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201. How economic ideas led to Taiwan’s shift to export promotion in the 1950s

Author:
Douglas A. Irwin
Publication Date:
08-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Taiwan was the first developing country to adopt an export-oriented trade strategy after World War II. The factors usually associated with big shifts in policy—a macroeconomic crisis, a change in political power or institutions, lobbying by export interests, pressure from international financial institutions—were not present; it was ideas that were key. In 1954, economist S. C. Tsiang proposed that Taiwan boost export earnings rather than squeeze import spending to deal with its chronic shortage of foreign exchange. He recommended a currency devaluation to establish a realistic exchange rate and a market-based system of foreign exchange allocation to end the inefficient rationing by the government. Four years later, a policymaker, K. Y. Yin, fought for the adoption of Tsiang’s proposal, helping clear the way for Taiwan’s phenomenal growth in trade.
Topic:
Economics, History, Exports, and Trade
Political Geography:
Taiwan and Asia

202. From hermit kingdom to miracle on the Han

Author:
Douglas A. Irwin
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
In 1960, South Korea’s exports were about 1 percent of GDP, and the country’s ability to import depended almost entirely on US aid. After changing its foreign exchange and trade policies in the mid-1960s, Korea saw a surge in exports to more than 10 percent of GDP by the end of the decade. What factors account for the shift in policy that enabled this dramatic export growth to occur? The United States helped initiate the process by withholding financial assistance, pressuring Korea to devalue its currency and reform its foreign exchange regime. Initially, the Korean government resisted taking these steps, but in 1964 it became firmly committed to an export promotion strategy to boost foreign exchange earnings and end its dependence on American aid.
Topic:
Economics, Foreign Exchange, Reform, Exports, and Trade
Political Geography:
Asia and South Korea

203. Between a Rock and a Hard Place: How Should South Korea Manage its Relations with the United States and China?

Author:
Zhiqun Zhu
Publication Date:
11-2021
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This paper deals with one of the most critical issues in contemporary international relations: how China’s rise challenges foreign policies of U.S. allies, with a focus on the Republic of Korea (ROK) or South Korea. South Korea has been carefully hedging between the United States and China, its traditional security patron and largest trade partner, respectively. Strategic rivalry between the two great powers has put South Korea in an awkward position as pressure grows from the two powers to pick a side. Using a modified dual-track economics-security nexus framework, this paper suggests that the United States and China each has a significant impact on South Korea’s security and economic policies, making it important but challenging for South Korea to simultaneously manage relations with the two great powers. So far, South Korea has maintained these two sets of relationships remarkably well, but it may be difficult to continue with business as usual in the years ahead. For its own national interests, South Korea must seek to preserve the status quo under which it can continue to benefit from good relations with both great powers. The paper also proposes that South Korea should form a “middle power coalition” with like-minded nations to deflect pressures and avoid the dilemma of having to choose sides.
Topic:
International Relations, Security, Foreign Policy, Alliance, and Trade
Political Geography:
China, Asia, South Korea, and United States of America

204. Takeaways From a Time of Increased Friction: South Korea-Japan Security Cooperation From 2015 to Present

Author:
Naoko Aoki
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
South Korea and Japan share common challenges and liberal democratic values but have been unable to build a close security relationship, due mainly to their political differences. This paper examines the two countries’ defense cooperation in the bilateral, trilateral, and multilateral arenas over the past six years to explore how the external security environment, as well as bilateral political problems, have affected their joint activities. The paper’s analysis shows that defense cooperation between South Korea and Japan is not always a binary choice between full cooperation or no cooperation. The two countries not only weigh external threats and bilateral problems, but also ponder such factors as U.S. encouragement to adjust the scope of their cooperation. The paper also shows that while the main constraint for security cooperation between South Korea and Japan is their historical animosity, in recent years, frictions involving the countries’ armed forces have become a new reason for limiting cooperation. As a result, grassroots military-to-military exchanges between the two countries, which in the past continued despite political problems, have largely stopped since late 2018. The paper concludes by proposing that South Korea and Japan work to restore routine bilateral working-level exchanges. It also recommends that the United States continue to urge the two countries to cooperate, and that multilateral exercises be employed as forums for cooperation between the two armed forces, as that is an area that is least impacted by bilateral problems.
Topic:
Security, Defense Policy, Regional Cooperation, and Bilateral Relations
Political Geography:
Japan, Asia, South Korea, and North Korea

205. Assessing South Korea's Role in Promoting ESG Investing in the Asia-Pacific

Author:
William Grimes and Yaechan Lee
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This paper assesses the potential for South Korea to be a regional leader in advancing environmental, social, and governance (ESG) investing, and supporting sustainable development in the Asia-Pacific region. Many economies in the Asia-Pacific region are facing threats from climate change or other environmental limits to growth. Thus, the expansion of ESG investment and green infrastructure is a major regional challenge that must be addressed for sustainable growth. We argue that Korea can play a central role in overcoming this challenge based on the following conjectures. First, Korea’s developmental legacy has allowed it to reshape its financial market and investment habits to quickly expand its ESG market. This model is more relatable to developing economy governments than those offered by Western economies. Sharing Korea’s experience and know-how with the region’s developing economies can augment their ESG compliance capacities and make them a more attractive destination for sustainable infrastructure investments. Second, Korea’s significant presence in the region as a major creditor and exporter can induce ESG adherence from the private sector as Korean investors enhance their commitment to ESG principles. While questions remain about the sustainability of Korea’s ESG adherence due to the market’s heavy reliance on government agency finance and ad hoc pandemic response investments, the increasing global interest in the ESG market makes it likely that the Korean government will continue to incentivize adherence to ESG principles.
Topic:
Economics, Markets, Investment, and Regional Economy
Political Geography:
Asia and South Korea

206. Women Left Behind

Author:
Radhika Jain and Pascaline Dupas
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
Using administrative data on over 4 million hospital visits, we document striking gender disparities within a government health insurance program that entitles 46 million poor individuals to free hospital care in Rajasthan, India. Females account for only 33% of hospital visits among children and 43% among the elderly. These shares are lower for more expensive types of care, and far lower than sex differences in illness prevalence can explain. Almost two-thirds of non-childbirth spending is on males. We combine these data with patient survey, census, and electoral data to show that 1) the program is unable to fully offset the costs of care-seeking, which results in disparities in hospital utilization because some households are willing to allocate more resources to male than female health; 2) lowering costs does not reduce disparities, because males benefit as much as females do; and 3) long-term exposure to village-level female leaders reduces the gender gap in utilization, but effects are modest and limited to girls and young women. In the presence of gender bias, increasing access to and subsidizing social services may increase levels of female utilization but fail to address gender inequalities without actions that specifically target females.
Topic:
Gender Issues, Governance, Health Care Policy, Women, Inequality, and Health Insurance
Political Geography:
India and Asia

207. Coordination Failure: Risks of US-China competition in space

Author:
Gidon Gautel
Publication Date:
04-2021
Content Type:
Working Paper
Institution:
LSE IDEAS
Abstract:
The 2020s will see a flurry of space activity, with both national and commercial programs picking up pace. Both the United States and China hold strong ambitions in telecommunications, lunar exploration, and beyond. However, currently fraught relations between the superpowers are unlikely to improve and may yet deteriorate further. On the one hand, competition between both countries may drive space activities and foster technological innovation. On the other, as both superpowers expand their activities in space, geopolitical tensions may increase the risk of harmful dynamics that could endanger the sustainable rollout of future programs. In this Strategic Update, Gidon Gautel seeks to outline and call attention to two high-risk flash points arising from the development of the US and China’s national space programmes and industries.
Topic:
Geopolitics, Space, Innovation, and Strategic Competition
Political Geography:
China, Asia, North America, and United States of America

208. Twitter and Digital Diplomacy: China and COVID-19

Author:
Chris Alden and Kenddrick Chan
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
LSE IDEAS
Abstract:
This Strategic Update explores how official Chinese foreign policy entities have used Twitter as a public diplomacy platform during the outbreak of the COVID-19 pandemic, the nature of their Twitter activity, and what this means for Chinese Twitter Diplomacy in the future.
Topic:
Diplomacy, Social Media, COVID-19, Twitter, and Digital Policy
Political Geography:
China and Asia

209. How Can America Challenge China's Political Ambitions in an Age of Deglobalisation?

Author:
Dimitri Zabelin
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
LSE IDEAS
Abstract:
COVID-19 has accelerated the trend of deglobalisation and further entrenched China into the growing political and economic fort of Asia. This has made the US less effective at implementing policies aimed at curbing Beijing’s political ambitions and strength in the region. Washington must therefore make itself indispensable in Asia and employ strategies for bringing China into a global network that can collectively reign in the Asian giant’s growing influence.
Topic:
Economics, Politics, Strategic Competition, and COVID-19
Political Geography:
China, Asia, North America, and United States of America

210. Melons as Lemons: Asymmetric Information, Consumer Learning and Seller Reputation

Author:
Jie Bai
Publication Date:
03-2021
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
There is often a lack of reliable quality provision in many markets in developing countries and firms generally lack a reputation for quality. One potential explanation is that mistrust due to past bad behavior can make reputation-building difficult. I examine this hypothesis in a setting that features typical market conditions in developing countries: the retail watermelon markets in a major Chinese city. I first demonstrate empirically that there is substantial asymmetric information between sellers and buyers on quality and a stark absence of quality premium at baseline. I then randomly introduce one of two branding technologies into 40 out of 60 markets–one sticker label that is widely used and counterfeited and one novel expensive laser-cut label. The experiment findings show that laser-branding induced sellers to provide higher quality and led to higher sales profits. However, after the intervention was withdrawn, all markets reverted back to baseline. I incorporate the experimental variation into an empirical model of consumer learning and seller reputation building. The results suggest that consumers are hesitant to upgrade their perception under stickers, which makes reputation-building a low-return investment. While the new technology enhances learning, the resulting increase in profits is not sufficient to cover the fixed cost of the technology for small individual sellers. Counterfactual analysis shows that information friction and fragmented market lead to significant under-provision of quality.
Topic:
Economics, Markets, and Developing World
Political Geography:
China, Asia, and Global Focus