econews - nus – faculty of arts and social sciences · econews july 2003 1 contents dpm lee hsien...

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ECONewsNewsletter of the Department of Economics July 2001Newsletter of the Department of Economics July 2003

Assoc Prof Habibullah KhanAssoc Prof Tay Boon NgaAssoc Prof Wong Chung MingDr Wong Wei KangMs Annie KohMs Khatini Bte Anuar

CONTENTS

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CONTENTS

DPM Lee Hsien Loong presents the Award to Dr Shin Jang-Sup

DR SHIN JANG-SUPWINNER OF THE MAS-ESSECONOMIC ESSAYCOMPETITION

The MAS-ESS Economic Essay Competition is jointly organizedby the Monetary Authority of Singapore and the EconomicSociety of Singapore. The Competition seeks to raise the overalllevel of awareness and interest of the public in global economicand financial issues.

The theme for the 2002 competition was The Role of the Statein an Increasingly Borderless World. Our colleague, Dr ShinJang-Sup won the first prize in the “Open Category”. We aregrateful to the Monetary Authority of Singapore and EconomicSociety of Singapore for granting us approval to produce anabridged version of this essay in ECONews.

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EDITORIAL TEAM OF

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Dr Shin Jang-SupWinner of the MAS-ESS EssayCompetition .................................. 1-3

MPA Professorship inShipping Economics ...........................4

ESU Forecasts ..........................................4Economics Participates in New Research

Project on Health Care in China .........5International Conference on “West China

Development: Domestic Strategies andGlobal Implications” ...........................6

Staff Publications ................................ 6-9Staff Seminars ................................ 10-11Conferences ................................... 11-12Staff News

Assoc Prof Hank Lim Retires ........... 13In Touch with

Assoc Prof Euston Quah .............. 14NUS Excellent Teachers’ Award ....... 15Welcome .......................................... 15Best Wishes ..................................... 15

Past Developments in GraduateProgramme ............................... 16-17

Graduate Seminar ................................. 18Student News - Special Achievements:

Mr Lim Tong Ni .............................. 19Ms Chua Boon Loy ......................... 19Mr Lim Teck Kiat ............................ 20

New Courses for UndergraduateCurriculum ...................................... 21

Singapore Economic Review ................. 22MAS-ESS Essay Competition 2003 ...... 23Stay in Touch ....................................... 23Upcoming Events ................................. 24

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THE ROLE OF THE STATE IN AN INCREASINGLYBORDERLESS WORLDby Dr Shin Jang-Sup

Globalisation is a trend increase in mobility ofproducts, services, and factors of production

across national borders. It has recently become a centralsubject in academic and policy-making discourse,mainly because the increase in mobility has beenextended significantly to factors of production andservices from the late 20th century, resulting in majorchanges in the world economy.

First, globalisation has increased the volume offinancial, technical, managerial and other resourcesavailable for individual countries, providing them withgreater potential for economic growth. Secondly,however, the increased instability is a Siamese twin ofthe higher growth potential as the rapidly growingincidence of financial crises shows. Thirdly, there hasbeen a great ‘power shift’ between mobile actors andless mobile actors. MNCs were previously regarded asentities to be accepted cautiously but are now regardedas ‘engines (at least catalysts) of growth’ by a broadspectrum of policy-makers, academics andinternational institutions.

One ironic thing about globalisation is that, as moreand more factors become mobile, nationalcompetitiveness is more critically dependent on lessmobile factors. Among others, the national governmentis arguably the most immobile one (we cannot movethe Singaporean government to Japan, for instance).In this respect, the role of the state becomes moreimportant with the further progress of globalisation,contrary to the popular perception that it should bediminished as an economy becomes globalised.Underlying this observation is the fact that the state isthe ultimate system manager of the national economy,which is responsible for providing mobile actors with‘complementary assets’. In determining the locationof production or provision of financial resources, themobile actors consider ‘location-specific factors’ whichwill complement their own assets. Within a giventerritory, the state is the principal agent responsiblefor providing crucial location-specific factors likepolicy, institutions, infrastructures and so on.

A basic assumption in the popular perception is thatmarket forces would replace or make unnecessary muchof the role previously undertaken by the state as aneconomy is more broadly exposed to forces ofglobalisation. However, still many important functionsare only undertaken by the state. For instance, policyformulation and implementation is one of the state’sunique responsibilities. The state is also a basic providerof human capital required for economic development.Political and social conflicts are resolved mainly throughthe state apparatus.

Moreover, the role required for the state is more than aSmithian minimal one. When a country attempts toattract FDIs, it is often the case that its state needs totempt them with an array of ‘incentives’, whichinevitably entails elements of industrial policy. The statealso should perform the role as a guardian to minimisenegative effects from increasing instability of the worldeconomy.

Although Singapore has developed through aggressivelyattracting MNCs’ investments, it did not in the leastlet market forces dictate the running of the economy.The role of the state was crucial as the prime agent toformulate and implement this development strategy.It provided foreign investors with competitive andcontinuously-upgraded complementary assets, as theleast mobile actor in its territory. It also invested directlyin areas where MNCs were not interested but which itregarded as strategic to the country’s development.

As compared with other developing countries, theacceleration of globalisation has posed relatively lessdifficult challenges to the Singaporean state becauseits economic management system had been alreadyestablished on the basis of little distinction betweendomestic and foreign capital (or markets). Singaporealso faced relatively less problems from the increasinginstability of the international financial market due torelatively low levels of foreign debt and corporate debt,combined with its strong position in foreign reserve.

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However, this does not imply that what lies ahead ofthe Singaporean state is an easy task. It is still aformidable task to anticipate the next growth areas whileproviding and upgrading necessary complementaryassets. Moreover, as the income level of the countryreaches that of an advanced country, it seems to face achallenge that is qualitatively different from previousones.

One weakness of the Singapore’s system lies in therelative underdevelopment of domestic technologicalcapability. This was because it had weak incentives toinvest in R&D because MNCs were sources of majortechnologies. Reflecting this, Singapore’s expenditureon R&D investment had been very low even until theearly 1990s when it reached the advanced countrystatus. While Singapore remained a catching-upcountry, it might have been sufficient to try to findbusiness areas that MNCs were willing to part withand attract them by providing complementary assets.However, there is a certain limit to this growth strategybecause of the difficulty in acquiring core technologies.

From the viewpoint of MNCs, the core R&D capabilityis the last thing that they will transfer to localsubsidiaries. It is still an overall trend that MNCsconcentrate their higher value-added productionprocesses, including R&D, in their home countries,although they set up regional R&D centres related withadaptation to rapidly-changing local market conditions.Moreover, as competition among MNCs intensifies and‘time-to-market’ becomes more important, MNCs lookfor investment sites where ‘higher-tier’ suppliers providethem with some technologies and productioncapabilities that they urgently need to develop but donot have time to implement.

These high-end capabilities, i.e., core technologicalcapabilities possessed by MNCs and technologiesowned by higher-tier suppliers, are now cruciallyimportant in maintaining Singapore’s advanced countrystatus. And this presses Singapore to pursue a two-pronged growth strategy: It needs to attempt seriouslyto acquire higher-end capabilities that are securely basedon its territory, while trying to exploit ever-expandingcomplementary business areas as it has done previously.

Here again, the state is the principal agent responsiblefor re-gearing the strategic focus and developingnecessary capabilities and institutions. As the ultimatesystem manager of the national economy, the stateshould maintain its leadership in transforming theeconomy for the next leap. Singapore’s current pushtowards nurturing ‘technopreneurship’ and building a‘regional knowledge hub’ can be understood in thiscontext. These are no more than state-initiated effortsto develop higher-end capabilities that are rooted inthe territory and interact with mobile actors.

The current discussion on the restructuring of GLCscan be also put into a similar context. At stake is notsimply whether the restructuring will make GLCs,which are already efficient in international standards,more efficient or not. The allegations of GLCs’‘encroachment’ of SMEs’ business areas and ‘stifling’competition have also more to do with distributionalquestions than long-term growth questions. It shouldbe understood that both GLCs and local privatecompanies are important constituents of less mobileactors responsible for higher-end capabilities withinSingapore. Therefore, a higher priority of the statepolicy should be given to the question of what kind ofmix between GLCs and local private companies willbe appropriate for Singapore to create coretechnological capabilities and a pool of higher-endsuppliers, than that of how to help globalisation ofGLCs.

I have painted here a broad picture on the role of thestate in the era of accelerated globalisation andattempted to draw policy implications for Singapore.The actual ways individual states respond toglobalisation would be diverse across countries,reflecting their differences in their previous paths ofdevelopment, stages of development, structure ofeconomy and so on. There will be no ‘one-size-fits-all’solution for any country. However, the fact remainsthat the state should not refrain from carrying out itscreative role as the system manager in its territory,without succumbing to the ‘market-will-do’ rhetoriccurrently prevalent in the academic and policy-makingdiscourse.

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The Department’s Econometric Studies Unit (ESU)announced its forecasts for the Singapore economy on 7

January 2003 at the Regional Outlook Forum, an annualconference organized by the Institute of Southeast AsianStudies (ISEAS). Held against a backdrop of emerging terroristthreats to the region and a looming war in the Middle East,the invited speakers at the forum – all of whom are seasonedobservers of Southeast Asia – dwelled on how these eventsmight impinge on regional political and economic landscapes.Despite the ominous storm clouds, there was nevertheless ageneral consensus that the ASEAN countries were poised formore vigorous economic growth this year.

The ESU forecasts presented by Associate Professor PeterWilson and Dr Choy Keen Meng were based on theassumption that a conflict in Iraq, were it to happen, wouldbe relatively short and successful. Once the economicuncertainties dissipate and business confidence recovers, theSingapore economy could rebound more strongly in thesecond half of 2003 as global investment and IT expenditurespick up. The ESU team believed that, barring any adverseshocks, 3˚–4˚% GDP growth was achievable this yearcompared to 2.2% in 2002.

Domestic consumer expenditures were predicted to increaseby only 2% in 2003 because Singaporeans, being over-cautious, would want to see concrete signs that the economy

ESU FORECASTS AT THE ISEAS REGIONALOUTLOOK FORUM . . . by Dr Choy Keen Meng

is back on a higher growth track before they start to spendagain. Similarly, investment spending was envisaged toimprove at a modest pace of 3˚%, partly due to a depressedconstruction industry. The outlook for exports was expectedto be considerably brighter since the anticipated recovery inexternal economic conditions later in the year should translateinto higher demand for Singapore’s manufactured electronicsproducts. Still, the labour market prognosis was poor, withemployment continuing to shrink marginally and real wagesstaying stagnant in 2003. Like households, business firms needmore evidence of a sustained economic recovery before hiringnew workers. The inflation figure was not expected to exceed1% even after taking into account the GST hike that cameinto effect earlier this year.

In retrospect, as expected, the Iraq war was swiftly concludedwithout precipitating a dramatic rise in oil prices. But noeconomic forecaster could possibly have foreseen the outbreaksof Severe Acute Respiratory Syndrome (Sars) that swept acrossSingapore and parts of Asia in March. The economic impactof this untimely epidemic is difficult to ascertain, given thesmall number of precedents in modern history. Although it isclear that the fear induced by Sars has significantly reducedeconomic activities hosted by the tourism and service sectorsduring the affected months, its full repercussions on theSingapore economy remain to be seen.

The Maritime and Port Authority of Singapore (MPA)has generously donated $8 million to the NUS

Endowment Fund for the establishment of two MPAProfessorships: One MPA Professorship in Maritime Lawat the Faculty of Law, and another MPA Professorship inShipping Economics at the Department of Economics ofthe Faculty of Arts and Social Sciences.

The Department of Economics intends to support two typesof visitors with the net income of the MPA ShippingEconomics Fund: (1) MPA Visiting Professors in ShippingEconomics; and (2) MPA Distinguished Visitors inShipping Economics.

The MPA Visiting Professors in Shipping Economics wouldcome to NUS for 3 to 4 months. The Professor’s mainresponsibility would be to conduct at least one, but possiblytwo, modules in Shipping Economics for postgraduate andundergraduate students, as well as conduct in-houseseminars and public lectures in Shipping and PortEconomics for maritime professionals in Singapore.

The MPA Distinguished Visitors in Shipping Economics wouldcome to NUS for up to a month. The Distinguished Visitorwould conduct non-credit courses and participate in specialistworkshops/conferences in Shipping Economics.

Besides teaching, the Visiting Professor/Distinguished Visitormay also be involved in the planning of relevant course syllabi,and advise on research and development efforts in theirspecialized fields.

Singapore has been for a long time one of the busiest seaportsin the world. The appointment of the Professor/DistinguishedVisitor in Shipping Economics is an important step in theDepartment’s efforts to equip interested professionals inSingapore with the necessary knowledge and skills in thecomplex and demanding areas of shipping and port economics.

The search for suitable candidates is now on and the firstProfessor/Distinguished Visitor are expected to be appointedfor the academic year 2004-5. Candidates who are interestedmay forward their enquiries to the Head, Department ofEconomics, at email: [email protected].

MARITIME AND PORT AUTHORITY OF SINGAPOREPROFESSORSHIP IN SHIPPING ECONOMICS

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A new multidisciplinary project on the important issueof health care reform in China has recently been

initiated. Participants include the East Asian Institute(through Dr. Gu Xin, the Principal Investigator, andProfessor John Wong), the Department of Community,Occupational, and Family Medicine (through Assoc Prof/P Phua Kai Hong and Assoc Prof/P Lim Meng KinKengMin), and the Department of Economics (through ProfessorÅke Blomqvist). Entitled “Institutional Restructuring inChina’s Health Care: Delivery, Financing, and Regulation”,the project’s preliminary phase is scheduled for AY 2003-04, with the help of funding from the Faculty of Arts andSocial Sciences; the intention is to later expand it into amulti-year project. The field work under the project will becarried out partly in conjunction with the Institute of SocialDevelopment and Public Policy at Beijing NormalUniversity (with which Dr Gu Xin has a long-termcollaborative relationship), and will also involve theDevelopment Research Center at the State Council ofChina, with which the East Asia Institute has a goodworking partnership.

Health policy and health system reform have emerged ascritical issues for social policy in China in recent years. Theinternational spotlight that was focused on health care inChina during the SARS epidemic contributed to theperception that these issues are important. However, healthcare reform figured prominently in the Chinese policydebate well before SARS.

The system of health financing and health services provisionin China has been profoundly influenced by the gradualtransition of the economy from a centrally planned to amarket-based one. In the central-planning era, reasonablywell functioning health institutions existed in both ruraland urban areas. In the countryside, health care was providedfor essentially all citizens through hospitals and doctors’practices that were funded and managed by the communes.In urban areas, all state-sector employees (including retiredones) received virtually free health care through theirworkplace. (Even when out-of-pocket payments wereinitially required for health services, these were subsequentlyreimbursed almost in full by the workplace unit.)Dependents of state employees were also covered, thoughless comprehensively.

Following the abandonment of central planning, the oldsystem has, to a large extent, ceased functioning both inthe city and the countryside. In rural areas, grass-roots healthcare providers receive less and less funding from the state.

ECONOMICS PARTICIPATES IN NEW RESEARCHPROJECT ON HEALTH CARE IN CHINA

As a result, they now have to rely on fees collected frompatients. With declining government funding, they haveincreasingly relied on increased patient fees, and also onresale of subsidized drugs at high markups. The result hasbeen financial hardship for those unfortunate enough tobe stricken with serious illness, as well as an increasingfrequency of unmet needs for health services and drugs whenindividuals uncovered by insurance have been unable toafford them. In the cities, privatization and reducedsubsidies to previously state-owned firms has caused manyof them to drop health insurance coverage for theiremployees (and retired employees); this has occurred at thesame time as falling government subsidies have forced manyhospitals to increase their reliance on patient fees as a sourceof funding, and to raise their income from retailing ofprescription drugs.

The proposed research intends to provide not only acomprehensive picture of the current state of affairs inChina’s health care system, but also to discuss variousoptions that might be used as China moves towardreorganizing its systems of health care financing, delivery,and regulation. With respect to financing, a key issue is theappropriate balance between private insurance and publicfunding in solving the problem of guaranteeing reasonableprotection against financial hardship for those unfortunateenough to be stricken with serious illness, keeping in mindthe limited effectiveness of the private sector in addressingthis issue for those with low income. Regarding health caredelivery, China may want to pay attention to theaccumulating evidence in favour of alternative methods(that is, methods other than the traditional fee-for-service)of paying for health services, and to the pros and cons ofvarious forms of “managed care” (i.e., care that is providedunder different forms of close provider-insurer contracts).Well-known reasons for the limited effectiveness ofcompetition in markets such as those for health insuranceand for certain kinds of physician services also means thatregulation (not only in the form of licensing requirements,but also of premiums, fees, and other aspects of insuranceand care provision) can serve as important policyinstruments, as the experience of Japan and other countriesdemonstrates. All of these issues will be addressed in theproposed research, and particular attention will be paid tothe question to what extent Singapore’s experience withhealth care funding (especially with medical savings andinsurance) and provider organization (such as hospitalrestructuring and corporatization) contains lessons (positiveor negative) for the direction in which China may want tomove further in reforming its health care system in futureyears.

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Lu Ding at the conference ‘West China Development: Domestic Strategies andGlobal Implications’ on March 6-8, 2003, University of Victoria.(From left: Wing T Woo, Diana Lary, Hou Yongzhi, Lu Ding, Greg Chin, DwightPerkins)

STAFF PUBLICATIONS

LIFE ANNUITIES OF COMPULSORY SAVINGSAND INCOME ADEQUACY OF THE ELDERLY INSINGAPOREby Chia Ngee Choon and Albert K C TsuiJournal of Pension Economics and Finance, 2 (1), March2003, pp. 41-65

Singapore has a publicly managed central provident fund(CPF) system, which is compulsory and based on individualaccounts with an explicit link between contribution andbenefit. This paper assesses the adequacy of the CPF savingto meet the retirement needs of the elderly in Singapore.Instead of emphasizing the mechanism of accumulation,we focus on the expenditure side of the lifetime budget of

the elderly and estimate the present value of retirementconsumption (PVRC). The estimated PVRC is obtainedby simulations through three major components:calibration of subsistence and medical expenses of theelderly; forecast of cohort survival probability by age andby sex; and generation of yield curves to discount the futurecash flows. Our results indicate that the existing CPF-decreed minimum sum is inadequate to meet the futureconsumption needs of the female elderly. The inadequacybecomes more severe when medical expense is set at highergrowth rates. Moreover, the monthly payouts of a singlepremium deferred annuity are computed as illustrativeexamples.

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During his study leave early this year,Associate Professor Lu Ding helped

the University of Victoria’s Centre forAsia-Pacific Initiative organize anInternational Conference, ‘West ChinaDevelopment: Domestic Strategies andGlobal Implications’ on March 6-8, 2003.This conference drew in a broad spectrumof participants and keynote speakers fromaround the globe, including: ProfessorDwight Perkins of Harvard University,Professor Diana Lary of University ofBritish Columbia, Professor Wing ThyeWoo of the University of California,Davis, Dr Hou Yongzhi of theDevelopment Research Center of theState Council, P.R.C, Dr Zheng Yuxin ofChinese Academy of Social Sciences, etc.The conference proceedings of over 20 papers, edited byLu Ding and William Neilson, will be published by theWorld Scientific Publishing Corp. In addition to theconference, Lu Ding gave seminars on topics such as

INTERNATIONAL CONFERENCE ON“WEST CHINA DEVELOPMENT: DOMESTICSTRATEGIES AND GLOBAL IMPLICATIONS”

‘Governance and values in Southeast Asia’, ‘China’sindustrial policy’, and ‘China’s urban and regional policies’at University of Victoria, Asia Pacific Foundation, andPacific Lutheran University.

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SINGAPORE BUSINESS CYCLES: A SUPPLY-SIDEANALYSISby Choy Keen MengASEAN Economic Bulletin, Vol. 20, No. 1, April 2003,pp.1-10

This paper employs a vector autoregressive (VAR) modelto investigate the supply-side causes of business cycles inthe small open economy of Singapore. The supply shocksexamined are oil price, foreign technology, labour supply,productivity and wage shocks. Empirical results suggest thatexternal and domestic technology shocks are responsiblefor the bulk of short-term output movements while laboursupply shocks are more important in the long run. Bycontrast, oil price and wage disturbances play negligibleroles in macroeconomic fluctuations. These findingssupport the view that Singapore business cycles are causedby both domestic and international factors.

FRINGE BENEFITS AND INEQUALITY IN THELABOR MARKETby Wankyo ChungEconomic Inquiry (forthcoming)

This study shows that when fringe benefits are accountedfor, inequality increases at a point in time, and grew fasterfrom 1987 to 1994. Several alternative explanations of theobserved discrepancies between wage inequality andcompensation inequality are assessed. The evidence is thatthe disproportionately greater decline in income for less-skilled workers is responsible for the greater decline in healthinsurance coverage, which in turn contributes to greaterinequality growth when fringe benefits are accounted for.

CHINA’S INDUSTRIAL POLICY ANDPARTICIPATION IN GLOBALIZATIONby Lu DingCurrent Politics and Economics of China (US), 4 (2),2001, pp. 109-130

In China’s rapid economic development of the past twodecades, industrial policy has played an important role. AsChina becomes a member of the World Trade Organization,its industrial policy regime must be revamped to meet theinternationally accepted rules. This paper reviews thecontents of China’s industrial policy before its accession tothe WTO and examines the effects of this policy regime on

inter-industry resource allocation. The results indicate that,while industrial policy has been effective in placing plannedpriority on resource allocation, it has so far failed to improveinter-industry allocative efficiency. Great gains in efficiencycan therefore be expected through further participation inglobalization after China joins the WTO.

CHINA’S ECONOMIC GLOBALIZATIONTHROUGH THE WTOby Ding Lu, Guanzhong James Wen and Huizhong ZhouAshgate, 2003, 240 pp.

This book represents one ofthe recent internationallycoordinated initiatives toaccess the rich and stillunfolding implications ofChina’s participation ineconomic globalization in thecontext of the nation’saccession to the World TradeOrganization.

The contributors includescholars in renowned universities in and outside China,researchers in Chinese government think tanks, andofficials/professionals in the international organizations suchas the WTO and United Nations. Not only does the bookhelp readers gain a better understanding of factors drivingChina to open up its economy from a scholarly perspective,but also sheds new light on the rationale behind Beijing’stenacious bid for the WTO membership from an insider’sstand. Such a multi-dimensional, institution-sensitiveapproach is manifested throughout the 11 chapters, whichcover issues ranging from reforms of the state-ownedenterprises and banking system, to capital flows andproductivity progress, regional growth, health care reforms,Internet regulation, and the compelling task of agriculture-restructuring.

THE DISPERSION OF ANALYSTS’ EXPECTATIONSAND THE CROSS-SECTION OF STOCK RETURNSby Bokhyeon Baik and Cheolbeom ParkApplied Financial Economics (forthcoming)

We present empirical evidence that the dispersion inanalysts’ forecasts can explain a part of differences in crosssectional stock returns. Generally, high dispersion stocks


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show relatively lower future returns than low dispersionstocks, and the difference in performance is statisticallysignificant. Furthermore, the negative relation betweenstock returns and dispersions continues to hold even aftercontrolling for size, book-to-market ratio and earnings-priceratio. This empirical fact is consistent with Harrison andKreps (1978), which demonstrates that investors areexploiting their awareness of heterogeneity in expectationsin order to pursue resale gains.

RESEARCH JOINT VENTURES (RJVs) INPRODUCT INNOVATION AND CARTELSTABILITYby Lambertini L, Poddar S, and Sasaki DReview of Economic Design, Vol. 7, No. 4, February 2003,pp. 465-477

We characterise the interplay between firms’ decision inproduct development undertaken through a research joingventure (RJV), and the nature of their ensuing marketbehaviour. Participant firms in an RJV face a trade-offbetween saving the costs of product innovation bydeveloping similar products to one another, e.g. by sharingmost of the basic components of their products, andinvesting higher initial efforts in product innovation in orderto develop more distinct products. We prove that the morethe firms’ products are distinct and thus less substitutable,the easier their collusion is to sustain in the marketingsupergame, either in prices (Bertrand) or in quantities(Cournot). This gives rise to a non-monotone dependenceof firms’ product portfolio upon their intertemporalpreferences.

MOTHERS, MAIDS AND TUTORS: AN EMPIRICALEVALUATION OF THEIR EFFECT ON CHILDRENS’ACADEMIC GRADES IN SINGAPOREby Roland Cheo and Euston QuahEducation Economics (forthcoming)

As female labour force participation in the workforceincreases in Singapore, the basic economic unit: the home,has become wealthier, though arguably at the expense ofboth personal and family leisure. Yet with additionalincome, breadwinners are better able to undertakeinvestment for their own well-being or their childrens’ well-being which can offset the net loss of utility associated withless leisure. Concomitantly, it is common to find a domestic

helper living with a Singapore family and other specialisthelpers such as paid home tutors, who come to the home.This paper examines how this new investment, vis a vis,new home variables affects a child’s overall academicperformance. Primarily, the effects of a mother’s choice towork, the presence of either tutors or domestic helpers andthe effects of different investment strategies to raise a child’squalitative attributes. The paper asserts that how a childperforms academically is less dependent on his choice oftime use, rather it is the number of qualitative benefits hereceives in the home environment. The conventionalwisdom of “the more the better” is questioned by the resultsof this study, arguing instead that diminishing returns setin far quicker when over-investment in the child takes place.

THE IMPACT OF EXPORT GROWTH ANDSCALE ECONOMICS ON PRODUCTIVITY INSINGAPORE’S MANUFACTURING INDUSTRIESby Shandre M Thangavelu and David T OwyongJournal of Economic Studies (forthcoming)

This paper examines the impact of export performance andscale economies on total factor productivity in Singapore’smanufacturing sector. A panel data of total of ten majorindustries within its manufacturing sector are analysed overthe period 1974-1995. It was found that export growthand scale economies contributed significantly to theproductivity growth of selected industries. In addition, theresults also indicate that the FDI intensive industries arethe main contributors to productivity growth in themanufacturing industries in terms of export performanceand economies of scale as compared to the non FDI-intensive industries.

TOWARDS UNITARY ECONOMICS: VALUATIONOF ENVIRONMENTAL CAPITAL FORENCIRONMENTAL STEWARDSHIPby Dodo J Thampapillai and Shandre M ThangaveluInternational Journal of Social Economics (forthcoming)

The paper presents a simple method of valuation that cansit beside ideology of a unitary economics, which seeks asynergy between materialistic and non-materialistic aspectsof welfare. The non-materialistic item considered here isenvironmental stewardship, the lack of which is widespreadamongst neoclassical economists. This is due to the belief


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that technology could always offset the problems of resourcescarcity. We use the basic tools of neoclassical economics toillustrate that resource scarcity is a real issue and that animproved sense of environmental stewardship is warranted.This illustration involves the valuation of environmentalcapital from the statement of national accounts. Scarcityindicators are defined in terms of the price of environmentalcapital. This price, which consists of an interest rate and acost of depreciation, is empirically estimated for Australia.

FINANICAL DEVELOPMENT AND ECONOMICGROWTH IN AUSTRALIA: AN EMPIRICALANALYSISby Shandre M Thangavelu and Ang Heng Jiunn, JamesEmpirical Economics (forthcoming)

The paper empirically examines the dynamic relationshipbetween financial development and economic growth inAustralia in terms of bank-based and market-based financialstructure. A time-series approach using the VAR Model isused to provide evidence for the dynamic relationship. Thepaper provides empirical evidence on the causal impact ofthe financial market on the economic growth of theAustralian economy. The results suggest that financialintermediaries and financial markets have different impactson economic growth given their diverse roles in the domesticeconomy. In particular there is evidence of causality fromeconomic growth to the development of the financialintermediaries. On the other hand, development in thefinancial markets causes economic growth but there is noevidence of any causality from economic growth to financialmarkets. The sensitivity test using different interest ratesdoes not change the results

TECHNOLOGY TRANSFER: VEHICLES,CONDITIONS, SPILLOVERS, AND POLICYCHALLENGESby Koh Ai Tee and Shandre M ThangaveluEncyclopedia of Life Support Systems (forthcoming)

This paper reviews recent theoretical and empirical literatureto underscore the main vehicles of technology transfer fromdeveloped to developing countries, as well as the conditionsfor, and results of, successful transfer. Based on this literature,the paper conducts a cross-country examination of theconditions for successful transfer and relates these to welfare

and technology output indicators in the context of thesevehicles. The main findings is that host countries with highabsorptive capacity, such as those in East Asia, tend to attractmore technology inflow, which lead in turn, to hightechnology output and welfare performances. Past success,however, is no guarantee for future prosperity. East Asiancountries will need to pay greater attention to tertiaryeducation if they wish to transition towards a high-technology growth equilibrium, and become knowledge-based economies.

HOW REWARDING IS TECHNICAL ANALYSIS?EVIDENCE FROM SINGAPORE STOCK MARKETby Wong W K, Manzur M and Chew B KApplied Financial Economics (forthcoming)

This paper focuses on the role of technical analysis insignalling the timing of stock market entry and exit. Weintroduce test statistics to test the performance of the mostestablished of the trend followers, the Moving Average, andthe most frequently used counter-trend indicator, theRelative Strength Index. Using Singapore data, the resultsindicate that the indicators can be used to generatesignificantly positive return. We find that member firms ofSingapore Stock Exchange (SES) tend to enjoy substantialprofits by applying technical indicators. This could be thereason why most member firms do have their own tradingteams that rely heavily on technical analysis.

AGENDA RESTRICTIONS IN MULTI-ISSUEBARGAINING (II): UNRESTRICTED AGENDASby Younghwan In and Roberto SerranoEconomic Letters, Vol. 79, Issue 3 (June 2003), pp. 325-331

We study a bilateral multi-issue bargaining procedure withcomplete information and endogenous unrestricted agenda,in which offers can be made in any subset of outstandingissues. We find necessary and sufficient conditions for thisprocedure to have a unique subgame perfect equilibriumagreement.


STAFF SEMINARS

The Department organizes staff seminars on a weekly basis with the objective of providing an opportunity for staff aswell as visiting economists to discuss their latest on-going research. Topics range from pure theoretical to applied

economics. The details of papers presented from January to July 2003 are provided below:

Dr Kartik AthreyaResearch Department, FederalReserve Bank of Richmond

Dr Yasmeen KhwajaBrunei University, andDr Pasquale ScaramozzinoSOAS, University of London

Dr Effrosyni DiamantoudiDepartment of Economics,University of Aarhus, Denmark

Assoc Prof Licun XueDepartment of Economics,University of Aarhus, Denmark

Dr Michael BinderUniversity of Maryland

Dr Jason ShachatIBM TJ Watson Research Center

Dr Guillaume RocheteauAustralian National University

Mr Jong Hoon KimYale University

Assoc Prof Robert FairlieUniversity of California, Santa Cruz

Assoc Prof Ghanshyam MehtaSchool of Economics, University ofQueensland, Australia

Professor John WhalleyUniversity of Western Ontario

Dr Aditya GoenkaUniversity of Essex

Dr Sarah TongUniversity of Hong Kong

Dr V. Anantha-NageswaranRegional Head of InvestmentConsulting at Credit Suisse Bank

Mr Mau-Ting LinBoston University

Mr Halis Murat YildizSouthernMethodist University

Dr Sripad MotiramUniversity ofCalifornia, Berkeley

Subsidized Higher Education and IntergenerationalConsumption Smoothing

Unknown Talents and the Brain Drain: TheInformational Role of Migration

International Environmental Agreements -The Role of Foresight

Merger Profitability under Uncertain Efficiency Gains

Common Features in Exchange RateDynamics in the World Economy UsingDynamic Heterogeneous Panel Data Models

Learning About Learning in Games ThroughExperimental Control of Strategic Interdependence

Money and Information

Higher-Order Improvements of the RestrictedParametric Bootstrap for Tests

Race and the Digital Divide

Some Problems and Recent Developments inPreference and Utility Theory

(joint seminar with IMS)

Regeneration, Labour Supply and The WelfareCost of Taxes

Non-Fungibility and Mental Accounting:A Model of Bounded Rationality with SunspotEquilibria

Protectionism and Regional Specialization: Evidencefrom China’s Industries

US Dollar: Nowhere to Go But Down?

New Tests of Long-Run Monetary Neutrality andHomogeneity

National Versus International Mergers and TradeLiberalization

Attached Labor: A Theoretical and Empirical Analysis

17 Jan

28 Jan

29 Jan

30 Jan

6 Feb

11 Feb

13 Feb

14 Feb

17 Feb

18 Feb

19 Feb

20 Feb

25 Feb

4 Mar

11 Mar

13 Mar

28 Mar

Presenter Topic Date

continued on page 11

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July 200310

Assoc Prof Myoung-jae LeeSchool of Economics and SocialSciences, Singapore ManagementUniversity

Professor Norman C. Bonsor LakeheadUniversity

Dr Cheolbeom ParkDepartment of Economics, NUS

Dr Younghwan InDepartment of Economics, NUS

Dr Enrico Diecidue,Assistant Professor of Decision Sciences,INSEAD

Dr Daniel A. TraçaAssistant Professor of Economics,INSEAD

Professor Chew Soo Hong VisitingProfessor, Department of Economics,NUS

Nonparametric Test and Estimation ofTreatment Effects for Randomly CensoredResponses

Shipping Conferences: Death and Resurrection?

Rational Beliefs or Distorted Beliefs: Equity PremiumPuzzle and Micro Survey Data

On the Relevance of Alternatives in Bargaining: AverageAlternative Solutions

Equity Weights in the Allocation of Health Care:The Rank-Dependent QALY Model

Spillovers and the Competitive Pressure for Long-RunInnovation

Domains(joint seminar with Dept of Business Policy,Business School, NUS)

3 Apr

7 Apr

15 Apr

17 Apr

6 May

8 May

9 May

CONFERENCESSome of the overseas conferences attended by our staff from January to June 2003 are given below:


Staff Name

Assoc Prof Lu Ding

Prof Parkash Chander

Dr Hu Guangzhou,Albert

Assoc Prof Peter Wilson

Dr Shandre Thangavelu

Prof Åke G. Blomqvist

Dr Kang Changhui

Conference Title

American EconomicAssociation Annual Meeting

Game Theory and ItsApplications

5th Biennial Pacific RimConference, WesternEconomic Association

5th Biennial Pacific RimConference, WesternEconomic Association

CORE University Project:Perspective of Flows, MiddleClass and State and Marketfor Asia

3rd Asia Pacific HealthEconomists (APHEN) Forum

The 4th Conference of KoreaLabor and Income PanelStudy

Title of Paper

China’s Current AccountBalance: Changing Trend andImplications on the World

“The γ-core and CoalitionFormation”

R&D and TechnologyPurchase: Evidence fromChinese Firms

Prospects for EnhancedExchange Rate Co-operationin East Asia; SomePreliminary Estimates forGeneralised PPP Theory

Structural Changes andProductivity Growth

Health Reform in Asia

Rexamination of Union WageEffect in Korea:Consideration of a Worker’sPosition in Job Ladder

Venue

Washington, DC

Bombay, India

Taipei, Taiwan

Taipei, Taiwan

Bangkok, Thailand

Manila, Philippines

Seoul, Korea

Date

3 – 5 Jan

8 – 10 Jan

9 – 12 Jan

9 – 12 Jan

14 – 16 Jan

20 – 22 Feb

21 – 22 Feb


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Assoc Prof Tay BoonNga

Dr Lee Jin

Dr Sougata Poddar

Dr JesuthasonThampapillai

Dr Hu Guangzhou,Albert

Dr Liu Haoming

Assoc Prof XingXiaolin

Assoc Prof Albert Tsui

Assoc Prof Chia NgeeChoon

Dr Chang Youngho

Assoc Prof Wong WingKeung

Dr Wang Jianguo

Dr Wong Wei Kang

Social Policy Responses toPopulation Ageing in theGlobalization Era

10th New ZealandEconometric Study GroupMeeting

Annual Conference onModels and Methods inEconomics

West China Development:Domestic Strategies AndGlobal Implications

ZEW Workshop on theEmpirical Economics andPatenting

37th Annual Meeting of theCanadian EconomicsAssociation (CEA)

2003 PennsylavaniaEconomic Association AnnualConference

2nd International Conferenceon Health Economics andHealth Management

2nd International Conferenceon Health Economics andHealth Management

The 26th InternationalAssociation for EnergyEconomics AnnualConference

2003 World MarketingCongress

The World MarketingCongress

2003 Econometric SocietyNorth American SummerMeeting

Economic responses topopulation ageing - Thecase of Singapore

Wavelet Transformationfor Estimating Non-Stationery Long MemoryParameter

On Software Piracy WhenPiracy is Costly

A PreliminaryEnvironmentalMacroeconomic ModelFor China: Implications ForWest China

MultinationalCorporations, Patentingand Knowledge Flow: theCase of Singapore

Parents’ Money Versus Parents’Ability

Pricing Online: the Case ofConsumer Electronics

Modelling HealthcareExpenses of the Elderly inSingapore

Healthcare Management inSingapore

Efficiency and Equityin a Deregulated ElectricityMarket

Consumer Attitudes TowardsAn Integrated e-PaymentSystem

A Theory Toward MarketingGoods

1) Economic Growth: AChannel AccountingExercise;

2) The ManufacturingSector Did Contribute toConverging Among theOECD countries;

3) How Good Are Trade &Telephone Call Traffic inBridging Income Gaps &Idea Gaps?

Japan

Auckland, NewZealand

India

University ofVictoria BritishColumbia, Canada

ZEW, MannheimGermany

Ottawa, Canada

USA

Kalamata, Greece

Kalamata, Greece

Prague, CzechRepublic

Perth, Australia

Perth, Australia

Chicago, USA

27 Feb – 1 Mar

28 Feb – 1 Mar

5 – 7 Mar

6 – 8 Mar

14 – 15 Mar

28 May – 1 June

29 – 31 May

29 – 31 May

29 – 31 May

4 – 7 June

11 – 14 June

12 – 18 June

26 – 29 June


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July 200312

I joined the Department of Economics, then NanyangUniversity on 10 August 1976 at a time of great

transitional changes at Nanyang or more informally knownas Nantah. From 1976 to 1978, I worked under three Vice-Chancellors, Dr Lee Chao Ming, Prof Wu Teh Yao and MrTan Chok Kian (as Director-General appointed by theGovernment). In addition to my teaching responsibility atthe Department of Economics under the Headship of ProfSaw Swee Hock, I was appointed the Director of NanyangUniversity’s Institute of Economics and Business Studies.Then came the Joint-Campus Scheme in 1978 that allowedsome selected teaching staff of Nanyang University (NU)to teach at the Bukit Timah campus of University ofSingapore (SU). Before the Joint-Campus Scheme, I hadmet Professors Lim Chong Yah, Lee Soo-Ann, AugustineTan, Basant Kapur, Chng Meng Kng, Bhanoji Rao, LeeYong Sin, G Shantakumar and the Secretary to the Head ofthe Department, Annie Koh (first Prof Peter You Poh Sengand later Prof Lim Chong Yah). At the Bukit Timah campus,however, I started to develop personal friendship andcollegiate relationship and continued to Kent Ridge campuswhen the National University of Singapore was establishedin 1980.

I was privileged to work in the Department of Economicsunder the Headship of Prof Lim Chong Yah who providedintellectual leadership and a strong sense of commitmentto the nation, the community and the region. I was activelyinvolved in the Department academic and public relationsactivities. In 1985 at the midst of recession in Singapore,26 academic staff of the Department of Economics underthe chairmanship of Prof Lim initiated a group research on“Policy Options for the Singapore Economy”. The bookcontained all the issues that are vital to Singapore then andeven now. For example, on housing, saving, wages, limitsto growth and exchange rate policy, our colleagues in theDepartment discussed many current important issues thatwere out of limit then for discussions set by the policymakers. Those issues have become more relevant and topicalnow. I served three consecutive years as the HonorarySecretary of the Economic Society of Singapore and I wasdirectly responsible together with Prof Pang Eng Fong inthe selection of the presently used logo of the EconomicSociety of Singapore. Another important event for theEconomic Society of Singapore was the 25 years’ celebration

REFLECTIONS OF 27 YEARS OF SERVICE TO THEDEPARTMENT OF ECONOMICS AND THEUNIVERSITYby Assoc Prof Hank Lim

(Silver Jubilee). Prof Lim and I managed to solicit $25,000contribution from Mr Lien Ying Chow (former Chairmanof Overseas Union Bank) to invite Prof and Mrs WassilyLeontief (the author of input-output table) from HarvardUniversity to give a series of lectures to the University andthe public.

On regional involvement, the Department had been verymuch involved in the establishment of the Federation ofASEAN Economic Associations (FAEA). We had organizedseveral FAEA meetings in Singapore and contributed tothe intellectual collegiate, networking and friendships withmany outstanding economists in Indonesia, Malaysia,Thailand and the Philippines. Also through ourDepartment, I was involved in establishing the East AsiaEconomic Associations (EAEA) with Prof Lim Chong Yahand Prof Shinichi Ichimura (Kyoto University) among theleading proponents to set up EAEA. To promote the Asia-Pacific regional co-operation, Prof Lim, myself, Tan KongYam from the Business School, Kesavapany from MFA(currently the Director of ISEAS) and Gwee Yee Hean fromthen Industrial Commercial Bank (ICB) set up theSingapore National Committee for Asia-Pacific EconomicCo-operation (SINCPEC) in 1984. Through relentlessefforts and hard work, we managed to convince theSingapore Government to assist the PECC (consisting of

Assoc Prof Hank Lim (standing) delivering his farewell speech.On the right is Prof Åke Blomqvist, Head of Department.On the left is Dr Amina Tyabji and Prof Basant Kapur.


ECONewsJuly 2003 13

ECONewsSTAFF NEWS

23 members national committees) to set up the PacificEconomic Co-operation Council (PECC) Secretariat inSingapore. In appreciation of my effort and contributionto Asia-Pacific economic co-operation and upon therecommendation from Singapore Government, the PECCStanding Committees appointed me as the first PECCInternational Director-General. NUS approved mysecondment to the PECC Secretariat for three years from1990-1992. The establishment of the PECC Secretariat inSingapore was an important milestone in Singapore’sexperiment with regional and international organizations.The establishment of intergovernmental Asia-PacificEconomic Co-operation (APEC) Secretariat in Singaporein 1993, to an important extent, was heralded with theestablishment of PECC Secretariat three years earlier.

The Singapore Government appointed me as the first APECEminent Persons Group (EPG) from 1993-94. I was oneof the leading authors of the first APEC Vision Statementsubmitted to the APEC Heads of Government InformalSummit in Blake Island, Seattle in 1984. One of the majorrecommendations of the Vision Statement is to have anAPEC Summit annually which till to date has been thestandard practice.

I had been actively involved and contributed direct orindirectly to our Faculty of Arts and Social Sciences. I alsohad served as the Acting Director of then Centre forAdvanced Studies (CAS) for three years.

My most recent contribution to the Department was toinitiate the establishment of the “Goh Keng SweeProfessorship”. My suggestion was strongly supported byProf Basant Kapur (then the Head), and Prof Lim Pin, (thenVice-Chancellor). A Fund-Raising Committee, consistingof Who Who’s in Singapore was set up. Within one year,the Committee chaired by Mr Wee Chow Yaw, Chairmanof United Overseas Bank, was able to raise considerablefunds to be matched on a dollar- to- dollar basis by theGovernment.

My 27 years of academic life had been spent very gratifyingand fruitful in the Department of Economics, Faculty ofArts and Social Sciences, four years at Nantah and the restat the National University of Singapore. If I could havemade a difference in the life of many students whom I havehad the privilege to teach economics for so many years,this was all made possible because I was given theopportunity and the privilege to teach as well as do researchat the Department of Economics, even beyond the normalretirement age of 62.

I will cherish for years to come many fond memories of mystudents, colleagues and NUS administrators who havemade my life more enjoyable, productive and meaningful.


Assoc Prof Euston Quah is currently on sabbaticalleave at Chulalongkorn University, Bangkok, till

August 2003 before proceeding to the University ofMelbourne where he will spend the remaining of hissabbatical till the end of this year. Reproduced belowis a brief message from him reporting on his researchwork in Bangkok:

“I am completing my fieldwork in Bangkok ondamage schedules. Damage schedules hold promiseas a novel alternative to existing valuation methodswhich if appropriately applied could be used to valueenvironmental damages. This method offerspredictability by stipulating damage awards andremedies in advance instead of waiting for somedamages to occur, and then do the valuation. Therewill be sufficient deterrence to potential polluters asthey would now become more aware of the potentialliabilities that they would be responsible for. Damageschedules could be derived from conducted preferencerankings of the local populace and then using somemeasures of replacement costs or benefit-transfermethods. It is much easier than the traditionalcontingent valuation method as far as understandingby respondents go. Basically, I take the four mostimportant environmental problem facingBangkokians as identified by their Ministry of theEnvironment and I asked two groups of people –laymen and the so-called experts. I then use thepairwise comparisons method. I categorise therespondents using quota sampling into three incomegroups, namely, high, low and median. After theranking exercise. I use the given environmental budgetas derived from their actual expenditures on the 4types of environmental problem and obtain a percapita measure. I then asked willingness to accepttype questions to see whether they accept or rejectthese per capita values. In this way, I am not tryingto derive actual valuations (although implicitly done)but to focus more on whether present governmentexpenditures are enough to combat these problems.The usual statistical tests are then done for the wholeexercise. The work is done in collaboration withSittidaj Pongkijvorasin, a member of the Faculty ofEconomics, Chulalongkorn University.”

In Touch with Assoc ProfEuston Quah who is away onsabbatical ... ...

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July 200314

Welcome to the Department ......Professor Parkash Chander who joined with effect from13 June 2003. Prof Parkash obtained his PhD from IndianStatistical Institute, and his research areas are in PublicEconomics and Applied Game Theory.

Dr Jason M Shachat who joined as Associate Professor witheffect from 30 June 2003. Assoc Prof Shachat obtained hisPhD from University of Arizona, and his research areas arein Experimental Economics, Microeconomic Theory andEconometrics. Dr Sachat holds a joint appointment withthe Department of Business Policy, School of Business.

Dr Choy Keen Meng who joined as Visiting Fellow witheffect from 1 July 2003. He obtained his PhD fromNational University of Singapore, and his research areasare Macroeconometric Modelling, Time SeriesEconometrics and Forecasting.

Dr Lin Mau-Ting who joined as Assistant Professor witheffect from 2 July 2003. He obtained his PhD from BostonUniversity, and his research areas are in Macroeconomics,International Finance, and Time Series.

Dr Julian Karl Douglas Wright who joined as AssociateProfessor with effect from 3 July 2003. He obtained hisPhD from Stanford University, and his research areas are inIndustrial Organisation, Network Economics, CompetitionPolicy and Regulation, and Payment Systems.

Dr Wu Yangru who joined as Visiting Associate Professorwith effect from 7 July. He obtained his PhD from OhioState University, and his research areas are in InternationalFinance, Investment Strategies and Asset Pricing.

Prof Gershon Alperovich who joined as Visiting Professorwith effect from 7 July 2003. He obtained his PhD fromUniversity of Pennsylvania, and his research areas are inUrban and Regional Economics.

Dr Sarah Tong Yueting who joined as Assistant Professorwith effect from 15 July 2003. She obtained her PhD fromUniversity of California, and her research areas are inInternational Trade, Economic Growth and Development,Chinese Economy, Economic Transition and AsianEconomies. Dr Tong holds a joint appointment with theEast Asian Institute.

Mr Kim Jong Hoon who joined as Visiting Fellow witheffect from 15 July 2003. He obtained his M.Phil. fromYale University, and his research areas are in Econometrics,Applied Econometrics and Macroeconomics.

Ms Nicky Kheh who joined as Administrative Officer witheffect from 17 March 2003.

Thank You and Best Wishes to the following staff whohad left the Department this year:

Assoc Prof Zhu Lijing (Associate Professor)on 2 January

Mr Mervin Cohen (Administrative Officer)on 4 January

Mr Roland Cheo (Teaching Assistant)on 14 February

Dr Yong Jong Say (Senior Lecturer)on 5 May

Dr Kenneth Leong (Visiting Fellow)on 17 May

Dr Anthony Tay (Assistant Professor)on 30 June

Dr Pundarik Mukhopadhaya (Assistant Professor)on 30 June

Assoc Prof Hank Lim (Assoc Professorial Fellow)on 30 June

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NUS Excellent Teachers’ Award - 2002/2003Heartiest Congratulations to Dr Ho Kong Weng for being selected, for the second consecutive year, asa NUS Excellent Teacher. The candidate was selected based on student feedback (score for overalleffectiveness); recommendations made by the respective Faculty Teaching Excellence Committees(FTECs), based on peer reviews, qualitative student feedback and teaching portfolios; and University-level review of candidates recommended by FTECs. Comments by students who recommended DrHo for best teaching include: “although I almost lost interest in the discipline, Dr Ho inspired new energyin me and inspired me to think about the fundamentals and applications of economics”, “eager to help students”, “enhanced mythinking ability”, etc.

Over the past few years, the department has greatlyimproved the quality of our graduate programme and

the graduate students admitted into our programme.Tangible evidence of these improvements is the placementof our Master’s graduates for PhD candidature with fundingin North American and Australian universities. Further thedemand for admission into our program has also witnesseda manifold increase. A list of changes that have beeninstituted in our graduate programme for the past years isgiven below. Of all the changes, it is most gratifying to knowthat our students are securing placements in top NorthAmerican and Australian Universities. This year ourgraduate students (top 10 percent of our graduates) havebeen successful in admission to PhD programmes inUniversity of British Columbia, Ohio State University,Pennsylvania State University, University of Toronto,Cambridge University, London School of Economics,Monash University, and Melbourne University. Past years,our graduate students managed to secure admission toUniversity of Toronto, Monash University, University ofChicago, Australian National University, etc. In most cases,our graduate students are able to secure full funding fortheir PhD studies. This is clearly an indication of our qualityof our graduate programme.

The other important development in our programme isthe contribution of our research students to the developmentof research output in the department. In 2000 to 2002, thegraduate students had nearly 20 working papers with ourstaff members (excluding those that have already beenpublished in the previous years). In the future, we couldexpect further increases in the joint research papers as thequality of our programme improves through the newcoursework structure.

List of Changes Instituted in the Graduate Programme:

(1) Development of the Graduate CurriculumIn 2000, the graduate programme transformedfrom a research-based graduate programme tothat of coursework and research. In the new

PAST DEVELOPMENTS IN THE GRADUATEPROGRAMMEby: Dr Shandre Mugan Thangavelu

structure, research students are required to fulfillaround 30 to 40 percent of their programme incoursework. The PhD students are required tofulfill the advance level modules (6000 levelmodules) and the qualifying exams before theycould undertake their research. Both written andoral qualifying exams are introduced to increasethe quality of the PhD students. In addition, allresearch scholars are required to participate inthe Graduate Student seminars. Researchscholars are required to make a full presentation(45 mins.) to the department every year.

(2) Increase in the Demand for the GraduateProgrammeThe demand for our graduate programme hasbeen increasing over the years. Over the years,there is an overwhelming demand for thedepartment’s graduate programme reflected bythe large number of applications received fromvarious top Universities in the World for the2002/2003 academic year (July intake). Thedepartment received applications from Africa,China, Malaysia, Thailand, Indonesia,Philippines, Myanmar, Vietnam, India, SriLanka, Taiwan, Mauritius, Japan, UnitedKingdom, United States, Italy, etc.

(3) Increased in the Number of Graduate StudentsAttending International ConferencesThe quality of the graduate programme isreflected by the increasing number of ourgraduate students attending and presentingpapers in International Conferences. In 2002,the graduate students presented papers in ADBFinancial Conference in Japan, EconomicsSociety of Australia’s 31st Conference in Australia,8th International Conference of East AsianEconomic Association in Malaysia, SouthernEconomic Association Conference in UnitedStates, etc. In addition to attending International


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July 200316

Conferences, the graduate students are alsosubmitting papers in internationally refereedjournals for possible publications.

(4) Graduate Student PlacementsThe quality of the graduate programme is notonly reflected by the number of graduate studentsattending and presenting papers in internationalconferences and the number of joint researchpapers and publications, but also by theplacement of our students in major consultingfirms and research institutes. Recently, Mr RahulSen, the PhD candidate, has taken up theappointment as a Research Associate at theInstitute of South-East Asian Studies. In 2002,Mr Rajaguru G, our potential PhD candidate,was able to secure an academic position at a topAustralian University.

(5) Increased in the Number of Masters StudentsPursuing PhD at North American andAustralian UniversitiesThe graduate programme has been successfulin placing our top graduate students in majorNorth American Universities to pursue theirPhD with full scholarship.

(6) Distinguished Visitors at Graduate SeminarThe distinguished Graduate Seminar Series wasinitiated in 2000. In the 2002/2003 academicyear, we had the privileged of the seminar by MrTharman Shanmugaratnam, Senior Minister ofState (Education); Dr Vivian Balakrishan,Minister of State (National Development); andProfessor Roberto Mariano, Dean (SMU) toaddress our graduate students in theDistinguished Graduate Seminar series.

(7) Increase External and Internal Funding to theGraduate StudentsDuring the past two years, Lee Foundation hasbeen supporting our graduate students byproviding an amount of $20,000 every year. In

addition, the department has also provided equalamount of internal funding to the graduatestudents through the support of the Head of thedepartment.

(8) Economics Graduate Student SocietyThe Economics Graduate Student Society wasinitiated in 2001. The Economics GraduateStudent Society organized events with thesupport of the department.

(9) Computer Lab and New ComputersIn 2001, the Graduate Computer Lab wasformed with 10 new computers for graduatestudents to use for their research activities.

Finally, I would to inform that I am relieved as the GraduateChair of the department with effect from 1 July 2003. Iwould like to thank the department for the support thatwas given to me throughout the past 2 years as the GraduateChair of the department. In particular, I would like to thankProf Åke Blomqvist, Assoc Prof Euston Quah and AssocProf Hui Weng Tat for their support throughout the past 2years. My gratitude and appreciation goes to Assoc ProfEuston Quah for his support and encouragement for thepast 4 years as a Joint Chair and Chair of the GraduateProgramme. Finally, it would not be possible to achieve theabove without the cohesive effort of the graduate committee.I would like to show my appreciation to the committee forconstantly giving input to improve the graduate programmeand in spending long hours screening hundreds ofapplications. In particular, I would like to thank Prof BasantKapur, Assoc Prof Xing Xiaolin, Assoc Prof Albert Tsui,Dr. Sougata Poddar, Assoc Prof Wong Chung Ming, DrEmily Cremers, Dr Chung Wankyo, Dr Wayne Chang, DrGamini Premaratne, Dr In Younghwan, Dr Lee Jin, Dr EkoRiyanto, Dr Souresh Saha, Prof J. Thampapillai, Dr WongSiu Kee, Assoc Prof Habibullah Khan, Assoc Prof AlanWong, and Dr M Pundarik. Also, I would like to thankMervin Cohen, Sagi Kaur and Diana Binte Ismail forproviding good administrative support to the graduatecommittee.


ECONewsJuly 2003 17

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Mr Tharman Shanmugaratnam (centre) talking to Dean, Prof LilyKong (right). On the left is Dr Shandre Thangavelu, Chairman ofthe Graduate Programme.

On 29 January 2003, the Economics Department ofthe National University of Singapore had the

distinguished presence of Mr Tharman Shanmugaratnam,Senior Minister of State, Ministry of Education andMinistry of Trade and Industry, at the 1st Graduate Seminarof 2003 and he spoke on “The New Asian Economy –Challenges and Opportunities”.

Prior to the seminar, many international students had theopportunity to interact with Mr Shanmugaratnam – whichwas especially enjoyable and heartwarming to some whodiscovered that he had been to their homeland during hisministerial visits. This gave rise to interesting and amusingconversations and anecdotes.

Mr Shanmugaratnam started his talk by mentioning theconventional views on the economic impact of China onAsia, in particular that the rise of the Chinese economyposes a serious threat to the economic prosperity of manycompanies and industries in Asia. He remarked thatalthough these opinions were valid, a deeper understandingneeded to be taken and he provided this by speaking aboutthe many opportunities that can be seized providedSingapore and the rest of the Asian countries re-alignthemselves in their trade towards China as well as India.

In contrast to the perception that foreign manufacturersface greater competition as local companies in China andIndia are able to thrive on the substantial domestic demandand population, Mr Shanmugaratnam pointed out that asboth India and China enjoy increasing GDP per capita andaffluence, the demand for foreign-produced goods,especially ‘branded’ goods, will increase proportionatelymore than demand for locally produced goods. Theinclination towards goods produced in other countries inthe region rather than domestic products clearly indicatesthat Asia stands to gain much from the increasing economicsuccess of China and India.

To dispel the economic uncertainties stemming fromChina’s establishment as an international economic power,Mr Shanmugaratnam noted that Singapore together withher neighbouring countries are in an advantageous positionto provide the necessary complementary services likebanking, education and housing. The challenge goingforward is to be valid and up-to-date with the needs andthe requirements of the Chinese economy. This has beenexemplified by the ongoing joint ventures between

GRADUATE SEMINARby Mr Tharman Shanmugaratnam

Singapore and China in developing industrial and residentialproperty.

He added that that despite many Multinational Companies(MNCs) establishing their branches in China and India,they will still maintain their offices in Asia, and indeed therest of the world, for the purpose of risk diversification.Political stability and infrastructure in the Asian region aretherefore imperative to ensure that MNCs continue theiroperations.

During the Question & Answer time, both staff andgraduates were able to seek Mr Shanmugaratnam’s opinionon various issues. For example, Rahul Sen, a recent graduateof the Economics PhD course who specialized in Asianregional trade, had an enlightening dialogue with MrShanmugaratnam on Singapore-India trade relations.

The Seminar ended with many who attended commentingon the intellectual appeal of Mr Shanmugaratnam’s talk andthat they benefited tremendously from his insights. As MrShanmugaratnam was the Chief Economist of MonetaryAuthority of Singapore before joining politics, there werealso a few Singaporeans among the audience who wereinspired by his success as an economist and endeavoured tofollow a similar route.

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ECONews

July 200318

A fruitful decade has passed since my first encounterwith Economics. Yet, the flames of enthusiasm and

curiosity remain strong and bright as ever. The rapiddevelopment of human thoughts, coupled with increasingtechnological sophistication, presents a huge challenge foraspiring and current economists to keep up with suchchanges. Many ideas and concepts were discovered usingadvanced and difficult mathematical tools. As these ideasbecome better understood, they can be presented in a moreelementary fashion.

The learning of Economics should be cultivated using anintuitive approach, reinforced by quantitative andmathematical methods. The tools and concepts that I havelearnt in my course help me sharpen my analytical andthinking skills, enabling me to plough through the manymind-boggling issues prevailing in the real world. Thecountless hours that I have spent on regular discussionswith my classmates have proven to be stimulating andcrucial towards reinforcing my knowledge of Economics.

I would like to express my gratitude to the many teacherswhose guidance I have greatly benefited from. To Prof

SPECIAL ACHIEVEMENTS

Basant Kapur, whose inspiring lessons and enthusiasmprovided a platform that enables me to look beyond themathematical rigors and learn to appreciate the beautybehind the evolution of the models taught. To Drs AnthonyTay and Lee Jin for helping me develop a sound backgroundon Econometrics. To Assoc Prof Albert Tsui and Dr SougataPoddar, for their excellent training in Financial Economicsand Industrial Organization. To Assoc Prof Anthony Chin,Dr Shandre Thangavelu, Dr Lim Boon Tiong and Dr AminaTyabji for their encouragement and help.

A special note of appreciation must be made to my Honoursand Masters Thesis supervisor, Assoc Prof Tilak Abeysinghe.Without his dedicated guidance and patience, I would havenever been able to complete my works. Other tutors include:Assoc Prof Chia Ngee Choon. Assoc Prof Hui Weng Tat,Dr Ho Kong Weng and Dr Gamini Premaratne. Manythanks going out to the friendly staff of the EconomicsDepartment office.

Lastly, I am grateful for the care and support from my friendsand parents, which have been the motivating force behindmy interest in Economics.

Mr Lim Tong Ni – Winner of the SINPEC Book Prize. A graduate of the M.Soc.Sci.(Economics) Programme

I am honoured to be recommended by the EconomicsDepartment to receive the Lim Chong Yah Gold Medal

for my part-time programme in Master of Social Science(Applied Economics).

Since graduating from the University of Tokyo with aBachelor of Economics in 1998, I have worked as agovernment economist at the Ministry of Trade and Industry,and my work has made me keenly aware of the complexitiesof real life economics. Economic policy-making does nothappen in a vacuum, but oftentimes involves trying toachieve the best balance amidst various trade-offs andconflicting needs. In addition, given the highly globalisedand dynamic nature of our economy, it is imperative toconstantly keep abreast of events unfolding in the worldeconomy and the latest economic ideas.

Ms Chua Boon Loy – Winner of the Lim Chong Yah Gold Medal. A graduateof the M.Soc.Sci. (Applied Economics) Programme

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STUDENT NEWS

Ms Chua Boon Loy with her mother

Keynes once said, “the rhetoric of policy-makers is thedistilled frenzy of academic scribblers.” Hence, to gain adeeper understanding of current economic issues, as well asto better acquaint myself with the intellectual climate andthe prevailing notions, I decided that it was time to go backto school. Besides sharpening my intellectual andprofessional saws, I also see it as part of an ongoing quest tofulfil the needs for self-actualisation to maximise my ownpotential.

The two-year programme has rewarded me with tremendousbenefits. Taught by dedicated lecturers, I read variousmodules in Public Sector Economics, Financial Economics,Environment Economics and Econometrics. And if onlythe schedules had permitted, I would also have chosen tosatisfy my curiosities in areas such as Health Economicsand Cultural Economics.

The applied orientation of the programme has been veryrelevant and allowed me to gain a broader perspective. Ithas also helped answer a question that has been nagging meas a practising public sector economist: that Economics is

not all about pure capitalistic gains or losses, but withinteractions with other fields of knowledge - frompsychology to sociology through political science, a capitalisteconomic structure can greatly enhance its fundamentalsocial responsibility. For me, this is a comforting keytakeaway from the programme, and I will continue to watchout for future developments in this area.

On a more personal level, juggling the demands of studies,career and family life has admittedly not been an easy task.In this regard, I am most grateful to my husband for beingmy staunchest supporter. Many a times I found himnodding off on the sofa, instead of going to bed, on thepretext of keeping me company while I was studying ordoing my assignments. Without his encouragement, Ibelieve I would not have been able to pull this off sosuccessfully. Thanks, J!

Next challenge? I am now looking forward to meeting mybaby in November, and his arrival will complete and enrichmy family life. This promises to be another exciting phaseof my life, and I hope to succeed in my new role as well.

How time flies. In the twinkle of an eye, four yearshave passed since I first entered National University

of Singapore. These four years with the EconomicsDepartment has been most intellectually gratifying, thankschiefly to its many passionate, dedicated and knowledgeable

Mr Lim Teck Kiat – PSC scholar and winner of the Economics Society of SingaporeGold Medal. He graduated with First Class Honours in Economics.

tutors who frequently venture beyond textbook curriculumrequirements to real life applications, notwithstanding theirhectic schedules. It was through them that the beauty ofeconomics and all its encompassing versatility andapplicability were unravelled; these diverse and inexhaustibleareas ranges from private trade markets to public policiesand from microeconomic behaviour of individuals and firmsto the macro facets of world economies. And it was in themthat I discovered and subsequently adopted the fervour ofcontinuous learning and research. Hitherto, although I maynot remember the “LeChatelier Principle”, “OverlappingGenerations Model” and “Ricadian Equivalence Theorem”in their absolute entirety, I am however certain that thisrigorous education with NUS has equipped me with strongresearch and incisive analytical skills. Thank you supervisors!

Let the truth be told. Much as economics is very interestingto me personally, there are arid areas too and these frequentlytake the form of columns filled with squiggly mathematicalequations. Fortunately, my understanding tutors will alwaysbe quick to remind us to focus on the economic intuitionsand leave the intricacies of the cumbersome equations tomathematicians. This has certainly helped and madelearning economics more enjoyable.

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Mr Lim Teck Kiat with his parents


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I am immensely grateful too to my peers for their resilientsupport and spontaneity. It is our many stimulating projectsand discourses that we engaged both inside and outsideclasses that has reinforced my comprehension in Economics.As much as I enjoyed the times when we studied together,so too the times when we collectively lambasted the opaquesystem for not releasing our grades to us in the all-importantfinal year. We also dislike leaving our future to luck,inevitably so when the faculty based our degree solely onour fourth year instead of including all four years results.Fortunately, someone high up there finally was enlightenedand we can take heart that our immediate juniors will notbe subjected to the same shadowy treatment.

I further vividly remember some of our other commongrouses. Recall the uneasiness when one of the classes peggedparticipation to such high uncomfortable level that thosefrom latter tutorials were referring to answers from earlierones to score presentation points and that the less vocal

students were out manoeuvred from discussions byoutspoken ones? Then there was the ostensibly “feel-lousy”examination where many sections were linked and errorsfrom the beginning means getting the whole questionwrong? It is precisely these forged experiences that willendear our friendships and help define this 2003 graduatingclass of ours.

I used to reason to myself that four years of rigorouseconomics education with NUS would have been asufficient signalling process of capabilities to prospectiveemployers. Alas, I was slightly mistaken. As we graduate onthe wrong side of the business cycle and into a time of doomand gloom, it is my sincerest wish that each and every oneof us assume jobs that enables us to maximise our potentialto the fullest. Let us all carry forth the good name of NUSeconomics department and promote it as a highly worthy,world class place for learning.


Two new courses were introduced in AY2002-03. Theyare EC3220 Economy of China and EC3240 Game

Theory and Applications to Economics.

EC3220 will, however, be expanded into a sequence of twomodules, EC2222 Economy of Modern China I andEC3222 Economy of Modern China II from Semester 2,AY2003-04. The re-writing of this course is theDepartment’s contribution to the Minor in China StudiesProgramme scheduled to be launched in January, 2004.

The following are the course descriptions.

EC2222 Economy of Modern China IThe rise of the Chinese economy has profound impact onthe world and our region. In this module, students will learnto appreciate the basic structure of China’s economy byexploring its historical origins, cultural backgrounds,geographical features, and institutional evolutions. Themodule aims to help students develop capability ofcomprehending changes of economic and businessenvironment in China and their likely implications onSoutheast Asian economies. The target students are thosewho are registered for China Studies Minor and those whoare interested in electing the module to increase theirunderstanding of the economic and business environmentin modern China.

NEW COURSES FOR UNDERGRADUATECURRICULUM

EC3222 Economy of Modern China IIThe module aims to help students understand the keycontemporary issues in the Chinese economy, particularlythe process and impact of its transition from a centrallyplanned closed economy to a market-based open economy.Students are expected to develop a comprehensive andcritical perspective of China’s economic development andits impact on the rest of the world economy. The targetstudents are those who are registered for China StudiesMinor and those who are interested in electing the moduleto further increase their understanding of economic andbusiness environment in modern China.

EC3240 Game Theory and Applications to EconomicsThis module introduces students in economics and othersocial sciences to game theory, a theory of interactive decisionmaking. This module provides students with the basicsolution concepts for different types of non-cooperativegames, including static and dynamic games under completeand incomplete information. The basic solution conceptsthat this module covers are Nash equilibrium, subgameperfect equilibrium, Bayesian equilibrium, and perfectBayesian equilibrium. This module emphasizes theapplications of game theory to economics, such as duopolies,auctions, and bargaining.

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THE SINGAPORE ECONOMIC REVIEW (SER)In its 48th year, one of the most established journal on Asia-Pacific economics

The Singapore Economic Review is a biannual journal devoted to the publication of high-quality theoretical and empiricalpapers on all aspects of economics with a special emphasis on the economic problems related to Asian countries.

Contents of the latest issue, Volume 48, No. 1 (April 2003), is appended below. For more information on submission ofmanuscripts and subscription to the journal, please visit the website at: http://www.worldscinet.com/ser/ser.shtml.

Contents of Volume 48, No. 1 (April 2003):

Leading Policy Paper – Macroeconomic Management: Is Keynesianism Dead?Lim Chong Yah

Was Japan’s Level of Investment in the 1990’s Excessive?Ross S. Guest, Ian M. McDonald

The Effect of Government on Economic Growth in FijiD.P. Doessel, Abbas Valadkhani

How Did the Bank of Thailand Respond to Capital Inflows before a Crisis?Sterilization and Base Money in the 1990’s

Masahiro Inoguchi

Sustainability of External Imbalances: The Case of MalaysiaEvan Lau, Ahmad Zubaidi Baharumshah

Orthodox Economics and Economists: Strengths and WeaknessesYew-Kwang Ng

Book Review by Tian XiaowenThe Extent of Marketization of Economic Systems in China,

Chen Zongsheng, Wu Zhe and Xie Siquan,NOVA Science Publishers, Inc., New York, 2000

Some of the forthcoming papers are:

The Dollar Standard and Its Crisis-Prone Periphery: New Rules for the GameRonald McKinnon

Economics, Economists, and Behavioural Economics: Some Issues of ChoiceJack L Knetsch

A Re-statement of Singapore’s Exchange Rate and Monetary PoliciesPaul S L Yip

Stochastic Frontier Analysis of Singapore Manufacturing IndustriesSoo-Wei Koh, Shahidur Rahman, and G K Randolph Tan

Intra-Industry Trade Theory: A Revolution in Trade TheoryPeter J Lloyd

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MAS-ESS Essay Competition 2003

“How can Singapore remain Competitivein a Globalising World Economy?”

Open category Students category

First Prize $5,000 $2,000

Second Prize $2,000 $1,000

Third Prize $1,000 $500

Information on Terms & Conditions, Judging Criteria and Entry Requirementsare available from the following websites: (http://www.mas.gov.sg/ess/index.html)or (http://www.ess.org.sg)

We would like to express our sincere appreciation to all those who have contributed to this issue of the Newsletter.

We welcome your contributions on teaching, research and learning topics, as well as feedback on this issue. Pleasewrite to: ecskoha@ nus.edu.sg or [email protected]

STAY IN TOUCHDo we have your correct name and address? Would you like us to send a copy of the Newsletter to your friends/colleagues? Please fill in the form below and send it to:

Mrs Annie KohEconomics NewsletterDepartment of EconomicsNational University of SingaporeAS2, 1 Arts LinkSingapore 117570

Change of Address / Your friends or colleagues addresses:

Name: ______________________________________________________________________________________

Address: _____________________________________________________________________________________

Email: _____________________________________________________________________________________

Tel: (H) ________________________ Tel (O): _______________________ Fax: ________________________

STAY IN TOUCH

ECONewsJuly 200324

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Upcoming EventsEconomics Executive Programme (EEP) Workshop:Regulation and Competition in the Economy

Deregulation and free trade agreement are being implemented in many market economies to promote competition.While the number of signed free trade agreement between economies is on the rise, deregulation is being introducedin markets that have been insulated from competition – electricity generation, transmission and distribution andsales, and telecommunications. In this EEP workshop, experts are invited to examine how these two trendswould shape the economy in terms of competition and economic performance. Firstly, it presents an overview onhow regulation has worked in a market economy. Secondly, it reviews how legislative framework could shapeeconomic policy for fair competition under deregulation and free trade agreements. Thirdly, it examines theactual performance of competition policy in two recently deregulated markets – electricity and telecommunications.

The workshop has been scheduled on 20 October 2003 at Orchard Hotel, Singapore. Speakers are from overseasand locals. Among others, notables are Professor Colin Kirkpatrick, Head of the Institute of Development Planningand Management at the University of Manchester, U.K., and Dr Robert Ian McEwin, Principal Economist,Market Analysis Division, Ministry of Trade and Industry, Singapore, Mr Henry Ergas, Managing Director ofNetwork Economics Consulting Group, Assoc Prof Julian Wright, Professor Parkash Chander and Dr ChangYoungho.

For further details and information, please contact Ms Lim Meng Woan at 68743962 or [email protected]

Joint Workshop with Chulalongkorn University:Economic Policies and Social Welfare: Challenges and Responses

Economic Policies are important for the overall welfare of any given population, whether it is poverty, incomeinequality, job availability, social security or environmental sustainability. In this joint workshop between theDepartment of Economics, National University of Singapore and the Faculty of Economics, ChulalongkornUniversity, Thailand, economists from both institutions will address economic policies and their impacts onsocial welfare in their respective economies. The workshop will also focus on macroeconomic management afterthe 1997 Asian financial crisis and issues relating to free trade areas and regional cooperation.The one-day workshop has been scheduled on 12 December 2003 and will be held in the Executive SeminarRoom, Shaw Foundation Building at National University of Singapore.

Following the workshop, an EEP workshop on Prospect for the Thai Economy: Amazed or Amazing? is scheduled.

Joint Workshop with Peking University:China in Transition: Growth and Social Development

In this joint workshop between the Department of Economics, National University of Singapore and the Schoolof Economics, Peking University, economists from both institutions will address the growth and social developmentbetween countries. The topics proposed are Growth and Development Path Model, Social Policies, Cultural andBusiness Differentiation Between Countries, and Transformation from Government Linked Enterprises to PrivateSector. The workshop is scheduled to be held during the first week of February 2004.

Immediately after, an EEP workshop on Prospect for China’s Economy: Moving or Stalling? is scheduled

econews - nus – faculty of arts and social sciences · econews july 2003 1 contents dpm lee hsien...

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