Applied Economics Journal <p>Applied Economics Journal (ISSN: 2586-9124) is a double blind peer-reviewed journal devoted to the applications of economic theories, concepts and methodologies to analyze well-defined research issues. It encourages empirical analysis, simulation, prediction and forecasting research. While it is aimed at academics and policy makers interested in the Thai and Asian economies, the journal also considers articles that deal with global issues. The primary criteria for selecting papers are originality, quality, and contribution to the field. The categories of articles include commentary, review articles, research articles and book reviews. &nbsp;AEJ is indexed in the Thai-Journal Citation Index (TCI, Tier1), IDEAS/RePEc, CAB Abstracts, Google Scholar, ASEAN Citation Index (ACI) and Emerging Sources Citation Index (ESCI). Two issues are published a year, in June and December. All articles are open access. No submission fee and page charge.</p> The Center for Applied Economics Research (CAER) en-US Applied Economics Journal 2586-9124 <p style="text-align: justify;">Submission of a manuscript to Applied Economics Journal will be taken to imply that the author(s) guarantee that the paper is an original work, has not been published, and is not being considered for publication elsewhere either in printed or electronic form. The author(s) have obtained permission from the copyright holder to reproduce in the article material not owned by them, that author(s) have acknowledged the source, and that this article contains no violation of any existing copyright or other third party right or any material of an obscene, indecent, libelous or otherwise unlawful nature and that the article does not infringe the rights of others. The author(s) will indemnify and keep indemnified the editors and Applied Economics Journal, Center for Applied Economics Research (CAER), Faculty of Economics, Kasetsart University against all claims and expenses. The author(s) agree that the publisher may arrange for the article to be published and sold or distributed on its own, or with other related materials, and could reproduce and/or distribute in printed, electronic or any other medium whether now known or hereafter devised, in all languages, and to authorize third parties to do the same.</p> Editorial Note <p>The editorial team is pleased to announce that <em>Applied Economics Journal </em>(<em>AEJ</em>) is back to being listed in the Thai Journal Citation Index (TCI) tier 1 with effect from January 1, 2021, to December 31, 2024. This will also be applicable to the update of the ASEAN Citation Index (ACI) database. The issues relating to referencing styles and the online journal management system, which caused <em>AEJ</em> to fall into TCI tier 2 in 2020, have been improved. Submissions to the journal have also increased and our full archive has shown continuing growth in downloads and citations (see ‘About the Journal’ on our website for details). Our sincere thanks are offered to our authors and our many reviewers for this performance.</p> <p>In this volume, diverse issues in applied economics are presented which we hope will be beneficial to readers, particularly researchers and relevant policymakers.&nbsp; The first article contributes to the debate on the relationship between direct marketing and farmers’ welfare. Using tomato farmers in India as a case study, its findings show that linking farmers with retail outlets or supermarkets is beneficial for the adoption of modern production technology and profitability. The second paper provides evidence that demographic structure has a significant positive relationship with public health care expenditure in Malaysia while education and health care will be competing for sources of funding in the long run. The third paper shows that worker remittances are important for receiving families but their impact on economic growth needs to be enhanced by incentivizing a more growth-conducive use of remitted funds. The fourth paper investigates the relationship between trade openness and income inequality using different measures of inequality. The cross-country analysis shows that trade openness reduces income inequality regardless of the measures. The fifth article provides empirical evidence that good governance can reduce the likelihood of armed conflict in South Asia, while population and remittances can fuel it. The sixth article compares the two most famous efficiency measurement methods, DEA versus SFA, using the US non-life insurance market as a case study. It concludes that the two approaches yield similar results and can be used complementarily. The last paper develops the front-end’s lending decision system, which can be used as an instrument to support the implementation of appropriate credit policies for the agricultural bank in Thailand.</p> Waleerat Suphannachart Copyright (c) 2021 Applied Economics Journal 2021-08-12 2021-08-12 28 2 i i Contents Waleerat Suphannachart Copyright (c) 2021 Applied Economics Journal 2021-08-12 2021-08-12 28 2 ii ii Impact of Market Reforms on Technology Adoption and Profitability: The Case of Tomato Farmers in India <p>Market reforms affect the development of agribusiness and remain contentious in many developing countries. This study contributes to the debate and the lack of evidence on the impact of marketing reforms on the welfare of farmers. It focused on the impact of direct marketing in tomato cultivating farmers with Super Markets (SMs) on the adoption of modern production technologies and the realization of net returns in India. Primary data was collected from 500 sample farmers and applied to the Seemingly Unrelated Regression (SUR) model to analyze the impact of SMs participation on the adoption of modern production technologies and the realization of net income. The findings revealed that SMs participation decisions, interactions with SMs personnel, land holding size and lucrative prices offered by SMs are influential factors in the use of modern inputs viz., organic manures, drip irrigation, micronutrients and for the realization of higher net income from tomato cultivation. Reduced transaction costs, assured marketing, the mitigation of both production and marketing risks, enhancing the commercial outlook of farmers, etc., are the other benefits due to market linkages of tomato farmers with corporate firms.</p> Nirmal Ravi Kumar Kotamraju Suresh Chandra Babu Jagan Mohan Reddy Maligireddy Copyright (c) 2021 Applied Economics Journal 2021-07-27 2021-07-27 28 2 1 20 Impact of Demographical Structural Change on Public Health Care Expenditure in Malaysia <p>The main objective of this paper is to shed light on the empirical relationship between demographic structure and public health care expenditure. A voluminous literature had pointed out the significant impact of demographic changes on public expenditure. Some of the scholars had attributed the growth effects of certain public expenditure to the age-specific effects, others recognized it as the age-transition effects. On a separate note, past researches had identified the aging population as a contributing factor to the increasing health care expenditure. Therefore, this paper empirically examines how the public health care expenditure in Malaysia responds to the population changes using the Autoregressive Distributed Lag (ARDL) Bounds testing approach. Empirical evidence from this finding demonstrated that the demography structure has a significant positive relationship with public health care expenditure. Hence, highlighted the existence of generational conflict in the allocation of health care expenditure. Besides that, bi-directional causality was found running between public health care expenditure and government education spending. This confirmed the correlation between these expenditures. The results also provide important implications that need to be taken into consideration by Malaysian policymakers when developing policies.&nbsp;</p> Wong Sing Yun Copyright (c) 2021 Applied Economics Journal 2021-07-31 2021-07-31 28 2 21 42 Inward Worker Remittances and Economic Growth: The Case of Bangladesh <p>It is commonly believed that for development economies, inward worker remittances are an important financial instrument to boost economic growth. This study investigates the relationship between inward worker remittances and economic growth for the case of Bangladesh. The study applies an Autoregressive Distributed Lags (ARDL) bounds testing approach based on 28 years of World Bank and IMF data. The paper adds to the literature by considering Foreign Direct Investment (FDI) and Official Development Aid as additional foreign sources of economic growth. In contrast to common belief and most prior results, the findings of this study indicate that worker remittances do not have a significant impact on economic growth. Rather, economic growth is mainly spurred by changes in Bangladesh’s capital stock and by FDI inflows. Thus, while worker remittances are certainly important for receiving families, their impact on economic growth needs to be enhanced by incentivizing a more growth-conducive use of remitted funds.</p> Md Ali Emam Tinggui Chen Markus Leibrecht Copyright (c) 2021 Applied Economics Journal 2021-07-31 2021-07-31 28 2 43 62 Trade Openness and Income Inequality: Fresh Evidence Based on Different Inequality Measures <p>Theoretical and empirical literature on the impact of trade openness on income inequality is inconclusive. The inconsistent findings may be partly the result of biased measures of income inequality and divergent data sources. This paper improves upon the previous literature by examining the impact of trade openness on income inequality, using data from three major data sources: the Standardized World Income Inequality Database (SWIID), including disposable and market income; World Development Indicators (WDI); and the University of Texas Inequality Project (UTIP); as well as four Gini coefficients as measures of inequality. We apply a two-step system GMM estimation technique and the findings suggest a negative relationship between trade openness and income inequality. Based on the empirical results, we conclude that changing the measure of inequality from different data sources does not affect the empirical results related to the trade-inequality relationship.</p> Noor Ahmed Khoso Sheraz Rajput Tariq Aziz Akseer Hussain Agha Jahanzeb Copyright (c) 2021 Applied Economics Journal 2021-07-31 2021-07-31 28 2 63 81 Economics of Armed Conflicts and Governance: An Empirical Study Focusing on South Asia <p>This study examines the effects of governance on armed conflict and the associations between economic factors, external finances (remittances), natural calamities, and armed conflicts. Panel data are used covering the South Asia region from 2002 to 2018, applying the logit and ARDL models. The results show that government effectiveness, political stability and absence of violence/terrorism, and regulatory quality, the rule of law, and droughts/floods have a negative relationship, with the dependent variable, armed conflict. On the other hand, we find that population and remittances, and Voice and Accountability have positive association with armed conflict, as per logit analysis. Based on ARDL estimations, government effectiveness, a proxy variable for governance, political stability and absence of violence/terrorism, and the rule of law have negative and highly significant association with armed conflict. We imply that with an increase in terrorist activities, the governance level, political stability, the rule of law, and regulatory quality deteriorate. In other words, good governance can reduce the likelihood of armed conflict, while population and remittances can fuel armed conflict. Moreover, natural calamities have an inverse relationship with armed conflict. Surprisingly, conflicts help increase the voice of and demand for accountability by general public in the conflict zone.</p> Hidayat Ullah Khan Leena Rehman Alam Khan Hameed Khan Copyright (c) 2021 Applied Economics Journal 2021-07-31 2021-07-31 28 2 82 106 A Comparison of DEA and SFA Approaches: Application to the US Non-Life Insurance Market <p>Analyzing the efficiency of markets is essential for both business managers and policymakers. On the one hand, private companies need to be as efficient as possible, given that their competitiveness and their chance of survival depend on it. On the other hand, public businesses claim to be committed to investing public funds in the best way. To be competitive, firms need to improve their performance by incorporating the benchmark practices of their field in their management, and studying efficiency levels may help identify potential areas for development. However, does the efficiency score depend on the method chosen to calculate it? In this paper, our aim is to compare the rate of agreement between two different approaches to measure efficiency, the parametric and the non-parametric. For the parametric procedure, we use stochastic frontier analysis (SFA), while in the case of the non-parametric, we use data envelopment analysis (DEA) and the dynamic approach of the DEA, the window DEA. To do so, we analyze 923 non-life (property/casualty) US insurance companies in the period 2007–2011. According to our results, comparable efficiency scores are found using SFA and DEA methodologies. More importantly, the two approaches rank companies in a similar order, mostly agreeing on which are the most and the least efficient firms. Therefore, we support that the approaches can be used complementarily.</p> Sara Suárez-Fernández Raquel Quiroga-Garcia Isabel Manzano-Perez Copyright (c) 2021 Applied Economics Journal 2021-07-31 2021-07-31 28 2 107 127 The Front-End’s Lending Decision System for the Agricultural Bank in Thailand <p>The main objective of this study is to develop the front-end’s lending decision system of the Bank for Agriculture and Agricultural Cooperatives, a major lender in Thailand’s agricultural sector. The logit model and the artificial neural network model have been developed to reflect risk factors to identify the probability of default by each new borrower. The study supports the use of the logit model to develop the system because it gives more accuracy in predicting the probability of default and debtor classification than the artificial neural network model. The working process of the system is classified into two sections including credit risk management, which is the process of screening the loan applications and setting the credit approval or rejection criteria, and affordability risk management, which is the process of determining the maximum loan amount for the debtor who has passed the credit approval criteria. In this study, the author caps the debt service ratio as a threshold for determining the amount of credit (the loan amount approved and interest expense) at 70% and determines that the maximum loan principal is 63% of the debtor's total annual income. The system is also used as an instrument to support the implementation of appropriate credit policies in handling agricultural households’ excess debt and promote the building of financial discipline for agricultural households in the rural sector of Thailand.</p> Songkran Somboon Copyright (c) 2021 Applied Economics Journal 2021-08-02 2021-08-02 28 2 128 161