We discuss the reasons for the introduction of the Goods and Services Tax (GST) in Malaysia, its subsequent abolition, and the factors to consider if it is to be reinstated. The GST was implemented hastily to rein in mounting government deficits and debt. The lack of preparation to address its impact on the general price level, and incomes of poorer households in an economy already predisposed to inflation, led to widespread public discontent. The high compliance costs borne by smaller firms, delays in providing tax refunds to businesses, and the wasteful use of the additional revenues the tax generated strengthened the anti-GST sentiment. Any attempt to bring back the GST must focus on gaining acceptance rather than the revenue it generates. This is best achieved by timing its reintroduction correctly, keeping the rate low, the base broad, and implementing parallel measures to supplement the incomes of households seriously undermined by the tax on the consumption side. Additionally, addressing leakages, waste, and corruption in the public sector will strengthen public acceptance of the tax and instill confidence in public sector fiscal management.
{"title":"The Untimely Demise of the Goods and Services Tax (GST) in Malaysia: A Postmortem and the Way Forward","authors":"Suresh Narayanan, Abdul Rais Abdul Latiff","doi":"10.1162/asep_a_00883","DOIUrl":"https://doi.org/10.1162/asep_a_00883","url":null,"abstract":"\u0000 We discuss the reasons for the introduction of the Goods and Services Tax (GST) in Malaysia, its subsequent abolition, and the factors to consider if it is to be reinstated. The GST was implemented hastily to rein in mounting government deficits and debt. The lack of preparation to address its impact on the general price level, and incomes of poorer households in an economy already predisposed to inflation, led to widespread public discontent. The high compliance costs borne by smaller firms, delays in providing tax refunds to businesses, and the wasteful use of the additional revenues the tax generated strengthened the anti-GST sentiment. Any attempt to bring back the GST must focus on gaining acceptance rather than the revenue it generates. This is best achieved by timing its reintroduction correctly, keeping the rate low, the base broad, and implementing parallel measures to supplement the incomes of households seriously undermined by the tax on the consumption side. Additionally, addressing leakages, waste, and corruption in the public sector will strengthen public acceptance of the tax and instill confidence in public sector fiscal management.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":"2 4","pages":""},"PeriodicalIF":9.7,"publicationDate":"2024-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139446091","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Comments by Nam Seok Kim, on The Untimely Demise of the Goods and Services Tax (GST) in Malaysia: A Postmortem and the Way Forward","authors":"","doi":"10.1162/asep_a_00884","DOIUrl":"https://doi.org/10.1162/asep_a_00884","url":null,"abstract":"","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":"23 4","pages":""},"PeriodicalIF":9.7,"publicationDate":"2024-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139446052","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Comments by Masahiro Endoh, on Change from COVID-19 Pandemic to a New Normal: Documenting Consumption Behavior of Two Years with Big Data","authors":"","doi":"10.1162/asep_a_00877","DOIUrl":"https://doi.org/10.1162/asep_a_00877","url":null,"abstract":"","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":"28 3","pages":""},"PeriodicalIF":9.7,"publicationDate":"2024-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139445929","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The intensified geopolitical tension in Northeast Asia and the U.S.–China confrontation have shifted policy debates in Japan toward national security while the economic discussion has become thin. To regain more balanced policy talks, this paper tries to quantitatively comprehend the effect of the United States and its allies’ export controls on the East Asian machinery production networks and Japan's trade performance. Major findings include the following four points: First, most of the supply chain decoupling policies by the Japanese government have been the ones to prepare for sudden interruptions of the supply of important items while decoupling policies for strategic competition are limited only in the context of the cooperation with the United States. Second, international trade statistics at the industry level do not show clear evidence of supply chain decoupling in East Asia due to the U.S. export controls, at least up to 2022. Third, however, the negative trade effect becomes visible at the product or individual firms’ level, and the recent strengthening of the United States and its allies’ export controls may augment the negative effect on machinery production networks. Fourth, although the scope of trade controls would expand further, the supply chain decoupling is likely to end up with a partial one. The paper claims that middle powers such as Japan must establish a well-balanced trade policy.
{"title":"The Threat of Economic Deglobalization from Cold War 2.0: A Japanese Perspective","authors":"M. Ando, Kazunobu Hayakawa, F. Kimura","doi":"10.1162/asep_a_00875","DOIUrl":"https://doi.org/10.1162/asep_a_00875","url":null,"abstract":"\u0000 The intensified geopolitical tension in Northeast Asia and the U.S.–China confrontation have shifted policy debates in Japan toward national security while the economic discussion has become thin. To regain more balanced policy talks, this paper tries to quantitatively comprehend the effect of the United States and its allies’ export controls on the East Asian machinery production networks and Japan's trade performance. Major findings include the following four points: First, most of the supply chain decoupling policies by the Japanese government have been the ones to prepare for sudden interruptions of the supply of important items while decoupling policies for strategic competition are limited only in the context of the cooperation with the United States. Second, international trade statistics at the industry level do not show clear evidence of supply chain decoupling in East Asia due to the U.S. export controls, at least up to 2022. Third, however, the negative trade effect becomes visible at the product or individual firms’ level, and the recent strengthening of the United States and its allies’ export controls may augment the negative effect on machinery production networks. Fourth, although the scope of trade controls would expand further, the supply chain decoupling is likely to end up with a partial one. The paper claims that middle powers such as Japan must establish a well-balanced trade policy.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":"59 9","pages":""},"PeriodicalIF":9.7,"publicationDate":"2024-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139447711","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Although Chinese exports to the United States hit an all-time high in 2022, it would be incorrect to conclude that the U.S.–China trade war had no effects on trade. By exploiting fine product-level information on trade war tariffs, this paper demonstrates how the trade war diminished China's exports to the United States in tariff-impeded products, while expanding opportunities for exports from other countries in a fashion that had some systematic characteristics. First, the impact of the trade war tariffs was not immediate, as trade responses took place with a lag. Second, the responses to trade-war tariffs were heterogenous across countries and regions, with finer distinctions by product categories. Finally, trade that could be viewed as highly tied to global value chains (GVCs), such as trade in information and communication technology products, exhibited stronger reactions to the imposition of trade-war tariffs. These responses, and their implications for the organization of global supply chains, are discussed considering current trade concerns.
{"title":"Trade-war Tariffs and Supply Chain Trade","authors":"Deborah L. Swenson","doi":"10.1162/asep_a_00885","DOIUrl":"https://doi.org/10.1162/asep_a_00885","url":null,"abstract":"\u0000 Although Chinese exports to the United States hit an all-time high in 2022, it would be incorrect to conclude that the U.S.–China trade war had no effects on trade. By exploiting fine product-level information on trade war tariffs, this paper demonstrates how the trade war diminished China's exports to the United States in tariff-impeded products, while expanding opportunities for exports from other countries in a fashion that had some systematic characteristics. First, the impact of the trade war tariffs was not immediate, as trade responses took place with a lag. Second, the responses to trade-war tariffs were heterogenous across countries and regions, with finer distinctions by product categories. Finally, trade that could be viewed as highly tied to global value chains (GVCs), such as trade in information and communication technology products, exhibited stronger reactions to the imposition of trade-war tariffs. These responses, and their implications for the organization of global supply chains, are discussed considering current trade concerns.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":"26 3","pages":""},"PeriodicalIF":9.7,"publicationDate":"2024-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139445263","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study investigates the reasons behind the slowdown in real wages for Japan and Korea based on the aggregate and industry-level data for the respective countries. The findings suggest the following. First, both at the aggregate and industry level, there is a significant slowdown in both countries in the post-1995 period regarding labor productivity, which explains the overall slowdown in real wages. Second, the main reason for the gap between the growths in real wages and labor productivity is found to be the changes in the labor's terms of trade, which is defined as the consumer price index to GDP deflator ratio. Thus, the wage–labor productivity gap is not systematically connected to changes in labor income shares. Finally, the fall in the labor's terms of trade may be potentially related to an emphasis on exports and strong technological upgrading toward higher productivity growth products in both countries’ economic development.
{"title":"Why Do Real Wages Stagnate in Japan and Korea?","authors":"Hyunbae Chun, K. Fukao, H. Kwon, Jungsoo Park","doi":"10.1162/asep_a_00882","DOIUrl":"https://doi.org/10.1162/asep_a_00882","url":null,"abstract":"\u0000 This study investigates the reasons behind the slowdown in real wages for Japan and Korea based on the aggregate and industry-level data for the respective countries. The findings suggest the following. First, both at the aggregate and industry level, there is a significant slowdown in both countries in the post-1995 period regarding labor productivity, which explains the overall slowdown in real wages. Second, the main reason for the gap between the growths in real wages and labor productivity is found to be the changes in the labor's terms of trade, which is defined as the consumer price index to GDP deflator ratio. Thus, the wage–labor productivity gap is not systematically connected to changes in labor income shares. Finally, the fall in the labor's terms of trade may be potentially related to an emphasis on exports and strong technological upgrading toward higher productivity growth products in both countries’ economic development.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":"50 18","pages":""},"PeriodicalIF":9.7,"publicationDate":"2024-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139447185","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We use COVID-19 as an exogenous shock to analyze the impact of the COVID-19 pandemic on Japanese multinational affiliates’ performance, determining that the pandemic adversely impacted performance in general, but severe disruptions did not last longer than one year. The COVID-19 shock also affected global transaction networks, and affiliates’ total sales were severely affected by procurement challenges. Regarding heterogeneous effects, affiliates actively engaged in trade experienced worse conditions than local-oriented firms. Finally, we explore whether and which local backward linkages could mitigate such shocks, concluding that affiliates’ local procurement from companies beyond only Japanese firms could gain resilience.
{"title":"Resilience of Japanese Multinational Enterprise Production Networks during the COVID-19 Pandemic","authors":"Licheng Liang","doi":"10.1162/asep_a_00879","DOIUrl":"https://doi.org/10.1162/asep_a_00879","url":null,"abstract":"\u0000 We use COVID-19 as an exogenous shock to analyze the impact of the COVID-19 pandemic on Japanese multinational affiliates’ performance, determining that the pandemic adversely impacted performance in general, but severe disruptions did not last longer than one year. The COVID-19 shock also affected global transaction networks, and affiliates’ total sales were severely affected by procurement challenges. Regarding heterogeneous effects, affiliates actively engaged in trade experienced worse conditions than local-oriented firms. Finally, we explore whether and which local backward linkages could mitigate such shocks, concluding that affiliates’ local procurement from companies beyond only Japanese firms could gain resilience.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":"51 2","pages":""},"PeriodicalIF":9.7,"publicationDate":"2024-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139445768","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In May 2020, China formulated the Internal Circulation Strategy (ICS) to address the risks of global economic downturns caused by deglobalization. This study is the first to empirically examine the impacts of China's ICS on its stock market performance, focusing on investor behavior. Using data from the Baidu search index and the Shanghai and Shenzhen stock exchanges for the period 27 July 2020 to 5 May 2023, the results reveal that stock returns are negatively associated with investor attention to China's ICS, while stock volatilities are positively associated. This suggests that the ongoing and profound shift in economic strategy has raised concerns among investors. Furthermore, our analysis of heterogeneity finds that the negative association with stock market returns is statistically significant only during times of high policy uncertainty or geopolitical risk. The positive association with stock market volatility is statistically significant only during times of high geopolitical risk. This indicates that the stability of the internal and external environment plays a crucial role in alleviating investor concerns. We also observe mixed impacts on different sectors of the stock markets, with some sectors unaffected while others primarily experiencing a decline in returns.
{"title":"Exploring the Impact of China's Internal Circulation Strategy on its Stock Market under Deglobalization","authors":"Yujie Shi, Xinyi Hong, Liming Wang","doi":"10.1162/asep_a_00880","DOIUrl":"https://doi.org/10.1162/asep_a_00880","url":null,"abstract":"\u0000 In May 2020, China formulated the Internal Circulation Strategy (ICS) to address the risks of global economic downturns caused by deglobalization. This study is the first to empirically examine the impacts of China's ICS on its stock market performance, focusing on investor behavior. Using data from the Baidu search index and the Shanghai and Shenzhen stock exchanges for the period 27 July 2020 to 5 May 2023, the results reveal that stock returns are negatively associated with investor attention to China's ICS, while stock volatilities are positively associated. This suggests that the ongoing and profound shift in economic strategy has raised concerns among investors. Furthermore, our analysis of heterogeneity finds that the negative association with stock market returns is statistically significant only during times of high policy uncertainty or geopolitical risk. The positive association with stock market volatility is statistically significant only during times of high geopolitical risk. This indicates that the stability of the internal and external environment plays a crucial role in alleviating investor concerns. We also observe mixed impacts on different sectors of the stock markets, with some sectors unaffected while others primarily experiencing a decline in returns.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":"2 6","pages":""},"PeriodicalIF":9.7,"publicationDate":"2024-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139445902","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The EU is becoming more inward-looking and more hesitant toward globalization. This paper examines recent transformations in the EU's economic policies, with a focus on international trade and industrial policy. It argues that these changes reflect the EU's response to the evolving global economic and political landscape, driven by factors such as China's rise and the United States’ protectionist policies. By analyzing the potential consequences of these policy adjustments on EU industries’ competitiveness and trade relations, the paper offers insights into the future prospects of EU economic policies and their role in shaping the global economy.
{"title":"Navigating the New Normal: The European Union's Changing Stance on Globalization in the Era of Trade Conflicts","authors":"Fredrik Sjöholm","doi":"10.1162/asep_a_00886","DOIUrl":"https://doi.org/10.1162/asep_a_00886","url":null,"abstract":"\u0000 The EU is becoming more inward-looking and more hesitant toward globalization. This paper examines recent transformations in the EU's economic policies, with a focus on international trade and industrial policy. It argues that these changes reflect the EU's response to the evolving global economic and political landscape, driven by factors such as China's rise and the United States’ protectionist policies. By analyzing the potential consequences of these policy adjustments on EU industries’ competitiveness and trade relations, the paper offers insights into the future prospects of EU economic policies and their role in shaping the global economy.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":"54 1","pages":""},"PeriodicalIF":9.7,"publicationDate":"2024-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139447614","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The COVID-19 pandemic has drastically changed our daily lives in terms of eating, learning, working, and leisure time. So far, Japan has experienced eight waves of widespread infection and three emergency declarations but has coped with the crisis without mandatory lockdowns, behavioral restrictions, and mandatory mask-wearing that were seen in other countries. The response has mainly been an encouragement of behavioral changes in our daily lives. In this paper, we observe through “consumption big data” the initial disruption, the adaptation period, and the change to a new normal. We use point of sale (POS) data from supermarkets, convenience stores, home centers, drugstores, and consumer electronics mass merchandisers, as well as data from household bookkeeping applications, for the two years from January 2020 to December 2021. The POS data was used to observe item-level sales trends, while the household bookkeeping application data was used to observe trends in service expenditures and the prevalence of cashless payments. This made it possible to comprehensively understand the changes in consumer behavior during the pandemic.
{"title":"Change from the COVID-19 Pandemic to a New Normal: Documenting Consumption Behavior of Two Years with Big Data","authors":"Yoko Konishi, Takashi Saito, Hajime Kanai, Naoya Igei, Junichi Mizumura, Kyoko Shiga, Keita Sueyasu, Ryosuke Hamaguchi","doi":"10.1162/asep_a_00876","DOIUrl":"https://doi.org/10.1162/asep_a_00876","url":null,"abstract":"\u0000 The COVID-19 pandemic has drastically changed our daily lives in terms of eating, learning, working, and leisure time. So far, Japan has experienced eight waves of widespread infection and three emergency declarations but has coped with the crisis without mandatory lockdowns, behavioral restrictions, and mandatory mask-wearing that were seen in other countries. The response has mainly been an encouragement of behavioral changes in our daily lives. In this paper, we observe through “consumption big data” the initial disruption, the adaptation period, and the change to a new normal. We use point of sale (POS) data from supermarkets, convenience stores, home centers, drugstores, and consumer electronics mass merchandisers, as well as data from household bookkeeping applications, for the two years from January 2020 to December 2021. The POS data was used to observe item-level sales trends, while the household bookkeeping application data was used to observe trends in service expenditures and the prevalence of cashless payments. This made it possible to comprehensively understand the changes in consumer behavior during the pandemic.","PeriodicalId":52020,"journal":{"name":"Asian Economic Papers","volume":"31 11","pages":""},"PeriodicalIF":9.7,"publicationDate":"2024-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139446239","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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