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Economy

New ways of looking into the future of a diverse Asia

Takers of the national college entrance exam pass through the gate of a middle school in Wuhan, in central China's Hubei Province, on June 7, 2015.

Several socio-economic hurdles -- labor, health and education among them -- sit between Asia and its future development. These issues will have to be deeply analyzed. But therein lies another problem: Levels of economic development, social structures and cultures differ greatly from country to country and region to region. Collecting good data is a difficult task.

     Earlier this month, about 25 top scholars took up these challenges during an international conference in Tokyo. Accounts of their work will make their way into the January 2017 edition of the Asian Economic Policy Review.

     One big issue in rapidly growing China has been migrant workers. Over the past three decades, more than 166 million Chinese have moved from rural areas to cities. They have often been greeted by poor working conditions. In 2008, the Chinese government enacted the Labor Contract Law to protect these workers. The law mandates that all jobs come with written contracts. It also established a legal channel for settling disputes between migrant workers and industry.

     The law's impact has been analyzed several times in the past, but professor Xin Meng of the Australian National University recently took a new approach. She analyzed a data set covering 15 cities and nine provinces. She also considered the tightening labor market of the past several years. She concluded that the law's effect "is not as clear cut" as former studies have suggested.

Regulations as constraints

Some in China argue that the law has led to excessive increases in the cost of labor. Policymakers have discussed whether the law should be kept as is or be amended. Analysts' reports are sure to be used in political decision-making.

     Professor Junsen Zhang of the Chinese University of Hong Kong analyzed how absent parents affect child development. More than 61 million children up to 17 years old have been left behind in rural China by one or both parents, according to the All-China Women's Federation. Using data collected at 38 primary schools in Longhui, a county in Hunan Province, he analyzed how parental absence affects scholastic achievement in Chinese and mathematics.

     His study shows parental absence has a significant negative impact on how well children perform in these subjects. He also found "strong evidence that children with both parents absent are less likely to feel happy and satisfied."

     Rana Hasan, a director of Development Economics and Indicator Division at the Asian Development Bank, studies how labor regulations affect India's apparel industry. The country's labor regulations are "among the most complex in the world," he said. He used various data sets and found that "regulations have contributed to keeping apparel firms relatively small and [unregistered]." Since small firms have low productivity, so too does the industry as a whole.

     He expanded from there. "The evidence," he said, "does point to labor regulations as a constraint on Indian manufacturing."

Elderly care

Needless to say, natural and human-made disasters influence Asia's economic development. Professor Yasuyuki Sawada of the University of Tokyo talked about disasters, consumption and insurance in the region. Natural disasters include floods, earthquakes and epidemics, whereas man-made disasters include war, financial crises and industrial accidents. Asia has seen an increasing number of disasters during the past half century.

     In analyzing the trend, Sawada looks at ways insurance might help spread the risk. "It is imperative to strengthen market-, government-, and community-based insurance mechanisms," he said, so the disaster risk can be diversified at the individual, national and regional levels.

     Professor Jong Wha Lee of Korea University and associate professor Dainn Wie of the National Graduate Institute for Policy Studies, in Tokyo, analyzed the returns of education in South Korea and Japan. They looked at data from a number of sources, including the Program for the International Assessment of Adult Competencies. They emphasize that education, vocational training and on-the-job training are all essential.

     Elderly care is already a crucial issue in advanced economies like Japan's, and it will surely impact other Asian countries as well. Despite all the talk in Japan about middle-aged men and women having to leave the workforce to care for aged parents, associate professor Ayako Kondo of the University of Tokyo has found "no evidence of a positive impact that long-term care availability has on the labor supply." Kondo emphasized that other barriers also need to be studied.

The proposed working papers can be found at:

https://www.jcer.or.jp/academic_journal/aepr/index.html

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