Given the rapid changes in the economic and social fabric of Brunei Darussalam (Brunei) over the last 40 years, there has been an increasing need for books and other published works on the economic and social aspects of development in the country. Brunei is scarcely covered in the international published economic literature including the databases of the key international lending agencies such as the World Bank and the International Monetary Fund. This book attempts to fill a small part of the big gap in knowledge about economic and social development issues concerning Brunei. It is the culmination of efforts made by several individuals at Universiti Brunei Darussalam (UBD) over the last five years in undertaking various research projects in three main areas of economic science and related social sciences: (a) macroeconomic analysis (b) microeconomic analysis and (c) analysis of socio-economic problems. The book is divided into three sections in line with the three main themes of economic and social science research undertaken by the authors. The first section consists of five chapters that analyse macroeconomic issues involving economic growth, aggregate labour demand and international trade. The second section deals with the analysis of microeconomic efficiency of various industries and services namely agriculture, construction, internet services and Islamic banking services. This section is made up of four chapters. The third section consists of three chapters dealing with several socio-economic problems.
In Chapter 1, the author describes the underlying fundamentals of the economy of Brunei over the period, 1971 to 2001, and outlines the prospects and challenges affecting economic growth and diversification in the country. He offers several suggestions for diversifying the economy and accelerating economic growth. The possibility of using the construction industry, the third largest economic sector, as a vehicle for pulling the economy out of a recession is analysed in Chapter 2. The author concludes that the construction industry is not likely to pull the economy out of a recession. Rather it is the rest of the economy which is likely to pull the construction industry along as it expands. It is generally considered that as an economy expands or grows, more people are employed. The analysis of factors influencing the aggregate demand of labour is undertaken in Chapter 3 using a relatively new econometric technique. Real wage reduction is shown to have higher impact on total employment than output expansion. The recent Asian financial crisis is shown to have had a negative lingering effect on employment in the country. Employment in the private sector has been growing modestly while government sector employment has been declining.
In Chapter 4, the authors estimate the social welfare of Brunei by applying the concept of health and environmental quality adjusted gross domestic product. The use of gross domestic product (GDP) as a measure of social welfare fails to take into account of the deterioration of other aspects of social welfare such as health, the environment and social capital that is linked to the growth of GDP. Based on the application of health and environmental quality adjusted gross domestic product, the authors suggest that over the period of the study, 1996-2001, an average of 12% of the country’s unadjusted GDP should be set aside as the real societal costs for maintaining the quality of health of the population, preserving the natural environment and social capital. Chapter 5, the last chapter of Section 1 of the book, is devoted to the analysis of the factors influencing merchandise trade flows between Brunei and the nine other member countries of the Association of Southeast Asian Nations (ASEAN). The authors build on recent studies on international trade involving Brunei. They demonstrate that bilateral trade flows between Brunei and ASEAN countries are driven mainly by the population of the ASEAN countries, historical relationships of ASEAN countries with Brunei and cultural similarities between the ASEAN member countries and Brunei.
The second section of the book starts with an analysis of the use of internet services by urban householders in Bandar Seri Begawan (Chapter 6). The authors establish that the likelihood of using internet services increases with longer experience using computers, younger age, higher family incomes and the ability to read and write English. The intensity or level of use of internet services is positively related to internet monthly charges, household income and the level of education. In Chapter 7, the authors estimate the aggregate production function for the agricultural sector in Brunei Darussalam. They show that labour inputs, machinery and intermediate capital inputs significantly influence the output of the sector in the positive sense. However there has been negative technological change in the agricultural sector. With the high technical inefficiency of the sector, the authors recommend the use of more quality capital inputs in the sector.
Technical inefficiency of a sector can also be ascertained by direct interviewing of managers of firms to identify the constraints that they face. In Chapter 8, the author reports on a survey of construction firms undertaken to identify the factors that adversely affect the efficiency of their operations. The three most important problems identified are the delay in payments by the government for completed work done by firms, the delay and late payments of work done for clients other than the government and the difficulty in accessing loans from local banks. In the concluding chapter of Section 2, Chapter 9, the authors discuss the various factors that influence the implementation of business activities in Brunei according to Islamic doctrine. They indicate the important challenges that need to be addressed to ensure that efforts directed towards achieving maximum use of Islamic business transactions in Brunei are successful.
The third and final section of the book is made up of three chapters and they all deal with emerging socio-economic problems in Brunei. In Chapter 10, the two authors analyse factors influencing the choice of marriage partners by currently married women in a representative urban Muslim community in Bandar Seri Begawan. Their analysis is extended to the identification of attributes of potential husbands desired by single females. The results indicate that husbands of currently married women come predominantly from similar educational attainment groups and social classes. Single females indicate preferences for potential partners from their own age groups though not necessarily from their own social class. With marriageable women outnumbering marriageable men in Brunei, the authors suggest the relaxation of laws to make it easier for Bruneian women to marry foreigners.
The linkage between the number of women working and the divorce rate is discussed in Chapter 11. The authors show that rising women labour participation has not led to the increasing divorce rate in Brunei. Rather it is the increasing divorce rate that is linked to increasing women labour force participation. They suggest the implementation of policies to assist married working women through provision of more childcare facilities and improved welfare system for divorced women. The final chapter of the book, Chapter 12, is devoted to the discussion of socio-economic problems faced by low-income immigrant workers in Brunei. These people constitute the largest group of workers in the country. The author analyses the socio-economic problems based on data gathered from a combination of survey and field research including focus group studies. He suggests several policy interventions to reduce the problems faced by low-income immigrant workers in Brunei.