Publishing Institution: Korea Institute for International Economic Policy (KIEP) / Political Geography: Asia / Publication Year: within 3 Years

1. Japan’s Carbon Neutrality and Green Growth Strategy

Author:: Gyu-Pan Kim
Publication Date:: 03-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Japan is mobilizing all its policy capabilities for energy transition from fossil fuels to renewable energy and hydrogen energy from the perspective of realizing carbon neutrality by 2050. Among them, the overseas development and return of hydrogen energy to Japan and the domestic green hydrogen development are making great progress since the announcement of the basic hydrogen strategy in December 2017. Japan promotes the green growth strategy (December 2020) as a national strategy to achieve the 2030 GHG reduction target of 46% (compared to 2013) (NDC) and to realize ‘carbon neutrality by 2050’. Japan's green growth strategy sets 14 areas as key development industries, including offshore wind power, hydrogen, nuclear power, automobiles and batteries, semiconductors, and information & technology. It also presents action plans in the key 14 areas such as R&D, demonstration projects, introduction expansion, and self-reliance/commercialization according to the growth stage of each area. In this WEB, we would like to explore which part of Japan's energy transition policy and green growth strategy the Korean government will refer to in order to achieve the task of realizing carbon neutrality by 2050, and cooperate with Japanese government.
Topic:: Climate Change, Economic Growth, Fossil Fuels, Carbon Emissions, Hydrogen, Energy, and Green Transition
Political Geography:: Japan and Asia

2. Korea's Official Development Assistance to the Philippine Education Sector: Observations and Inputs

Author:: Inero Ancho
Publication Date:: 03-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Advocating inclusive and equitable quality education (SGD 4: Quality Education) is central to sustainable development efforts anchored on collaboration and partnership that enable the policy-to-impact synergy. Agencies and institutions in various levels need to align motivations as they work towards realizing education for sustainable development (ESD). As education fuels sustainable development, school access and completion need to be prioritized, as wealth inequality and gender gap are eliminated. Human capital investment involves the provision of relevant and responsive education systems and training. These mechanisms enable an individual to be productive and contribute to positive outcomes, improved standard of living, and potential gains. As a core element to growth and poverty reduction, human capital suggests implementing significant and concrete progress in core education indices. Further, sustained economic growth, increased productivity value, and favorable social returns are manifested outcomes at the macro level. This paper looks at the ODA from Korea to the Philippines in the context of education. The discussion will be anchored on the Philippine Development Plan and AmBisyon Natin 2040 as roadmaps reflecting the aspirations of every Filipino of having a strongly rooted, comfortable, and secured life.1 Observations and inputs will be offered to ensure effective ODA and provide focus and ways forward towards access to and quality of education, along with programs and projects that contribute into any meaningful development of the Philippine economy.
Topic:: Development, Education, Economy, Human Capital, and Sustainability
Political Geography:: Asia, South Korea, and Philippines

3. ASEAN's medium- to long-term trade strategies and the direction of RoK-ASEAN cooperation

Author:: Sungil Kwak, Seungjin Cho, Jaewan Cheong, Jaeho Lee, Mingeum Shin, Nayoun Park, and So Eun Kim
Publication Date:: 03-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: In recent years, the U.S.-China hegemony competition has intensified, dividing the world into two blocs. ASEAN has long culti-vated its position on the international stage by maintaining a certain distance between the United States and China. In that sense, ASEAN is the best partner for Korea to ef-fectively respond to the divided world. Therefore, this study seeks the directions of cooperation with ASEAN in supply chain, digital trade, climate change response, and health and development cooperation in line with changes in the international order.
Topic:: Climate Change, Development, Economics, International Cooperation, Trade, and ASEAN
Political Geography:: China, Asia, North America, and United States of America

4. Strengthening Regional Value Chain between India and South Korea: Emerging Opportunities for Trade and Investment Cooperation

Author:: Durairaj Kumarasamy
Publication Date:: 03-2023
Content Type:: Working Paper
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The changing dynamics of supply chains and their impact on shaping international relations in East Asia have become crucial issues for scholars and policymakers. Asia’s two major economies, India and South Korea, are reassessing their strategy on the changing dynamics of the supply chain. India is to redesign its developmental strategy to establish India-centric supply chains in key industries. India has stressed its endeavour to become a self-reliant economy by introducing a highly ambitious Production-Linked Incentive (PLI) scheme to attract FDI in strengthening and establishing the supply chain linkages in India, whereas South Korea has adopted a strategy to mitigate supply chain-related risk through greater emphasis on developing strong self-reliance and promoting economic diversification by enhancing its economic ties with India. In addition, the pandemic-induced supply chain disruptions further reinforced South Korea toward diversification and resilience of its supply chain. South Korea’s development experience and deep investment relations with India can explore the untapped potential of bilateral trade and investment linkages. To ensure supply chain resilience both India and South Korea focus on critical sectors such as semi-conductors, steels, secondary batteries and chemicals, along with new technology areas like AI, 6G, Digital Infrastructure and renewable energy for cooperation. In this regard, the study explores the trade and investment relationship between India and South Korea and identifies the potential sectors to engage in the sustainable value chain between them.
Topic:: Investment, Trade, Economic Cooperation, Supply Chains, and Value Chains
Political Geography:: South Asia, India, Asia, and South Korea

5. Developing ODA Evaluation Methodology for Technical Cooperation

Author:: Eunsuk Lee and Hyemin Yoon
Publication Date:: 03-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: As the volume of Korea's official development assistance (ODA) expands, the demand for systematic management of evaluations and improvement of their usefulness is increasing. This study focuses on developing evaluation methodology for technical cooperation (TC) which is an important part of Korea’s ODA. Based on the case studies of six multilateral organizations and four bilateral development agencies, we draw lessons for Korean ODA agencies in terms of selection criteria, types, and methodological aspects of evaluation of technical cooperation and propose a four-step project management and evaluation mechanism for TC activities.
Topic:: Development, Economics, Science and Technology, and Management
Political Geography:: Asia and South Korea

6. International Humanitarian Assistance and Multilateral Cooperation in North Korea

Author:: Jangho Choi and Yoojeong Choi
Publication Date:: 04-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The economic situation in North Korea is worsening. If an economic crisis occurs in North Korea, the first thing that will be pursued is humanitarian aid from the international community. North Korea's problems should not spread beyond North Korea, and above all, the international community should help ensure that the residents of North Korea can live at a minimum level of respect as human beings. This article aims to examine international humanitarian aid to North Korea and multilateral cooperation. We will examine how international humanitarian aid to North Korea has been carried out so far, what North Korea's position is on international support, and what the achievements of multilateral cooperation have been.
Topic:: Economics, Humanitarian Aid, and Multilateralism
Political Geography:: Asia and North Korea

7. Does Institutional Quality Matter to Korean Outward FDI? A Gravity Model Analysis

Author:: Muhammad Akhtaruzzaman
Publication Date:: 01-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: According to Korea’s Ministry of Knowledge Economy (currently the Ministry of Trade, Industry and Energy), foreign investment has now become one of the major economic pillars driving the Korean economy over the past 15 years (Tang 2022). The Korean economy started to open up to rest of the world following the Asian financial crisis in 1997 and was the biggest FDI policy reformer among 40 developed and emerging economies over the period from 1997 to 2010 (Nicolas et al. 2013). Over the last decade, Korea’s outward FDI grew much faster than inward FDI (See Figure 1) and Korea is now a net capital exporter to the world. In 2021, Korea’s outward FDI flows totaled $76.64 billion and a total of 2323 Korean enterprises invested in overseas countries (Korea EXIM Bank 2022). Due to this increased amount of outward FDI, a large number of studies (Kim and Rhee 2009; Park and Jung 2020) investigated what determines Korea’s outward FDI (OFDI). Institutional quality is found to be a major determinant in FDI literature in general. It suggests that political risk (lack of/poor institutional quality) not only deters FDI inflows to host countries but also can lead FDI to countries with higher risks and to ‘pollution heaven’ which might have an adverse impact on long term growth and development in both host and home countries. There are strong empirical evidences in literature that lack of institutional quality or good governance is associated with lower FDI inflows. An extensive literature (Alfaro et al. 2008; Ali et al. 2010; Akhtaruzzaman et al. 2017; Bénassy‐Quéré et al. 2007) investigated FDI response to various types of institutional quality in FDI host countries. Over the last 20 years data evidenced that Korea’s OFDI flowed to developing countries with a sustained large gap existing in institutional quality between host countries and Korea (See, Fig 2 top panel); however; those countries had been offering a higher degree of capital account openness. A sharp increase in capital account openness since the early 2000s coincides with sharp increase in Korea’s OFDI to those host countries. For example, Peru was the least open economy and started to initiate measures to open capital account since the mid-90s and early 2000s. The degree of openness in Peru is now similar to that of developed countries. On the other hand, Peru is one of the least progressed countries in terms of institutional quality over the same period of time. This slow or no progress in institutional quality is a common pattern of institutional improvement for a large sample of host countries of Korea’s OFDI (see, Figure 2). However, those developing countries including Peru are regular destinations of a substantial amount of Korea’s OFDI. Does this suggest that institutional quality of host country does not matter to Korean investors, or is there a 3rd factor mitigating the impact of institutional quality on Korea’s OFDI? Few studies on Korea’s OFDI considered institutional quality of host country as a control variable instead of main determinant of FDI (Park and Jung 2020). However, existing studies do not explain why Korea’s OFDI flowed to countries with a large gap in institutional quality between Korea and host countries. This research fills the gap in the literature of Korea’s OFDI. The findings of this research suggest that high degree of capital account openness (a factor that ensures profit repatriation of investors) weakened the negative impact of poor institutional quality in host countries on Korea’s OFDI. The remaining of this paper is organised as follows. Section II reviews relevant literature of FDI and identifies major determinants for Korea’s OFDI from existing studies; Section III discusses research method and empirical issues; Section IV presents the research findings; Section V concludes the research, points to the research limitations, and provides policy recommendations.
Topic:: Economics, Foreign Direct Investment, Institutions, and Knowledge Economy
Political Geography:: Asia and South Korea

8. Analysis of India's New and Renewable Energy Market and Policies and Implications for Korea-India Cooperation

Author:: Hyoungmin Han
Publication Date:: 02-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The importance of new and renewable en-ergy has been drawing attention since the Paris Climate Agreement was adopted in 2015. In response to the Paris Climate Agreement, the Korean government declared carbon neutrality by 2050 and announced policy plans to create a low-carbon ecosystem in 2020. However, the domestic new and re-newable energy market is limited, making it difficult to mass-produce power generation devices. In addition, the international community's transition to a low-carbon ecosys-tem is rapidly taking place. To achieve 2050 carbon neutrality, it is necessary to secure Nationally Determined Contributions (NDC) through various overseas cooperation pro-jects. Thus, it is believed that energy cooperation with developing countries is needed to expand domestic markets and to achieve overseas NDC reduction targets. Considering India's recent market expansion and active policy in the area of renewable energy, India can be a good partner for Korea in the renewable sector. To have a clear understanding of India’s renewable energy market, we conduct the analysis on India’s renewable energy market and policy, which we will explore in this article.
Topic:: Climate Change, Treaties and Agreements, Renewable Energy, and Cooperation
Political Geography:: South Asia, India, Asia, and South Korea

9. China's Green Transition Policies and Its Implications for Korea

Author:: Won Seok Choi
Publication Date:: 02-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: In China, carbon emissions from the energy and heat producing sector account for 53.4% of total emissions, with industry (28.6%) and transportation (8.9%) being the main carbon emission sectors. Therefore, various green transition policies in energy, industry and transportation are being pursued in Chinese cities. In Chinese cities, the promotion of rooftop-distributed photovoltaic power generation, among renewable energy sources, is evaluated to be capable of intensive development, reducing power peak load, and inducing residents to consume green energy. Policies are being implemented in urban industries to reduce pollution and carbon emissions, increase energy use efficiency, improve resource use levels, and improve green manufacturing systems. In the transportation sector, China's policies to reduce emissions, expand the supply of new energy vehicles, and strengthen green transportation technology are representative. Consequently, this study summarizes the policy implications, areas of Korea-China cooperation, and risk factors of China's green transition promotion plan for its Chinese cities.
Topic:: Transportation, Industry, Carbon Emissions, Energy, and Green Transition
Political Geography:: China, Asia, and South Korea

10. Strategies of Multinational Companies Entering China in the Era of U.S.-China Competition and Implications for Korea

Author:: Sang Baek Hyun, Ji Young Moon, Min-suk Park, Jonghyuk Oh, and Yunmi Oh
Publication Date:: 03-2023
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: With the integration of resources and markets around the world sparked by the trend of globalization, multinational companies have continued to grow at a rapid pace. In particular, global manufacturers have maintained their competitiveness by distributing resources more efficiently while establishing a global value chain with China as their main production hub. However, measures taken by the U.S. to block China’s access to technology and supply chains in some high-tech industries have prompted discussions on reorganization of the global supply chain, placing these multinational companies in an uncertain situation concerning their operations in China. At a time when competition between the U.S. and China is intensifying, it is necessary to look at the response strategies of global companies that have entered China and seek effective countermeasures for Korean companies.
Topic:: Economics, Multinational Corporations, Manufacturing, and Competition
Political Geography:: China, Asia, South Korea, North America, and United States of America

11. COVID-19 and the Health of Banking Sector in Japan and South Korea: A Comparative Study

Author:: Munim Kumar Barai
Publication Date:: 07-2022
Content Type:: Working Paper
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The economies of Japan and South Korea are dominated by banks. Both countries have created a complex financial structure, including a well-established banking industry at their heart that supports economic operations. However, both countries’ banking sectors have previously faced crises such as the Asian Financial Crisis (mostly in South Korea), the Japanese economic slowdown, and the financial crisis of 2007-08 (both). While the Bank of Japan (BOJ) approved the quantitative easing (QE) monetary policy and lowered interest rates to manage the crises, the Bank of Korea (BOK) pursued interest and financial restructuring as well as banking system digitization to overcome the crises. Covid-19 has disrupted the normal operation of banks, and the central banks and governments of both countries have implemented a variety of monetary and other measures to mitigate its economic and financial consequences. This study aims to identify and assess the health of domestic banks in Japan and South Korea for the Covid-19 ex-ante and interim periods. Several important variables, i.e., portfolios of assets and liabilities, asset productivity, stockholders' equity, profitability, and operating efficiency, have been included to evaluate the health of their banks. This compari-son of health metrics for 2010 to 2020 could help identify changes or shifts in the banking sector of Japan and Korea. The study has used ex-ploratory and descriptive methodologies to undertake qualitative and quantitative evaluations of important bank health indicators in the ex-ante and interim periods of Covid-19. It also used a hybrid method to produce research goals and arguments, including a framework based on what was already known in the field.
Topic:: Financial Crisis, Economy, COVID-19, and Banking
Political Geography:: Japan, Asia, and South Korea

12. The Effects of Online Export Promotion Policies for SMEs in Korea

Author:: Kyong Hyun Koo
Publication Date:: 10-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This study explores the impact of participating in five major online export support programs currently being implemented by the Ministry of SMEs and Startups on online exports of SMEs in 2018-20. The main findings show that the online export support program appear to significantly have improved the online export-related performance of participating SMEs in a short period of time. In addition, the online export support program’s online export enhancement effect tend to be relatively greater when the participating SMEs have relatively little experience with online export and low sales volume. Manufacturers also appear to benefit from support programs more than resellers. In summary, the findings suggest that Korea's online export support policy has had a significant impact in providing incentives for SMEs to start/increase online exporting.
Topic:: Economics, Business, Exports, and Manufacturing
Political Geography:: Asia and South Korea

13. Understanding Hainan Free Trade Port: China's Efforts to Explore High-level Opening-up

Author:: Wenfeng Wei
Publication Date:: 10-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: On 13 April 2018, upon the 30th anniversary of Hainan province, Chinese President Xi Jinping announced to build Hainan into a free trade port. According to the Master Plan for the Construction of the Hainan Free Trade Port released by the State Council on 1 June 2020, China aims to build this southern island province into a high-level free trade port with global influence by the middle of the century. As China's largest special economic zone, Hainan is expected to become the frontline of China's integration into the global economic system. Noting that the world is facing a new round of major development, changes and adjustment, with protectionism and unilateralism on the rise and economic globalization facing greater headwinds, it was also a strategic decision of Chinese authorities based on the domestic and international landscapes. As such, Hainan Free Trade Port (HNFTP) is more than a regional development initiative, and it has a much bigger role to play in China’s reform and opening endeavors.
Topic:: Development, Economics, Special Economic Zones, and Free Trade
Political Geography:: China and Asia

14. Components of Industry Resilience to Maintain Sustainable Economic Growth under COVID-19 Within the Knowledge-Based Economy Frame-work: A Comparative Study Between Iran and South Korea

Author:: Marzieh Asaadi
Publication Date:: 11-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: COVID-19 was first reported in Wuhan, China, in December 2019 and spread rapidly across the globe. Then on March 11, 2020, the World Health Organization (WHO) declared the COVID-19 outbreak a pandemic, causing more than 600 million confirmed cases and 6.49 million deaths around the world so far. The effects of the pandemic on societies can be examined mainly by two criteria: 1) the number of lives lost due to the disease (Mortality Rate), and 2) the number of jobs lost due to social distancing rules (fall in GDP). Both have a wide consequence for economic growth and other key macroeconomic indicators. An important explanatory factor for the significant difference between Case Fatality Rate (CFR) for Iran and Korea can be related to the Worldwide Governance Indicators (WGI) components (Daliri and Asaadi 2021). The WGI is a composite index consisting of six measurement factors, including voice and accountability, political stability, government effectiveness, regulatory quality, the rule of law, and control of corruption. Furthermore, another critical factor is COVID-19 governance which can be monitored by calculating Government Stringency Index. This index is a composite measure based on several indicators which monitor the state of lockdowns and social distancing and range to values between 0-100, while 100 presents the most restrictive. In addition to the governance of COVID-19, from the perspective of public health and lives saved, maintaining jobs and supporting the resilience of industries to achieve SEG has been another important concern for nations and governments worldwide. As stated by Bernanke (2020), it is widely believed that the global economic crisis caused by COVID-19 is different from past crises in terms of cause, scope, and severity that suddenly disrupted economic activity. These necessitate research on the potential determination factors influencing the response of countries, companies, and individuals to the COVID-19 crisis. The key to ensure Business Continuity and SEG is to identify factors that increase the resilience of businesses under COVID-19 circumstances and other potential public health crises. Theoretical and empirical studies confirm that three main explanatory factors are at play: 1) macroeconomic structure and governance, 2) financial resilience of companies which is traced by available capital (i.e., the physical and human capital), and firms' adopted strategies and 3) digital evolution state and momentum and the adaptation of countries to technological innovations and Digital Intelligence, which is an indicator of transmission to KBE. By examining these components, it is possible to evaluate the structure and response of countries to the pandemic and post-COVID era. Thus, the report seeks to contribute to the literature on sustainable economic growth under crisis through a comparative study of Iranian industries with South Korea. The main research question here relates to the components of successful covid-19 governance from the perspective of SEG and business continuity within a KBE environment.
Topic:: Economic Growth, Industry, Resilience, COVID-19, and Knowledge Economy
Political Geography:: Iran, Middle East, Asia, and South Korea

15. Accelerating Transitions towards a Circular Economy and Policy Implications for Korea

Author:: Jinyoung Moon, Youngseok Park, Seung Kwon Na, Sunghee Lee, and Eunmi Kim
Publication Date:: 08-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This study analyzes global efforts to transition to a circular economy, and analyzes each country's responses and major issues to the stages of waste generation and management, which decisively distinguish the existing economic system from the circular economy. In addition, this study examines cases of private-sector-led cooperation for sup-porting developing countries in terms of international cooperation and linking with international trade, and also analyzes the implications of information-based environmental policies in response to the circular economy. Finally, based on the results of these analyses, this study proposes policy measures to prepare for the circular economy.
Topic:: Development, International Cooperation, Economy, Trade, Private Sector, and Management
Political Geography:: Asia and South Korea

16. Geopolitical Risk in the Era of U.S.-China Strategic Competition and Economic Security

Author:: Jai Chul Heo
Publication Date:: 09-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Recently, the intensification of U.S.-China strategic competition, spread of COVID-19 infections, and the Russia-Ukraine war are disrupting the global supply chain and increasing instability in the global economy. The resulting instability in the supply of semiconductors, medicines, food, and energy is leading to an economic downturn, and the U.S., China, Japan, and EU are actively pursuing strategies to strengthen economic security. The key to recent economic security is the U.S.-China strategic competition. Because the United States is re-tightening economic-security links that were loosened in the post-Cold War era to counter China's economic rise. And the concept of recent economic security largely includes the elements of economic statecraft, economic resilience, and building mutual trust.
Topic:: Geopolitics, Strategic Competition, COVID-19, Economic Security, and Russia-Ukraine War
Political Geography:: China, Asia, North America, and United States of America

17. The Export Effect of Servitization of Manufacturing

Author:: Hyunsoo Kim, Jungu Kang, Hyeyoon Keum, and Jae Wook Jung
Publication Date:: 09-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This study examines the status and characteristics of Korea’s servitization of manufacturing and its impact on business performance and exports. In particular, we focus on servitization in manufacturing, which can be seen as a part of servicification in manufacturing. It is the phenomenon of manufacturing firms producing more services as final goods and provide them to the market with their products. Looking at the status of servitization in the manufacturing sectors focusing on the service sales generated by manufacturing firms, the servitization in manufacturing in Korea has gradually increased. Sales in service sectors, which stood at 4.5% of the total sales of manufacturing firms in 2012, surged to 15.9% in 2017, and then decreased to 6.9% in 2019. Based on the stylized fact that servitization in manufacturing in Korea has gradually increased, we empirically analyze the effect of servitization in manufacturing on the business performances and exports. The result suggets that the servitization in manufacturing is progressing in the direction of improving firm’s productivity, profitability, and exports.
Topic:: Economics, Business, Manufacturing, and Services
Political Geography:: Asia and South Korea

18. International Spread of Anti-dumping Measures and Diversification of Investigation Methodologies

Author:: Moonhee Cho, Cheon-Kee Lee, Min Ji Kang, and Min-chirl Chung
Publication Date:: 09-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: As global economic growth has lost momentum due to the COVID-19 pandemic and the tension between U.S. and China, among other developments, concerns about the spread of protectionism are growing. In particular, anti-dumping (AD) measures are more likely to expand in the future in that they are relatively easy to take and have a direct effect on international trade compared to other protectionist trade policies. This study reviews the spread of AD measures and the effects of AD measures on trade. We also pay attention to the fact that AD investigation methodologies are being diversified. Focusing on particular market situation (PMS) and adverse facts available (AFA) provisions, which have been applied in many recent AD investigations on Korean export goods, we analyze the logic of investigation authorities.
Topic:: Economic Growth, Trade, COVID-19, and Protectionism
Political Geography:: China, Asia, North America, and United States of America

19. Korea's Economic Presence in Iran under Trump and Its Prospects during the Biden Presidency

Author:: Shirzad Azad
Publication Date:: 10-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: On July 14, 2015, when Iran and the 5+1 group (the United States, Russia, China, France, Britain, and Germany) ultimately agreed over the Joint Comprehensive Plan of Action (JCPOA), the Republic of Korea (ROK) was practically one of the top three trade partners of the Persian Gulf country. In early May 2016 and only a few months after the nuclear deal was carried through, the then Korean President, Park Geun-hye, made an official visit to Iran where the two countries vowed to ratchet up their economic relations from roughly $6 billion to more than $18 billion in the years to come. Accompanied by “the largest business delegation in the history of Korean presidential trips,” Park’s high-profile trip to Iran persuaded many interested experts and observers to believe that the East Asian country was really determined to shore up its economic weight in Iran by drawing certain policies relevant to the long-term presence of Korean businesses in the Middle Eastern country (Choi 2016). Despite all those upbeat expectations about the ROK’s future economic and technological role in Iran, however, various data and statistics coming out indicate that over the past several years nearly all well-known Korean brands and products have increasingly lost their market share in the Mideast country to brands and goods supplied by other competitors. As a matter of fact, in the late 1990s and early 2000s the East Asian nation emerged as one of the Persian Gulf country’s top trading partners in the world, outstripping a number of Tehran’s traditional trading partners from the West. And while Korea managed to even expand its economic presence in Iran in the heydays of sundry international sanctions levied against the Middle Eastern country over its contentious nuclear program a couple of years before the JCPOA was eventually agreed in 2015, the ROK has been doing relatively poor in Iran during the past years (Azad 2018). Such lackadaisical performance, epitomized by abandoning the long-established pattern of significant trade in energy with Iran, has critically influenced a sharp decline in the total volume of two-way commerce between the two countries. While the plummeting share of Korean brands and goods in Iranian markets had indubitably something to do with certain policies pursued by the Moon Jae-in-led Korean government, however, the main culprit turned out to be the Trump administration’s unilateral withdrawal from the nuclear deal in May 2018. The crippling sanctions which Washington under Trump subsequently imposed on Iran played a pivotal role in reshaping the scope and size of Korean commercial connections to the Persian Gulf country, though some unprecedented diplomatic and political troubles involving Seoul and Tehran during the past years have also had a lot to do with those punitive economic and financial measures targeting the Iranians. How did then the Koreans respond to those unique circumstances rendered largely by Trump’s approach toward the Persian Gulf country? What are going to be the prospects of a Biden administration’s policy shift for Korea’s economic performance in Iran? This study seeks to shed some light on Trump’s Iran policy with regard to Korea, its repercussions for the East Asian nation’s economic relationship with the Middle Eastern country, and potential solutions to chip away at those impediments under a Democrat administration in Washington led by Joe Biden.
Topic:: Foreign Policy, Economics, Donald Trump, JCPOA, and Joe Biden
Political Geography:: Iran, Asia, South Korea, and United States of America

20. Recent Marriage and Labor Supply Pattern of Young Chinese Women

Author:: Yoon Jae Ro and Jeonghwan Yun
Publication Date:: 09-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: In this paper, we examine the impact of a sibling gender on educational attainment, earnings, family formation for a recent cohort of women in China. Family characteristics such as number of siblings, sibling gender composition, and parents’ characteristics may play an important role in children’s life as the presence of a sibling can affect parents’ treatment of the remaining children. Especially male siblings can affect children’s outcome through various pathways as male sibling may pull parental investment of resources away from girls, because boys may be seen as the “higher return” investment (Becker, 1991). We investigate the effect of having a (male) sibling on a daughter by exploiting the change in fertility trend in China induced by the One Child Policy (OCP).
Topic:: Economics, Labor Issues, Women, Marriage, Supply, and Gender
Political Geography:: China and Asia

21. The U.S.-China Battle for Semiconductor Supremacy and Reshaping of Global Supply Chain

Author:: Hyung-gon Jeong
Publication Date:: 10-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The realization of digital transformation (DX) and the Fourth Industrial Revolution (4IR) has led to the development of new technologies in areas such as AI, big data, metaverse, autonomous vehicles, digital currency, and blockchain technology. While these sectors are expected to continue to grow, major countries including the United States and China are fiercely competing to secure a global supply chain for the semiconductor industry. Built on free trade, the global division of production in the semiconductor industry has driven corporate innovation and technology development. However, the trend of technological nationalism and countries’ efforts to build a value chain within their territory are expected to hurt the global semiconductor industry. The ever-deepening hegemony competition between the U.S. and China in the semiconductor industry could have a profound impact not only on the Korean economy but also on a restructuring of the global semiconductor supply chain. This study analyzes the supply chain structure and risks of the Korean semiconductor industry, along with U.S. and Chinese policies to foster the semiconductor industry, going on to explore corresponding countermeasures.
Topic:: Science and Technology, Supply Chains, Semiconductors, and Competition
Political Geography:: China, Asia, North America, and United States of America

22. Tackling the Challenges of Climate Change Adaptation in Central America: Can Korea Contribute?

Author:: Seungho Lee
Publication Date:: 05-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Climate change adaptation has long been established as a regional and national priority in Central American countries. Korea, as a responsible middle power in global governance, should not hesitate to play a more active role in tackling their adaptation challenges. This brief summarizes a number of findings and policy suggestions from Lee et al. (2021), which identifies promising cooperation areas in the field of climate change adaptation between Korea and four Central American countries and proposes cooperation schemes in each area.
Topic:: Climate Change, International Cooperation, Governance, and Adaptation
Political Geography:: Asia, South Korea, and Central America

23. The Impact of Immovable Property Tax on the Macro Economy

Author:: Young Sik Jeong, Eunjung Kang, Jinhee Lee, Kyunghun Kim, and Jeehye Kim
Publication Date:: 01-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Since the 2008 global financial crisis, inequality has been increasing worldwide. In particular, wealth (asset) inequality is getting worse than income inequality. And Korea is no exception. This deepening of inequality is more worrisome in that it leads to inequality of opportunity while suppressing movement between classes, which in turn deepens inequality, creating a vicious cycle of inequality. This is a bigger problem than the inequality itself. The international communities are calling for stronger property taxes, including recurrent taxes on immovable property, as part of mitigating inequality and promoting inclusive growth. In Korea, there is heated discussion on property taxes, such as recurrent taxes on immovable property including the comprehensive real estate tax. Therefore, this study aims to investigate policy directions in international organizations and major countries on immovable property tax and examine the effect of property tax on the macro economy. This study examine international comparisons of immovable property tax burdens using OECD data. Next, this study analyzes the effect of immovable property tax on housing prices, inequality, and economic growth. Finally, we suggest policy implications to Korea through this. Based on our results, we present policy implications for Korea.
Topic:: Inequality, Tax Systems, Macroeconomics, and Wealth
Political Geography:: Asia and South Korea

24. Russia’s Energy Strategy in the Northeast Asian Region and New Korea-Russia Cooperation: Focusing on the Natural Gas and Hydrogen Sectors

Author:: Joungho Park, Boogyun Kang, Seok Hwan Kim, Won Soon Kwon, and Andrey Kovsh
Publication Date:: 07-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This study attempts to identify new directions for energy cooperation between Korea and Russia, focusing on the areas of natural gas and hydrogen. In particular, we derive new directions and tasks for energy cooperation between the two countries, reflecting changes in the international energy environment, such as climate change and decarbonization, which are in full swing at the global level. To this end, this study is consisted of the following four parts. Part II examines the geopolitics of energy coming into the 21st century and Russia’s new energy strategy. Part III conducts an in-depth analysis of the energy cooperation strategies of China and Japan, major Northeast Asian countries, with Russia, and Part IV comprehensively evaluates Korea’s energy strategy and Korea-Russia energy cooperation. In conclusion, Part V presents new plans for Korea-Russia energy cooperation. As a side note, after carrying out this study, the policy environment for energy cooperation with Russia has significantly changed. Russia’s war against Ukraine is expected to change the landscape of global energy and its geopolitics in profound ways. In the midst of these significant changes, it is hoped that this study will serve as a meaningful reference for analyzing and forecasting the global energy dynamics surrounding Russia.
Topic:: International Relations, International Cooperation, Gas, Hydrogen, and Energy
Political Geography:: Russia, Asia, South Korea, and Northeast Asia

25. A Review of the First Decade of the Korea-EU FTA

Author:: Dong-Hee Joe
Publication Date:: 07-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Last year marked the tenth anniversary of the Free Trade Agreement (FTA) between the European Union (EU) and Korea, which entered into force in 2011. The EU is the world's largest economy and Korea's third largest trade partner, only after China and the United States. Back when the FTA nego-tiations began in 2007, the EU was Korea's second largest export destination, from which Korea enjoyed the largest surplus. Al-so, more than 35 per cent of Korea's foreign direct investment came from the member states of the EU. Korea is also a major econ-omy and a major trade partner of the EU, especially in Asia. The FTA with Korea was the first case of the EU's “next generation” FTAs, and is considered to have served as a benchmark for the EU's bilateral trade agreements thereafter (Kang 2016). As for Korea, it was the first FTA with a major economy, even before the US, its traditional ally, and China, its closest neighbor. Because of its importance, the Korea-EU FTA has received attention from economics and trade policy. KIEP also took a look at the first decade of its implementation last year (Joe et al. 2021). This Brief introduces some of the findings in Joe et al. (2021), fo-cusing on the impact of the FTA on the bi-lateral economic relationship between the two sides.
Topic:: European Union, Economy, Free Trade, and Trade
Political Geography:: Europe, Asia, and South Korea

26. Internationalization of the Korean Won in the Light of RMB Internationalization

Author:: Hyo Sang Kim, Young Sik Jeong, Ji Young Moon, and Da Young Yang
Publication Date:: 07-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: While China has risen to become a global superpower with a growing impact on the world economy, its currency, the Renminbi (RMB), has a limited role in the existing international financial system. China has made significant progress and will continue to push for the internationalization of the RMB, which can disrupt the global financial system, dominated by the US dollar. Under such circumstances, Korea must find a new direction for the internationalization of the Korean Won. The internationalization of the Korean won will provide new opportunities for the economy to take a further step through financial advancement.
Topic:: Economy, Currency, Internationalization, and Financial Development
Political Geography:: China, Asia, and South Korea

27. Korea’s Regional Cooperation and ODA Policy in Asia: Performance and Challenges

Author:: Aila Yoo and Yul Kwon
Publication Date:: 08-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The COVID-19 pandemic and ongoing geopolitical conflicts have deteriorated socio-economic conditions all around the world. As developing countries in Asia have made enormous progress in economic and social development based on the stable ground for growth, the development gap within the region has also been expanded. In addition, the region’s socio-economic conditions have become worse after the pandemic. Along with the pandemic crisis, there are several issues that have negatively influenced the region’s sustainable growth, such as climate change and climate-related natural disasters, and conflicts. These multiple crises change the development needs in the region, and cannot be solved through the efforts of any sole country but must be tackled through regional cooperation. While Korea strengthens its strategic approach for regional economic cooperation to expand its partnership with emerging countries and its Official Development Assistance (ODA) volume is highly concentrated in Asia region, Korea still focuses on cooperation with each country based on priority countries’ Country Partnership Strategy (CPS) without any integrated regional cooperation strategy. Strengthening inclusive partnerships would be a key to reduce the development gap in the region, by supporting regional programs such as the ASEAN Connectivity and Mekong Subregion development projects. To improve policy coherence and tackle the region-wide problems, Korea should adopt an integrated regional cooperation approach by reflecting the characteristics of Asia. This study analyzes changes in the socio-economic conditions and development environment in the Asia region and provides policy implications for preparing regional cooperation strategy for Asia.
Topic:: Economics, Regional Cooperation, Partnerships, Economic Cooperation, and COVID-19
Political Geography:: Asia and South Korea

28. Is Korea’s Social Services Employment Increasing Too Fast?

Author:: Dong-Hee Joe
Publication Date:: 08-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Employment in social services is on an increasing trend in the developed world. The average among the OECD countries, for instance, was about 43 employments per thousand population, or about 9.1 per cent of total employments, in 2005. In 2020, it has risen as high as 49 employments per thousand population and 10.4 per cent of total employment. In 2016, right before the previous Korean administration was inaugurated in 2017, Korea had 36.3 employments in social services per thousand population, far below the OECD average. Since then, social services employment grew the fastest in Korea among the OECD countries, narrowing its gap from the OECD average. By 2019, for instance, social services em-ployments per thousand population in-creased by 6.3, while the average among the OECD countries was 2.7. Is Korea’s fast increase “natural” or justifiable? As an attempt to shed some light on this issue, KIEP researchers estimated the determinants of the size of social services employment and used the results to compare the observed (i.e., actual) change with the predicted change (Joe et al. 2021 and Joe 2022). This exercise supports Korea’s speed of increase; that is, it was no faster than what is predicted by the estimated models. This Brief summarizes these exercises.
Topic:: Employment, Social Services, and OECD
Political Geography:: Asia and South Korea

29. The Challenges of Adapting Trade Policies to the Digital Era

Author:: Kyu Yub Lee, Won Seok Choi, Ji Hyun Park, Min Ji Kang, and Unjung Whang
Publication Date:: 01-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This study provides evidence on barriers to digital trade and the economic effect of digital trade, based on surveys of domestic firms in Korea and data collected from random sampling. After briefly examining the prospects of e-commerce talks at the WTO and characterizing digital trade rules at the FTA level, the study concludes by providing suggestions for major policy tasks and mid- to long-term directions of Korea’s digital trade policy.
Topic:: Digital Economy, Trade Policy, and WTO
Political Geography:: Asia and South Korea

30. Efficacy of Economic Sanctions against North Korea: Evidence from Satellite Nighttime Lights

Author:: Youngseok Park
Publication Date:: 01-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The United Nations Security Council adopted eight resolutions from 2012 to 2019, in condemning threatening actions on the part of North Korea, such as conducting ballistic missiles and nuclear weapons tests. I examine the efficacy of sanctions against North Korea using satellite nighttime lights data. The political system of North Korea is defined as suryong dictatorship, in which the dictator (supreme leader or suryong) holds absolute power to dictate the country’s resources. Suryong allocates large enough fraction of the country’s resources to the selectorate for supporting his political power. I empirically test the theoretical hypothesis - the ruler will transfer a greater fraction of the country’s resources to the selectorate as sanctions intensify - using satellite nighttime lights data. I find that an additional sanction is associated with an increase in the difference in nighttime lights between the capital city, Pyongyang, and the rest of the country by about 0.4 percent. Manufacturing cities, mining areas, the Chinese border region, and Sinuiju become relatively brighter with an additional sanctions event. Another notable finding is the estimate on the interaction term with the nuclear development facilities areas, which suggests that the ruler diverts resources and electricity from nuclear development activities to other sectors when sanctions increase.
Topic:: United Nations, Sanctions, UN Security Council, Data, and Satellite
Political Geography:: Asia and North Korea

31. Who Leads China's 5G Technology Ecosystem? A Network Analysis of China's Cooperation on Association Standards

Author:: Won Seok Choi
Publication Date:: 02-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This study suggests who is leading the ecosystem of China's 5G industry through analysis of the association standard network. Our study finds that the Chinese government think tank is in the most important position in the related network. Our study also suggests that it is important to monitor association standards in China and strengthen the standard cooperation of companies, scholars, and institutes in the Korean ICT industry.
Topic:: Government, Science and Technology, Think Tanks, and 5G
Political Geography:: China, Asia, and South Korea

32. COVID-19 and Voter Turnout in Europe and in Korea

Author:: Dong-Hee Joe
Publication Date:: 02-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Even while we are suffering from the COVID-19 pandemic, cyclical events arrive mercilessly as scheduled. While some of them are held virtually (i.e., online), some cannot be completely virtualized, at least as of now, including national elections. A major risk in holding an election during a pandemic is the increase of contagion due to the gathering of people in polling stations and campaign events. The opposite direction of causality, that is, from contagion to voter turnout, is another serious, but much less recognized, risk, because voters may refrain from voting due to health concerns. This Brief reviews some of the empirical studies on the relation between the prevalence of COVID-19 and voter turnout in recent elections in Europe and Korea. It also discusses their implications for election administration during pandemic.
Topic:: Elections, Voting, COVID-19, and Turnout
Political Geography:: Europe, Asia, and South Korea

33. An Analysis on India's Foreign Economic Relations and Its Implications for Korea-India Cooperation

Author:: Jeeyon Janet Kim, Hyoungmin Han, Hyeyoon Keum, and Jonghun Pek
Publication Date:: 03-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Economic exchanges between Korea and India have been expanding since the signing of the Korea-India CEPA, which took effect in 2010, and the promotion of the New Southern Policy (NSP) by Korea, but the level of exchange still remains insufficient considering the potential of the two countries. We aim to contribute to deepening Korea-India trade cooperation by analyzing India's foreign trade investment relations. Part II and III examine India's recent trade and investment structure with major countries including Korea, and Part IV analyzes India's status on the global production networks. In conclusion, Part V presents various implications for Korea-India trade cooperation.
Topic:: Foreign Policy, Economics, International Cooperation, Bilateral Relations, and Trade
Political Geography:: South Asia, India, Asia, and South Korea

34. Japan’s National Economic Security Strategy and Implications for Korea

Author:: Gyu-Pan Kim
Publication Date:: 03-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This paper defines the concept of economic security strategy as “acts that deviate from the rules of the market economy by using economic power as a source of power in the perception that the state or national economy is threatened.” The scope of Japan's economic security strategy is divided into five categories: first, economic statecraft; second, securing of safety and trust in “critical infra-structure”; third, reinforcement of supply chains in critical materials; fourth, public-private R&D cooperation of critical technologies; and fifthly, cooperation in strengthening global supply chains with “like-minded partners.”
Topic:: International Cooperation, Economy, Supply Chains, Economic Security, and Public-Private Partnership
Political Geography:: Japan, Asia, and South Korea

35. Analysis of Chinese Response Patterns to Diplomatic Friction and Its Influencing Factors

Author:: Jai Chul Heo
Publication Date:: 03-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: As China grows into a global power, it is forming a closer relationship with the international community. In the process, the nation is experiencing increasing levels of diplomatic friction, such as confrontation and conflict with other countries, as well as cooperation. Accordingly, this study analyzes China's response to various forms of diplomatic friction, as Korea seeks an effective response to possible friction with China in the future. More specifically, China's response to diplomatic friction was examined through various cases, with the aim of categorizing China’s response measures based on these examples. In addition, this study aims to prepare for possible friction with China in the future by identifying factors that differ in China's response to diplomatic friction.
Topic:: International Relations, Diplomacy, Sovereignty, Territorial Disputes, and Economy
Political Geography:: China, Asia, and South Korea

36. Analysis of the Healthcare Sector in Africa and Its Policy Implications for Korea

Author:: Young Ho Park, Munsu Kang, Yejin Kim, Kyu Tae Park, and Young-Chool Choi
Publication Date:: 03-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: One of the main changes in Korea’s foreign affairs in recent years is the expansion of official development assistance (ODA), among which Africa is showing particularly rapid growth. Korea’s ODA to Africa accounted for 15% of its total ODA budget in 2010, and rose to 25% in 2019 as Korea emphasized its role in international development. Korea ranks 11th in terms of the cumulative size of ODA to the African healthcare sector between 2011–2019, totaling 674 million USD. As Korea’s expansion of ODA and solidarity in international development aid to respond to COVID-19 are related, the expansion of ODA in the African healthcare sector is anticipated to continue. This study analyzes features of the healthcare sector in Africa in an effort to suggest various plans for development cooperation, based on an evaluation of Korea’s ODA project design to enable the effective provision of ODA.
Topic:: Foreign Policy, Development, Health, Economic Growth, COVID-19, and Foreign Assistance
Political Geography:: Africa, Asia, and South Korea

37. China's New Trade Strategy amid US-China Confrontation and Implications

Author:: Sang Baek Hyun, Wonho Yeon, Suyeob Na, Young Sun Kim, and Yunmi Oh
Publication Date:: 03-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: In 2021, China has reached the point of entering a new stage of socialist development by declaring the achievement of the goal of building ‘a comprehensive well-off society’. Since the reform and opening up of China, the paradigm of economic and social development is facing the greatest turning point from ‘getting rich first’ to ‘common prosperity’. As the US checks on China intensify during this period of economic transition in China, China is pursuing a new trade strategy to respond to it. In order to understand the changes in the global trade environment in the era of the US-China conflict, it is necessary to understand both the US checks with China and China's trade strategy to respond to them. Most of the recent US-China conflicts are analyzed from the perspective of the US checking in with China, but it is necessary to take a balanced look at what kind of countermeasures China is seeking in order to correctly forecast and prepare for changes in the global trade environment in the future.
Topic:: Foreign Policy, Global Markets, Trade, and Economic Development
Political Geography:: China, Asia, North America, and United States of America

38. Petroleum Industry Diversification in the Middle East and Its Policy Implications for Korea in the Era of Energy Transition

Author:: Kwon Hyung Lee, Sung Hyun Son, Yun Hee Jang, Kwang Ho Ryou, and Dawoon Lee
Publication Date:: 04-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The GCC oil exporters including Saudi Arabia and the UAE are under strong pressure to prepare for decreasing global oil demand in the era of energy transition and carbon neutrality. To overcome these challenges, they need to diversify their industrial structure and develop low carbon technologies such as green hydrogen and CCUS (Carbon Capture, Utilization and Storage). This research is aimed to examine various mid-to-long term plans, industrial policies, and business cooperation cases to promote diversification in the Middle Eastern petroleum industry, suggesting policy proposals for cooperation between Korea and the Middle East and business opportunities in the region.
Topic:: Oil, Business, Diversification, Industry, Carbon Emissions, and Energy
Political Geography:: Middle East, Asia, and South Korea

39. The Effects of Increased Trade with China and Vietnam on Workers’ Earnings and Job Security in Korea

Author:: Kyong Hyun Koo
Publication Date:: 04-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This study empirically demonstrates that changes in trade structure caused by the rise of China and Vietnam over the last 20 years have had a significant impact on the widening of the income and employment stability gap for Korean workers. An important policy goal for Korea, which is heavily reliant on trade, is to ensure that the benefits of trade and openness are distributed evenly to all classes of society while minimizing the harm. In order to achieve the policy goal, the analysis results of this paper show that it is necessary to institutionalize a systematic process for monitoring changes in Korea's trade structure and preparing response policies from a mid- to long-term as well as a short-term perspective. Furthermore, the results indicate that policy efforts are required to identify blind spots where existing trade adjustment assistance policies, employment insurance systems, and vocational training policies do not adequately protect or support workers, and supplement and improve them. More follow-up research is needed to gain a better understanding of the mechanism by which external trade shocks are transmitted to the domestic labor market in order to develop more effective domestic supplementary measures for trade shocks.
Topic:: Labor Issues, Employment, Inequality, Economy, Trade, and Wage Income
Political Geography:: China, Asia, South Korea, Vietnam, and Southeast Asia

40. Foreign Firms Investment in Inter-Korean Economic Cooperation

Author:: Jang Ho Choi, Jung Kyun Rhee, Yoojeong Choi, and Dae-Eun Lee
Publication Date:: 04-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This paper examines various channels and issues for foreign firms to invest in inter-Korean economic cooperation with the as-sumption that inter-Korean economic cooper-ation can be resumed after sanctions against North Korea have been lifted, and the same treatment is applied to foreign firms. Foreign firms' investment in inter-Korean economic cooperation will provide a new op-portunity for foreign firms to earn stable profits, while also playing a role in further solidifying the establishment of peace on the Korean Peninsula. Now, inter-Korean rela-tions have fallen into difficulties due to sanc-tions against North Korea and the coronavirus pandemic, making it difficult to resume inter-Korean economic cooperation or to expect foreign firms to invest in inter-Korean eco-nomic cooperation. However, if inter-Korean economic cooperation is resumed, foreign firms' investment in inter-Korean economic cooperation will be prioritized.
Topic:: Foreign Direct Investment, Sanctions, Economy, and Economic Cooperation
Political Geography:: Asia, South Korea, and North Korea

41. Analysis of U.S. International Economic Policies and its Implications

Author:: Gu Sang Kang
Publication Date:: 05-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This study analyzes and evaluates the impact of foreign economic policies implemented during the Trump administration's four-year tenure, and aims to predict the direction of international economic policies under the Biden administration launched following the 2020 presidential election. The former President Trump put 'America First' as the slogan of economic policies and imposed import restrictions and tariffs on trading partners based on Sections 201, 232, and 301 of the U.S. trade acts. In addition, the Trump administration strongly promoted renegotiation, claiming that some existing trade agreements had been concluded unfavorably to the U.S. Furthermore, the Trump administration promoted the standardization of digital trade rules and the expansion of digital taxation in order to support the expansion of digital trade. Through the empirical analysis, we find that the Trump administration's tariff measures had a somewhat positive effect on the U.S. industrial employment, but it is difficult to say that the policy effect that President Trump initially expected was achieved as the measures also had a negative effect on industrial production. Moreover, we find that the tax reform had only a short-term effect in reducing the U.S. direct investment to foreign countries. Like the Trump administration, the Biden administration's international economic policy directions are showing strong protectionist perspectives such as maintaining tariffs on Chinese imports and reorganization of the global supply chains centered on the U.S. Based on our analysis, there are three policy implications. First, it is necessary to strengthen digital trade cooperation with middle power countries participating in the WTO e-commerce negotiations along with a detailed analysis and review of the economic impacts. Second, Korea needs to take advantage of the benefits provided by the U.S. federal government and strengthen cooperation in the supply chain based on norms with the U.S. Finally, Korea needs to reach an amicable agreement with the U.S. on trade remedies that have already been applied by raising the need to strengthen its supply chain with the U.S.
Topic:: Foreign Policy, Digital Economy, Economic Policy, Trade Policy, Donald Trump, Industry, Protectionism, and Joe Biden
Political Geography:: Asia, South Korea, North America, and United States of America

42. Green New Deal for Carbon-neutrality and Open Trade Policy in Korea

Author:: Jukwan Lee, Jongduk Kim, Jinyoung Moon, Jyun-Hyun Eom, Ji Hyeon Kim, and Jungmin Suh
Publication Date:: 05-2022
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This study focuses on Korea’s Green New Deal policy and global response measures to climate change that affect international trade. A trade policy perspective and approach have been applied while reviewing the carbon-neutral policy pursued by the Green New Deal. We attempted through an empirical analysis to determine whether the expansion of openness helps reduce carbon emissions and simulate the impact of a carbon-neutral policy, such as the EU's carbon border adjustment, on the global economy under global production networks. In addition, the amount of financial support from Korea's Green New Deal needed to offset the negative economic effects of other countries’ independent carbon-neutral policies was derived. This study finally suggests that the effect of the Green New Deal can be expanded through the restoration of openness and global cooperation.
Topic:: Climate Change, International Trade and Finance, Economy, Trade, Carbon Emissions, and Green New Deal
Political Geography:: Asia and South Korea

43. The New Southern Policy Plus: What’s New and What’s Next?

Author:: Moe Thuzar
Publication Date:: 03-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Building on the New Southern Policy (NSP) implementation experience, and in recognition of the uneven impact of the Covid-19 pandemic on different populations in ASEAN, the ROK may consider the following operational dimensions of implementing the NSP Plus’ strategic thrusts. First, consultation of ASEAN’s collective and individual needs on each of the core strategy areas, leveraging on the ROK’s willingness to share and adapt its successful practices to meet the needs of its ASEAN partners. Second, synchronizing or aligning the NSP Plus’ regional thrusts with the ROK’s bilateral programs in the ASEAN countries, to ensure a seamless continuity of matching regional-level support with in-country requirements. Third, instituting a periodic or mid-term review mechanism for the NSP Plus implementation may help early identification of areas or priorities to adjust or revise, taking into account emerging needs and concerns. Ultimately, the ROK’s NSP niche will be the quality of its impact, in areas where the ROK’s strengths speak most to its “new southern neighbors.”
Topic:: Economy, ASEAN, and Regional Economy
Political Geography:: Asia and Korea

44. Field-by-Field Changes in China since Covid-19 and Implications for Korea

Author:: Jai Chul Heo
Publication Date:: 03-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: China has been able to escape from the Covid-19 outbreak relatively quickly compared to other countries. Nevertheless, it still remains greatly influenced by the Covid-19 pandemic across its politics, economy, society, culture, and other areas, which has led to various changes throughout China. Therefore, this study comprehensively examined the impact of the Covid-19 outbreak on various aspects of Chinese politics, economy, society, and culture. And in response to these changes in Chinese society, the study explores new strategies toward China in the post-Covid-19 era.
Topic:: Politics, Culture, Economy, COVID-19, and Society
Political Geography:: China, Asia, and Korea

45. The Effects of Free Trade Agreements on SMEs’ Direct and Indirect Exports

Author:: Kyong Hyun Koo
Publication Date:: 03-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: FTAs have been known to have large positive effects on trade creation between member countries. However, it is relatively unexplored how much small/medium-sized enterprises (SMEs) accounted for in the trade creation due to FTAs compared to large-sized enterprises (LEs). We find that Korean FTA policies have significantly increased SMEs’ direct exports to FTA partner countries between 2005 and 2017, although the effects were as much as a half of those for LEs, which indicates a considerable LEs’ premium in the direct export effects of FTAs. We further find that the FTAs also significantly increased the indirect exports of Korean firms, i.e., the domestic input supplies through in-dustrial input-output linkage, and that SMEs have benefited more from the indirect export effects of FTAs than LEs. Considering the direct and indirect export effects together, the LEs’ premium in the total export effects of FTA is found to become smaller.
Topic:: Treaties and Agreements, Economy, Free Trade, Exports, Trade, and Industry
Political Geography:: Asia and Korea

46. The Determinants and Welfare Implications of Labor Share

Author:: Sungbae An, Minsoo Han, Subin Kim, and Jinhee Lee
Publication Date:: 03-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The decline in labor share is recognized as a global phenomenon. Concerns have been raised that this trend will exacerbate the income inequality between business owners as capitalists and households as the labor suppliers, prompting a decline in household income and consumption, which are major driving forces for sustainable growth. Meanwhile, various policy measures have been introduced to raise the labor share, with the aim of correcting inequality and boosting growth. This study explores the determinants of labor share and analyzes the effects of these factors on the economy and social welfare, offering various interpretations and policy alternatives according to economic conditions.
Topic:: Labor Issues, Inequality, Economy, Business, and Welfare
Political Geography:: Asia and Korea

47. South Korea’s New Southern Policy as an Open Regime: A View from Southeast Asia

Author:: Aaron Jed Rabena
Publication Date:: 03-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: There are four ways on how the NSP Plus could be further improved. First, to avoid policy limitations and maximize the room for supply chain resiliency and functional cooperation, the coverage of the NSP countries can be expanded apart from ASEAN and India. Second, South Korea can employ the concept of Third-Party Market Cooperation (TPMC) or the pursuit of joint ventures or partnerships with other countries in maximizing capacity-building in third countries (NSP countries). Third, South Korea can help strengthen ASEAN institution-building, regionalism and internal balancing by applying a similar policy framework to the Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) just as it does to the Mekong Region. Fourth, there needs to be more reciprocity or two-way interaction in the NSP so as to not make it seem that ASEAN is only on the receiving end of South Korean generosity. Finally, it is important to note that a change in the South Korean administration does not necessarily spell the end of the NSP just as the US’ Pivot or Rebalance to Asia of the Obama Administration was remodeled to the Indo-Pacific under the Trump administration.
Topic:: Markets, Regional Cooperation, and ASEAN
Political Geography:: India, Asia, South Korea, and Southeast Asia

48. What’s in the New Southern Policy Plus? An ASEAN Perspective on Building Niche-based Pragmatic Cooperation with South Korea

Author:: Chiew-Ping Hoo
Publication Date:: 03-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: It is clear that the NSP started off with the right messages and many Southeast Asian countries have been receptive to the initiatives. Despite the pandemic bringing a lot more challenges in implementing the policy initiatives, the NSP Plus has envisioned an innovation-oriented cooperation by transforming the traditional face-to-face operations to electronic and digitalized management. Public health cooperation is understandably the immediate focus, but such cooperation should be also seen as long-term fulfilment of the cooperation on the People pillar in the NSP. Infrastructure connectivity and South Korea’s cooperation in the building of an evolving East Asian regional architecture respectively enhance the Prosperity and Peace pillars. With patience, dedication, and commitment, the NSP Plus will be a long-lasting foreign policy legacy of Moon that brings benefits to Korea, ASEAN, and regional stability.
Topic:: Foreign Policy, Regional Cooperation, Political stability, Public Health, and ASEAN
Political Geography:: Asia, Korea, and Southeast Asia

49. Twenty Years of One Country Two Systems in China: Evaluation and Future Prospects

Author:: Jai Chul Heo
Publication Date:: 04-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This study evaluated China's model of “One Country, Two Systems” (一國兩制) 20 years into operation and the bilateral relationship between Taiwan and Mainland China ‒ focusing on Hong Kong, Macau, and Taiwan ‒ and examined future prospects. The study is meaningful in that it conducts a more objective evaluation than the previous studies by empirically analyzing data accumulated over the past 20 years of implementation of the One Country Two Systems principle from various perspectives. In addition, it is also a timely study in that it analyzes how the One Country Two Systems arrangement is likely to develop in the future, and what impact this would have, making considerations for changes in China's national strategy during the Xi Jinping period and the competition for hegemony between the U.S. and China. The results of the analysis indicate that over the past 20 years China has been experimenting with the possibility of coexisting different systems in one country, and that the One Country Two Systems arrangement, as a new form of unification which has never been attempted in the history of mankind, has actually shown the possibility of success. However, in recent years, various political contradictions have been exposed in the process of implementing the arrangement, mostly in the Hong Kong society, and the resulting conflict has gradually intensified. While maintaining the current capitalist system for 50 years, Macau is expected to gradually progress in its “Sinicization,” with continuing active economic and social exchanges and cooperation with mainland China. As a result, Macau is expected to be fully incorporated into China's socialist system in 2049, 50 years after the return, but it is likely to remain a city of special character considering Macau's region and its economic structure. On the other hand, the One Country Two Systems arrangement with Hong Kong is expected to undergo a difficult process in the future. In the midst of various conflicts surrounding Hong Kong, the guarantee for Hong Kong’s autonomy is expected to end in 2047 amid efforts on the part of the mainland government to sinicize Hong Kong. And China wants to apply the philosophy of “One Country, Two Systems” to its reunification with Taiwan as well, but in reality this remains very low in possibility.
Topic:: Foreign Policy, Politics, Bilateral Relations, Hegemony, and Strategic Competition
Political Geography:: China, Taiwan, Asia, Korea, Hong Kong, and Macau

50. Labor Market Impact of Immigration in the European Union

Author:: Dong-Hee Joe
Publication Date:: 04-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Immigration is one of the factors often considered as the causes of Brexit. Researchers find evidences that regions with more immigrants from the new member states of the European Union (EU hereinafter) in eastern Europe tended to vote more in favor of Brexit in the 2016 referendum. Similar relations between the size of immigrant population and anti-immigration attitudes or far-right voting are found in other richer EU member states. A common explanation for this relation is the concern that immigrants negatively affect the outcome in the host labor market. Immigration is drawing attention in Korea too. Although immigrants' share in population is still substantially smaller in Korea than in the EU, its increase is noticeable. Also, certain industries in Korea are known to be already heavily reliant on immigrant labor. Recently, as entry into the country was tightened due to the COVID-19 pandemic, firms and farms are reported to have faced a disruption in production. This trend of increasing presence of immigrants in population and in the labor market, vis-à-vis the low fertility rate and rapid aging in Korea, is raising interest and concern on the socioeconomic impact of immigration. To offer some reference for the debates related to immigration in Korea, KIEP researchers (Joe et al. 2020 and Joe and Moon 2021) look at the EU, where immigrants' presence was much higher from much earlier on, and where the greater heterogeneity among the immigrants allows for richer analyses. This World Economy Brief presents some of their findings that are salient for Korea.
Topic:: Immigration, European Union, Brexit, and Labor Market
Political Geography:: Britain, Europe, Asia, and Korea

51. China’s FDI in Europe and Europe’s Policy Response

Author:: Pyoung Seob Yang, Cheol-Won Lee, Suyeob Na, Taehyn Oh, Young Sun Kim, Hyung Jun Yoon, and Yoo-Duk Ga
Publication Date:: 04-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: China’s investment in the European Union (EU) increased significantly during the European financial crisis, but has been on the decline in recent years. The surge of Chinese investment has raised concerns and demands for analysis on the negative effects it could have on the EU companies and industries. In this context, the present study aims to analyze the main characteristics of Chinese investment and M&A in Europe, major policy issues between the two sides, the EU’s policy responses, and prospects of Chinese future investment in Eu-rope, going on to draw important lessons for Korea. To summarize the main characteristics of China's investment in Europe, the study found that the EU's share of China's overseas direct investment has continued to increase until recently. Second, investment in the Central and Eastern European Countries (CEECs) is gradually increasing, although it is still insignificant compared to the top five destinations in the EU: Netherlands, Sweden, Germany, Luxembourg and France. Third, China's investment in the EU is being made in pursuit of innovation in manufacturing and to acquire high-tech technologies. When it comes to China's M&A in Europe, the study found that the proportion of indirect China's M&As (via third countries (e.g. Hong Kong) or Chinese subsidiaries already established in Europe) was relatively higher than direct ones. Empirical factor analysis of investment also shows that China's investment in the EU is strongly motivated by the pursuit of strategic assets. Other factors such as institutional-level and regulatory variables are found to have no significant impact, or have an effect contrary to expectations. This suggests that China's investment in the EU is based on the Chinese government's growth strategy, and accompanies an element of national capitalism Today, It is highly expected that the COVID-19 pandemic will have a reorganizing effect on the global value chain (GVC) and Foreign investment regulation in the high-tech sector motivated by national security is emerging as a global issue as the US and the EU are tightening their control. As Korean companies are not free from the risk of falling under such regulations, a thorough and careful response is required. And for the Korean government, it is necessary to prepare legal and institutional measures regulating foreign investment in reference to the US and the EU.
Topic:: Foreign Direct Investment, Financial Crisis, European Union, Economy, Economic Growth, Global Value Chains, and COVID-19
Political Geography:: China, Europe, Asia, Korea, and United States of America

52. Changing Environment for Opening of Chinese Financial Sector and Implications

Author:: Sangbaek Hyun, Suyeob Na, Young Sun Kim, Koun Cho, and Bongkyo Seo
Publication Date:: 04-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The opening of China's financial sector has progressed at a very slow pace, unlike the manufacturing and trade sectors that have pushed for an active opening to the outside world. The Chinese economy has been growing rapidly while serving as a global production base, but since 2012, it has become necessary to modify its approaches to achieve growth as it enters an era of medium-speed growth. Recently, new reform and opening measures have been taken in various fields to improve the quality of the Chinese economy, and the need for reform and opening in the financial sector has also increased. Internally, the financial system centered on China's state-owned commercial banks has focused on indirect financing, which has served as a major obstacle to upgrading China's economy and industry to the next level, further increasing the need for reform and opening of the financial sector. Moreover, externally, the U.S.-China conflict which began in earnest in 2018, is applying strong pressure toward reform and opening in China’s financial sector. The Chinese government began to show a proactive attitude toward financial opening amid such internal needs and external pressure, and an important development was seen in China’s financial opening when President Xi Jinping declared further opening measures at the Boao Forum in April 2018. The Chinese financial authorities have prepared follow-up measures related to financial opening, and the Chinese government’s efforts toward financial opening in the three years from 2018 to 2020 yielded more results than the ten-year opening period since its accession to the WTO. Against this backdrop, this study examines the main contents of China’s financial opening process, which has been accelerating recently, and derives evaluation and implications.
Topic:: Finance, Economy, Economic Growth, and Banks
Political Geography:: China, Asia, and Korea

53. A Comprehensive Evaluation on Korea’s ODA to Rwanda’s Agriculture Sector and Its implications for Strategic Approaches

Author:: Young Ho Park, Minji Jeong, and Soo Hyun Moon
Publication Date:: 01-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: There has been a growing consensus in the national and international aid architecture that sporadic or scattered aid modality should be avoided. This study conducted a comprehensive cluster evaluation on Korea’s agricultural ODA to Rwanda between 2013 and 2017, with two newly devised indexes: Cluster Performance Index (CPI) and Resource Allocation Index (RAI). Every Korean agricultural ODA project was categorized into five clusters and numerically evaluated against criteria widely used in the evaluation of development projects: relevance, efficiency, effectiveness and sustainability. Our cluster evaluation reveals that projects are mostly planned appropriately, but in some clusters, large amounts of the budget have been invested in poorly planned projects. Regarding efficiency, there was considerable room for improvement in all clusters. Particularly, in the Monitoring and Evaluation (M&E) category, all clusters scored below average. Concerning performance evaluation, all clusters scored relatively high in effectiveness, specifically in goal achievement. Lastly, in terms of sustainability, risk management was found to be relatively inadequate in all clusters. Based on the lessons from the aforementioned observations and analysis results, this study suggests ODA quality can be improved by optimizing budget allocation, improving monitoring efficiency, creating synergistic effects through cluster linkage, and developing agricultural value chain program.
Topic:: Agriculture, Foreign Aid, Economy, and Value Chains
Political Geography:: Africa, Asia, Korea, and Rwanda

54. Fourth Industrial Revolution in Japan: Technology to Address Social Challenges

Author:: Gyupan Kim, Hyongkun Lee, Boram Lee, Jongeun Lee, and Wonju Son
Publication Date:: 01-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: In Japan, the challenges posed by its low birthrate and aging population expanded rapidly with the collapse of the bubble economy in the early 1990s, and in March 2011, energy and environmental problems such as power supply shortages and nuclear radiation issues occurred in the wake of the Great East Japan Earthquake and Fukushima nuclear accident. Also, with the beginning of the coronavirus pandemic in January 2020, digital transformation has emerged as a social challenge. In particular, Japan's aging population combined with a decrease in the working age population, has caused the government to face fiscal crisis due to the burden of social insurance, and a sense of crisis of labor shortage in the medical, manufacturing and logistics sectors. This is also leading to a sense of crisis at local governments as well, seen with the collapse of the medical service supply system under “Tokyo centralization,” the rapid increase of the vulnerable in transportation due to the super-aging of rural areas, and the risk of extinction of local communities. The analysis on the healthcare and medical care sectors was conducted in chapter 2, and the manufacturing, mobility, and logistics sectors in Chapter 3, and the local revitalization in Chapter 4 respectively. And chapter 5 of conclusion remarks presents policy implications for the Korean government.
Topic:: Demographics, Industrial Policy, Science and Technology, Nuclear Power, and Economy
Political Geography:: Japan and Asia

55. Economic Policies of GCC Countries in the Era of Low Oil Prices and Their Policy Implications for Korea

Author:: Kwon Hyung Lee, Sung Hyun Son, Yun Hee Jang, and Kwang Ho Ryou
Publication Date:: 02-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Over the past several decades, the six member countries of the Gulf Cooperation Council (GCC) have implemented economic policies for industrial diversification to lessen severe dependence on the oil industry. Such policy efforts have been driven by their awareness of macro-economic and structural risks from heavy volatilities in international oil markets in terms of fiscal and trade sectors. For instance, the drop in international oil prices reduces export performance in the oil and natural gas sectors, which in turn results in a decline in the stability of fiscal revenue. The recent trends of low oil prices since 2014, as well as high unemployment rates, have strengthened the policy regime for industrial diversification and job creation supported by mid- to long-term economic plans of the GCC countries. This report reviews what has been emphasized in the areas of industrial, employment, trade and investment policies. We then derive implications for Korean companies and policymakers for sustainable cooperation between Korea and the Middle East.
Topic:: Oil, Economy, Diversification, and Trade
Political Geography:: Asia, Korea, and Gulf Nations

56. The Effects of US-China Rivalry on Latin America and Their Implications

Author:: Sungwoo Hong, Yeo Joon Yoon, Jino Kim, Jeewoon Rim, and Jimin Nam
Publication Date:: 02-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The conflict between the United States and China may be the issue of most importance as well as interest to the world, prior to COVID-19. This conflict between the two countries is appearing not only in the economic sector, but also in various field such as politics, diplomacy, and military affairs. Such competition between the two countries is likely to escalate further as multilateral systems such as the WTO are threatened and protectionism intensifies in the post-COVID-19 world. Even within Latin America, the competition between the two countries frequently appears in a variety of forms. Conflicts between the United States and China in Latin America tend to occur mainly in the infrastructure sectors. Furthermore, the United States pressured Latin American countries to choose between the United States and China, with the results of this pressure depending on the political orientation of the ruling government. In order to investigate the impact of retaliatory tariffs between the two countries on Latin American countries’ exports and welfare, we employ an event analysis for exports and computational general equilibrium (CGE) model for welfare, with Argentina, Brazil, Mexico, and Chile as the subject of our analysis. Based on the outcome of the event study, Brazil’s exports to the United States moderately increased due to the tariff imposition, and such an effect persisted for short term. Its exports to China rose considerably immediately after the tariff imposition, and then the impact tended to decrease over time. By contrast, it is difficult to conclude that the tariff imposition had a statistically significant and lasting effect on the exports of the remaining three countries to the United States and China. As a result of the analysis using the CGE model, meanwhile, the tariffs imposed between the United States and China trivially increased the welfare of Latin American countries.
Topic:: Foreign Policy, Economy, Tariffs, Exports, Trade, and Rivalry
Political Geography:: China, Asia, South America, Latin America, Korea, and United States of America

57. Consumer Responses to Price Shocks of Wine Imports in Korea

Author:: Chul Chung, Min-chirl Chung, and Bonggeun Kim
Publication Date:: 07-2021
Content Type:: Working Paper
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The main purpose of the study is to develop a methodology that divides consumers' responses to FTAs or commodity taxes into quantitative and qualitative margins, which cause exogenous price changes for some specific goods. The use of unit values as a dependent variable for consumers' qualitative choice, unlike the usual method of utilization of unit values as a proxy variable for market prices, showed that qualitative response to price changes exists and its size is significant. The methodology of separating and estimating qualitative responses to income changes as in economic crises is also presented, and the empirical analysis using this methodology showed that much of the existing income effects were qualitative responses. As a key result, the price elasticity of -1.178 estimated by the usual demand model based on a single commodity assumption is reduced to -0.712 for the quantitative margin only, and the qualitative margin is the remaining -0.466, accounting for more than a third of the overall response. The significant degree of qualitative response estimates suggests that policy makers and researchers should consider qualitative response as an important factor when analyzing the effectiveness of FTAs, especially on consumption.
Topic:: Imports, Consumer Behavior, and Price Shocks
Political Geography:: Asia and South Korea

58. Korea's Aid Agencies and Result-Based Management System

Author:: Yul Kwon, Ju Young Lee, and Chami Park
Publication Date:: 12-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: This study was conducted to analyze the current situation of results-based management in Korea's ODA agencies and to find ways to reform the results-based management system. To this end, a fact-finding survey and literature review were conducted for the government agencies implementing ODA. This study also analyzed each institution’s aid implementation system, types of aid, and performance management environment. Based on this analysis, organizations that conduct self-evaluation were compared and classified into three results-based management models. The appropriate results-based management methods and evaluation indicators were derived according to the evaluation system and characteristics of each model.
Topic:: Development, Domestic Policy, and Management
Political Geography:: Asia and South Korea

59. How Can South Korea Teach, Lead, and Help in Asia’s Quest for Smart Cities?

Author:: Clara Gillispie
Publication Date:: 10-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: As of 2021, virtually every country in Asia has announced some plan for standing up their own smart cities, with national- and/or city-level governments launching either pilot projects or official strategies to coordinate activities and investment across different stakeholder groups. In this context, South Korea could (and does) play a positive role in how countries across the region might be able to realize these plans. This includes through not only providing direct financial, technical, and development support, but also sharing its own lessons learned and practices in promoting sustainable, secure, and inclusive smart cities. Even so, both South Korean and Asian interests could benefit from greater attention to expanding South Korea-Asia engagements and cooperative mechanisms on digital development issues, as a means of better supporting and bolstering ongoing regional priorities.
Topic:: Development, Regional Cooperation, Digital Economy, Investment, and Smart Cities
Political Geography:: Asia and South Korea

60. Korea’s Strategy on Trade Agreements with Developing Countries in Africa and the Pacific Regions

Author:: Meeryung La
Publication Date:: 09-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: As the US-China trade conflict intensifies, high dependence on US and China has been pointed out as a potential risk to the Korean economy. This calls for trade policies including diversification of trading partners and the establishment of a new model for trade agreements suitable to such diversified partners. Meanwhile, the necessity for such policies grows as protectionism spreads globally and trade order changes after the Covid-19 pandemic. Africa and the Pacific (AP) regions, the main areas of interest in this report, have been excluded from Korea’s FTA network despite their high growth potential and strategic significance. Most countries in the AP regions are geographically distant from Korea and mostly underdeveloped, so we have approached the region only in terms of development cooperation. Currently, trade agreements and systems for trade and investment with AP countries are insufficient, and the size of economic cooperation with these countries remains small. However, Africa has high market potential, owing to various factors such as its high population growth, middle-class growth, and transition to digital economy, while the Pacific island countries have abundant fisheries and marine resources, and wield voting power in international organizations. In this regard, it is necessary to build the foundation for cooperation with AP countries in the mid-to-long term. Against this backdrop, this study seeks mid- to long-term strategies to promote trade cooperation with AP countries. First we consider introducing and expanding nonreciprocal arrangements for developing countries in the AP regions, as currently provided to United Nations-defined least developed countries. Then we consider introducing a reciprocal trade agreement, for example, an FTA. As a result, we found that it is necessary to introduce an FTA model suitable for developing countries in the AP regions instead of introducing further nonreciprocal agreements. Based on the results of the study, this paper proposes strategic directions for trade cooperation with the AP regions, and furthermore, provides policy suggestions that should be included in the agreement with those countries.
Topic:: Markets, Treaties and Agreements, Partnerships, Digital Economy, Economy, and Trade
Political Geography:: Africa, Asia, South Korea, and Asia-Pacific

61. Changes in the Regional Structure of China's Domestic Market and Implications

Author:: Jihyun Jung, Won Seok Choi, Hong Won Kim, and Joohye Kim
Publication Date:: 08-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: In response to intensifying conflict with the United States and the shock of Covid-19, China reinforced its strategy to expand domestic demand. China's domestic market is an important factor affecting Korea's exports and economic growth. Accordingly, a large body of research has been conducted in Korea on China's expansion policy and changes in its domestic market. However, most studies have analyzed changes in China's consumer market, import market and imported items, limiting the overall understanding of China's domestic economy. In addition, most studies on China's regional domestic market have analyzed the market segmented by region. Recognizing this gap, this study expanded the scope of analysis of the domestic market in China to the entire domestic final demand, and analyzed inter-regional trade relations and other economic relations based on an inter-regional input-output analysis, which has rarely been attempted in analyses of the Chinese domestic market. In addition, the changes in the regional structure of the Chinese import market and Korea's competitiveness were analyzed using Chinese trade statistics. In particular, by synthesizing the changes after the global financial crisis, a turning point in China's economic structure, we project future changes in the regional economic structure of China, which emphasizes the independence of its domestic economy. In addition, in the era of US-China conflict, the study aimed to select regional markets meaningful to Korea, and to present strategic directions toward China focusing on regional cooperation and approaches into the domestic market.
Topic:: Markets, Economy, Regional Economy, and Domestic Market
Political Geography:: China, Asia, and South Korea

62. Digital Platform Markets of ASEAN and India: Implications for Cooperation with Korea

Author:: Jeong Gon Kim, Seung Kwon Na, Jaeho Lee, ChiHyun Yun, and Eunmi Kim
Publication Date:: 06-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: The growth of digital platform markets in ASEAN and India is prominent. With COVID-19, demands for economic and social activities centered on digital platforms are expected to rise further; especially five sectors (e-commerce, sharing economy, education, healthcare and fintech) are fast growing seectors. Korean is a potential partner of ASEAN countries and India. Korea's Digital New Deal policy now stresses tasks such as sharing and utilizing data, convergence of 5G and artificial intelligence across whole industries, spreading digital education, digital healthcare, etc., which are closely related to the economic and social needs of ASEAN countries and India. In order to promote regulatory harmonization and cooperation with ASEAN and India, it is necessary for Korea to promote digital economy and trade agreements.
Topic:: Treaties and Agreements, Digital Economy, Artificial Intelligence, ASEAN, COVID-19, 5G, and Regional Economy
Political Geography:: India, Asia, and South Korea

63. ASEAN Economic Integration on Services: An Analysis of Economic Impacts and Implications

Author:: Meeryung La
Publication Date:: 06-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: ASEAN continues its efforts to liberalize services trade in the region as part of the process of establishing the ASEAN Economic Community (AEC). ASEAN has been increasing the level of regional liberalization through package negotiations of the ASEAN Framework Agreement on Services (AFAS). After signing the 10th AFAS package, the package negotiations were replaced by the ASEAN Trade in Services Agreement (ATISA), which takes a negative list approach and includes regulatory cooperation between member states. Upon this backdrop, this paper attempts to examine the progress of service market integration within ASEAN and analyze the impact of service liberalization pursued by ASEAN. Based on the analysis results, we also present policy implications to enhance cooperation with ASEAN in the service sectors.
Topic:: Economy, Services, ASEAN, Economic Integration, and Regional Economy
Political Geography:: Asia

64. Increasing Global Climate Ambition and Implications for Korea

Author:: Jinyoung Moon, Soo Hyun Oh, Youngseok Park, Sunghee Lee, and Eunmi Kim
Publication Date:: 05-2021
Content Type:: Policy Brief
Institution:: Korea Institute for International Economic Policy (KIEP)
Abstract:: Since the adoption of the Paris Agreement, wider and decisive actions to tackle climate change and reduce greenhouse gas (GHG) emissions have been called for in the international community. Many countries are seeking a sustainable economic recovery plan that reflects climate change and environmental considerations. The private sector has also been trying to expand environmentally sustainable investments and disclose relevant information on climate change. In particular, major GHG emitters such as China, the United States (U.S.), European Union (EU), Japan and Korea have pledged to move forward carbon neutrality. For this goal, the EU has established action plans for the European Green Deal, including a plan for introducing a Carbon Border Adjustment Mechanism (CBAM). In this context, this study aims to propose policy recommendations for Korea by analyzing measures to strengthen reduction targets and the economic impact of the EU's CBAM. The following implications can be derived. First, it is necessary to support low-carbon transition efforts in industries. Second, it is also important to support low-carbon technological innovation. Third, monitoring and response measures for the CBAM should also be prepared. Fourth, the private sector should expand voluntary efforts to reduce emissions and environmentally sustainable investment. Lastly, it is necessary to actively engage in international cooperation, not only in terms of reducing GHG emissions but also responding to climate change.
Topic:: Climate Change, Environment, Science and Technology, Sustainability, Carbon Emissions, and Paris Agreement
Political Geography:: Asia and South Korea

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COLUMBIA UNIVERSITY PRESS