Competitiveness by Kwan Kee Ng
The Benchmarking Survey of Establishments in Batam, Bintan and Karimun Special Economic Zone (BBK... more The Benchmarking Survey of Establishments in Batam, Bintan and Karimun Special Economic Zone (BBK SEZ) is part of a collaboration project between the Faculty of Economics, University of Indonesia (FEUI) and the Asia Competitiveness Institute, Lee Kuan Yew School of Public Policy, National University of Singapore (ACI). The objective is to study the competitiveness of BBK SEZ through obtaining views and concerns of existing investors, investigating linkages between BBK SEZ and Singapore, and proposing appropriate policy recommendations. The study comprises of qualitative research (focus group discussions and in-depth interviews) from April 2008 to November 2008 and quantitative research (survey of BBK establishments) from August 2008 to January 2009.
This survey report forms part of the deliverables of the study. Various aspects of this survey report were presented in seminars in Indonesia and Singapore, among them a BBK Competitiveness Seminar in Jakarta co-organised by the Ministry of Trade, Indonesia, FEUI and ACI. The opening address of this seminar in Jakarta was given by the Trade Minister of Indonesia, Ibu Dr. Marie Elka Pangestu and the seminar was attended by about 200 participants, including stakeholders of the development of BBK, government officials and academia.
The 1997 Asian Financial Crisis (AFC) had dealt a severe blow to the economic development of Indo... more The 1997 Asian Financial Crisis (AFC) had dealt a severe blow to the economic development of Indonesia. The setting up of SEZs on the islands of Batam, Bintan and Karimun (BBK) was one possible positive step to regain the growth momentum enjoyed by the Indonesian economy in the past. Another objective was to renew investor interest in the three Riau islands which has tapered off over the past five years. In this paper, we traced the development of BBK, highlighted recent development efforts by the Indonesian government to revitalise BBK by developing it into a SEZ and analysed the trends of growth in BBK.
Purpose-The purpose of this paper is to provide a critical review of the Indonesian economy and i... more Purpose-The purpose of this paper is to provide a critical review of the Indonesian economy and its industrialization effort, highlighting competitiveness issues faced by Indonesia and linking them to the current investment climate. Design/methodology/approach-Secondary data are used to assess competitiveness performance and competitiveness determinants. In competitiveness performance the paper analyzes the role of the Indonesian economy through its shares in world population, world total trade, and world total inward foreign direct investment. The paper also looks at outcome measures such as real GDP per capita in PPP terms and real GDP in PPP terms in level and growth. For competitiveness determinants, the paper analyzes competitive determinants reported by the Global Competitiveness Index. Findings-The competitive position of Indonesia is compared to other Asean countries and different government policies and strategies from the first president (Soekarno) till the current president (Susilo Bambang Yudhoyono). This paper also provides some key policy recommendations to enhance investment climate and competitiveness of Indonesia. Research limitations/implications-This paper does not look at investor opinion toward Indonesia which perhaps could help us in developing policy. Practical implications-The results show that the Indonesian Government has taken steps in several areas to improve investment climate. But still they have to improve their competitiveness performance by providing a coherent strategy, developing close connections between economics and politics, through transparent regulation, formulating an attractive investment policy, and realizing the importance of excellent political leadership. Originality/value-This paper provides a critical analysis of the Indonesian competitive position and offers policy recommendations on how we can improve its performance.
Attracting foreign direct investment (FDI) is a perennial policy challenge for Indonesia. FDI is ... more Attracting foreign direct investment (FDI) is a perennial policy challenge for Indonesia. FDI is a necessary condition for industrial development and technological progress, important determinants of sustainable economic growth. However, poor FDI performance over the years has retarded industrial development and technological progress in Indonesia. To attract FDI to Indonesia, the policy priority is to improve the current investment climate. Relevant but separate policies addressing the current factors affecting the investment climate were found to have limited success. A focused and coherent overall policy strategy is therefore necessary.
Facets of Competitiveness, Narratives from ASEAN, 2011
The following sections are included:
Country Background
The Case for a Cross-National Economic ... more The following sections are included:
Country Background
The Case for a Cross-National Economic Strategy — The SEZ Model
Rationale for Selecting BBK as the First SEZ
Location
Infrastructure
Historical Development of Batam and Linkages with Singapore
Pro-business Investment Policies
Progress Made by BBK
Growth Trends
Issues in Policy Coherence and Coordination
Survey Findings on the Competitiveness of BBK
Conclusions
Policy Implications
Endnotes
There is a strong belief among scholars that country competitiveness has a significant influence ... more There is a strong belief among scholars that country competitiveness has a significant influence on the flow of investment. This paper firstly reviews Indonesia’s competitiveness through a set of indicators, its industrialisation policies throughout different presidents and assesses its current investment climate. Despite steps taken by the Indonesian government such as renewing efforts to improve the business and investment climate and intensifying the anti-corruption drive, there is no significant improvement in inward foreign direct investment as investors are deterred by risks induced by macroeconomic instability and uncertainty in government policies and regulations. This paper highlights the importance of a coherent strategy that encompasses close connection between economics and politics, attractive investment policy as well as transparent regulation and existence of prominent leadership.
This policy paper summarises the recent policy response of Indonesia to global increase in food a... more This policy paper summarises the recent policy response of Indonesia to global increase in food and oil prices, and more importantly, documents and evaluates its various policies aiming at improving the investment climate in Indonesia.
The development of entrepreneurship in Singapore is evident from the substantial increase of SMEs... more The development of entrepreneurship in Singapore is evident from the substantial increase of SMEs in the Manufacturing (increase of 13%), Services (increase of 92%), and Wholesale and Retail (increase of 31%) sectors from 1982 to 1997. In fact, a large proportion of firms in the Services, Wholesale and Retail, and Manufacturing sector are SMEs. The increasing importance of SMEs to the Singapore economy is also reflected by its contribution of 38.6% in total employment and a 152% in value-add.
The earlier Phase I study 1 highlighted the characteristics of entrepreneurs in Singapore. For the inception stage, the key motivational factors to become an entrepreneur are culture, willingness to take risks, and the desire to be own boss. Usually the entrepreneur possesses a special product and able to see market potential and niche for the product. These budding entrepreneurs have access to incubators to help them. During the start-up stage, financing comes from personal saving and bank loan (with property as mortgage). There are available markets for products and the legal system protects all vested interests. During the early development stage, entrepreneurs are supported by trained labour, supportive team, training programmes and professional services. Entrepreneurs use technology to improve efficiency and productivity, and network to get more sales to sustain and make profit, and government assistance for finance and business support. Entrepreneurial network is important at all three stages and risk-taking propensity is the most important attribute of an entrepreneur.
Conference on Trade and Industry in Asia Pacific: History, Trends and Prospects, Australian National University, Canberra, 2009
Foreign Direct Investment (FDI) has been an important contributor to economic growth in many ASEA... more Foreign Direct Investment (FDI) has been an important contributor to economic growth in many ASEAN economies, but the share of world FDI inflows to the ASEAN region declined sharply after the 1997 Asian financial crisis. Raising the quality of the regulatory environment through reforms is a key element in creating an attractive investment area. Efforts to develop indicators of regulatory quality and track countries' performance on regulatory reforms have become prominent in an increasing number of international organizations and forums, such as the OECD, World Bank and the European Union. An interesting question to examine is whether regulatory indicators compiled from different sources convey the same messages about the regulatory environment faced by businesses in a country. It is also of interest to explore how well different sets of regulatory indicators are related to indicators of favourable economic outcomes, such as foreign direct investment flows. If alternative measures of regulatory quality carry different implications, then an analysis of these differences will assist policy makers to gain added understanding on the regulatory areas they should focus attention on. This paper aims to explore these issues using alternative measures of regulatory quality from World Bank's Ease of Doing Business, IMD Business School's World Competitiveness Yearbook, and the World Economic Forum's Global Competitiveness Report. This paper supports the understanding that there is a link between a more business friendly environment, particularly in enabling firms to start up businesses, and the rate of foreign direct investment. Regulatory indicators compiled from different sources may give a different picture of strengths and weaknesses in the regulatory environment in a country. This serves to highlight that policy makers looking to assess regulatory quality and identify priority areas for regulatory reforms would find value in referring to regulatory indicators from multiple sources in their decision making process.
Spotlight on Growing Industries, BDO International Accountants & Consultants, Annual Report 1996, 1996
The global information technology industry is creating unprecedented economic opportunities and n... more The global information technology industry is creating unprecedented economic opportunities and new playing fields. Companies that seized the opportunities have achieved competitive breakthroughs and positioned themselves as leaders. We examine the seven trends that we have identified in the global IT industry.
Proceedings of the International Seminar on Human Capital Formation and SMEs in the Information Society, December 2-6, 1996, Tokyo and Fukuoka, Japan. Institute of Developing Economies, 1996
In the 80’s, the Government of Singapore recognised that given the slower growth of our populatio... more In the 80’s, the Government of Singapore recognised that given the slower growth of our population and labour force, our long term economic growth prospects would come from improvements in labour productivity and improvements in management or business efficiency and that information technology (IT) would be the key technology to help Singapore to sustain its economic growth and maintain its competitiveness in the world market. This report starts with a review of the state of economic development and the growing importance of the IT industry in Singapore, and proceeds to evaluate the degree of development of the Information Society, to review the role of Government in the Information Society and to comment on the possible regional co-operation and assistance schemes.
Work Competencies by Kwan Kee Ng
Tourism Management and Policy: Perspectives from Singapore, 2010
This paper describes a practical framework for identifying and assessing competencies or requisit... more This paper describes a practical framework for identifying and assessing competencies or requisite skills, knowledge and attitudes for jobs in the Singapore Tourism industry. Besides having a model that would enable the establishment of industry competency sets, it also offers the means for competency certification of individuals working in the Tourism Industry. Our operationalization of competency focused on what is really required for the job from the perspectives of the job incumbents, supervisors and management in the Tourism Industry. By building the proposed competency model from a scrutiny of the elemental constituents in work itself, we believe that it will provide practical insights for HR practitioners and national manpower policy makers about the Tourism Industry. Specifically, the model can a) define benchmark competency standards; b) measure competency levels of individuals; c) identify skills and knowledge where training is required based on competency gaps; d) determine the type and extent of training needed; and e) highlight possibilities and opportunities for cross-occupation and cross-industry labor mobility. Arguably, our conceptualized model can provide a different lens for identifying and understanding competencies for the changing work landscape, that is both rigorous and relevant.
Conference on Interconnected Worlds: South East Asian Tourism in the 21st Century, 6-7 September 1999, Singapore, 1999
This paper presents the methodological concept for developing a competency model for employees in... more This paper presents the methodological concept for developing a competency model for employees in the Singapore tourism industry that can be used for competency certification, training and development. While previous attempts had been made to identify and formalise the skill standards for certification purposes, these were confined to task-related skills and knowledge identification in a few of the tourism-related occupations. With the growing importance of competency in the new knowledge-based economy, there is a need to develop a rigorous methodology that is both effective and efficient and at the same time relevant to the existing conditions in the tourism industry.
The working definition of competency used in our model development is a cluster of related knowledge, skills and attitudes (KSAs) that affects a major part of one's job; that correlates with performance on the job; that can be measured against well-accepted standards; and that can be improved via training and development. First, occupations in the five key tourism sectors, namely, Hotels, Eateries/restaurants, Attractions, Retail, and Travel agents (HEART) are identified. Each tourism occupation is decomposed into component jobs that are then further differentiated into the tasks needed to carry out each of these jobs. A job/task analysis is carried out to develop the job and task profiles of these occupations. Secondly, the developed job profile is used as a basis by the incumbent, immediate supervisor and the management to identify KSAs and the desired level of KSAs. Thirdly, the identified KSAs and the desired levels for each job are graphically presented in a C-Plot which is intended to be a simple visual tool that will help identify the areas where training is required.
In addition to identifying what to train, we also propose a three-tier classification to determine the appropriate level for administering the required training: industry and sector specific tiers administered by national training institutions and the organisational-specific tier which should be administered by the organisation.
Management Development Forum, 2000
This article describes a practical framework for identifying and assessing competencies or the re... more This article describes a practical framework for identifying and assessing competencies or the requisite skills, knowledge and attitudes for jobs. This operationalization of competency deliberately moves beyond the existing rhetoric of “higher is better” to focus on what is really required for the job from the perspectives of the job
incumbents, supervisors and management. Based on the premise that competencies must be understood in the context of jobs, this proposed model was developed from a scrutiny of the elemental constituents in work itself. By so doing, this proposed competency model can provide practical insights for HR practitioners and, at the
national level, manpower policy makers. More specifically, the model can a) define benchmark competency standards, b) measure competency levels of individuals, c) identify skills and knowledge where training is required based on competency gaps, d) determine the type and extent of training needed, and e) highlight possibilities and opportunities for cross-occupation and cross-industry labor mobility. As conceptualized, this model provides a different lens for understanding and identifying competencies that is both rigorous and relevant for the changing work landscape.
Labour Polarization and Wage Inequality by Kwan Kee Ng
Over the past decade, Indonesia has seen a rapid increase in wage inequality. This paper seeks to... more Over the past decade, Indonesia has seen a rapid increase in wage inequality. This paper seeks to first understand the nature and causes of wage inequality and whether labour polarization exists. Traditionally, skill-biased technical change (SBTC) has been used to explain rising wage inequality in developed countries by examining technological advances that shift employment towards more skilled workers and depress wages of unskilled and semi-skilled workers. More recent studies, however, present a more nuanced approach to the impact of technology on the labour market by arguing that instead of uniformly shifting demand away from lower skilled jobs, technology replaces “routine” occupations. These jobs are typically in the middle of the wage and skill distribution leading to a disproportionate increase in high and low paid employment. While this theory of labour polarisation has been applied in the context of the US, UK and European labour markets, this paper explores the applicability of this hypothesis in Indonesia by examining the structure of employment in the country from 2001 to 2010. We found evidence of SBTC but not labour polarization in explaining wage inequality in Indonesia.
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Competitiveness by Kwan Kee Ng
This survey report forms part of the deliverables of the study. Various aspects of this survey report were presented in seminars in Indonesia and Singapore, among them a BBK Competitiveness Seminar in Jakarta co-organised by the Ministry of Trade, Indonesia, FEUI and ACI. The opening address of this seminar in Jakarta was given by the Trade Minister of Indonesia, Ibu Dr. Marie Elka Pangestu and the seminar was attended by about 200 participants, including stakeholders of the development of BBK, government officials and academia.
Country Background
The Case for a Cross-National Economic Strategy — The SEZ Model
Rationale for Selecting BBK as the First SEZ
Location
Infrastructure
Historical Development of Batam and Linkages with Singapore
Pro-business Investment Policies
Progress Made by BBK
Growth Trends
Issues in Policy Coherence and Coordination
Survey Findings on the Competitiveness of BBK
Conclusions
Policy Implications
Endnotes
The earlier Phase I study 1 highlighted the characteristics of entrepreneurs in Singapore. For the inception stage, the key motivational factors to become an entrepreneur are culture, willingness to take risks, and the desire to be own boss. Usually the entrepreneur possesses a special product and able to see market potential and niche for the product. These budding entrepreneurs have access to incubators to help them. During the start-up stage, financing comes from personal saving and bank loan (with property as mortgage). There are available markets for products and the legal system protects all vested interests. During the early development stage, entrepreneurs are supported by trained labour, supportive team, training programmes and professional services. Entrepreneurs use technology to improve efficiency and productivity, and network to get more sales to sustain and make profit, and government assistance for finance and business support. Entrepreneurial network is important at all three stages and risk-taking propensity is the most important attribute of an entrepreneur.
Work Competencies by Kwan Kee Ng
The working definition of competency used in our model development is a cluster of related knowledge, skills and attitudes (KSAs) that affects a major part of one's job; that correlates with performance on the job; that can be measured against well-accepted standards; and that can be improved via training and development. First, occupations in the five key tourism sectors, namely, Hotels, Eateries/restaurants, Attractions, Retail, and Travel agents (HEART) are identified. Each tourism occupation is decomposed into component jobs that are then further differentiated into the tasks needed to carry out each of these jobs. A job/task analysis is carried out to develop the job and task profiles of these occupations. Secondly, the developed job profile is used as a basis by the incumbent, immediate supervisor and the management to identify KSAs and the desired level of KSAs. Thirdly, the identified KSAs and the desired levels for each job are graphically presented in a C-Plot which is intended to be a simple visual tool that will help identify the areas where training is required.
In addition to identifying what to train, we also propose a three-tier classification to determine the appropriate level for administering the required training: industry and sector specific tiers administered by national training institutions and the organisational-specific tier which should be administered by the organisation.
incumbents, supervisors and management. Based on the premise that competencies must be understood in the context of jobs, this proposed model was developed from a scrutiny of the elemental constituents in work itself. By so doing, this proposed competency model can provide practical insights for HR practitioners and, at the
national level, manpower policy makers. More specifically, the model can a) define benchmark competency standards, b) measure competency levels of individuals, c) identify skills and knowledge where training is required based on competency gaps, d) determine the type and extent of training needed, and e) highlight possibilities and opportunities for cross-occupation and cross-industry labor mobility. As conceptualized, this model provides a different lens for understanding and identifying competencies that is both rigorous and relevant for the changing work landscape.
Labour Polarization and Wage Inequality by Kwan Kee Ng
This survey report forms part of the deliverables of the study. Various aspects of this survey report were presented in seminars in Indonesia and Singapore, among them a BBK Competitiveness Seminar in Jakarta co-organised by the Ministry of Trade, Indonesia, FEUI and ACI. The opening address of this seminar in Jakarta was given by the Trade Minister of Indonesia, Ibu Dr. Marie Elka Pangestu and the seminar was attended by about 200 participants, including stakeholders of the development of BBK, government officials and academia.
Country Background
The Case for a Cross-National Economic Strategy — The SEZ Model
Rationale for Selecting BBK as the First SEZ
Location
Infrastructure
Historical Development of Batam and Linkages with Singapore
Pro-business Investment Policies
Progress Made by BBK
Growth Trends
Issues in Policy Coherence and Coordination
Survey Findings on the Competitiveness of BBK
Conclusions
Policy Implications
Endnotes
The earlier Phase I study 1 highlighted the characteristics of entrepreneurs in Singapore. For the inception stage, the key motivational factors to become an entrepreneur are culture, willingness to take risks, and the desire to be own boss. Usually the entrepreneur possesses a special product and able to see market potential and niche for the product. These budding entrepreneurs have access to incubators to help them. During the start-up stage, financing comes from personal saving and bank loan (with property as mortgage). There are available markets for products and the legal system protects all vested interests. During the early development stage, entrepreneurs are supported by trained labour, supportive team, training programmes and professional services. Entrepreneurs use technology to improve efficiency and productivity, and network to get more sales to sustain and make profit, and government assistance for finance and business support. Entrepreneurial network is important at all three stages and risk-taking propensity is the most important attribute of an entrepreneur.
The working definition of competency used in our model development is a cluster of related knowledge, skills and attitudes (KSAs) that affects a major part of one's job; that correlates with performance on the job; that can be measured against well-accepted standards; and that can be improved via training and development. First, occupations in the five key tourism sectors, namely, Hotels, Eateries/restaurants, Attractions, Retail, and Travel agents (HEART) are identified. Each tourism occupation is decomposed into component jobs that are then further differentiated into the tasks needed to carry out each of these jobs. A job/task analysis is carried out to develop the job and task profiles of these occupations. Secondly, the developed job profile is used as a basis by the incumbent, immediate supervisor and the management to identify KSAs and the desired level of KSAs. Thirdly, the identified KSAs and the desired levels for each job are graphically presented in a C-Plot which is intended to be a simple visual tool that will help identify the areas where training is required.
In addition to identifying what to train, we also propose a three-tier classification to determine the appropriate level for administering the required training: industry and sector specific tiers administered by national training institutions and the organisational-specific tier which should be administered by the organisation.
incumbents, supervisors and management. Based on the premise that competencies must be understood in the context of jobs, this proposed model was developed from a scrutiny of the elemental constituents in work itself. By so doing, this proposed competency model can provide practical insights for HR practitioners and, at the
national level, manpower policy makers. More specifically, the model can a) define benchmark competency standards, b) measure competency levels of individuals, c) identify skills and knowledge where training is required based on competency gaps, d) determine the type and extent of training needed, and e) highlight possibilities and opportunities for cross-occupation and cross-industry labor mobility. As conceptualized, this model provides a different lens for understanding and identifying competencies that is both rigorous and relevant for the changing work landscape.
We found that the proportion of moderate paying routine middle-skill Service and Sales jobs experienced significant growth in the last ten years. It was the category with the second-largest employment share in 2011. We also noted significant decline in the proportion of high paying high-skill Legislators & Managers jobs to become the category with the lowest employment share in 2011. There is no evidence of labour polarization in explaining wage inequality in The Philippines.
We found that the proportion of moderate paying routine middle-skill Service and Sales jobs experienced significant growth in the last ten years. It was the category with the second-largest employment share in 2011. We also noted significant decline in the proportion of high paying high-skill Legislators & Managers jobs to become the category with the lowest employment share in 2011. There is no evidence of labour polarization in explaining wage inequality in Thailand.
INTRODUCTION
The Special Economic Zone (SEZ) is not a new concept in economic development literature. Its predecessor takes the form of free trade zone (FTZ) and export processing zone (EPZ) where selected production activities (often manufacturing-related in nature) are permitted within the zone without the encumbrances of cross-border custom clearances and trade-related taxes so that industrial development and international trade can be given a boost.
Popularized by the success of the SEZs in launching China into a new economic powerhouse, many aspiring developing economies are willing to spare resources to develop SEZs to catalyse economic growth. SEZs have evolved with changing international economic trends to take the form of industrial parks (e.g. Vietnam-Singapore Industrial Park; Suzhou Industrial Park in China); science, technology and high-tech parks (e.g. Incheon Science Park in South Korea; Bangalore IT Park in India), and on a larger scale like the “growth triangle” that involves Singapore, Johor (Malaysia) and Batam (Indonesia), and the contiguous economic hub consisting of Hong Kong and Shenzhen in the Pearl River Delta of China.
The 1997 Asian financial crisis (AFC) had dealt a severe blow to the economic development programme in several of the ASEAN economies. Among these countries, Indonesia has perhaps been the most affected. Ten years after the AFC, Indonesia has yet to regain the same vitality and exuberance as before the crisis. The setting up of a SEZ on the islands of Batam, Bintan and Karimun (BBK) is viewed as one of possible positive steps to regain the growth momentum enjoyed by the Indonesian economy in the past.
In the next section, we will review the use of concepts of global value chains (GVC) and global production networks (GPN) in promoting regional economic development. Following that we profile the progress and past efforts on economic reform and industrialization in Indonesia, keeping in mind the resultant impact on BBK. We next consider the stylized economic strategies for development in the globalized world. International trade promotion and attraction of foreign investments have become the main avenues to better economic performance. Facilitating the development thrust is the formation of SEZs and harnessing the capability to be part of the GPN and GVC.
In this case study, an organisation reputed for its emphasis on leadership and quality culture, Texas Instruments Singapore Pte Ltd is featured.
Next, a simulation model was run to examine the plausible strategies that the institution could undertake and the timing of the assessment. From the various scenarios, it appeared that the key strategy might be a 'controlled' increase in capacity to match customers' expectations. As long as the institution was performing as well as or better than its competitors, then increasing capacity might not be critical. The model also showed that how often the assessment is done and acted upon affects the institution's ability to react to the changing needs of the customers. If assessed too infrequently, the institution will fail to detect any changes in customers' expectations. Assessing too frequently may result in high costs for the firm.
The paper clearly demonstrates that the institution can make a better strategic decision by understanding the service delivery system and making a constant effort to adapt to changing customer expectations.
This paper will discuss the MRP implementation process and present the critical success factors of MRP implementation. The paper will draw from the MRP literature and highlight the state-of-the-art research on MRP implementation.
However, in data analysis, it has often been discovered that the assumptions with which errors are normally and identically distributed are frequently inappropriate. In fact, error distributions are likely to be contaminated by occasional bad values giving rise to outliers. Outliers can be viewed as observations that are drawn from a normal distribution with large variances or from a flat-tailed distribution, say the Cauchy distribution.
In view of this, alternatively, the following Bayesian approaches are considered for the estimation of the location and coefficient parameters - the usual Bayesian and empirical usual Bayes approaches associated with the normal g-prior, and the new Bayesian and empirical new Bayes approaches associated with the independent Cauchy-type g-prior, a flat-tailed and more realistic prior distribution. For Bayesian approaches, unfortunately, it is often difficult to assess the true value of a hyperparameter.
Hence, in this AE, the robustness of the abovementioned Bayesian approaches with respect to misspecification of prior, lack of normality assumption and the presence of discrepant values will be investigated. Comparison will be made to that of the Least Squares approach. The criteria for the assessment of robustness are mean error, MSE and variance.
The assessment will be done by conducting a simulation study based on 10,000 samples, using 2 computer programs written in Turbo Pascal Version 5.5. In this simulation study, two models - a simple location model and a linear regression model, are treated for the various types of estimators, based on the contaminated normal or the contaminated Cauchy error distributions.
From the simulations, useful insight is gained concerning the robustness of the new Bayesian approach which is obtained using the independent Cauchy-type g-prior. It appears that this approach is robust with respect to the presence of discrepant values and departure from normality assumption. In addition, the new Bayesian estimate is found to have very small and stable variance. As the prior mean departs from the true value of the parameter of interest, the bias of the new Bayesian estimate increases with its variance maintained at a very low level. This provides an opportunity for statisticians to reduce the bias without seriously affecting the variance.
From this research, the use of flat-tailed prior distributions seems to provide a promising means for finding robust Bayesian estimators.