Winners and Losers during a Deep Economic Crisis: Firm‐level Evidence from Indonesian Manufacturing*

What happens to firms during periods of deep economic crisis? Depending on the nature of the crisis, the general effects are well known. However, owing to data availability, there are relatively few detailed firm‐level studies. With the aid of an unusually rich database, the present paper investigates the effects of Indonesia's 1997–1998 crisis on manufacturing establishments. Consistent with studies of other crisis episodes, foreign ownership and prior export orientation are found to be highly significant determinants of survival and recovery. The effects of firm size are ambiguous. The industry in which firms are located, in particular its factor proportions, is also found to be significant.     

Foreign Investment and East Asian Economic Development

This article surveys and anabses the very lure literature on direct foreign investmenl (DFI) in the developing economies of East Asia and the Southwest Pacifi. Commencing with an overview of the MNC (mufcinafional corporation) presence in the region, successive sections a-amine patterns and performance of major investors, trude-DFI interrelationships, the impact of DFI on market structure and peflormance, the modalities of MNC entry, and host country policy. The latter, it is argues, is criticully importunt for assessments of the costs and benefits of DFI.     

Indonesia – Trade Policy Review 2007

This paper examines the 2007 WTO review of Indonesian trade policy. Indonesia undertook a major policy liberalisation in the late 1960s. Serious protectionist pressures emerged in the 1970s but for most of this period, and especially since the mid‐1980s, the economy has remained broadly open. We summarise the WTO report, update some of its analysis, highlight its key findings, and point to some trade policy issues that in our opinion warranted greater attention. The main theme of the paper is that Indonesia is a largely open economy, but that this openness on occasion remains precarious. There are both political economy, rent‐seeking forces opposed to the current openness and, perhaps more importantly, much of the country's influential public opinion is sceptical of the merits of an open economy and deeper global commercial integration. Nor is there a deeply institutionalised support for openness in the country's bureaucracy and polity. Seen from this perspective, a key question to answer is why the country has remained open, particularly since the deep economic and political crises of 1997–98.     

MEASURING THE DEADWEIGHT COSTS OF DUP AND RENT SEEKING ACTIVITIES

I examine a simple model of rent seeking behavior in order to determine the correct way to measure welfare loss due to rent seeking. I conduct this analysis using a general equilibrium version of the standard partial equilibrium consumers' surplus cost-benefit setup. I conclude that the ordinary tools of cost-benefit analysis, such as consumers' and producers' surplus, are up to the task of measuring the deadweight loss due to rent seeking, as long as they are applied in the proper general equilibrium context.     

Using the budget constraint to monetarise impact assessment results

Recent developments in Life Cycle Impact Assessment (LCIA) provide a basis for reducing the uncertainty in monetarisation of environmental impacts. The LCIA method “Ecoindicator99” provides impact pathways ending in a physical score for each of the three safeguard subjects humans, ecosystems, and resources. We redefine these damage categories so that they can be measured in terms of Quality Adjusted Life Years (QALYs) for impacts on human well-being, Biodiversity Adjusted Hectare Years (BAHYs) for impacts on ecosystems, and monetary units for impacts on resource productivity.The monetary value of a QALY can be derived from the budget constraint, i.e. the fact that the average annual income is the maximum that an average person can pay for an additional life year. Since a QALY by definition is a life-year lived at full well-being, the budget constraint can be determined as the potential annual economic production per capita at full well-being. We determine this to be 74,000 EUR with an uncertainty estimate of 62,000 to 84,000 EUR. This corresponds well to the 74,627 EUR willingness-to-pay estimate of the ExternE project. Differences to other estimates can be explained by inherent biases in the valuation approaches used to derive these estimates.The value of ecosystems can be expressed in monetary terms or in terms of QALYs, as the share of our well-being that we are willing to sacrifice to protect the ecosystems. While this trade-off should preferably be done by choice modelling, only one such study was found at the level of abstraction that allows us to relate BAHYs to QALYs or monetary units. Stressing the necessity for such studies, we resort to suggest a temporary proxy value of 1400 EUR/BAHY (or 52 BAHY/QALY), with an uncertainty range of 350 to 3500 EUR/BAHY.The practical consequences of the above-described monetarisation values has been investigated by combining them with the midpoint impact categories of two recent LCIA methods, thus providing a new LCIA method with the option of expressing results in both midpoints and an optional choice between QALY and monetary units as endpoint. From our application of the new method to different case studies, it is noteworthy that resource impacts obtain less emphasis than in previous LCIA methods, while impacts on ecosystems obtain more importance. This shows the significance of being able to express impacts on resources and ecosystems in the same units as impacts on human well-being.     

An environmental performance index for products reflecting damage costs

Several studies have demonstrated how to use DEA (Data Envelopment Analysis) based techniques to estimate environmental performance indices. None of these studies, however, are taking information on the environmental damage costs of the pressure types considered into account. This study is bridging a gap between environmental indices founded in physical pressures and damage costs founded in welfare economics. The aim of the paper is twofold: first, to demonstrate how to implement the information on environmental damage costs within a DEA based environmental performance index, and second, to estimate these indices at product level by using Danish input-output data and environmental data from 1997.     

What is unemployment in Europe? Concepts and measurement in the European community household panel

The purpose in this article is to evaluate the consistency between two measures of unemployment in a cross-country context. We use the European Community Household Panel to identify unemployment at an individual level based as well on the ILO criteria for being classified as unemployed as on the individual respondent reporting to be unemployed. This opens a unique opportunity to compare unemployment measured in two different ways based on a cross European Union panel study covering the years 1994 to 2001. The two main questions addressed in this article are to which extent the two unemployment measures differ and whether transition rates out of unemployment depend on which concept we use. Both questions are answered in the affirmative. The overall conclusion is that it is important, especially in some of the EU countries, to include both measures of unemployment as guidelines and indicators for policy.     

Perceptions of the Ethicality of Consumer Insurance Claim Fraud

It was proposed that ethical evaluation of insurance claim padding behavior would be affected by characteristics of the policyholder, insurance agent, and company. These three factors were manipulated in written scenarios and the premise was tested in a factorial experimental design. No significant support was found for an effect of any of the three factors on ethical perceptions of claim padding. However, females found claims padding to be significantly less ethical than males. Given a claim scenario where the actual loss was $500 and the claimed amount was $3000, subjects awarded an average of $986.91 on the claim. Many respondents were willing to compensate victims for intangible losses as well as tangible losses.