explains divergent performances among East Asian economics from the late 1990s by examining the different Challenges they faced as their economies became mature and more fully open to forces of globalization. fn conclusion, the paper discusses the applicability of the East Asian models for today's developing countries. [ABSTRACT FROM AUTHOR]

This paper aims to gauge the impact of the global financial crisis on bilateral holdings of financial assets among East Asian countries. For this purpose, this paper uses the International Monetary Fund's Coordinated Portfolio Investment Survey (CPIS) data. We first present information about financial linkages between the CPIS-participating eight East Asian economies and other East Asian economies before and after the global financial crisis of 2008. We then apply the gravity model to assess the determinants of the cross-border holdings of foreign securities for four major East Asian financial investors – Hong Kong, Japan, Korea and Singapore. We find only few changes in the bilateral holdings of financial assets among East Asian countries in the post-crisis period. In particular, our evidence does not indicate that intra-Asian financial integration has increased noticeably since the global crisis. [ABSTRACT FROM AUTHOR]

This paper estimates the economic impacts of the various sequential liberalization scenarios in East Asia, emphasizing the significance of the 'sequence' of the liberalization process in computable general equilibrium (CGE) analysis. The major findings are as follows: (1) 'Sequence' matters in measuring the economic impacts of free trade agreement (FTA) scenarios in the region; (2) Scenario 1 (Korea-China FTA → Korea-Japan FTA → China-Japan FTA) is the sequence maximizing Korea's economic gains, whereas Scenario 3 (Korea-China-Japan FTA) is the one most preferred economically by China and Japan; (3) Korea's FTAs with the United States (US) and European Union (EU) can be evaluated as a preemptive strategic move, causing changes in FTA preferences of Korea and Japan; (4) the prediction of Bond and Baldwin (adjustment cost and juggernaut effect) and that of Evenett et al. (trade diversion effect) are supported by the empirical results that Korea's (China's) expected gains from northeast Asian FTA sequences increase (decrease) after Korea's FTAs with the US and EU are made; (5) predictions about the International Political Economy (IPE) theories (power consideration and domestic politics) upon the sequential FTA formations in East Asia are consistent with the findings above. [ABSTRACT FROM AUTHOR]

This paper aims to investigate the relationship between energy consumption and economic growth for 11 East Asian countries over the period 1971-2005 by taking into account their strong relationships. Based on fully modified ordinary least squares (FMOLS) and dynamic OLS (DOLS) approaches, while there exists a strong relation running from economic growth to energy consumption, it is observed that the strong relationship which runs from energy consumption to economic growth is overwhelmingly rejected for all cases except Indonesia and the Philippines. Moreover the inverse relation between two variables is observed for these two countries. [ABSTRACT FROM AUTHOR]

This paper discusses major conceptual and empirical issues relevant to the exchange rate policies of East Asian ecnomies. Given the high degree of economic integration, intraregional exchange rate stability remains an important objective in East Asia. But the current uncoordinated practice of each economy managing exchange rates or maintainging a de facto dollar peg is not optimal for this purpose. The paper suggests that the region's governments take a coordinated action to shift the anchor of nominal exchange rate policy from the US dollar alone to a common basket of the US dollar, The Japanese yen, and the Euro, Which would be more reflective of the average structure of foreign trade and direct investment. At least initially, each economy is gree to choose its own formal exchange rate arrangement, be it a fixed exchange rate regime, a crawling peg or a managed float with wide margins, as long as it chooses the common basket as the reference. Such an arrangement is a pragmatic policy option for East Asia until greater political and institutional development create an environment condcive to a more robust framework of monetary and exchange rate policy coordination. [ABSTRACT FROM AUTHOR]

There have been two related trends shaping global trade during the past couple of decades: the increasing role of international supply chains and the rise of China. Increased complexity in global trade has generated a need to construct more processed trade data — trade in value added — in order to deepen our understanding of trade relations between countries. In this article, we present a broad picture of trade in value added between the EU28 and East Asian countries. We find that East Asia is important as a final demand and supply chain export destination, especially for Northern European countries, while for CEE countries it is more important as an import source for both final demand and supply chain trade. Trade with East Asia is least important for Southern European countries. The production structure of an EU country seems to be one of the main factors explaining the importance of supply chain trade with East Asian countries. The data also suggest that supply chain trade could support the growth of domestic value-added exports to the supply chain trade partner country as well as to other countries. [ABSTRACT FROM PUBLISHER]

Critics opine that social capital, despite its importance, provides little empirical insight because it is difficult to measure. This paper develops a broad measure of social capital, incorporating four major components: social trust, norms, social networks, and social structure. We constructed an index of social capital for 72 countries by extracting the principal components from 44 variables. Consistent with the social capital literature, the index of social capital is significantly associated with various social and economic indicators, such as income per capita, education, infant mortality, regulatory quality and even happiness. We compare the levels of social capital between East Asia and other world regions. The results suggest that although the level of social capital varies widely across countries, East Asia has markedly less social capital than Western Europe or North America. [ABSTRACT FROM AUTHOR]

This paper proposes a general framework of patent protection which can be applied to most existing theories, and can be used to resolve various issues regarding the protection of information technology (IT)-enabled innovations, especially those involving business methods (BMs) and software. We suggest that one should consider that firms have many strategic choices or mixtures of appropriate combinations of innovations, examine different combinations of menu components rather than focusing on well-explored policies, revise market assumptions to make them more realistic and capture the complexity of policy-strategy assumptions by applying methodologies, such as experiments, system dynamics and intelligent agent theory. The work explores how these innovations are protected using the cases in the East Asian economy and find out that software and BMs are better protected in the nations that enforce strong patent rights. [ABSTRACT FROM AUTHOR]

This paper investigates the sources of economic fluctuations in the four Asian newly industrialized economies (NIEs), namely Hong Kong, Republic of Korea, Singapore and Taiwan. As small open economies, their macro-economic development is highly dependent on technology as well as markets of large countries. Using the common trends model, we examine the impacts of external supply shock, internal supply shock and trade shock on the key national macro-economic variables of these four economies, i.e. output, consumption, investment, export and import. Our empirical evidence suggests that supply-side disturbances, both the country-specific supply shocks and international supply shocks explain the bulk of fluctuations in output. [ABSTRACT FROM AUTHOR]

There has been a long tradition in business and economics to use frontier analysis to assess a production unit's performance. The first attempt utilized the data envelopment analysis (DEA) which is based on a piecewise linear and mathematical programming approach, whilst the other employed the parametric approach to estimate the stochastic frontier function. Both approaches have their advantages as well as limitations. This paper sets out to use an alternative approach, i.e. artificial neural networks (ANNs) for measuring efficiency and productivity growth for seven East Asian economies at manufacturing level, for the period 1963 to 1998, and the relevant comparisons are carried out between DEA and ANN, and stochastic frontier analysis (SFA) and ANN in order to test the ability of ANNs to assess the performance of production units. The results suggest that ANNs are a promising alternative to traditional approaches, to approximate production functions more accurately and measure efficiency and productivity under non-linear contexts, with minimum assumptions. [ABSTRACT FROM AUTHOR]

This paper models and tests the stability of the demand fur money in five East Asian countries—Indonesia. Malaysia, Philippines, Singapore, and Thailand—in the context of an open economy. The Johansen multivariate cointegration vector error correction analysis against quarterly data covering the period 1985:1–2001:4 was used. It was found that a stationary long run cointegrating relationship exists between broad money, real income, domestic interest rates. foreign interest rates corrected for exchange rate depreciation, and the expected rate of depreciation of the exchange rate. The results show that US Treasury bills rates and the foreign exchange rate vis-à-vis the US dollar play a significant role in the East Asian countries money demand relationship. This .suggests that currency .substitution vis-à-vis the US dollar may be an important consideration in the design and implementation of monetary policy in the East Asian countries. Furthermore, the results show that the Asian currency crises impacted the money demand functions negatively in these countries. CUSUM and CUSUMSQ stability tests show no evidence of parameter instability of the money demand functions in three of the fire countries throughout the period under investigation. [ABSTRACT FROM AUTHOR]

An introduction is presented in which the editor discusses various articles within the issue on topics including correlation of individual sectors in Korean economy, impact of banking industry concentration on financial stability and impact of financial crises in East Asia.

Recent increases in East Asian purchases of US treasury securities has led to growing concern over its impact on the US economy, particularly on the US long-term and short-term interest rates. The vector error-correction model results revealed the presence of long-run causal relations among the federal funds rate, the 10-year Treasury rate and the East Asian demand in addition to a unidirectional short-run causal relation from the 10-year rate to the Federal funds rate. The variance decomposition and impulse response findings indicated that the Asian demand for US assets has a limited but negative impact on the 10-year US Treasury interest rate. The transmission of the East Asian demand shock on both interest rates was almost immediate. The Federal funds rate is found to have a significant negative impact on the long-term rate. [ABSTRACT FROM AUTHOR]

Moving from labour to some capital and knowledge intensive sectors, East Asian countries have actively pursued strategic industrial policies and successfully promoted targeted sectors. However, their growth in high tech sectors challenged the US leadership and the World Trade Organization (WTO)-supported neo-liberal development "wisdom". Tensions over trade and technology issues eventually exploded into fierce policy conflicts. This study explores the role of the state in a single information and communication technology (ICT) sector, the semiconductor industry, over the course of its evolution in Japan, Korea, Taiwan and China. It is hoped to tackle the issues surrounding the conflicts between the Western economic orthodoxy and East Asian development policies through explaining the ICT development pathway of these countries. The finding shows that the international frictions in both ICT trade and technology were inevitable and reflect the divergence of development visions held by latecomers and developed countries. [ABSTRACT FROM AUTHOR]

A call for papers on global financial crises is presented.

An invitation for the submission of papers about global financial crisis and its policy implication on East Asia emerging economies is presented.

In this research note, I analyse the effects of religion on educational attainment in four East Asian countries (China, Japan, Korea and Taiwan) using the East Asian Social Survey. Controlling for a host of background variables, ordinary least squares (OLS) estimates of educational attainment show that Catholics and Orthodox Christians have on average more education than those with no religious affiliation, while the followers of other Eastern religions (including, among others, Taoism and syncretistic beliefs) have on average less education. The effects for Protestantism and Buddhism differ across the four different countries, probably because they both include various denominations and schools. [ABSTRACT FROM AUTHOR]

In the mid-1990s, the East Asian countries experienced severe financial crisis that were followed by deep economic downturns. A variety of methodologies have been used to understand the nature of the Asian financial crisis. However, the impact of the 1997 Asian financial crisis on the efficiency of the financial industry has yet to be critically examined. By employing the Data Envelopment Analysis (DEA) approach the present study attempts to examine for the first time the impact of the 1997 Asian financial crisis on the efficiency of the Korean banking sector. The study focuses on three major approaches, namely, intermediation, value added, and operating approaches. The results clearly bring forth the high degree of inefficiency in the Korean banking sector, particularly a year after the Asian financial crisis. We find that the Korean banking sector has consistently exhibit higher technical efficiency levels under value added approach, while technical efficiency seems to be lowest under intermediation approach. [ABSTRACT FROM AUTHOR]

By estimating a dynamic panel-gravity model of bilateral foreign direcr investment (FDI), this article investigates the location determinants of inward FDI in South and East Asia and assesses their short-run and long-run effects. The econometric results highlight the importance of the vertical specialization-, trade-, and international integration-related location factors. The gravity-specific variables are also found to be significant location determinants, whilst some of the traditional determinants are found to have either a weak or statistically insignificant effect (except host-market size) on inward FDI in South and East Asia. [ABSTRACT FROM AUTHOR]

This article is a theoretically grounded empirical contribution aimed at shedding light on Japan's policy stance on East Asian neo-regionalism. It aims to examine the recent region-building process in East Asia. The dynamics in East Asia suggest that regional institutionalization, brought about by norm diffusion based on the idea of neo-regionalism, is likely to follow a progressive and evolutionary trajectory through the institutionalization of the Association of Southeast Asian Nation (ASEAN) + 3 (South Korea, Japan and China). It provides a wide spectrum of regional-integrationist perspectives in order to offer as full a picture as possible of Japan's role in promoting regional integration in East Asia. The key finding of this article is that Japan has changed from a being “reluctant”, to becoming a “proactive” state in the context of regional collaboration in East Asia. [ABSTRACT FROM AUTHOR]

After discussing whether there should be global standards in institutions, the article shows that the so-called global institutions (GSIs) are not truly ‘global’ but institutions that are specific to the Anglo-American countries. The article then criticizes the arguments that the Anglo-American institutions will eventually become GSIs because of their superiority. Finally, the article discusses why the Anglo-American institutions are particularly unsuited to developing countries, which is why even the Anglo-American countries adopted them only after they had achieved their economic development. It is concluded that the East Asian countries would be ill advised to adopt the so-called GSIs. [ABSTRACT FROM AUTHOR]

Contrary to the dominant view that the developmental state evolved to reduce transaction cost (such as moral hazard), it is argued that it represented, first and foremost policy compromise between business and government over redistribution and market competitiveness. This compromise was possible because of favouable political conditions: a long shadow of the future, a favorable payoff structure, and an unequal distribution of power (in favor of the government). The long shadow of the future, in particular, was decisive in allowing the government and business to commit to and enforce their agreement. In some East Asian countries, however, political changes shortened the time horizon of state and business elites, weakening their policy cooperation and increasing the vulnerability of the economy to a crisis. This theory is tested against the cases of nine East Asian countries, using the stability of the party system as a proxy for the length of the time horizon and thus, the ability of actors to make a credible commitment. Consistent with theory, it is found and the more fragmented or divided a country's party system (i.e the shorter the time horizon) had become before the outbreak of the crisis, the more severe and costly the economic crisis has been in that country. [ABSTRACT FROM AUTHOR]

This special issue contains five articles that reflect the content shared during presentations at the 2012 Global Marketing Conference by Korean Scholars of Marketing Science held in Seoul, Korea. The authors of the twelve papers presented in relevant tracks of the 2012 Global Marketing Conference received an opportunity to revise their work for possible inclusion in this special issue. Through an independent round of double-blind reviews, the five articles that follow were developed, extended, and finalized. [ABSTRACT FROM PUBLISHER]