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Vol 4, Issue 2 (2023)

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Frequency :Bi-Annual

ISSN :2582-3086

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Latest Articles :- Vol: (4) (2) (Year:2023)

Mediating Effects of Governance in the Relationship between FDI and Innovation in Developing Economies

BY:   Hannarong Shamsub
Asian Journal of Economics and Business, Year:2023, Vol.4 (2), PP.123-148
Received:28 March 2023   |   Revised:19 May 2023   |   Accepted:10 June 2023   |   Publication:16 October 2023
DOI: https://DOI:10.47509/AJEB.2023.v04i02.01

While most studies in the available body of literature had focused on the direct relationship between FDI and innovation, this paper goes a step further to analyse whether governance in developing economies mediates this relationship. A 25 year cross-sectional time-series data was collected from the World Bank Development Indicators and the Worldwide Governance Indicators (2019) databases. This data spans the years 1995 to 2019. This panel dataset was estimated using a system GMM. The results of the study show that regulatory quality and voice and accountability are the two governance indicators that mediate the relationship between FDI and innovations. The results imply that, in the absence of high governance quality, the traditional policy prescription—such as increasing government spending on research and development (R&D), and education—may not be adequate to promote FDI’s innovation spillovers. The findings suggest that governments in developing nations should work to improve the voice and accountability and regulatory quality indicators by ensuring that citizens participate in decision-making to promote the flow of knowledge and information that fosters innovation. This will help to strengthen the influence of FDI on domestic innovations. In addition, the governments should foster an environment that is welcoming to foreign investment and implement the appropriate regulatory reforms, such as those that strengthen competition protection, property rights protection, and transparency in the operations of the organisations’ implementing policies.

Keywords: governance and FDI, governance, innovation, mediating effect of governance, spillover effect, innovation spillover

Hannarong Shamsub (2023). Mediating Effects of Governance in the Relationship between FDI and Innovation in Developing Economics. Asian Journal of Economics and Business. 4(2), 123-148. https://DOI:10.47509/AJEB.2023.v04i02.01

Economics of Agrarian Governance

BY:   Hrabrin Bachev
Asian Journal of Economics and Business, Year:2023, Vol.4 (2), PP.149-178
Received:30 March 2023   |   Revised:22 May 2023   |   Accepted:17 June 2023   |   Publication:16 October 2023
DOI: https://DOI:10.47509/AJEB.2023.v04i02.02

The goal of the article is to give answers to following academic and practical (policies and business and farms strategies forwarded) questions: “What is Agrarian Governance?” and “How to Assess Agrarian Governance?” The interdisciplinary methodology of the New Institutional Economics has been adapted and an adequate definition and framework for analysing the system of agrarian governance in Bulgaria has been suggested. Based on a critical review of previous research and practical experience in this area, it is underlined that agrarian governance is to be studied as a complex system, including four main components: agrarian and related agents involved in making management decisions; rules, forms and mechanisms that govern the behaviour, activities and relationships of agrarian agents; processes and activities related to making governing decisions; a specific social order resulting from the governing process and functioning of the system. The analysis of agrarian governance is to include the individual elements for the system, different levels of governance, and the main functional areas of agrarian governance, for each of which adequate quantitative or qualitative methods of institutional approach are suggested. When evaluating the agrarian governance system, the personal characteristics of the participating agents, the institutional environment, transaction costs and benefits, the comparative efficiency of alternative governing structures, and the “time factor” must be taken into account. Further theoretical and empirical research in this “new” field is needed to better understand this complex category and refine approaches to its economic analysis. Systematic theoretical and empirical research in this “new” field has to be expanded to better understand this complex category and refine approaches to its economic analysis. For a better distinction and a more complete definition, a wider adaptation of the term Governance in languages like Bulgarian is necessary.

Keywords: governance, agriculture, definition, assessment, Bulgaria

JEL codes: Q12, Q18, Q56

Hrabrin Bachev (2023). Economics of Agrarian Governance. Asian Journal of Economics and Business. 4(2), 149-178. https://DOI:10.47509/AJEB.2023.v04i02.02

The Investment Development Path Theory: Evidence from China

BY:   Zining Wang, Hongrui Wang & Bing He
Asian Journal of Economics and Business, Year:2023, Vol.4 (2), PP.179-191
Received:08 April 2023   |   Revised:05 May 2023   |   Accepted:20 June 2023   |   Publication:16 October 2023
DOI: https://DOI:10.47509/AJEB.2023.v04i02.03

During past the decades, the inward and outward FDI of China increased rapidly, and China became the net outward investor since 2015. Using the time series data of Chinese FDI stocks from 2003 to 2018 and the panel data of 281 cities, this paper studies the investment development path (IDP) model through a single variable polynomial function and a panel correction standard error model. The result shows that China had entered the early stage 4 of the investment development path in 2016 and has confirmed the U-shaped relationship between net outward investment position (NOIP) and GDP per capita. The subsample analysis shows that the IDP of Beijing-Tianjin-Hebei Urban agglomeration lags behind that of the Pearl River Delta and Yangtze River Delta. Besides, the IDP is also U-shaped and is ahead of economic development.

Keywords: FDI, IDP, Net Outward Investment, Urban Agglomeration, U-shaped

Zining Wang, Hongrui Wang & Bing He (2023). The Investment Development Path Theory: Evidence from China. Asian Journal of Economics and Business. 4(2), 179-191. https://DOI:10.47509/AJEB.2023.v04i02.03

Inequality of Opportunity in Health in Old Age in China and India

BY:   Dhiman Das
Asian Journal of Economics and Business, Year:2023, Vol.4 (2), PP.193-214
Received:18 July 2023   |   Revised:19 August 2023   |   Accepted:20 August 2023   |   Publication:16 October 2023
DOI: https://DOI:10.47509/AJEB.2023.v04i02.04

In this paper we have examined inequality of opportunity in health among aging population in China and India drawing from Roemer’s distinction of inequality due to circumstances beyond one’s control and efforts for which one should be responsible. We studied whether the Chinese policies of abolishing property rights and relatively better public provision of nutritional and health resources diminished the importance of early life circumstances on health outcomes as compared to India. Using data from Wave 1 of the WHO Study on Global Ageing and Adult Health Survey, we found that early childhood nutritional and disease environment, and parental education, especially father’s education, played an important role in health inequality in later life in both countries. Though the Chinese developmental programs led to better health outcomes for its population, it did not perform as well in removing inequality of opportunity in health among the aging population compared to India. On the other hand, though the Indian state achieved lesser inequality due to circumstances for its aging population, it mainly favoured the male. The relatively high importance of circumstances in overall inequality, compared to factors within individual control, in both countries also highlight the need to redesign redistributive policies.

Keywords: Property rights, Aging population, Inequality of opportunity

Dhiman Das (2023). Inequality of Opportunity in Health in Old Age in China and India. Asian Journal of Economics and Business. 4(2), 193-214. https://DOI:10.47509/AJEB.2023.v04i02.04

Importing Sobrie ‘Tea’: Understanding the Tea Trade during the Industrial Revolution

BY:   Kabeer Bora
Asian Journal of Economics and Business, Year:2023, Vol.4 (2), PP.215-239
Received:12 March 2023   |   Revised:29 April 2023   |   Accepted:10 May 2023   |   Publication:16 October 2023
DOI: https://DOI:10.47509/AJEB.2023.v04i02.05

Economic historian, Robert Allen observed that during the Industrial Revolution, the British working class experienced a period of stagnant real wages. This had led many historians to investigate changes in the diet of the working class during that time. While there has been a focus on the entire food basket, this paper primarily concentrates on the consumption of tea, which was entirely imported. I have tried to explore why the demand for tea increased during the Industrial Revolution by examining the effect of working hours on tea imports between 1760 and 1834. I have also aimed to identify the determinants of tea demand while underlining the crucial role that increasing working hours played during the Industrial Revolution. The Industrial Revolution was characterised by long working hours, and the per capita declining consumption of the so-called luxury items, such as tea, due to their use as stimulants. To examine the relationship between working hours and tea imports, I employed a Dynamic OLS (DOLS) methodology, which demonstrated that tea imports responded positively to increasing working hours. This finding was corroborated by another method, the Fully Modified OLS (FM-OLS) methodology. I have also proposed some new methods for calculating the number of hours worked and the consequent result on tea imports in the process.

JEL Classification: N33, J22, I15, N73, F14

Keywords: Tea, Working hours, Time Series, Trade History, Industrial Revolution

Kabeer Bora (2023). Importing Sobrie ‘Tea’: Understanding the Tea Trade during the Industrial Revolution. Asian Journal of Economics and Business. 4(2), 215-239. https://DOI:10.47509/AJEB.2023.v04i02.05

The Relative changes in the Steady States of Per-Capita Output of Some Typical “Middle Income Trap” Countries and China

BY:   Gang Liu
Asian Journal of Economics and Business, Year:2023, Vol.4 (2), PP.241-292
Received:31 January 2023   |   Revised:19 May 2023   |   Accepted:28 August 2023   |   Publication:16 October 2023
DOI: https://DOI:10.47509/AJEB.2023.v04i02.06

Based on a sample of 114 countries and regions, this paper uses the econometric method to show that, in terms of steady state of per-capita output, the relative positions of Brazil, Mexico, Malaysia, Turkey and South Africa in the sample generally remained slightly lower than the average level of the sample in the 1970-2019 period; China’s relative position in the sample was extremely low in the 1970s, then continued to rise rapidly and caught up with the overall level of the above five countries in 2010s. Thus, even in terms of steady state of per-capita output, the above five countries were still typical “middle income trap” countries in the 1970-2019 period while China was not, but China started to face the “middle incometrap” in 2010s. Next, combining the theory of convergence with the practical data of the above 5 countries and China, this paper analyses the reasons, respectively, for their different changes in the relative position in the sample. Finally, from the perspective of steady state of per-capita output, this paper gives some suggestions, respectively, for the above five countries and China to cross the “middle income trap” in the future.

Keywords: “middle income trap” country; China; steady state of per-capita output; conditional convergence; social infrastructure

Gang Liu (2023). The Relative changes in the Stready States of Per-Capita Output of Some Typical “Middle Income Trap” Countries and China. Asian Journal of Economics and Business. 4(2), 241-292. https://DOI:10.47509/AJEB.2023.v04i02.06

Financial Stress Testing: Evidence of Asia, Euro Zone and the United States

BY:   Nadhem Selmi
Asian Journal of Economics and Business, Year:2023, Vol.4 (2), PP.293-304
Received:18 July 2023   |   Revised:09 August 2023   |   Accepted:18 August 2023   |   Publication:16 October 2023
DOI: https://DOI:10.47509/AJEB.2023.v04i02.07

Financial stress testing (FST) is an operational tool for detecting fragility and vulnerability in financial system. Looking at the FST process, we find that Financial Stress Index (FSI) is a particular case of FST. FSI is a measure of the banking sector’s stress which gives a better picture of the bank’s condition than a simple binary crisis indicator. It is argued that this type of a fragility index seems to be a highly useful measurement for monitoring the banking sector fragility. During this financial crisis phase, global interactions are important and fellow’s shocks are the main driving forces of the economic sector. Our findings imply that policy responses to a pandemic, corona virus are unlikely to prevent the spread among countries, making fewer domestic risks internationally diversifiable when it is most desirable. In this paper we have also introduced a novel non parametric approach to measure stress for the analysis of financial data.

Keywords: Financial Stress Testing, MGARCH-A-DCC

Nadhem Selmi (2023). Financial Stress Testing: Evidence of Asia, Euro Zone and the United State. Asian Journal of Economics and Business. 4(2), 293-304. https://DOI:10.47509/AJEB.2023.v04i02.07

Constitutional Endorsement and Entrepreneurship Development in China’s Economic Transformation

BY:   Shiyong Zhao and Ruitian Wu
Asian Journal of Economics and Business, Year:2023, Vol.4 (2), PP.305-321
Received:18 February 2023   |   Revised:29 March 2023   |   Accepted:11 April 2023   |   Publication:16 October 2023
DOI: https://DOI:10.47509/AJEB.2023.v04i02.08

In this paper we provide empirical evidence on the impact of Constitution endorsement of private ownership on local entrepreneurship development in China’s economic transition era. Employing the data from China’s 31 provinces between 1992 and 2019, we found that the amendment to the Constitution in 2004, which declared explicitly to protect private property rights for the first time in the history of the People’s Republic of China since it’s founding in 1949, had significantly promoted the development of China’s entrepreneurship in all relevant sample periods. The Constitution amendment in 1999, which upgraded private ownership from “a supplement to socialist public ownership economy” to “an important component of socialist market economy,” also had a significant and positive effect on entrepreneurship development over the sample period 1992-2019 (and 1989-2019 as well). But this effect was less significant both statistically and economically than the 2004 amendment. This finding is robust to various sensitivity tests. Our study adds some basic evidence to a growing literature emphasising the role of institutions in promoting entrepreneurship development.

Keywords: Constitution endorsement, Entrepreneurship, China

Shiyong Zhao & Ruitian Wu (2023). Constitutional Endorsement and Entrepreneurship Development in China’s Economic Transformation. Asian Journal of Economics and Business. 4(2), 305-321. https://DOI:10.47509/AJEB.2023.v04i02.08

Does China’s Rise mean the End of the United States’ Economic Leadership?*

BY:   Raul Ornelas and Josue Garcia2
Asian Journal of Economics and Business, Year:2023, Vol.4 (2), PP.323-338
Received:30 August 2023   |   Revised:11 September 2023   |   Accepted:18 September 2023   |   Publication:16 October 2023
DOI: https://DOI:10.47509/AJEB.2023.v04i02.09

The article offers an updated overview of the hegemonic dispute between the United States and China, analysed from the perspective of the competition of its main transnational corporations for world economic leadership. The research was carried out by systematising Fortune Global 500´s list for a period of 26 years (1994-2020). The descriptive analysis focused on four main variables: incomes, profits, assets, and employment; for two scales of the study: a first global scale that locates the main groupings of the world’s largest companies by their headquarters country; and a second meso-economic scale that determines the top economic activities in which the world’s largest corporations compete. Finally, we performed a comparative analysis of the economic performance of the United States and Chinese corporations in those core activities. Our study concludes that in the short term, the economic bases of the United States corporations will continue to play a hegemonic role in world economic competition.

Keywords: World Economic Order, Capitalist Enterprises, Capitalist Political Economy, Prospects of Capitalist System, Hegemony, World economic leadership

JEL: F02, P12, P16, P17

Raul Ornelas & Josue García (2023). Does China’s Rise mean the End of the United States’ Economic Leadership. Asian Journal of Economics and Business. 4(2), 323-338. https://DOI:10.47509/AJEB.2023.v04i02.09

Improved Martingale Betting System for Intraday Trading in Index Futures—Evidence of TAIEX Futures

BY:   Ting-Yuan Chen and Szu-Lang Liao
Asian Journal of Economics and Business, Year:2023, Vol.4 (2), PP.339-366
Received:28 July 2023   |   Revised:19 September 2023   |   Accepted:25 September 2023   |   Publication:16 October 2023
DOI: https://DOI:10.47509/AJEB.2023.v04i02.10

In this paper we have proposed an innovative intraday trading policy which originated from the standard Martingale gambling system with a stop policy. Therefore we call the new trading method as the Improved Martingale Betting System (IMBS). The traditional martingale betting system was investigated in the case of Casino Roulette gambling. In this paper we have modified the method by adding a stop policy and applied the new method to intraday trading. We have investigated the efficacy of our modified IMBS in actual empirical tests. The results show that in the context of TAIEX futures (TX) trading with three different strategies, our IMBS has quite good performance and can be applied to TX intraday trading and other related markets.

Keywords: Martingale betting system, TAIEX futures, Intraday trading, Improved martingale betting system

Ting-Yuan Chen & Szu-Lang Liao (2023). Improved Martingale Betting System for Intraday Trading in Index Futures–Evidence of TAIEX Futures. Asian Journal of Economics and Business. 4(2), 339-366. https://DOI:10.47509/AJEB.2023.v04i02.10

Impact of Global Value Chains’ Participation on Manufacturing Employment in China

BY:   Ping Hua
Asian Journal of Economics and Business, Year:2023, Vol.4 (2), PP.367-387
Received:28 July 2023   |   Revised:29 August 2023   |   Accepted:22 September 2023   |   Publication:16 October 2023
DOI: https://DOI:10.47509/AJEB.2023.v04i02.11

The literature on the employment impact of China’s GVCs (global value chains) participation has focused on the substitution effects of Chinese inputs imported by developed countries, while few studies have been made on its domestic job creations. To complete this gap, this study proposes GVCs augmented labour demand function, which was applied to panel data of 16 Chinese manufacturing industries over the 2005-2014 period using Arellano and Bond’s GMM (Generalised Moment Model) estimator for dynamic panel data model specifications to estimate employment effects of different GVCs participation modes. The obtained positive coefficients of backward linkages show increasing labour intensity processing and assembly increased employment, while the negative coefficients of China’s forward linkages and position mean producing more capital intensity intermediate inputs to be embodied in third countries’ exports and upgrading along to GVCs provided less job opportunities. Thus, the decrease of processing and assembly exports, the growth of intermediated inputs’ exports and the position improvement during the studied period have all diminished the manufacturing employment. These results support the ‘mixed-blessing hypotheses of GVC participation in the literature.

Keywords: GVCs, manufacturing employment, China

JEL Classifications: F14, F16, F66

Ping Hua (2023). Impact of Global Value Chains’ Participation on Manufacturing Employment in China. Asian Journal of Economics and Business. 4(2), 367-387. https://DOI:10.47509/AJEB.2023.v04i02.11

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