Political Geography: Asia / Publication Year: within 25 Years / Topic: Economics

1. US-China Effort to Set “Guardrails” Fizzles with Balloon Incident

Author:: Sourabh Gupta
Publication Date:: 05-2023
Content Type:: Journal Article
Journal:: Comparative Connections
Institution:: Pacific Forum
Abstract:: The proposed “guardrail” that Joe Biden and Xi Jinping sought to erect last fall in Bali failed to emerge in the bitter aftermath of a wayward Chinese surveillance balloon that overflew the United States and violated its sovereignty. Though Antony Blinken and Wang Yi met on the sidelines of the Munich Security Conference afterward, aspersions cast by each side against the other, including a series of disparaging Chinese government reports, fed the chill in ties. Taiwan President Tsai Ing-wen’s meeting with House Speaker Kevin McCarthy during the return leg of her US transit added to bilateral and cross-strait tensions and were met with Chinese sanctions. Issues pertaining to Taiwan, be it arms sales or a speculated Chinese invasion date of the island, remained contentious. The administration’s attempt to restart constructive economic reengagement with China, including via an important speech by US Treasury Secretary Janet Yellen, appears to have fallen on deaf ears in Beijing. Following the Biden-Xi meeting on Nov. 14 on the sidelines of the G20 Leaders Summit in Bali, Indonesia, US-People’s Republic of China relations were transitioning to an improving track—or so it seemed. US Defense Secretary Lloyd Austin met with his Chinese counterpart, Defense Minister Wei Fenghe, on the sidelines of the ASEAN Defense Ministers” Meeting-Plus meeting in Cambodia on Nov. 22. On Dec. 11-12, US Assistant Secretary of State for East Asian and Pacific Affairs Daniel Kritenbrink held “candid, in-depth and constructive” talks in Beijing. On Jan. 18, Secretary Yellen had a “candid, substantive, and constructive conversation” with departing Vice-Premier Liu He in Zurich ahead of the World Economic Forum in Davos. Hours before Secretary Blinken was due to board a flight to Beijing on Feb. 3, which would have been the highest-ranking contact between the two sides since the Bali meeting, the budding rapprochement came to a screeching halt.
Topic:: Security, Foreign Policy, Economics, and Bilateral Relations
Political Geography:: China, Asia, North America, and United States of America

2. Japan-China Relations: A Period of Cold Peace?

Author:: June Teufel Dreyer
Publication Date:: 01-2023
Content Type:: Journal Article
Journal:: Comparative Connections
Institution:: Pacific Forum
Abstract:: In the sole high-level meeting in the reporting period, on the sidelines of the APEC meeting in Bangkok in November, General Secretary/President Xi Jinping and Prime Minister Kishida Fumio essentially talked past each other. At an earlier ASEAN+3 meeting in Phnom Penh, Premier Li Keqiang and Kishida not only talked past each other but pointedly walked past each other. There was no resolution of major issues: the Chinese position is and remains that Taiwan is a core interest of the PRC in which Japan must not interfere. Japan counters that a Chinese invasion would be an emergency for Japan. On the islands known to the Chinese as the Diaoyu and to the Japanese as the Senkaku, Tokyo considers them an integral part of Japan on the basis of history and international law while China says the islands are part of China. On jurisdiction in the East China Sea, Japan says that demarcation should be based on the median line and that China’s efforts at unilateral development of oil and gas resources on its side of the median are illegal. Beijing does not recognize the validity of the median line. Economically, a number of Japanese industries have been decoupling from China out of concern for the integrity of their supply chains and for security reasons while others are planning to expand operations there. Both sides continued their respective defense buildups while accusing the other of military expansionism.
Topic:: Security, Defense Policy, Diplomacy, Economics, Politics, and Bilateral Relations
Political Geography:: Japan, China, and Asia

3. Will China's impending overhaul of its financial regulatory system make a difference?

Author:: Martin Chorzempa and Nicolas Véron
Publication Date:: 03-2023
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: China's reshuffle of its financial supervisory architecture announced in March, like previous changes, appears incremental rather than radical. It will not, however, resolve the main challenge hobbling China’s financial system, which is not linked to specific choices of supervisory architecture but rather to the unfinished transition from a state-directed to a market-based financial system and the way the Chinese Communist Party's pervasive role creates obstacles to good corporate governance of individual financial firms and to the independence of supervisory authorities. Too often, political authorities and sometimes the supervisors themselves intervene directly in financial firms’ decisions to allocate capital and credit, occasionally resulting in failures of risk control and risk management. The authors argue that Chinese reformers should aim at a clearer and more rigorous division of responsibilities, in which financial firms manage financial opportunities and risks, and supervisors are exclusively focused on their respective public policy mandates.
Topic:: Economics, Regulation, Finance, and Corporate Governance
Political Geography:: China and Asia

4. Impact of economic sanctions on net commodity-producing and net commodity-consuming countries

Author:: Sergio R. Vale and Eduardo Viola
Publication Date:: 01-2023
Content Type:: Journal Article
Journal:: Revista Brasileira de Política Internacional (RBPI)
Institution:: Instituto Brasileiro de Relações Internacionais (IBRI)
Abstract:: The war in Ukraine has had a marked economic impact. However, since Russia is a net producer of important commodities, the impact of sanctions on its economy was less than expected. But what would happen if there was a war involving a country that was a net importer of commodities? In the case of a possible China-US conflict over Taiwan, the impact on the world economy would be different, with a deeper recession around the world, but the impact on the Brazilian economy would still be positive on account of the possibility that would remain of agricultural exports to China.
Topic:: Agriculture, Economics, International Trade and Finance, Sanctions, Commodities, and Exports
Political Geography:: Russia, China, Europe, Ukraine, Taiwan, Asia, North America, and United States of America

5. Korea Matters for America/America Matters for Korea (2023)

Author:: East-West Center
Publication Date:: 04-2023
Content Type:: Special Report
Institution:: East-West Center
Abstract:: The 4th edition of Korea Matters for America/America Matters for Korea, part of the Asia Matters for America initiative, maps the trade, investment, employment, business, diplomacy, security, education, tourism, and people-to-people connections between the United States and South Korea at the national, state, and local levels. This publication and the AsiaMattersforAmerica.org website are resources for understanding the robust and dynamic US-Indo-Pacific relationship.
Topic:: International Relations, Climate Change, Economics, Education, Environment, Politics, Science and Technology, Governance, Population, Public Health, and Travel
Political Geography:: Asia, South Korea, North Korea, North America, and United States of America

6. Two Peripheries: The Ukraine War's Effect on North Korea-Russia Relations

Author:: Anthony V. Rinna
Publication Date:: 03-2023
Content Type:: Special Report
Institution:: East-West Center
Abstract:: Spanning the Eurasian landmass, Russia’s actions in adjacent Ukraine invariably affect the geopolitical state of play on the similarly adjacent Korean Peninsula. Although ties between the Democratic People's Republic of Korea (DPRK) and Russia have been of largely secondary importance for both countries since their veritable rupture in the early- and mid-1990s, Moscow-Pyongyang relations became more mutually beneficial in 2022. Whereas most countries have outright condemned Russia’s invasion of Ukraine or taken up an ambiguous position, the DPRK has been vocal in its support for Russia. From the DPRK perspective, the Kremlin’s post-2022 diplomatic and economic estrangement from much of the world has provided Pyongyang with an opening to leverage ties with Russia to push for an easing of its own diplomatic and economic isolation. Meanwhile, strengthening its DPRK ties allows Russia to undermine US influence on its Asian periphery. In supporting Russia’s full-scale invasion of Ukraine, North Korea appears to be aiming toward obtaining economic benefits from closer ties with Russia, a country whose economy has managed to stay afloat despite heavy Western sanctions. Russia’s full-scale invasion of Ukraine has provided the impetus for Pyongyang’s outreach to Moscow. However, the roots of the current upswing in Moscow-Pyongyang relations go back to the April 2019 summit between Kim Jong Un and Vladimir Putin. Kim received an invitation to meet with Putin in May 2018 yet waited eleven months to meet with the Russian leader, even as Kim regularly met with the leaders of other major players on the Korean Peninsula. Kim may have decided after the February 2019 Hanoi summit yielded few results that strengthening ties with Russia, which was more reluctant than China to support UN sanctions against Pyongyang in 2017, was a more viable option for sanctions relief. Aside from the fact that Russia has demonstrated a clear unwillingness to impose new sanctions against the DPRK, North Korean citizens are reported to still be working in Russia in contravention of UN Resolution 2397. North Korean workers’ earnings are said to have suffered because of Russia’s reduced access to hard currency. Yet, the ruble’s continued resilience may mean that earning currency in Russia is still worthwhile for laborers dispatched at Pyongyang’s behest.
Topic:: International Relations, Foreign Policy, Economics, and Politics
Political Geography:: Russia, Europe, Ukraine, Asia, and North Korea

7. United Kingdom Engagement with North Korea

Author:: Alastair Morgan
Publication Date:: 03-2023
Content Type:: Special Report
Institution:: East-West Center
Abstract:: As one of the Allied Powers, The United Kingdom was involved in Post-World War II planning for the Korean peninsula, including the November 1943 Cairo Conference declaration that “… in due course, Korea shall become free and independent.” However, US President Roosevelt’s proposal at the February 1945 Yalta Conference did not establish a formal role for the UK in the trusteeship of Korea. Subsequently, the United States and the Soviet Union agreed to divide the peninsula at the 38th parallel in August 1945, and direct British involvement in the peninsula was limited prior to the Korean War. The United Kingdom’s Korean War contribution to the United Nations Command was second only to the United States, with significant deployments of maritime and air assets in addition to the provision of ground troops. Almost 60,000 British troops saw action, with nearly 5,000 killed, wounded, missing in action, or taken prisoner. Following the armistice, the United Kingdom has continued to send representation to the United Nations Command. The armistice agreement includes an obligation on so-called “Sending States” to respond to renewed hostility. Although there is no automatic UK commitment to send forces, the armistice agreement remains a consideration in engagement with North Korea.
Topic:: International Relations, Foreign Policy, Economics, Education, Politics, and Strategic Engagement
Political Geography:: United Kingdom, Europe, Asia, and North Korea

8. North Korea-Germany Relations: An Ambassador's Perspective of Diplomacy with Pyongyang

Author:: Armin Schäfer
Publication Date:: 03-2023
Content Type:: Special Report
Institution:: East-West Center
Abstract:: Germany established diplomatic relations with North Korea, also known as the Democratic People's Republic of Korea (DPRK), in 2001 at the request of the South Korean government, which hoped that Germany and the European Union (EU) would play a more active role in supporting the “Sunshine Policy.” Since then, Germany, together with the other EU states, has sought to moderate North Korea through a “Policy of Critical Engagement” to convince it of the benefits of international cooperation, respect for the rule of law, and improving the political and economic situation of its people. In doing so, Germany could build on the long relationship between North Korea and the former East Germany. “Critical engagement” means being willing to talk and get involved, but without holding back on criticism—and, if need be, imposing sanctions. It also implies that comprehensive engagement is not (yet) possible because of the circumstances. There is ample cause for a constrained approach from North Korea’s aggressive foreign policy and systematic human rights violations to the absence of suitable economic and fiscal conditions for business and development cooperation. Moreover, the lack of will on the part of considerable segments of the North Korean regime to engage with other countries also hampers broader engagement.
Topic:: Foreign Policy, Diplomacy, Economics, Education, and Bilateral Relations
Political Geography:: Europe, Asia, North Korea, and Germany

9. From Coy to Cold Shoulder - The European Union and North Korea

Author:: Glyn Ford
Publication Date:: 03-2023
Content Type:: Special Report
Institution:: East-West Center
Abstract:: The European Union (EU)—then 15 member states prior to its 2004 enlargement to 25—formally established diplomatic relations with Pyongyang in 2001 after a high-level visit to Pyongyang by Göran Persson, Swedish Prime Minister and then President in office of the European Council of Ministers. There, accompanied by EU security affairs chief Javier Solana and EU foreign affairs commissioner Chris Patten, he met with Kim Jong Il. Less than five years before, Commission officials were under orders not to even speak to officials from North Korea, officially the Democratic People's Republic of Korea (DPRK). However, at this meeting, the two parties agreed to establish both Political and Human Rights Dialogues; the latter modeled on the EU’s ongoing Human Rights Dialogue with Beijing. This move by the EU followed pressure from President Kim Dae-Jung in Seoul for allies to normalize relations as part of his ‘Sunshine’ policy. Some of the EU’s peripheral member states had long-standing relations with Pyongyang, in some cases dating back to before they had even joined the EU, with Finland, Sweden, and Denmark establishing relations in 1973, Austria in 1974, and Portugal in 1975. However, only Sweden had chosen to establish an Embassy, with the rest represented from Beijing. At the turn of the century, that pressure from Seoul resulted into most of the remaining dominoes falling in place. Italy and the UK jumped the gun in 2000, with Tony Blair and UK Foreign Minister Robin Cook agreeing to extend diplomatic recognition and establish an embassy en route to the Seoul Asia-Europe Summit.
Topic:: International Relations, Economics, Politics, and European Union
Political Geography:: Europe, Asia, and North Korea

10. From Close Allies to Distant Comrades: The Ups and Downs of the Vietnam-North Korea Relationship

Author:: Khang X. Vu
Publication Date:: 03-2023
Content Type:: Special Report
Institution:: East-West Center
Abstract:: In 2019, more than five decades after North Korean President Kim Il-sung’s last official trip to Vietnam in 1964, Kim’s grandson, North Korean Chairman Kim Jong-un, visited the country at the invitation of the Communist Party of Vietnam General Secretary Nguyen Phu Trong. In a welcoming speech, Trong described the relationship, “although the road is long, our hearts are close.” Kim responded to Vietnamese hospitality, saying North Korea would “staunchly preserve and forever honor the North Korea-Vietnam friendship from generation to generation.” Vietnam and North Korea are among the world’s last five communist party states, along with China, Laos, and Cuba. As such, it is no surprise that the two leaders emphasized common communist values and a shared history of struggle against US imperialism in their speeches. Still, despite the amicable words extolling the longevity of the traditional friendship, both leaders avoided mention of Vietnam’s conflict with the North Korea-backed Khmer Rouge and subsequent occupation of Cambodia from 1978 to 1989. Vietnam’s war with Cambodia was a facet of intra-communist bloc conflicts that spanned the whole of East Asia. Despite Hanoi and Pyongyang’s shared communist ideology, intra-bloc tensions eroded the friendship between the two nations. What were the reasons behind this dramatic shift in bilateral relations?
Topic:: International Relations, Economics, Politics, and Bilateral Relations
Political Geography:: Asia, North Korea, and Vietnam

11. A Monumental Relationship: North Korea and Namibia

Author:: Tycho van der Hoog
Publication Date:: 03-2023
Content Type:: Special Report
Institution:: East-West Center
Abstract:: Visitors to Windhoek, the capital city of Namibia, will quickly learn a remarkable fact that is well-known among the local population—much of the capital’s architectural landscape is designed and constructed by North Korea. In recent years, North Korean nationals have built the official residence of the president of Namibia, the State House; the national cemetery for the fallen heroes of the liberation struggle, the National Heroes’ Acre; the national history museum, the Independence Memorial Museum; the Ministry of Defense headquarters and other buildings. The Namibian government thus uses North Korean aesthetics for some of the most important aspects of its power: the president, the history, and the army. This analysis explores the relationship between Namibia and North Korea by providing historical and political context to the aforementioned buildings. Today, Namibia often has the reputation of a quaint and sometimes sleepy destination, tucked away in the southwestern corner of the African continent. Yet, Namibia was at the center of geopolitical tensions for most of the twentieth century. The complicated decolonization process of Namibia, or “the Namibian question,” as it became known in the corridors of the United Nations (UN), had its roots in the aftermath of three decades of German occupation between 1884 and 1915. German South West Africa, the area that became modern Namibia, was transferred to South Africa as a League of Nations mandate territory and renamed “South West Africa.” South Africa viewed the territory as an unofficial fifth province and introduced brutal apartheid legislation. Internal opposition against the South African regime resulted in the formation of nationalist organizations, of which the South West Africa People’s Organization (SWAPO) became the most prominent.
Topic:: International Relations, Economics, Politics, Arts, and Culture
Political Geography:: Africa, Asia, North Korea, and Namibia

12. Japan Matters for America/America Matters for Japan (2023)

Author:: East-West Center
Publication Date:: 02-2023
Content Type:: Special Report
Institution:: East-West Center
Abstract:: The 4th edition of Japan Matters for America/America Matters for Japan, part of the Asia Matters for America initiative, maps the trade, investment, employment, business, diplomacy, security, education, tourism, and people-to-people connections between the United States and Japan at the national, state, and local levels. This publication and the AsiaMattersforAmerica.org website are resources for understanding the robust and dynamic US-Indo-Pacific relationship.
Topic:: International Relations, Climate Change, Economics, Education, Politics, Science and Technology, Governance, Population, Public Health, and Travel
Political Geography:: Japan, Asia, North America, and United States of America

13. Economic Sanctions During Humanitarian Emergencies: The Case of North Korea

Author:: Stephan Haggard and Marcus Noland
Publication Date:: 01-2023
Content Type:: Special Report
Institution:: East-West Center
Abstract:: North Korea is experiencing yet another cycle of humanitarian distress. While sanctions are not the primary cause, they are a contributing factor. This essay examines the channels through which sanctions affect the North Korean economy and reaches four conclusions: First, sanctions have contributed to a deterioration of economic performance. Second, the UNSC’s 1718 Sanctions Committee should consider a thorough review to identify goods that would warrant blanket humanitarian financial sanctions have raised the risk premium on all financial transactions with North Korea; the sanctioning authorities need to do a better job of clarifying transactions permissible under humanitarian exemptions. Finally, while the global community should reassess its policies, the government of North Korea bears responsibility as well. The benefits of sanctions relief will be diminished if North Korea refuses to engage constructively with the international community on a broader range of issues running from basic humanitarian relief to economic reform.
Topic:: International Relations, Economics, Politics, Sanctions, and Humanitarian Crisis
Political Geography:: Asia and North Korea

14. China Is Finally Making Progress on the China-Kyrgyzstan-Uzbekistan Railway

Author:: Niva Yau
Publication Date:: 03-2023
Content Type:: Commentary and Analysis
Institution:: Foreign Policy Research Institute
Abstract:: Since the 1990s, China has tried to build the China-Kyrgyzstan-Uzbekistan (CKU) railway. The railway would advance China’s geopolitical and economic interests in Central Asia. Until recently, China has been unable to overcome opposition to the project in Kyrgyzstan and Uzbekistan. However, local concerns about the railway may be giving way since Russia’s war in Ukraine has made new trade routes bypassing Russia more profitable, and a new Uzbek government is looking to expand regional and international engagement.
Topic:: Economics, Infrastructure, Geopolitics, and Russia-Ukraine War
Political Geography:: China, Central Asia, Asia, Kyrgyzstan, and Uzbekistan

15. Exploring the Interplay between Trade and Industrial Policies and the Impact of Geopolitics on the Transformation of Taiwan’s Economy

Author:: Ying-Jun Lin
Publication Date:: 10-2023
Content Type:: Journal Article
Journal:: Revista UNISCI/UNISCI Journal
Institution:: Unidad de investigación sobre seguridad y cooperación (UNISCI)
Abstract:: Over the past five decades, Taiwan's economy has shifted from inward-oriented to outward-oriented, from an import-substitution policy to an export-expansion policy. This evolution in economic structure has also brought about changes in the industrial landscape. While there is an ongoing debate about the respective roles of the market and the government in promoting Taiwan's economic growth, this article argues that the history of Taiwan's economy demonstrates a mutually beneficial relationship between trade and industrial policies. The integration of market forces and government intervention has played a crucial role in Taiwan's economic success story. However, the dynamics between the United States and China, as well as the emergence of new Asian regionalism, pose challenges to Taiwanese industries and enterprises. In conclusion, this article emphasises the importance of refining trade and industrial policies in line with the geopolitical context in order to maintain the momentum of Taiwan's economy.
Topic:: Economics, Bilateral Relations, Trade, and Dependency
Political Geography:: China, Taiwan, Asia, and United States of America

16. Resisting China’s Gray Zone Military Pressure on Taiwan

Author:: Jacob Stokes
Publication Date:: 12-2023
Content Type:: Special Report
Institution:: Center for a New American Security (CNAS)
Abstract:: The People’s Republic of China (PRC or China) has sharply escalated its pressure campaign targeting the Republic of China (ROC or Taiwan) in recent years. Beijing appears likely to use Taiwan’s upcoming presidential election in January 2024 as a pretext to apply more pressure on the self-governing island, particularly in the “gray zone” using China’s military, the People’s Liberation Army (PLA), along with other tools of state power. There is no precise and commonly agreed upon definition of what gray zone activities are and are not. In general, though, the concept refers to actions that fall into the space between, on one side, peace and, on the other, full-scale kinetic war.1 Gray zone activities are coercive and aggressive but designed to stay below the threshold of triggering major conflict. China uses gray zone operations as part of a comprehensive strategy to pressure Taiwan that spans the areas of diplomacy, information, economics, and security. This policy brief examines one major component of that campaign: gray zone military and security operations. It starts by detailing the capabilities and tactics China uses to put security pressure on Taiwan. Then, it explains what Beijing seeks to achieve with those actions. The paper concludes with recommendations for how U.S. and Taiwan policymakers can resist and counter China’s gray zone operations.
Topic:: Security, Foreign Policy, Defense Policy, Diplomacy, Economics, Military Affairs, and Information
Political Geography:: China, Taiwan, and Asia

17. 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

18. 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

19. 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

20. 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

21. 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

22. What Japanese Tourism Amenities are Influenced in Terms of Affecting Inbound Tourist Demand?

Author:: Yoko Konishi and Takashi Saito
Publication Date:: 08-2023
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: Since 2012, the number of inbound tourists to Japan has increased every year, and new records of tourism-related economic indicators are being updated. On the other hand, the sudden inbound boom has led to a concentration of travel destinations, and over-tourism has become a problem. In this paper, we first statistically observe the concentration of tourists by accommodation type for each country of origin. Second, by identifying tourism amenities that contribute to inbound demand, we gain the knowledge necessary to shift demand from facilities with a high concentration of inbound tourists to facilities with lower occupancy. For the analysis, we utilised establishment data from the Online Travel Agency ‘Accommodation Travel Statistics Survey’ and data on tourism resources by region. The results show that the number of rooms, average price, membership of the hotel in a chain, internet availability, room type, number of World Heritage sites, and number of direct flights positively affect inbound demand. In particular, for ryokan (Japanese-style inns) with low occupancy rates and inbound guest ratios, their independence, internet availability, Western-style room availability, number of World Heritage sites, and hot spring facilities are effective in capturing demand.
Topic:: Economics, Tourism, Hospitality, and Travel
Political Geography:: Japan and Asia

23. Is there Eurasian Connectivity without Europe?

Author:: Niva Yau
Publication Date:: 12-2023
Content Type:: Journal Article
Journal:: Fletcher Security Review
Institution:: The Fletcher School, Tufts University
Abstract:: Tucked between Russia, Iran, and China, Central Asia is now desperately looking for solutions to cushion the impacts of global tension on its fragile economies, which are deeply tied to sanctions against Russia and a local production slowdown as China recovers from its zero COVID policy. While European diplomacy has come at a crucial time, its Central Asian policy is ambiguous, and commitments misplaced. Central Asia is continuously perceived by the EU as a region in need of developmental assistance, which leads to European regional policies that focus on digitalization and climate issues. What Central Asia needs is the establishment of concrete logistical connectivity that will enable efficient flow of products across Eurasia.
Topic:: Climate Change, Diplomacy, Economics, European Union, Connectivity, and Digitalization
Political Geography:: Russia, China, Europe, Iran, Central Asia, Eurasia, and Asia

24. Decoding China’s Dilemma: The Difficulties Of Economic Reform

Author:: Sunny Cheung
Publication Date:: 12-2023
Content Type:: Journal Article
Journal:: China Brief
Institution:: The Jamestown Foundation
Abstract:: On November 27, the State Council of the People’s Republic of China (PRC) unveiled a new policy, titled “Notice on Strengthening Financial Support Measures for the Private Economy (关于强化金融支持举措助力民营经济发展壮大的通知)” (People’s Bank of China, November 27). The notice introduces a set of 25 measures crafted to reinvigorate the private sector. These prioritize key areas such as technological innovation, green initiatives, and primary support for small to medium-sized enterprises. The package includes increasing financial assistance and gradually enhancing the proportion of loans to private businesses. It underscores the importance of facilitating credit, lowering interest rates, issuing bonds, and other kinds of financial instruments to meet the varied financing needs of private enterprises. This policy measure echoes mandates put forth during the 20th Party Congress in October 2022 and Central Financial Work Conference held at the end of October 2023 in response to China’s deepening economic woes (Xinhua, November 1). This backdrop has prompted policies aimed at addressing the challenges facing the Chinese economy. In October, the PRC National Bureau of Statistics announced that the Consumer Price Index (CPI) fell by 0.2 percent year-on-year—worse than expected and marking a contraction since July (RTHK, November 9). This ominous data, which includes price deflation for both July and October this year, is indicative of significant weakness in domestic demand, particularly due to the underperforming real estate market, which affects citizens’ expectations for asset prices. The ongoing economic downturn in China also refutes the notion that economic chaos would clear up after the abandonment of the Zero-Covid policy. This situation is also similar to the Japan-style recession in the 90s in which consumption and investment are further repressed in favor of paying down debt. China’s recent response has been to implement a series of economic stimulus measures in an attempt to revive its weakening national economy.
Topic:: Economics, Reform, Business, and Banking
Political Geography:: China and Asia

25. The Chinese Debate on Economic Reform

Author:: Arran Hope
Publication Date:: 09-2023
Content Type:: Journal Article
Journal:: China Brief
Institution:: The Jamestown Foundation
Abstract:: A steady drumbeat of ominous data and troubling commentary on the state of China’s economy has punctuated the summer months. Reports from the commentariat in the anglosphere have provided diagnostic analysis and detailed potential policy solutions that the Chinese government might pursue. However, China’s central decision makers in the Politburo or in the National Development and Reform Commission (NDRC), are more likely to take their cues from internal advisors and domestic experts within the PRC than from those outside. As such, one fruitful exercise is to take the temperature of voices within the system to determine the extent to which their perceptions align or diverge from those in the West, and to ascertain which views carry weight with the final arbiters of economic policy in Beijing. By doing so, analysts outside of China may better comprehend the future (mis)steps that China will take as it struggles to achieve its aim of “basically realizing socialist modernization.” In July, the Chinese government held several meetings and released documents pertaining the economy. On July 24 the Politburo met to discuss the economy as it usually does this time of year. But on the same day, a 17-point plan was issued by the NDRC, following on from a 31-point plan co-issued by the State Council and the Central Committee ten days prior. These send a clear message about the concern in government over China’s straitened circumstances. Indeed, just this week, the NDRC announced a new “private economy development bureau” to further support private industry (NDRC, September 4). The assessment of the situation is put bluntly in the Politburo readout: “the current economic system is facing new challenges… insufficient domestic demand, difficulties in some enterprise’s operations, multiple risks in key areas, and a complex and severe external environment.”
Topic:: Development, Economics, and Reform
Political Geography:: China and Asia

26. A Belt and Road to Nowhere? Italy on the Frontlines of Europe’s Changing Strategy Toward China

Author:: Andrew R. Novo
Publication Date:: 08-2023
Content Type:: Journal Article
Journal:: China Brief
Institution:: The Jamestown Foundation
Abstract:: During her tenure as Prime Minister, Giorgia Meloni has been far more active on the international scene than most observers predicted. Within the first ten months of her tenure, she has traveled to capitals across Europe, Asia, and North Africa and has hosted numerous foreign leaders on official visits. In July, Meloni visited Washington, D.C. where she and President Biden affirmed their commitment to deepening collaboration across various areas of shared interests. Meloni’s foreign policy agenda has touched on a range of issues including, but not limited to, European security, migration, energy policy, and international trade. It is on this last issue that Italy’s decision-making might be most impactful. As the Meloni administration reassesses its economic partnerships around the world, Italy’s relations—and by extension the European Union’s (EU) overarching position—towards the People’s Republic of China (PRC) could witness lasting changes. At the heart of the new government’s economic policy lies its choice of whether to withdraw from China’s Belt and Road Initiative (BRI). Meloni—along with many members of her cabinet—have voiced skepticism towards the agreement. As such, everything is on the table in the run-up to the decision at the end of the year.
Topic:: Foreign Policy, Economics, Infrastructure, and Belt and Road Initiative (BRI)
Political Geography:: China, Europe, Asia, and Italy

27. The Demise of Diplomatic Ambiguity: Parsing South Korea’s Estrangement From China

Author:: Matthew Fulco
Publication Date:: 08-2023
Content Type:: Journal Article
Journal:: China Brief
Institution:: The Jamestown Foundation
Abstract:: In July, the US Ohio-class ballistic-missile submarine (SSBN) visited South Korea for the first time since 1981. Not one, but two of the 560-foot-long warships—which carried a payload of 24 long-range Trident ballistic missiles—surfaced in South Korean waters (Korea JoongAn Daily, July 24, 2023). From Washington and Seoul’s perspective, the SSBN deployment was a pointed reminder to the mercurial North Korean regime to exercise restraint, but the symbolism of the SSBN visit was not lost on China—Pyongyang’s closest ally. For all its military modernization efforts, Beijing has no effective defense against the Ohio-class sub. That South Korea would support the deployment of the SSBNs to its territory illustrates both its concern about rising North Korean brinkmanship and newfound willingness to risk Beijing’s ire. Indeed, after three decades of stable ties anchored in economic interdependence, major changes are afoot in the South Korea-China relationship. Compared to Japan, which also counts China as its largest trading partner, South Korea has historically been less willing to stand its ground in the face of political pressure from Beijing. On the one hand, Seoul and Beijing have no major territorial disputes, but more importantly, South Korea had previously calculated that its political deference—especially on China’s “core interests” like Taiwan—would encourage Beijing to support denuclearization of the Korean Peninsula, the Republic of Korea’s (ROK) top foreign policy objective. For many years, South Korea handled Beijing with kid gloves, irrespective of who was in the Blue House. While the left-leaning Democratic Party of Korea (DPK) is traditionally more China-friendly, it was the conservative President Park Geun-hye who attended China’s jingoistic September 2015 military parade. After a summit between Xi Jinping and Park, both leaders made a commitment to oppose any unilateral actions that could lead to tension on the Korean Peninsula. The following day, President Park joined Xi and Russian President Vladimir Putin in China’s military parade. South Korea was the only US ally to attend the event (The Korea Herald, September 3, 2015). Since then, however, the two countries have drifted apart. The catalyst for this change was Seoul’s decision to deploy the THAAD missile defense system in 2017, which China views as a security threat and South Korea deems essential for self-defense. China has repeatedly demanded that South Korea dismantle its THAAD system (Xinhua, September 21, 2017). When those demands failed to bear fruit, it resorted to sanctions against South Korea (The Korea Herald, March 8, 2017). Furthermore, both China’s imposition of a draconian national security law in Hong Kong and its mismanagement of the coronavirus pandemic have hurt its reputation in South Korea (The South China Morning Post, October 20, 2020). It is against this backdrop that the ROK’s anti-China sentiment has surged to an all-time high—a development that will inevitably spill over into Seoul’s foreign policy. According to a 2021 survey conducted by SisaIN, for the first time since the ROK and the PRC normalized relations in 1992, South Koreans view China even more negatively than they do Japan (SisaIN, November 29, 2021). China’s ruling Communist Party seems oblivious to the existential threat that South Korea feels in the face of surging missile tests by North Korea. The JoongAng Daily noted in June that it takes just two minutes for a North Korean missile to hit Seoul. According to the editorial, “South Korea is technically still at war with North Korea. The government and people must not forget that” (Yonhap News Agency, June 1, 2023). Concluding that political appeasement and economic engagement with China have failed to pay off, South Korea is taking two significant steps: strengthening its ties with its top security partner, the US, and mending fences with its former rival, Japan. The implications of Seoul’s estrangement from Beijing could have far-reaching implications for geopolitics in the broader Indo Pacific region.
Topic:: International Relations, Diplomacy, Economics, and Regional Security
Political Geography:: China, Asia, and South Korea

28. China-Pakistan Economic Corridor: Socio-Cultural and Political Implications for Pakistan Amid Covid19 and the Way Forward

Author:: Mubeen Adnan and Reema Murad
Publication Date:: 07-2023
Content Type:: Journal Article
Journal:: Journal of Political Studies
Institution:: Department of Political Science, University of the Punjab
Abstract:: Through the ‘game changer’ project of China Pakistan Economic Corridor, China is aiming to stabilize its western part by promoting investment and economic development in its neighbour to the West, Pakistan, which will lead to a boost in the Pakistani economy through investments in infrastructure and construction of gas and oil pipeline. There is also the aim of reducing extremism in the Xinjiang region. However, there are several social, cultural and political changes that the project has the potential to bring about in Pakistan. This research work has made an attempt to understand the variousimplications of the China Pakistan Economic Corridor on Pakistan as well as how the COVID-19 pandemic impacted CPEC and the path ahead as the world slowly transitions out of COVID-19. This research paper has used secondary sources in order to answer these pertinent topics. Major opportunities which Pakistan and China have gained through this ChinaPakistan economic Corridor as well as some challenges are also discussed.
Topic:: Economics, Bilateral Relations, Investment, Economic Development, COVID-19, and Opportunity
Political Geography:: Pakistan, China, South Asia, and Asia

29. Digitalization of Special Economic Zones in China

Author:: Jie (Jeanne) Huang
Publication Date:: 01-2022
Content Type:: Working Paper
Institution:: China Studies Centre, The University of Sydney
Abstract:: Special Economic Zones (SEZ) have become the forefront in China to test legal and technological reforms for digital trade. This chapter explores three cutting-edge case studies in China’s SEZs: the Beijing blockchain-based Single Window deposit box; newly established big data exchanges in Beijing, Tianjin, and Shanghai SEZs; and pilot projects in financial, medical care and automobile industries to flow data across the border in the Shanghai SEZ. It scrutinizes China's experiments in the context of its applications to join CPTPP and DEPA. It argues that the development of Chinese domestic law for digital trade is shifting away from the traditional paradigm that uses international commitments to push domestic reform or make domestic law according to international law. The development of Chinese domestic law for digital trade relies much more on China’s domestic needs than what FTAs negotiations require. FTAs are increasingly becoming a tool for China to shape international law rather than a benchmark for legislating domestic Chinese law.
Topic:: Development, Economics, International Trade and Finance, Hegemony, and Digitalization
Political Geography:: China and Asia

30. Germany’s Economic Security and Technology: Optimizing Export Control, Investment Screening and Market Access Instruments

Author:: Tyson Barker and David Hagebölling
Publication Date:: 11-2022
Content Type:: Special Report
Institution:: German Council on Foreign Relations (DGAP)
Abstract:: Technological development and increasingly fraught US-China competition have geopolitical consequences for technology access. The erosion of post-Cold War multilateral dual-use technology export control regimes, such as the Wassenaar Arrangement, and investment and other control frameworks have led to na-tional, EU, and ad hoc measures, such as the restrictions on Russian semiconductor access following the invasion of Ukraine. The German government must integrate technology access and control instruments – export controls, FDI screening, critical infrastructure access, research protection, and outbound investment– in its Digital Strategy and National Security Strategy. The former currently neglects critical technology access and control; the latter must address it comprehensively. German – and EU – dual-use export and FDI screening reforms have been updated and are now in place. Capacity building and alignment with EU and NATO partners now deserves greater attention. Measures could include more robust, institutionalized information-sharing and consultations on dual-use technology export, import, investment, and research controls in a Multilateral Technology Control Committee born out of the G7 or TTC. The commit-tee should also establish the capacity to deny end-user access to German technology through its own Foreign-Direct Product Rules and Entity List.
Topic:: Security, Economics, Science and Technology, Investment, and Exports
Political Geography:: China, Europe, Asia, North America, and United States of America

31. Don’t Get Caught in the Middle: A Geo-Economic Strategy for Germany to Survive US-Chinese Rivalry

Author:: Markus Jaeger
Publication Date:: 12-2022
Content Type:: Policy Brief
Institution:: German Council on Foreign Relations (DGAP)
Abstract:: The economic fallout from the war in Ukraine has been very significant. The consequences of a war in East Asia involving the United States and China would be much worse. And even if a Sino-US military confrontation can be avoided, geo-economic conflict between the two powers is going to intensify. Washington will put increasing pressure on Germany and Europe to align their policies with Washington’s geo-economic strategy.
Topic:: Economics, Strategic Competition, Rivalry, and Geoeconomics
Political Geography:: China, Europe, Asia, Germany, North America, and United States of America

32. Red Ink: Estimating Chinese Industrial Policy Spending in Comparative Perspective

Author:: Gerard Dipippo, Ilaria Mazzocco, and Scott Kennedy
Publication Date:: 05-2022
Content Type:: Special Report
Institution:: Center for Strategic and International Studies
Abstract:: A new report by the CSIS Economics Program and the Trustee Chair in Chinese Business and Economics quantifies the size of total industrial policy spending by China and compares it to seven other major economies: Brazil, France, Germany, Japan, South Korea, Taiwan, and the United States. Much of the existing research on industrial policy focuses on its effects, but there are few, if any, published studies that attempt a systematic comparison and quantification of overall industrial policy spending. The heart of the report is the careful calculation of total industrial policy spending by China and the other economies, combining estimates from multiple tools, among them direct subsidies, tax breaks, below-market credit, and state investment funds. The report provides additional context by examining the historical trajectory of industrial policy of these economies and the evolution of industrial policy across these economies for three industries—aluminum, semiconductors, and electric vehicles. The historical and sectoral analyses point to some similarities across economies, but they also demonstrate how distinctive China has been in terms of both quantifiable spending and non-quantifiable policy tools. Finally, this report discusses several important policy implications, including greater transparency and more harmonized reporting about industrial policy spending and the potential ways in which policymakers could employ these data to more effectively limit industrial policy spending by China and other economies.
Topic:: Economics, Industrial Policy, Industry, and Labor Market
Political Geography:: China and Asia

33. Sanctions, SWIFT, and China’s Cross-Border Interbank Payments System

Author:: Barry Eichengreen
Publication Date:: 05-2022
Content Type:: Policy Brief
Institution:: Center for Strategic and International Studies
Abstract:: In response to Russia’s attack on Ukraine, the United States and a coalition of cooperating countries imposed harsh financial sanctions on the Russian government, corporations, and individuals.1 These sanctions bar Russian banks from using SWIFT (the Society for Worldwide Interbank Financial Telecommunications) to facilitate cross-border payments, prohibit banks from doing most forms of business with Russian entities, and freeze assets held abroad by the Central Bank of Russia in the form of treasury securities and bank deposits. These developments have led Russia, as well as other countries contemplating whether they might find themselves in the same position, to explore alternatives. Such options could include building a substitute for SWIFT to send instructions regarding cross-border interbank transactions; identifying financial counterparties other than Western banks with which to do international business and platforms other than Western clearinghouses through which to make payment; and finding a vehicle other than the dollar for denominating and executing transactions. Specifically, countries are looking to China, which has large internationally active banks, has created its own clearinghouse for cross-border transactions and is embarked on a campaign to encourage broader international use of its currency, the renminbi.2 This note investigates how far China has gone in creating alternatives to SWIFT, Western banks, and the dollar. It explores whether Russia and other countries might be drawn toward this parallel international financial universe and what economic and political implications this has—for the United States, for its geopolitical rivals, and for global economics and politics. China is making strides in fostering cross-border use of the renminbi and building a renminbi-based interbank payments system that can serve as an alternative to SWIFT and Western clearinghouses. However, these remain somewhat limited alternatives—for the moment. The situation could change faster if lent additional impetus by Western sanctions. Thus, countries such as the United States that employ financial sanctions should prepare for the development of alternative financial arrangements in China and possibly elsewhere. This may mean relying more heavily on nonfinancial measures insofar as financial sanctions eventually become less effective.
Topic:: Economics, Sanctions, Finance, Borders, and Banks
Political Geography:: China and Asia

34. Economic Security in Emerging Markets: A Look at India, Vietnam, and Indonesia

Author:: Matthew Goodman, Matthew Reynolds, and Julianne Fittipaldi
Publication Date:: 05-2022
Content Type:: Policy Brief
Institution:: Center for Strategic and International Studies
Abstract:: With the outbreak of the Covid-19 pandemic, supply chain resilience has emerged as a policy priority of the United States and its allies. The issue of supply chains has also raised the profile of emerging economies that offer possible alternatives to China as production platforms for multinational firms. This report surveys economic security policy developments in three major emerging economies: India, Vietnam, and Indonesia. It finds that all are attempting to take advantage of this new focus on supply chain resilience, while (to varying degrees) balancing the economic security risks posed by China’s rise. The United States and its allies have an opportunity to work with these emerging economies to shape their decisions about trade, investment, and technology policies in ways that promote mutual economic security and enhance international economic rules and norms.
Topic:: Security, Economics, Emerging Markets, International Trade and Finance, and Markets
Political Geography:: Indonesia, India, Asia, Vietnam, and Asia-Pacific

35. How China’s Human Capital Impacts Its National Competitiveness

Author:: Briana Boland, Kevin Dong, Jude Blanchette, and Ryan Haas
Publication Date:: 05-2022
Content Type:: Policy Brief
Institution:: Center for Strategic and International Studies
Abstract:: How will the strengths and weaknesses of China’s human capital impact national competitiveness? China’s efforts to maintain economic growth, strengthen supply chains, develop strategic science, technology, engineering, and mathematics (STEM) sectors, and secure a modern military edge hinges on the ability to cultivate and utilize human capital. As the United States and other countries increasingly engage in multidomain competition with China, it is critical to start from a clear-eyed understanding of China’s human capital and Beijing’s strategy for nurturing national talent. Investments in higher education, strategic STEM sectors, and military talent demonstrate key areas in which Beijing is focusing on cultivating human capital. However, China must overcome significant obstacles to innovate as it faces substantial demographic pressures, socio-economic inequalities, and challenges to attracting and retaining top talent both domestically and internationally.
Topic:: Economics, Labor Issues, Human Capital, and Strategic Competition
Political Geography:: China and Asia

36. 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

37. Beijing Winter Olympics 2022: Sports, Law, and Policies

Author:: Tim Harcourt, Deborah Healey, Keiji Kawai, and Yang Pei
Publication Date:: 02-2022
Content Type:: Policy Brief
Institution:: China Studies Centre, The University of Sydney
Abstract:: The 2022 Beijing Winter Olympics were hosted amid the Covid-19 pandemic and surrounded by concerns and controversies. This Understanding China Brief results from a roundtable discussion organized by the China Studies Centre and the Centre for Asia and Pacific Law of Sydney University on 3 February 2022 to examine four aspects of the Beijing Olympics: boycotts, COVID- 19 control, law reform, and the economics of the Olympics.
Topic:: Economics, Reform, Sports, Conflict, Olympics, Pandemic, and COVID-19
Political Geography:: China and Asia

38. CHIPS Act will spur US production but not foreclose China

Author:: Gary Clyde Hufbauer and Megan Hogan
Publication Date:: 10-2022
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: The CHIPS and Science Act, export controls, and agreements with allied countries will accomplish many of their multiple objectives. More US semiconductor fabrication plants will be built, US R&D will be accelerated, and advanced chips and chip-making machines will be denied to China, Russia, and other adversaries. However, the Act will not make a material difference to US chip supplies in the next two or three years. Slower economic growth has already tipped the chips market in favor of ample supplies. While collective measures have inflicted considerable short-term pain on China, causing a sharp drop in the fortunes of its high-tech firms, China will respond by redoubling its self-sufficiency programs. The United States, however, should not mimic China in pursuing self-sufficiency, as US self-sufficiency is an illusion. The United States currently exports high-value chips and imports low-value chips, so increasing self-sufficiency would require the United States to prioritize basic chip production at the same time it is supposed to be competing with China in advanced chip production. Continuing to prioritize advanced chip production—where the United States has a clear advantage—is the most efficient course of action.
Topic:: Economics, Legislation, Exports, Production, and Semiconductors
Political Geography:: China, Asia, and United States of America

39. Is South Korea vulnerable to EU and US carbon border restrictions?

Author:: Jeffrey J. Schott and Megan Hogan
Publication Date:: 07-2022
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: South Korean exports, especially carbon-intensive products like steel, are increasingly vulnerable to both the European Union’s proposed carbon border adjustment mechanism (CBAM)—set to begin on January 1, 2023—and the proposed Clean Competition Act (CCA) before the US Congress. Schott and Hogan caution that Korean exporters should not count on Korea’s decade-old EU and US free trade agreements (FTAs), nor on the multilateral trading rules of the World Trade Organization (WTO), to protect them from new carbon-based import barriers in key foreign markets. The WTO and the FTAs have broad and loosely defined exemptions for environmental protection. Nor is Korea likely to be shielded by its own cap-and-trade emissions trading system (the K-ETS), because of extensive use of free allowances and large differences between EU and Korean carbon prices. While the threat the EU CBAM poses to Korean exports is imminent, passage of the CCA faces major legislative obstacles. But US imports of Korean steel and other carbon-intensive goods are still subject to climate-related duties at the US border under US unfair trade statutes. The US Department of Commerce has ruled that free allowances issued under the K-ETS (and EU ETS) are implicit subsidies that can be offset by countervailing duties. These charges are in addition to the harsh tariff-rate quotas on imported Korean steel applied under the “national security” authority of Section 232 of US trade law, which are more restrictive than measures imposed against European and other steel exporters. The authors suggest relaxing these US barriers, as they have been for shipments from Europe, in return for Korean participation in the nascent US-EU talks to establish a “Global Arrangement on Sustainable Steel and Aluminum.”
Topic:: Economics, International Trade and Finance, European Union, Exports, and Carbon Emissions
Political Geography:: Europe, Asia, South Korea, and United States of America

40. South Korea should prepare for its exposure to US-China technology tensions

Author:: Mary Lovely and Abigail Dahlman
Publication Date:: 07-2022
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: The stated goal of the US-led Indo-Pacific Economic Framework for Prosperity (IPEF) is to create standards that enhance and elevate regional trade and investment flows, but it is clearly aimed at reducing the role of China in global supply chains. As China is Korea’s largest trading partner, US policy discouraging Chinese participation in supply chains has immediate detrimental implications for Korean manufacturers. The United States is the second-most important destination for Korean exports. Given the values of these triangular trade flows, Lovely and Dahlman assess South Korea’s exposure to US demands to remove or reduce Chinese participation in the manufacture of exports destined for the US market. The reliance of the proposed framework on certain standards will likely reduce Chinese participation in IPEF trade networks. Korea may benefit from this trend, but IPEF could also increase production costs for Korean companies, especially in the electronics sector, a problem that would worsen if China retaliates against these companies. To reduce these risks, Korea might find it prudent to reduce its reliance on intermediate goods from China for products it produces for export to the United States. The Korean government should also seek to better understand its exposure to US–China trade tensions and diversify its trade relations. Korean firms should start preparing for supply chain disruptions, perhaps by making investments at home. Korea could also help other IPEF members reduce supply chain disruptions while addressing security concerns over China.
Topic:: Economics, Science and Technology, Supply Chains, and Competition
Political Geography:: China, Asia, South Korea, North America, and United States of America

41. Public responses to foreign protectionism: Evidence from the US-China trade war

Author:: David Steinberg and Yeling Tan
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: America's recent turn toward protectionism has raised concerns about the future viability of the liberal international trading system. This study examines how and why public attitudes toward international trade change when one's country is targeted by protectionist measures from abroad. To address this question, the authors fielded three original survey experiments in the country most affected by US protectionism: China. First, they find consistent evidence that US protectionism reduces Chinese citizens' support for trade. This finding is replicated in parallel experiments on technology cooperation, and further validated outside of the China context with a survey experiment in Argentina. Second, they show that responses to US protectionism reflect both a "direct reciprocity" logic—citizens want to retaliate against the United States specifically—and a "generalized reciprocity" logic that reduces support for trade on a broader, systemic basis.
Topic:: Economics, International Trade and Finance, Protectionism, and Competition
Political Geography:: China, Asia, North America, and United States of America

42. Why gender disparities persist in South Korea’s labor market

Author:: Karen Dynan, Jacob Funk Kirkegaard, and Anna Stansbury
Publication Date:: 07-2022
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: Although the South Korean economy fared relatively well on the whole during the pandemic, the labor market consequences were uneven, with women experiencing worse outcomes than men. These gender disparities have reinforced and highlighted important longer-term gender-related challenges in the South Korean labor market. Despite an above-average level of female tertiary education, the gender pay gap in South Korea is at the top of the range among OECD countries. The labor force participation rate is 20 percentage points lower for women than for men, a difference that is about one-quarter larger than the average for high-income countries. These disparities—as well as fertility that is the lowest of any advanced economy country in the world—reduce South Korea's future economic prospects and will contribute to fiscal challenges as the population rapidly ages. The analysis in this paper suggests that the combination of low female employment and low fertility in South Korea reflects features of the traditional nature of work that create a particularly stark tradeoff for women between work and family and put pressure on women to choose one or the other. This tradeoff has increased in recent years because the opportunity cost of having a child has risen with the rapid growth in the tertiary education rate of South Korean women. Regressions based on individual-level data from the Korean Labor and Income Panel Study (KLIPS) show that the entire gap in female labor force participation is driven by married women, particularly women with children. Unmarried women with no children are just as likely to be employed as men. A sizable "child earnings penalty" for South Korean women is fully explained by women dropping out of the labor force after the birth of their first child rather than reducing hours or hourly wages. Although South Korea has made strides toward making work more family friendly, there is scope to do better.
Topic:: Economics, Inequality, Labor Market, Fertility, and Gender
Political Geography:: Asia and South Korea

43. Will economic statecraft threaten western currency dominance? Sanctions, geopolitics, and the global monetary order

Author:: Carla Norrlof
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Atlantic Council
Abstract:: The return of great power rivalry is stoking renewed fears of weakening Western currency dominance. Financial sanctions are becoming the preferred economic tool for accomplishing geopolitical goals. These instruments are especially popular with the United States and Europe. In response, rival great powers, notably China and Russia, are diversifying away from Western currencies and developing counterstrategies to maintain economic and foreign policy autonomy. As other countries are hit by increasingly punishing Western sanctions, the incentive to join Russia and China’s alternative international monetary order increases. New analysis, published in this report, shows early signs that some countries may be trying to diversify away from the dollar. A growing circle of countries attempting to evade the Western-centric financial and currency order may over time erode the dollar and the euro’s sizeable lead, though will likely fall well short of ending their global dominance. This report analyzes these trends and quantifies the extent of reserve diversification following Russia’s 2022 war on Ukraine. It also assesses the polarity of the international currency order since the onset of the euro in 2002. Reserve diversification out of the dollar, and into the euro, has been modest, though Chinese renminbi reserves grew after Russia’s February offensive in Ukraine. Dollar unipolarity declined acutely in 2017 as the number of countries sanctioned by the United States increased and the US President Donald J. Trump threatened to revoke alliance commitments. Using economic statecraft while retaining global economic influence will require the United States to keep its economic house in order and allies close, if the current unipolar currency order is to survive.
Topic:: Economics, Monetary Policy, Sanctions, and Geopolitics
Political Geography:: China, Europe, and Asia

44. Taiwan Matters for America/America Matters for Taiwan

Author:: East-West Center
Publication Date:: 09-2022
Content Type:: Special Report
Institution:: East-West Center
Abstract:: The inaugural edition of Taiwan Matters for America/America Matters for Taiwan, part of the Asia Matters for America initiative, maps the trade, investment, employment, business, diplomacy, security, education, tourism, and people-to-people connections between the United States and the Taiwan at the national, state, and local levels. This publication and the AsiaMattersforAmerica.org website are resources for understanding the robust and dynamic US-Indo-Pacific relationship.
Topic:: International Relations, Climate Change, Economics, Education, Environment, Politics, Science and Technology, Governance, Culture, Population, and Travel
Political Geography:: Taiwan and Asia

45. New Opportunities for the United States-Kingdom of Thailand Alliance in the Indo-Pacific

Author:: Lance D. Jackson
Publication Date:: 09-2022
Content Type:: Special Report
Institution:: East-West Center
Abstract:: In March 2022, the East-West Center in Washington (EWCW), in collaboration with the Royal Thai Embassy, Washington, DC, convened a two-day seminar in which experts from Thailand and the United States discussed issues and opportunities for the US-Thailand alliance. The workshop included a diverse array of discussants hailing from government, military, academic, think tank, and private sector backgrounds. This report, which adheres to the “Chatham House Rule” under which observations referred to in the report are not attributed to any individual participant, is a summary of the group discussions and the key themes from the seminar. The recent signing of the United States-Thailand Communique on Strategic Alliance and Partnership and a memorandum of understanding (MOU) focused on promoting supply chain resilience on July 10, 2022, highlight the pertinence of this report and the associated seminar. The topics detailed in this report aligned with many of the pressing issues addressed in the Communique and MOU, including expanding law enforcement cooperation, deepening cybersecurity collaboration, supporting resilient transportation corridors, advancing military modernization, and catalyzing Thailand’s bio-circular-green (BCG) economy. The report also covered topics and key themes from a series of jointly produced public webinars and an Asia Pacific Bulletin series of policy briefs on US-Thai affairs.
Topic:: International Relations, Climate Change, Economics, Education, Environment, Politics, Science and Technology, Governance, Population, Leadership, Public Health, and Travel
Political Geography:: Asia, North America, Thailand, Southeast Asia, United States of America, and Indo-Pacific

46. China’s Infrastructure Projects in the Middle East: Lessons from China’s Engagement Elsewhere

Author:: Dominika Urhová
Publication Date:: 12-2022
Content Type:: Working Paper
Institution:: Moshe Dayan Center for Middle Eastern and African Studies
Abstract:: In our latest issue of Iqtisadi, Ms. Dominika Urhova discusses the economic strategy and role of China in the Middle East, and analyzes the implications of China's growing influence in the region.
Topic:: Foreign Policy, Development, Economics, Belt and Road Initiative (BRI), and Strategic Engagement
Political Geography:: China, Middle East, and Asia

47. Economic Zones and Local Income Inequality: Evidence from Indonesia

Author:: Cecília Hornok and Sidan Raeskyesa
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: Economic zones can be powerful drivers of economic growth in developing countries. However, less is known about their distributional impact on the local society. This paper provides empirical evidence from Indonesian provinces on the relationship between economic zones and within-province income inequality. Estimates from panel regressions and synthetic control case studies suggest that this relationship is positive overall. The estimated rise in income inequality after a zone opens is relatively small on average and may be short-lived. However, the average estimate masks large regional differences, which suggests that the inequality implications of economic zone policies depend on local conditions. One explanation for the rise in inequality is that the unskilled population benefits disproportionately less from the policy. As a remedy, we propose education and training programs that target the poor and unskilled and in which companies also actively participate.
Topic:: Economics, Emerging Markets, Globalization, Economic Growth, and Income Distribution
Political Geography:: Indonesia, Asia, and Southeast Asia

48. 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

49. 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

50. 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

51. 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

52. 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

53. 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

54. A Model Comprehensive MSME Policy for Indian States

Author:: Richard M. Rossow
Publication Date:: 11-2022
Content Type:: Special Report
Institution:: Center for Strategic and International Studies
Abstract:: Small businesses are the job-creating engines of any healthy economy. Having a supportive policy environment can help high-potential businesses accelerate. Creating such an environment is a shared responsibility of both the central government and India’s 28 states. Many state governments in India have piecemeal policies and programs to support micro, small, and medium enterprises (MSMEs). About one-third of India’s states have worked to craft multifaceted and supportive policies and practices to encourage MSME growth. This paper reviews the ideas already enacted in different Indian states, as well as in national and subnational governments around the world. Developing a single comprehensive MSME policy is an effective approach for a state-level government to consider. It allows small firms to find policy incentives and programs in a single place, and perhaps most importantly, it allows a state to directly consider a range of intertwined incentives that can work together. This will maximize the positive impact to small firms that are poised for growth. Facilitating the growth of MSMEs will have a much wider impact on India’s job growth overall. The large multinational manufacturers that India hopes to lure to invest through programs like Make in India require a diverse and efficient network of suppliers. Supporting MSME growth can create a multiplier effect—driving new investment and employment generation by larger firms. The central government has affirmed a 25 percent target of gross domestic product (GDP) for manufacturing, up from around 14 percent today. This white paper provides leading international examples in the promotion of small businesses, while also enumerating best practices from Indian states’ MSME policies. The final section lays out the 30 elements commonly utilized by Indian states to offer targeted assistance to MSMEs as a roadmap for other states that want to provide best-in-class policy interventions.
Topic:: Development, Economics, Business, and Job Creation
Political Geography:: India and Asia

55. Istanbul Journal of Economics: Volume 72 Issue 1

Author:: Gökhan Karabulut
Publication Date:: 01-2022
Content Type:: Journal Article
Journal:: Istanbul Journal of Economics
Institution:: Istanbul University Faculty of Economics
Abstract:: Istanbul Journal of Economics-İstanbul İktisat Dergisi is an open access, peer-reviewed, scholarly journal published two times a year in June and December. It has been an official publication of Istanbul University Faculty of Economics since 1939. The manuscripts submitted for publication in the journal must be scientific and original work in Turkish or English. Being one of the earliest peer-reviewed academic journals in Turkey in the area of economics, Istanbul Journal of Economics-İstanbul İktisat Dergisi aims to provide a forum for exploring issues in basicly economics and publish both disciplinary and multidisciplinary articles. Economics is the main scope of the journal. However, multidisciplinary and comparative approaches are encouraged as well and articles from various social science areas such as sociology of economics, history, social policy, international relations, financial studies are welcomed in this regard. The target group of the journal consists of academicians, researchers, professionals, students, related professional and academic bodies and institutions.
Topic:: Debt, Development, Economics, Budget, Finance, Investment, Trade, Unemployment, and COVID-19
Political Geography:: Europe, Turkey, and Asia

56. Istanbul Journal of Economics: Volume 72 Issue 2

Author:: Gökhan Karabulut
Publication Date:: 06-2022
Content Type:: Journal Article
Journal:: Istanbul Journal of Economics
Institution:: Istanbul University Faculty of Economics
Abstract:: Istanbul Journal of Economics-İstanbul İktisat Dergisi is an open access, peer-reviewed, scholarly journal published two times a year in June and December. It has been an official publication of Istanbul University Faculty of Economics since 1939. The manuscripts submitted for publication in the journal must be scientific and original work in Turkish or English. Being one of the earliest peer-reviewed academic journals in Turkey in the area of economics, Istanbul Journal of Economics-İstanbul İktisat Dergisi aims to provide a forum for exploring issues in basicly economics and publish both disciplinary and multidisciplinary articles. Economics is the main scope of the journal. However, multidisciplinary and comparative approaches are encouraged as well and articles from various social science areas such as sociology of economics, history, social policy, international relations, financial studies are welcomed in this regard. The target group of the journal consists of academicians, researchers, professionals, students, related professional and academic bodies and institutions.
Topic:: Economics, Islam, Religion, Communications, Natural Resources, Finance, Internet, Economic Growth, Macroeconomics, Currency, Unemployment, Sustainability, COVID-19, BRICS, Labor Market, Economic Stability, Consumer Behavior, Rent-seeking, Energy, and Wages
Political Geography:: Europe, Turkey, and Asia

57. Correlates of Politics and Economics: How Chinese Investment in Africa Changes Political Influence

Author:: Carla D. Jones, Mengge Li, and Hermann A. Ndofor
Publication Date:: 03-2022
Content Type:: Special Report
Institution:: Foreign Policy Research Institute
Abstract:: This study investigates the impact of Chinese economic engagement in Africa (FDI and loans from China to African countries) on African countries’ international political alignment as evidenced by voting patterns in the UN General Assembly. We find three seasons of Chinese policy in Africa. Pre 2008, Chinese economic engagement in Africa was driven primarily by economic considerations, market seeking for FDI and likely resource seeking for loans. During the Great Recession, China came to terms with its rise as an economic power and thus started leveraging its economic power in international relationships. During this season, both Chinese FDI and loans were no longer driven by economic considerations but rather by international relations which led to increased political alignment with recipient African countries. The final season captured the Xi Jinping era beginning 2013. During this season, Chinese FDI had no effect on African countries’ foreign policy alignment with China, but Chinese loans still had a significant positive effect. This likely reflects a movement away from FDI to less transparent bilateral loans as a means of utilizing Chinese economic power to influence foreign policy. During the entire period of the study, Chinese FDI to Africa resulted in reduced political alignment between African countries and the United States.
Topic:: Foreign Policy, Economics, Politics, Investment, and Influence
Political Geography:: Africa, China, and Asia

58. China’s Development Path: Government, Business, and Globalization in an Innovating Economy

Author:: Yin Yi and William Lazonick
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Institute for New Economic Thinking (INET)
Abstract:: We employ the “social conditions of innovative enterprise” framework to analyze the key determinants of China’s development path from the economic reforms of 1978 to the present. First, we focus on how government investments in human capabilities and physical infrastructure provided foundational support for the emergence of Chinese enterprises capable of technological learning. Second, we delve into the main modes by which Chinese firms engaged in technological learning from abroad—joint ventures with foreign multinationals, global value chains, and experienced high-tech returnees—that have contributed to industrial development in China. Third, we provide evidence on achievements in indigenous innovation—by which we mean improvements in national productive capabilities that build on learning from abroad and enable the innovating firms to engage in global competition—in the computer, automobile, communication-technology, and semiconductor-fabrication industries. Finally, we sketch out the implications of our approach for current debates on the role of innovation in China’s development path as it continues to unfold.
Topic:: Development, Economics, Globalization, Infrastructure, Hegemony, and Innovation
Political Geography:: China and Asia

59. Immaterial Competition: Rethinking the Roles of Economics and Technology in the US-China Rivalry

Author:: Arthur Tellis
Publication Date:: 05-2022
Content Type:: Special Report
Institution:: Hudson Institute
Abstract:: The US-China rivalry is likely to be the fulcrum around which international affairs are structured in the twenty-first century, akin to the Cold War from 1947 to 1991. This rivalry, like its predecessor, emerges from divergent geopolitical interests and imperatives. While the Chinese Communist Party’s aims are many, various, and subject to change, they include its continued control of the Chinese State; economic and technological modernization and leadership; internal order; complete union with Taiwan on Beijing’s terms; certain territorial concessions from its neighbors; and the disestablishment of security arrangements across the Indo-Pacific that it views as threatening and trammeling. The latter three are in direct conflict with US interests and imperatives in the Indo-Pacific: prohibiting China’s unilateral modification of the status quo vis-à-vis Taiwan; preserving the sovereignty and territorial integrity of its allies and partners; and maintaining its military partnerships and presence in the region. These antithetical interests animate a larger struggle for hegemony in the Indo-Pacific and serve as the terms on which this contest will be decided. Explanations of the rivalry as an ideological contest or a competition born from competing economic interests are less compelling by comparison. The United States and China are motivated to an extent by ideological imperatives, but these do not appear to propel or serve as the central stakes for the rivalry as much as they affect each’s disposition toward the other. Long-standing trade, investment, and commercial disputes and competition, meanwhile, are not so substantial that they motivate the rivalry. While these issues are impactful to niche communities and conspicuous to national policymakers, they are not particularly consequential for national prosperity. The logic of competition, trade, and globalization, in fact, suggests that the US-China commercial relationship is mutually beneficial, notwithstanding each’s concerns with the other’s economic statecraft and market-leading firms. In their geopolitical rivalry, there are a few key forces or contests of interest: path dependence, regime continuity, prudent strategy, third-party alignments, and the balance of military forces in the Indo-Pacific. Each affects the United States’ and China’s ability to achieve their ends and shapes their rivalry. Economic and technological statecraft, by contrast, is largely peripheral to these ends as it does not effectively advance political objectives relevant to territory, borders, security architectures, and national defense. That is not to suggest that economic and technological factors are irrelevant, however; they shape, constrain, and advantage the United States and China across their rivalry’s key forces and contests of interests. Particularly noteworthy are economic and technological factors’ impact on the military balance. Tradition and intuition hold that nations with bigger and more advanced economies are better postured to resource, procure, and manufacture military equipment and can therefore generate greater military power. In the case of the US-China military competition, however, total military power is less relevant than the specific military balance in the Indo-Pacific, in which the distribution and strength of forces in the theater, the capability and reliability of key materiel inputs of outsized importance, and the operational concepts and tactics with which each’s military fights are more important. Total military power—and in particular greater military equipment—matters on the margin, of course, if only because the party with the greater mass and quality of materiel will be able to retain more forces in the Indo-Pacific, maintain more of these key materiel inputs, and develop novel operational concepts and tactics tailored to their superior materiel. Neither the United States’ nor China’s total economic production, public balance sheet, high-technology commercial firms, and scientific production are likely to provide a decisive or lasting advantage on this count. Each country’s economy can support substantially greater military spending, limiting the extent to which one can derive an advantage from the other’s more binding constraints. The capacity and maturity of each country’s defense industrial base is of greater relevance, but these are flexible quotients that investment can improve. This elasticity of defense production suggests that microeconomic endowments may be binding in the short run but variable in the longer run, meaning that policy choices—rather than existing economic endowments—constrain military production. Technological endowments, informing each country’s capacity for broad innovation, are of similarly bounded importance because military technology is somewhat narrow and other factors, such as military procurement processes and inflexibility in concepts of operation, limit the extent to which superior technology translates into military advantage. The fundamental result of this argument is that the concerns that propel the emerging US-China economic and technological competition are ultimately not all that relevant to the matters at the core to their rivalry and to the instruments of national power most relevant to these issues. The US should therefore be wary of policies ostensibly demanded by economic and technological competition and may find its interests better served by limiting its rivalry with China to military competition driven by its core geopolitical interests.
Topic:: Economics, Science and Technology, Strategic Competition, and Rivalry
Political Geography:: China, Asia, North America, and United States of America

60. Understanding and Countering China's Approach to Economic Decoupling from the United States

Author:: John Lee
Publication Date:: 08-2022
Content Type:: Special Report
Institution:: Hudson Institute
Abstract:: Many experts have highlighted American efforts to partially decouple from China. Yet China began pursuing a far more ambitious and comprehensive decoupling strategy vis-à-vis the United States long before Donald Trump entered the White House. This monograph examines China’s evolving approach to economic decoupling from the US. It makes the following arguments and conclusions. First, on the back of a preexisting mercantilist political economic structure, China has been explicitly pursuing economic decoupling from US and allied economies on Chinese terms for at least a decade. Second, while the US seeks to decouple some aspects of its economic activity from China, the latter seeks to dominate vast segments of the Asian economy and to decouple these segments from the US. This is the Chinese strategy and threat that the US vastly underappreciates. Third, the most important segments are the high-tech and high-value sectors. These sectors are where competition is the most consequential and where decoupling on US terms needs to occur. Fourth, China faces increasingly serious problems and obstacles regarding its decoupling strategy. Many of these arise out of structural weaknesses inherent in its political economy. The monograph is written to assist the Biden administration and those who follow it to possess a deeper understanding of: China’s actions and the motives behind them; China’s strengths, weaknesses, and vulnerabilities; and How the US and its allies can craft an evolving approach that better plays to their individual and collective strengths and advantages. China hopes the US and its allies will adopt a cautious, gradualist, and ineffective approach to countering Beijing’s strategy and objectives. The Chinese Communist Party knows the US and other advanced economies still have immense advantages despite clever Chinese messaging to the contrary. The US and its allies continue to enjoy considerable leverage and remain well placed to partially decouple from China on their preferred terms, but they need to act quickly, collectively, and decisively.
Topic:: International Relations, Foreign Policy, Defense Policy, Economics, and National Security
Political Geography:: China, Asia, North America, and United States of America

61. Chinese Information and Influence Warfare in Asia and the Pacific

Author:: John Lee
Publication Date:: 09-2022
Content Type:: Special Report
Institution:: Hudson Institute
Abstract:: The People’s Liberation Army’s increasingly provocative and reckless activities in and around disputed zones such as Taiwan, the Senkaku Islands, and the South China Sea constitute only one means through which Beijing seeks to change key aspects of the regional order and compel others to “accept its interests.” However, the Chinese Communist Party and PLA are already decades into China’s information and influence war, which is designed to either weaken the will and capabilities of the United States and its allies should military conflict break out or, even better, eliminate the need for China to use military force to achieve its primary objectives (i.e., to “win without fighting”). In this context, the PLA is several steps ahead of the West; whereas Western analysts observe that the PLA is operating in the “grey zone,” the PLA is instead redefining and expanding this grey zone by manipulating how other countries think about it. With respect to this so-called grey zone, a cost-benefit analysis encompassing both objective and subjective elements typically determines an entity’s decision to respond with military force. For example, crafting narratives about the PLA’s military superiority, elite capture, ability to foment disunity within a target country, or normalization of coercion raises the West’s threshold of what provocations demand a military response—thereby expanding the grey zone within which the PLA and CCP are allowed to operate. Thus, Beijing is well ahead of the US and its allies in conceptualizing and operationalizing the use of military actions other than (kinetic) war to achieve political or strategic objectives. Finally, Asia and the Pacific constitute both the primary and most suitable region within which the Chinese can conduct information and influence warfare. These sub-regions’ unique material, geographical, ideational, and cultural characteristics render them especially suitable for Beijing to successfully wage political warfare. This policy memo describes the key objectives, strategies, and tactics of Chinese information and influence warfare developed and refined for use in the Asia-Pacific region. It focuses on maritime Southeast Asia and the Pacific, the areas of highest interest for the US, Australia, and their allies. Offering Singapore, Thailand, and the Solomon Islands as three pertinent case studies, the memo also lays the groundwork for an examination of effective US and allied counters to Beijing’s activities in these contexts, which follow-up reports in this series will present.
Topic:: Foreign Policy, Economics, National Security, Territorial Disputes, and Information Warfare
Political Geography:: China and Asia

62. The Mixed Record of China’s Belt and Road Initiative

Author:: Thomas J. Duesterberg
Publication Date:: 10-2022
Content Type:: Special Report
Institution:: Hudson Institute
Abstract:: China’s Belt and Road Initiative (BRI), a signature program of Xi Jinping, has had undoubted success in supporting Xi’s ambitions to reestablish China as a global leader while strengthening its mercantilist economy. Nonetheless, developed and developing countries are reconsidering the program because of its success—largely for China itself—and because of the global economic and political crises since the onset of the COVID-19 pandemic. BRI also has increasingly visible problems caused by its operating structure, prompting participants and developed countries whose geoeconomic and geopolitical interests are undermined by the program’s expansion to reassess it. Continued BRI growth is at best questionable and probably unlikely in the wake of growing pushback to the program as well as growing problems inside China itself.`
Topic:: Economics, Infrastructure, Belt and Road Initiative (BRI), and Xi Jinping
Political Geography:: China and Asia

63. Russia’s connectivity strategies in Eurasia: Politics over economy

Author:: Kristiina Silvan and Marcin Kaczmarski
Publication Date:: 06-2022
Content Type:: Policy Brief
Institution:: Finnish Institute of International Affairs
Abstract:: Russia has been attempting to strengthen connectivity within Eurasia since the early 2000s as a part of its policy to “pivot to the East”. Yet due to limited resources and political will, the tangible effects of its connectivity strategy have remained limited. The Russian Far East would greatly benefit from an improved connectivity infrastructure, given its proximity to Asian markets and the abundance of natural resources in the region. However, the attempts to accelerate regional socio-economic development by strengthening the region’s connectivity have failed to make a difference. In post-Soviet Central Asia, Russia adopted a passive approach to connectivity in the 1990s and 2000s, which meant focusing on maintaining and protecting the links inherited from the Soviet Union. It was only the pressure of external actors – both China and the West – that prompted Moscow to take a more active stance in the region in the 2010s. The launch of China’s Belt and Road Initiative pushed Russia to promote its own grand vision of trans-continental connectivity, the Greater Eurasian Partnership, designed to reaffirm Moscow’s great-power status and its equal standing with China. While it lacks economic and administrative foundations and its implementation is highly implausible, it has fulfilled a symbolic role as Russia’s grand connectivity project for Eurasia.
Topic:: Economics, Infrastructure, Belt and Road Initiative (BRI), Rivalry, and Resource Allocation
Political Geography:: Russia, China, Europe, and Asia

64. China’s Belt and Road Initiative: Successful economic strategy or failed soft-power tool?

Author:: Jyrki Kallio
Publication Date:: 09-2022
Content Type:: Policy Brief
Institution:: Finnish Institute of International Affairs
Abstract:: The Belt and Road Initiative (BRI) is part of China’s efforts to integrate its neighbouring countries into its economic sphere, thus increasing China’s security in its immediate neighbourhood while facing an increasingly hostile international environment due to its rivalry with the US. In reality, the BRI has evolved into an umbrella term for various infrastructure and development projects with no unified object or strategy. The projects should, in principle, increase goodwill towards China, and correspondingly boost its influence, but in practice they are mainly aimed at economic benefit. The results of the BRI, especially as a soft-power tool, are ambiguous. Its ideational basis is thin, consisting mainly of China’s critique towards the “hegemony of the West”. This reduces the BRI to a hollow slogan with little appeal apart from the pragmatic gains. However, the BRI is here to stay for the duration of Xi Jinping’s rule because China’s foreign policy is often driven by prestige. The BRI is enshrined in the Communist Party’s Constitution in order to both add weight to the initiative and to increase the Party’s prestige with its success, modest as it may be.
Topic:: Economics, International Trade and Finance, Infrastructure, Hegemony, and Belt and Road Initiative (BRI)
Political Geography:: China and Asia

65. Estados Unidos y África. Historia de una no-política

Author:: Pablo Rey-García and Pedro Rivas Nieto
Publication Date:: 10-2022
Content Type:: Journal Article
Journal:: Revista UNISCI/UNISCI Journal
Institution:: Unidad de investigación sobre seguridad y cooperación (UNISCI)
Abstract:: En este artículo se estudian las relaciones entre Estados Unidos y África, desde los puntos de vista económico, político y de seguridad. Son, estos tres campos, interdependientes, pero a la vez enormemente dinámicos, tanto por la inercia política estadounidense, como por los condicionantes propios de África (déficit en desarrollo, pobreza, inseguridad o inestabilidad política) como por el contexto internacional. En este último aspecto, cobra especial relevancia la invasión rusa de Ucrania o la emergencia de la ambición militar China, pues ambos países compiten con Estados Unidos por tener una mejor posición en el continente africano.
Topic:: International Relations, Development, Economics, National Security, and Terrorism
Political Geography:: Africa, Russia, China, Asia, North America, Sahel, United States of America, and Horn of Africa

66. Mapping Innovation-Driven Entrepreneurial Ecosystems: An Overview

Author:: Alessandro Rosiello, Matjaz Vidmar, and Giulia Ajmone Marsan
Publication Date:: 05-2022
Content Type:: Policy Brief
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: Innovation-driven entrepreneurship enables people and companies to pursue global opportunities based on innovative processes, products, or services. Studies show that innovation-driven entrepreneurial high-growth firms represent a small fraction (<10%) of all start-ups but create more than 50% of jobs and are more resilient during crises, including the recent coronavirus disease (COVID-19) pandemic. However, their growth depends on an entrepreneurial ecosystem surrounding them, including access to key markets, finance, networks, and human resources, especially new knowledge and education. To ensure the development of innovation-driven entrepreneurial activities, their geographical and sectoral distribution needs to be mapped, but indicators are lacking, especially for the Association of Southeast Asian Nations (ASEAN). New sources of data, including social media, offer a new way to expand these indicators, and we propose a new methodology to identify emerging places of innovation-driven entrepreneurship (E-PIE).
Topic:: Economics, Entrepreneurship, Business, and Innovation
Political Geography:: Asia and ASEAN

67. Japan and the Regional Comprehensive Economic Partnership (RCEP)

Author:: Mie Oba
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper aims to clarify the role of Japan in the process leading up to the establishment of the Regional Comprehensive Economic Partnership (RCEP). While emphasising that respect for the centrality of the Association of Southeast Asian Nations (ASEAN) was a principle of RCEP, Japan played a leading role in the process of RCEP negotiations. For Japan, RCEP is one of the fruits of its strategy in East Asia/Asia-Pacific that began the mid-1990s to protect and increase the interests and advantages of Japanese business and retain Japan’s political leverage in the region. When substantial negotiations for RCEP began in 2013, its importance for Japan was secondary to other free trade agreements (FTAs) including the Trans-Pacific Partnership, China–Japan–Korea FTA, and Japan–European Union FTA. However, the Government of Japan and the business community had set a lot of economic and strategic goals in promoting RCEP. After the withdrawal of the United States (US) from the Trans-Pacific Partnership, RCEP was seen as an essential framework for establishing a rules-based regional order in the Indo-Pacific region. Although it was after India’s withdrawal from the RCEP negotiations, Japan further emphasised the importance of RCEP as the measure to sustain and foster the rule-based regional order and simultaneously pursued the conclusion of negotiations and the establishment of high-level rules, achieving some success. Ultimately, the havoc brought about by the coronavirus disease (COVID-19) pandemic and the sense of crisis in the traditional liberal international order caused by the intensifying strategic competition between the US and China, drove the conclusion of RCEP. RCEP will be increasingly important for economic order in Japan and Asia in the coming years. Ironically, as the strategic competition between the US and China escalates and leads to a surge in protectionism, the economic and strategic importance of RCEP – an FTA that incorporates China – is becoming more significant as a measure to counter unilateralism and protectionism. In addition, RCEP needs elements that address globalisation’s adverse effects and pitfalls, in areas such as the environment, labour rights, and a reduction in the disparity between the rich and poor.
Topic:: Development, Economics, International Trade and Finance, and Regional Cooperation
Political Geography:: Japan and Asia

68. International Production Network in the Next Generation and the Role of RCEP

Author:: Mitsuyo Ando, Fukunari Kimura, and Kenta Yamanouchi
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper attempts to discuss the potential role of RCEP from the perspective of two kinds of international division of labor, i.e., machinery international production networks (IPNs) and digital-related services trade. To consider the possible contribution of RCEP to the widening and deepening of IPNs, we first provide an overview of machinery IPNs in ASEAN and East Asia by employing international trade data, a value-added based index for global value chain (GVC) activities using international input–output tables, and a gravity equation exercise. Then, we focus on trade in two global innovator services – information and communication technology (ICT) services and other business services exports – to foresee the future of the new international division of labour and highlights some policy issues. RCEP should be an evolving, living one. In terms of liberalisation and facilitation as well as international rule-making, which cover the whole region, RCEP is expected to revise and upgrade the contents to support the dynamic international division of labour in East Asia. At the same time, RCEP may play an important role in reducing policy risks due to ad hoc trade policies based on political intension and defending the rules-based trading regime for the regional economy.
Topic:: Economics, International Trade and Finance, Labor Issues, and Digital Economy
Political Geography:: Asia and ASEAN

69. Potential Impact of RCEP and Structural Transformation on Cambodia

Author:: Shandre Mugan Thangavelu and Vutha Hing
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper examines the potential impact of the Regional Comprehensive Economic Partnership (RCEP) on the Cambodian economy in terms of trade, output growth, and employment. It also provides quantitative (structural gravity model estimation and simulation) and qualitative trade policy evaluation in terms of exports, output, and the structural transformation of the economy in global and regional value chains. The results highlight the importance of RCEP for the pandemic and post-pandemic recovery and the structural transformation of the Cambodian economy. The paper also provides key policy recommendations to fully maximise the benefits of RCEP for Cambodia for inclusive and sustainable growth.
Topic:: Economics, International Trade and Finance, Regional Cooperation, and Global Value Chains
Political Geography:: Asia and Cambodia

70. The Implications of the Regional Comprehensive Economic Partnership (RCEP) for Asian Regional Architecture

Author:: Shiro Armstrong and Peter Drysdale
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: East Asia’s Regional Comprehensive Economic Partnership (RCEP) came into force in 2022 as the world’s largest free trade agreement. RCEP was concluded, signed and brought into force in the face of major international uncertainty and is a significant boost to the global trading system. RCEP brings Australia, China, Japan, South Korea and New Zealand into the same agreement with the ten member ASEAN group at its centre. It keeps markets open and updates trade and investment rules in East Asia, a major centre of global economic activity, at a time of rising protectionism when the WTO itself is under threat. The agreement builds on ASEAN’s free trade agreements and strengthens ASEAN centrality. One of the pillars of RCEP is an economic cooperation agenda which has its antecedents in ASEAN’s approach to bringing along its least developed members and builds on the experience of capacity building in APEC and technical cooperation under the ASEAN Australia-New Zealand Free Trade Agreement. There is an opportunity to create a framework that facilitates deeper economic cooperation that involves experience-sharing, extending RCEP’s rules and membership at the same time as strengthening political cooperation. The paper suggests some areas that might be best suited to cooperation — that is confidence and trust building instead of or before negotiation — and discusses how non-members such as India may be engaged and the membership expanded. Options such as multilateralising provisions and becoming a platform for policy convergence and coordinating unilateral reforms are canvassed.
Topic:: Economics, International Trade and Finance, Regional Cooperation, and Architecture
Political Geography:: Asia and ASEAN

71. Restrictiveness of RCEP Rules of Origin: Implications for Global Value Chains in East Asia

Author:: Archanun Kohpaiboon and Juthatip Jongwanich
Publication Date:: 10-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This chapter aims to examine the restrictiveness of rules of origin (RoO) in the Regional Comprehensive Economic Partnership (RCEP) and other key multilateral free trade agreements (FTAs) in East Asia with a view to facilitating the operations of existing global value chains (GVCs). The analysis begins with dissecting PSRs in the RoO Chapter in these FTAs and quantifying them. The key finding is that product-specific rules in RCEP are the most flexible compared to the other multilateral FTAs and more facilitative to GVC operations. This is driven by RCEP-specific features, such as high intra-member trade and the member coverage. The main policy inference is that a full cumulation clause is needed in RCEP to allow a regional value content alternative to be in full effect. Harmonisation in RoO provision across these multilateral FTAs remains a challenge for ongoing negotiation. Monitoring the dynamics of RoO as well as the FTA utilisation is needed so that these multilateral FTAs could be a true stepping stone for trade liberalisation in the broader World Trade Organization multilateral trading system.
Topic:: Economics, International Trade and Finance, Regional Cooperation, and Global Value Chains
Political Geography:: Asia and ASEAN

72. Centrality and Community: ASEAN in the Regional Comprehensive Economic Partnership

Author:: Soo Yeon Kim
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper examines the Association of Southeast Asian Nations’ (ASEAN) role in the formation of the Regional Comprehensive Economic Partnership (RCEP) agreement. The RCEP project proceeded as trade governance has shifted from the multilateral trade regime under the World Trade Organization to free trade agreements and where the geopolitics of Asia has cast a shadow on the progress of regional integration efforts. The analysis in this paper focuses on ASEAN centrality, both as a concept and practice, in influencing the launch and progress of RCEP. Conceptually, ASEAN centrality is about the capacity of the 10-member group to help launch negotiations for the RCEP agreement and to shape its provisions for governing trade. In practice, the RCEP agreement consolidates and significantly unravels the numerous overlapping trade agreements between ASEAN, 38 in all between individual ASEAN members and its five RCEP partners, Australia, China, Japan, the Republic of Korea, and New Zealand. The paper also examines the relationship between the ASEAN Economic Community (AEC) and RCEP. RCEP provides for further tariff liberalisation between ASEAN members and its five RCEP partners and thus expands the zone of preferential treatment for goods exported from ASEAN and other RCEP members. RCEP also consolidates rules of origin requirements under one agreement, providing for diagonal cumulation and common rules of cumulation for agreement partners. The RCEP provisions can greatly facilitate production and trade along regional supply chains, thus accelerating the progress of the AEC as a single market and production base. Moving forwards, RCEP and ASEAN’s place in it, is likely to be shaped by challenges and opportunities from the Comprehensive and Progressive Transpacific Partnership and the Biden administration’s Indo-Pacific Economic Framework (IPEF) initiative. The ASEAN members with overlapping membership in the IPEF and RCEP will be pivotal in determining areas of cooperation. Regional integration will thus continue to be shaped by ASEAN centrality, and its progress will shape the ASEAN community.
Topic:: Diplomacy, Economics, International Trade and Finance, and Regional Cooperation
Political Geography:: Asia and ASEAN

73. Regional Comprehensive Economic Partnership: Economic Backgrounds of ASEAN and Its Dialogue Partners

Author:: Keita Oikawa, Fusanori Iwasaki, and Shujiro Urata
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: We overview the economic backgrounds of the countries participating in the Regional Comprehensive Economic Partnership (RCEP) negotiations and two Association of Southeast Asian Nations (ASEAN) Dialogue Partners – the United States (US) and the European Union (EU) – to understand their economic relationships before the signing of the RCEP and their economic interests in the RCEP. We discover that the 16 countries participating in RCEP negotiations vary in terms of economic size, income level, growth pattern, share of trade in the economy, and foreign direct investment (FDI) flows. Additionally, both lower- and higher-income ASEAN Member States (AMS) have received a large amount of FDI, in contrast to Japan and the Republic of Korea (henceforth, Korea), which have seen more FDI outflows from their countries than inflows. In terms of bilateral FDI inflows and outflows, as a centre for regional FDI, Singapore attracts FDI from developed countries (including the US and the EU) and reinvests it in India and other AMS. As an FDI hub, Singapore promotes liberalised regional markets to attract advanced country investors. By examining bilateral trade relationships, we find that as the centre of manufacturing in the world, ASEAN and China have participated in international production networks that also include Japan and Korea since 2000. Japan and Korea have maintained competitiveness in intermediate goods in the region’s production networks, while China notably exports final products to the US and the EU. Amongst the 16 countries participating in RCEP negotiations, India has not had a significant presence in the production networks. Indeed, India has expanded its bilateral trade deficit with China, which probably caused India to withdraw from RCEP negotiations to protect its manufacturing industry. Simulation results of the impacts of the RCEP, using a computable general equilibrium (CGE) model (Global Trade Analysis Project model), show that the countries participating in RCEP negotiations – particularly the less developed AMS – would gain greatly from lowering services trade costs and investment liberalisation. India would also gain significantly from the RCEP. In contrast, countries not participating in RCEP negotiations (the US and the EU) would experience small negative impacts of the RCEP through trade diversion effects.
Topic:: Diplomacy, Economics, International Trade and Finance, and Regional Cooperation
Political Geography:: Asia and ASEAN

74. Regional Comprehensive Economic Partnership, ASEAN’s Agency, and the Role of ASEAN Members in Shaping the Regional Economic Order

Author:: Huong Le Thu
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: The Regional Comprehensive Economic Partnership (RCEP) – a mega free trade agreement comprising 15 countries – the 10 Association of Southeast Asian Nations (ASEAN) Member States and the dialogue partners (China, Japan, the Republic of Korea, Australia, and New Zealand) was finalised in November 2020. This paper looks at the process of the RCEP negotiations as an example of an ASEAN exercising agency. This paper also argues that RCEP asserts the agency of smaller powers within the trade network – ASEAN and its member states – particularly the more active role of individual members, including Viet Nam and Singapore amongst the most diplomatically supportive of the deal. The circumstances under which RCEP came to life is not trivial. Under Viet Nam’s ASEAN chair in 2020, and amidst the global pandemic, RCEP was finalised. RCEP’s political and geo-economic significance arguably can overtake its economic role. In the time of great power competition where China becomes one of the key economic centres of the world, and the United States (US) competes with a vision of Indo-Pacific, the region’s middle and smaller powers are anxious about becoming ‘collateral damage’, particularly in the process of US–China ‘decoupling’. The ASEAN countries have emphasised the reluctance to ‘choose a side’. RCEP shows that they can show agency in carrying out trade liberalisation at the time when the global leader of the US in this field is missing. A mega-trade deal can be successfully led by smaller, and even developing, economies.
Topic:: Economics, Regional Cooperation, Social Order, and Strategic Interests
Political Geography:: Asia and ASEAN

75. Trade Facilitation in RCEP Countries

Author:: Weixiang Wang and Shandre Mugan Thangavelu
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: The trade facilitation under the Regional Comprehensive Economic Partnership (RCEP) is critical for regional trade and economic cooperation amongst the 15 member countries. This chapter examines the trade facilitation under RCEP using the available datasets on the trade facilitation index and compares the current trends in trade facilitation across RCEP countries in terms of four dimensions: the World Trade Organization’s Trade Facilitation Agreement, digital trade streamlining, ease of doing business, and trade logistics performance. The study finds that RCEP countries have improved significantly in trade facilitation measures, but they vary across the countries. For example, China should further enhance its performance in cross-border paperless trade, whilst the Association of Southeast Asian Nations countries should improve their performance in the documentary compliance of trade, the infrastructure of trade, and trade logistics performance.
Topic:: Economics, International Trade and Finance, Regional Cooperation, and Regionalism
Political Geography:: Asia and ASEAN

76. Opportunities and Challenges for ASEAN and East Asia from the Regional Comprehensive Economic Partnership on E-Commerce

Author:: Jane Kelsey
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: The Regional Comprehensive Economic Partnership (RCEP) is a microcosm of the current tensions in negotiations on digital trade involving parties that have divergent positions on the digital economy, data, and regulation, including within the Association of Southeast Asian Nations (ASEAN) itself. It adopts a prudent approach that recognises the state parties need flexibility and policy space at the national and regional levels to develop of policy and regulation in the rapidly changing digital ecosystem and seeks to advance their collective interests through dialogue and cooperation. This paper contrasts that approach with the disciplinary nature of binding legal obligations that are enforceable by other states and their investors, as in the Trans-Pacific Partnership Agreement and similar recent treaties. The analysis of key differences focuses on matters of particular importance to ASEAN, such as local content and government procurement, data rules and flexibilities, financial data, source codes, and transparency. RCEP’s cautious approach enables ASEAN members to deepen their national and regional understanding of the opportunities and challenges these agreements present, whilst developing and implementing their own digital development strategies. Yet those good efforts may be undermined through the binding and enforceable trade in services rules.
Topic:: Economics, Regional Cooperation, Digital Economy, and Economic Cooperation
Political Geography:: Asia and ASEAN

77. Traditional Services Trade in the Regional Comprehensive Economic Partnership

Author:: Zhang Yan and Shandre Mugan Thangavelu
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: Traditional services trade (TST), including tourism and transport services, is the basic and key component of services trade in the Regional Comprehensive Economic Partnership (RCEP). The implementation of RCEP will provide a platform for further liberalisation in TST, thus effectively promoting the growth of the whole service trade and the development of the travel and transportation industry. In this paper we will first show the trade pattern of TST in RCEP. Then, the commitments by each RCEP member will be thoroughly analysed, and the Hoekman index will be constructed to measure the liberalisation levels for the RCEP members. In the last section, we outline some impacts of the COVID-19 pandemic on TST and propose policy implications for RCEP in the post pandemic era.
Topic:: Economics, Tourism, Services, and Transportation
Political Geography:: Asia and ASEAN

78. The Investment Chapter in the Regional Comprehensive Economic Partnership: Enhanced Rules without Enforcement Mechanism

Author:: Henry Gao
Publication Date:: 09-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper examines the legal rules in the investment chapter in the Regional Comprehensive Economic Partnership (RCEP). It starts with an overview and summary of the main provisions in the chapter, followed by an assessment of the rules by comparing established free trade agreements (FTAs), especially the Comprehensive and Progressive Trans-Pacific Partnership. In particular, it notes that the chapter, whilst largely following the established approaches to investment in other FTAs, also includes important twists to the common rules to favour the host states. The last part discusses the conspicuous absence of an investor–state dispute settlement mechanism, its pros and cons, and wider implications on regional integration, then concludes with some thoughts on future developments.
Topic:: Economics, Regional Cooperation, Economic Cooperation, and Strategic Interests
Political Geography:: Asia and ASEAN

79. The Regional Comprehensive Economic Partnership Agreement and Europe: Impact and Implications

Author:: Haans Gunther Hilpert
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: In the first 2 decades of the millennium, European Union (EU) trade policy underwent historic changes, amongst them an explicit pivot to Asia. Along with continued firm support of the rules-based World Trade Organization (WTO)-centred multilateral trading system, important new directions in the EU’s trade policy included a turn to competitive bilateralism, a strong focus on values, an ambition to protect and to promote European trade standards as well as the politicisation of trade policy. Asia’s outwards looking economic growth, the increasing trade interdependence in Asia as well as the various bilateral and multilateral trade agreements in the region, notably amongst them the Regional Comprehensive Economic Partnership (RCEP), attracted the EU’s attention, and have helped cause and drive these changes. There was no particular Asian influence on the EU’s own regionalisation, however. Meanwhile, trade and investment relations between Europe and Asia have intensified greatly over this period. But the EU has been slow and late to formulate a comprehensive strategy for the Indo-Pacific region. In spite of some notable successes, the EU’s trade policy remains fragmented with differentiated approaches for each trading partner. Opinions on the RCEP’s relevance and importance for Europe are divided. RCEP sceptics point to the overall shallow nature of the agreement. RCEP optimists emphasise the future potential of trade and investment integration within the newly established RCEP economic area and warn of the discriminatory effects for Europe’s economy and businesses. So, Europe’s business will have to invest in the new RCEP free trade zone to overcome trade diversion risks and to benefit from the RCEP market integration. More worrying from Europe’s perspective is RCEP’s potentially negative policy impacts: a relative loss in the EU’s trading power, the risk of Europe being sidelined in the make-up of future trade rules, and RCEP’s future impact on rules based multilateralism and the WTO. The EU has various trade policy options with regard to the Indo-Pacific trade area and RCEP in particular. The most promising options include the conclusion of free trade agreements with as many RCEP member countries as possible, with the Association of Southeast Asian Nations as a group (as a region-to-region agreement), with other trading partners (from the Indo-Pacific or from other world regions), or with the Comprehensive and Progressive Agreement for Transpacific Partnership area.
Topic:: Diplomacy, Economics, Regional Cooperation, and Economic Cooperation
Political Geography:: Asia and ASEAN

80. The Story of RCEP: History, Negotiations, Structure, and Future Directions

Author:: Aladdin D. Rillo, Anna Maria Rosario D. Robeniol, and Salvador Buban
Publication Date:: 08-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: This paper is about the story of the Regional Comprehensive Economic Partnership (RCEP), including the history, dynamics of negotiations, and structure of this multilateral framework. Issues related to ASEAN centrality, sensitivities of negotiations, and other challenges are also highlighted and analysed. Nearly a decade in the making, RCEP represents a significant achievement for the region. As an ASEAN-led process, RCEP supports not only the region’s market integration but as well as ASEAN’s economic relations with the rest of the world, particularly with the 5 RCEP FTA Partners. Beyond the impact of RCEP in supporting the multilateral trading system, it is also intended to address the current challenges in the region, including the COVID-19 pandemic crisis. Thus, the narrative of RCEP provides a comprehensive overview of, and considers the potential implications for, trade in the region; for economic integration, and for the future of trade policy.
Topic:: Diplomacy, Economics, Regional Cooperation, Regionalism, and Economic Cooperation
Political Geography:: Asia and ASEAN

81. Prediction Errors of Macroeconomic Indicators and Economic Shocks for ASEAN Member States, 1990‒2021

Author:: Masahito Ambashi, Fusanori Iwasaki, and Keita Oikawa
Publication Date:: 05-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: In this study, economic shocks on six selected Association of Southeast Asian Nations (ASEAN) Member States (i.e. Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam) are analysed in three dimensions: global, domestic, and uncertainty. Annual actual and prediction values from 1990–2021 macroeconomic indicators – from international organisations such as the Asian Development Bank – were collected, and macroeconomic shocks were calculated based on prediction errors (i.e. actual values minus prediction values). The first finding is that if prediction errors of the real gross domestic product (GDP) growth rates are negative, on average, the countries were significantly subjected to negative economic shocks that were not anticipated. Second, according to a correlation analysis of the actual values and prediction errors of real GDP growth rates, economic fluctuations and shocks are highly synchronised within the countries as well as with the world, as previous literature has indicated. Finally, by conducting regression analyses regarding the prediction error of real GDP growth rates separately for each country, (i) variations of the global real GDP growth rate are positively associated with countries’ economic shocks; (ii) the previous estimates have different quantitative significance amongst the countries; (iii) residual variations approximate country-specific, domestic shocks; and (iv) global and country-level uncertainty indices are correlated with negative economic shocks in some countries. Based on this dataset, the effect of the COVID-19 pandemic is also reviewed, and economic and historical backgrounds are examined that caused past economic shocks to these ASEAN Member States.
Topic:: Economics, Regional Cooperation, Macroeconomics, and Economic Cooperation
Political Geography:: Asia and ASEAN

82. Entry Mode Choice and Performance of Foreign Direct Investment Firms in Emerging Economies: Micro-evidence from Viet Nam

Author:: Linh Bui, Huyen Hoang, and Hang Bui
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: Does the right entry mode choice help foreign direct investment (FDI) firms to perform efficiently in emerging economies? This study attempts to answer this question by examining the impact of the entry mode choice made by FDI firms on their post-entry performance in emerging markets. Using a dataset derived from specific firms for the period 2002–2016, this study accounts for the selection biases and inherent differences of FDI firms that affect their selection of entry strategies. The study found that, with regard to the manufacturing sector, the ownership type with a wholly owned subsidiary (WOS) had negative impacts on either the technical efficiency or the total factor productivity (TFP) of firms. Conversely, regarding all sectors in the economy, the WOS is likely to have a positive role on technical efficiency and TFP. It is also interesting to see that for firms with an equity joint venture (EJV) type, the higher proportion of capital contribution from domestic firms might lead to lower technical efficiency and TFP. It implies that the higher degree of management and control by the domestic firms compared with foreign firms would have negative impacts on the EJV firms’ performance.
Topic:: Economics, Foreign Aid, Foreign Direct Investment, and Emerging Powers
Political Geography:: Asia and Vietnam

83. Projecting Infrastructure Needs and the Financing Mechanism: A Review of Estimations by ADB, McKinsey, and the OECD

Author:: Fauziah Zen and Michael Regan
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:: How much does a country, a region, and the world need to spend on infrastructure development to fulfil demand? This question has been asked frequently because governments try to see it as a reference for budget allocation and evaluation of development progress. Since infrastructure consists of a wide range of types, qualities, and sizes, it is difficult to come up with a number that represents these variants. Several widely cited attempts have been made to provide estimations of infrastructure needs. This paper aims to assess the features, scope, methods, and suggested financing mechanism of the projections made by the Asian Development Bank (2017), the Organisation for Economic Co-operation and Development (2017), and the McKinsey Global Institute (2016). It is not meant to focus on the limitations of these projections, but to understand the process used to put these estimates together and the extent to which they provide comparative information.
Topic:: Development, Economics, Emerging Markets, and Infrastructure
Political Geography:: Asia and ASEAN

84. Beyond India’s Lockdown: PMGKY Benefits During the COVID-19 Crisis and the State of Digital Payments

Author:: Alan Gelb, Anurodh Giri, Anit Mukherjee, Ritesh Rautela, Mitul Thapliyal, and Brian Webster
Publication Date:: 04-2022
Content Type:: Working Paper
Institution:: Center for Global Development
Abstract:: India imposed a lock-down in response to the COVID-19 pandemic in March 2020 and began a gradual re-opening in June. A telephonic survey in April examined the early effectiveness of information and the massive PMGKY social protection program (Policy Paper 217). This paper analyzes a second-round survey, conducted six months later. Logistical and information constraints had relaxed, and incomes and jobs had begun to stabilize for some. There were not strong indications of differential access to benefits by income or location, but constraints to providing public employment had tightened in the face of increased demand, resulting in greater job rationing. Men made more use of digital channels, with a clear smartphone ownership hierarchy between men and women; this divide carried over into the growing autonomous use of digital payments which is conditioned on access to smartphones. Survey results confirm strong local agglomeration effects in digital payments, mirroring the general pattern with higher use in states hosting India’s major technology hubs. At the same time, trust-based concerns reduced the use of assisted digital cash-outs through agents.
Topic:: Economics, Pandemic, COVID-19, and Digitalization
Political Geography:: India and Asia

85. Embedding Human Rights in European and US China Policy

Author:: Malin Oud
Publication Date:: 05-2022
Content Type:: Working Paper
Institution:: German Marshall Fund of the United States (GMFUS)
Abstract:: Europe and the United States share an interest in promoting human rights in China but often struggle to affect change in this regard. Because of ineffective approaches and low political commitment, human rights are a marginalized issue in transatlantic China policy and an afterthought to commercial interests. European and US policymakers have attempted to compartmentalize their approach to China, keeping human rights separate from commercial and other interests. This does little to advance human rights, and it only seems to encourage more assertive and coercive behavior by China. During the last few years, the Western assumption that trade and foreign capital would transform China into a more open and democratic society has been replaced by a disillusioned realization that its rise as a superpower is reshaping the international order. Under President Xi Jinping, China has evolved from its previous position as rule-taker and status quo-keeper at the UN to become an assertive rule-maker and international norm entrepreneur. Its vulnerability to external pressure has declined while its power to exert pressure and economic coercion on others has increased. China no longer presents its political and economic model merely as different from but as superior to that of the liberal democracies in the West. For several years now, European and US policymakers have declared an “end of naivety” in relation to China. After years of debating how to make the EU more resilient and robust, Russia’s invasion of Ukraine has “given birth to geopolitical Europe,” in the words of its chief diplomat, Josep Borrell. It remains to be seen whether this moment of clarity will translate into a more principled defense of human rights and investment in democratic resilience. For this to happen, there needs to be a broader reckoning with how Western countries for decades mishandled the authoritarian challenge to the international order, often because they were pursuing stronger economic ties with the same governments they now see as systemic rivals.
Topic:: Foreign Policy, Economics, Human Rights, Business, and Trade
Political Geography:: China, Asia, North America, and United States of America

86. The Indo-Pacific Economic Framework and Digital Trade in Southeast Asia

Author:: Andreyka Natalegawa and Gregory B. Poling
Publication Date:: 05-2022
Content Type:: Special Report
Institution:: Center for Strategic and International Studies
Abstract:: In October 2021, the Biden administration announced the development of an Indo-Pacific Economic Framework (IPEF) with partner nations to “define our shared objectives around trade facilitation, standards for the digital economy and technology, supply chain resiliency, decarbonization and clean energy, infrastructure, worker standards, and other areas of shared interest.” Details on the framework are still being worked out, but it now seems that those six areas of focus have been distilled into four negotiating “pillars.” Deputy U.S. Trade Representative Sarah Bianchi said in early February that these would include “fair and resilient trade, supply chain resilience, infrastructure and decarbonization, and tax and anticorruption.” The Office of the U.S. Trade Representative (USTR) will likely lead negotiations on the first, while it appears that the Commerce Department will take the lead on the other three. The details of each pillar will be worked out in the months ahead, but the Biden administration is certain to face challenges and trade-offs across each, given the diversity of economies and political constraints across the region. USTR has said the trade pillar will be “high-ambition” and include binding commitments. But this will be complicated by the fact that the administration plans to roll out the IPEF through executive action rather than as a traditional trade deal requiring congressional approval. This pathway will help the framework sidestep political obstacles that agreements like the Trans-Pacific Partnership faced before Congress, but it also means that the administration cannot offer increased market access or any other concessions that would require changes to U.S. law. Moreover, moving forward with the IPEF through executive action has led to concerns among partners that the framework could be vulnerable to U.S. domestic politics or that a future administration may well roll back or abandon the framework. Given these self-imposed constraints, the administration will face headwinds trying to convince countries to sign on to high-standard provisions on digital trade, labor, and environmental standards that might run counter to their perceived short-term political or economic interests. One possible solution would have been to make the involvement in the other three pillars, where there are likely to be more tangible benefits for other countries, contingent on an agreement in the trade pillar. But that would run counter to the desire to get as many countries on board as possible. So, the administration has instead indicated that countries will be invited to engage in each pillar a la carte. And while like-mindedness in and of itself does not immediately guarantee their support for the IPEF, the likely result is that only Japan, Australia, New Zealand, Singapore, and perhaps South Korea—the most developed economies which already share U.S. standards on digital trade, environment, and labor—will engage with USTR on the trade pillar. But a wider array of economies will likely join the talks with the Commerce Department on the other three.
Topic:: Economics, International Trade and Finance, Digital Economy, and Economic Cooperation
Political Geography:: Asia, Southeast Asia, and Indo-Pacific

87. Strategic Competition in the Financial Gray Zone

Author:: Heather A Conley, James Andrew Lewis, Eugenia Lostri, and Donatienne Ruy
Publication Date:: 04-2022
Content Type:: Special Report
Institution:: Center for Strategic and International Studies
Abstract:: Over the past 10 years, the U.S. government has slowly reoriented its foreign and security policy from the fight against global terrorism toward strategic competition with Russia and China. This reorientation has been accompanied by a new examination of how strategic competition will impact the integrity and future stability of the U.S. economy and financial system. One of the most important elements of strategic competition is sub-threshold warfare (also called asymmetric, hybrid, or gray zone warfare), wherein strategic competitors seek to shape the geostrategic environment in their favor, from information operations to economic warfare—which includes such tools as illicit finance and strategic corruption. Strategic competitors present a clear economic and financial threat to the United States when they operate in the emerging financial gray zone, in which malign actors can take advantage of the U.S. financial system to further their aims and disarm the country internally. The U.S. government, along with its allies, has only begun to acknowledge the sweeping nature of the financial gray zone and to reposition itself to compete within it. Because adversaries exploit the seams between the internal and external policies and authorities, Washington must have greater insights into a complex operating system and better integrate data across the many relevant agencies—in a way, connecting the financial dots. As it develops this comprehensive picture, the U.S. government should develop stronger defensive and offensive policy tools to counter this emerging threat.
Topic:: Economics, Finance, Strategic Competition, and Rivalry
Political Geography:: China, Asia, North America, and United States of America

88. Public responses to foreign protectionism: Evidence from the US-China trade war

Author:: David Steinberg and Yeling Tan
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Peterson Institute for International Economics
Abstract:: America's recent turn toward protectionism has raised concerns about the future viability of the liberal international trading system. This study examines how and why public attitudes toward international trade change when one's country is targeted by protectionist measures from abroad. To address this question, the authors fielded three original survey experiments in the country most affected by US protectionism: China. First, they find consistent evidence that US protectionism reduces Chinese citizens' support for trade. This finding is replicated in parallel experiments on technology cooperation, and further validated outside of the China context with a survey experiment in Argentina. Second, they show that responses to US protectionism reflect both a "direct reciprocity" logic—citizens want to retaliate against the United States specifically—and a "generalized reciprocity" logic that reduces support for trade on a broader, systemic basis.
Topic:: Economics, Political Economy, Public Opinion, Trade, and Protectionism
Political Geography:: China, Asia, North America, and United States of America

89. Defying United Nations Sanctions: Three Reasons for African Engagement with North Korea

Author:: Tycho van der Hoog
Publication Date:: 06-2022
Content Type:: Working Paper
Institution:: Korea Economic Institute of America (KEI)
Abstract:: The United Nations (UN) sanctions against North Korea are weakened by structural evasion techniques and weak enforcement. The African continent is a crucial node in the global illicit networks of North Korea. This paper examines three motives for African states to cooperate with North Korea, with a particular focus on the context of southern Africa: historical affinity (reciprocity), the practical issue of maintenance dependency (necessity), and the presence of weak enforcement regimes (opportunity). Based on a deep reading of UN Panel of Experts reports, academic literature and policy papers, novel archival material, and an interview with a defected North Korean diplomat, this paper argues that solutions to strengthen the sanctions regime can be successful only if they are grounded in African initiatives.
Topic:: Security, Economics, United Nations, and Sanctions
Political Geography:: Africa, Asia, and North Korea

90. South Korea's Critical Moment in Digital Currency Policymaking: Between Regulating Cryptocurrencies and Launching a Central Bank Digital Currency (CBDC)

Author:: June Park
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Korea Economic Institute of America (KEI)
Abstract:: Why is South Korea pilot-testing its Central Bank Digital Currency (CBDC), and what made it shift from non-issuance to consideration? This paper investigates the Bank of Korea (BOK)’s CBDC-related developments amid the geopolitical contest between the U.S. and China. It examines the Moon Jae-in administration’s defiance of decentralized finance (DeFi) and the BOK’s sudden shift from non-issuance to potential issuance, which led to expedited research, development, and pilot-testing of CBDCs. As in the case of the digital yuan, the BOK envisions a hybrid architecture for the digital won, wherein central banks and associated partner institutions are CBDC distributors, though they are distinguished by placing the digital won on distributed ledger technology rather than by centrally controlling it. However, South Korea’s previously rash decision to forego DeFi under an undemocratic process has deprived the country of the time and opportunity to develop new innovations as a leading country in the digital frontier. By sticking only to digitalizing centralized finance, the country now aims to be in “standby” mode for its CBDC launch if and when required, so as not to fall behind in digital financial architecture. This paper scrutinizes the South Korean government’s moves on crypto and CBDCs and argues that 1) the Moon administration has shown incapability in addressing DeFi amid the crypto boom and bust, and 2) the BOK’s shift from non-issuance to potential issuance of the digital won is driven by its interest to uphold central bank independence amid swaying geopolitics between the U.S. and China and an unpredictable upcoming presidential election in South Korea.
Topic:: Economics, Elections, Finance, Cryptocurrencies, and Digital Currency
Political Geography:: China, Asia, South Korea, North America, and United States of America

91. Mine Action and the Environment in Karabakh

Author:: Emil Hasanov
Publication Date:: 04-2022
Content Type:: Journal Article
Journal:: Baku Dialogues
Institution:: ADA University
Abstract:: The now‑liberated areas of Azerbaijan are contaminated by mines and explosive remnants of war (ERW), the clearance thereof being one of Baku’s highest post‑conflict priorities. Before proceeding any further, we must provide proper definitions of these terms, since they are technical in nature and thus may not be familiar to the general reader. According to the Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti‑Personnel Mines and on Their Destruction that was adopted in Oslo in 1997 and entered into force in 1999 (it is colloquially called the AntiPersonnel Mine Ban Convention, or APMBC), an anti‑personnel mine “means a mine designed to be exploded by the presence, proximity or contact of a person and that will incapacitate, injure or kill one or more persons.” An antivehicle or antitank mine is effectually the same thing, except that it is designed to explode when triggered by a vehicle. Together, they fall under the catchall term mine, which the same document defines as a “munition designed to be placed under, on, or near the ground or other surface area and to be exploded by the presence, proximity, or contact of a person or a vehicle.” Furthermore, explosive remnants of war (ERW) are defined as explosive munitions left behind after a conflict has ended. They include unexploded artillery shells, grenades, mortars, rockets, air‑dropped bombs, and cluster munitions. If such weapons fail to detonate as intended for whatever reason, they are called unexploded ordnance (UXO); if, on the other hand, they have not been used during an armed conflict and have been left behind by the party that brought them to the battlefield, they are called abandoned explosive ordnance (AXO). Lastly, cluster bombs or cluster munitions, which are defined as weapons containing from several to hundreds of explosive submunitions. They are dropped either from the air or fired from the ground and are designed to break open in mid‑air, releasing submunitions and saturating an area that can be as wide as several football pitches. Based on past practice, the failure rate of cluster munitions to explode as intended stands at between 10 and 30 percent.
Topic:: Climate Change, Economics, Environment, Mining, and Recovery
Political Geography:: Central Asia, Asia, and Azerbaijan

92. Assessing the economic, societal and cultural impact of YouTube in India

Author:: Oxford Economics
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Oxford Economics
Abstract:: Recent research by Oxford Economics suggests YouTube contributed 6,800 Cr to the Indian economy in 2020 and supported 6,83,900 jobs. But its impact goes further, bringing a rich array of economic, cultural and societal benefits to India. YouTube generates substantial revenue for creators, artists, and media companies, who in turn support a broad ecosystem of employees and businesses in India. Creators deliver a wealth of educational tools and materials, which are valued by students, parents, and teachers alike.
Topic:: Economics, Mass Media, Social Media, and YouTube
Political Geography:: India and Asia

93. Japan's "Economic Security" Measures

Author:: Didi Kirsten Tatlow and Afra Herr
Publication Date:: 02-2022
Content Type:: Policy Brief
Institution:: German Council on Foreign Relations (DGAP)
Abstract:: Japan and Germany face an acute dilemma. China, a key trading partner for both nations, uses political warfare and economic statecraft to advance its interests. Like Germany, Japan has a strong SME economy and auto industry, and has dependencies on China. Yet Japan faces more risk due to its geographical proximity to China and territorial disputes. As global tensions grow, Japan is responding robustly by building economic security. Germany, together with the EU and other like-minded partners, should do the same.
Topic:: Security, Economics, Politics, and Trade
Political Geography:: Japan, China, Asia, and Germany

94. Promoting the Euro – Countering Secondary Sanctions: Germany Should Push to Complete Monetary Union

Author:: Markus Jaeger
Publication Date:: 02-2022
Content Type:: Policy Brief
Institution:: German Council on Foreign Relations (DGAP)
Abstract:: US-Chinese rivalry will increasingly play out in the geo-economic realm. The use of secondary sanctions – especially secondary dollar sanctions – negatively affects German economic interests. The new German government should therefore intensify efforts to promote the euro as an international currency coequal to the dollar in addition to lending its qualified support to EU anti-coercion policies.
Topic:: Economics, Sanctions, European Union, Rivalry, and Geoeconomics
Political Geography:: China, Asia, and United States of America

95. China’s Dilemmas in Bailing Out Debt-Ridden Sri Lanka

Author:: Ganeshan Wignaraja
Publication Date:: 01-2022
Content Type:: Special Report
Institution:: East-West Center
Abstract:: Ganeshan Wignaraja, a Non-Resident Senior Fellow at the Institute of South Asian Studies (ISAS) of the National University of Singapore and a Senior Research Associate at the Overseas Development Institute (ODI) in London, explains that "Sri Lanka is now stuck in a ‘debt trap’. However, the debt trap is not wholly Chinese."
Topic:: Debt, Development, Diplomacy, and Economics
Political Geography:: China, Asia, and Sri Lanka

96. China’s increased presence in Latin America: Win-win relations or a new dependency? A state of the art

Author:: Daniel Agramont Lechín
Publication Date:: 01-2022
Content Type:: Working Paper
Institution:: Postgraduate Program on Sustainable Development and Social Inequalities in the Andean Region (trAndeS)
Abstract:: The rise of the Popular Republic of China (PRC) is one of the most significant events in contemporary international relations. However, at the global level, the “reemergence of China as a major global power has led to a considerable debate over the likely consequences for the rest of the world” (Jenkins, 2010: 810). China’s growing power raises questions as to the meaning of its superpower status as a nation, and the impact of its newfound influence in not only the Asia-Pacific region, but also the Global South (Dessein, 2015). In the specific case of Latin America and the Caribbean (LAC), the debate centers on the potential disadvantages that China’s vast supply of financial resources might bring for the region. Accordingly, the current paper is intended to examine the debate that has arisen in recent literature around the impact of China’s increased economic presence on Latin America –with win-win relations on the one hand and new dependency on the other.
Topic:: International Relations, Economics, Investment, and Dependency
Political Geography:: China, Asia, and Latin America

97. Assessing the Effects of Trade Liberalization With Third Countries: The Case of the Eurasian Economic Union

Author:: Simon Sngryan
Publication Date:: 06-2022
Content Type:: Journal Article
Journal:: Journal of Liberty and International Affairs
Institution:: Institute for Research and European Studies (IRES)
Abstract:: The processes of objectively conditioned integration in the economic, political, legal, and institutional spheres of the Eurasian Economic Union (EEU) Member States took place step by step, starting from preferential trade agreements, passing to the customs union, the common market and other stages of integration. This process is accompanied by the gradual deepening of trade liberalization with potential partners. The selection of potential partners should be carried out through a comprehensive and detailed analysis of the structure and volumes of foreign trade of the EEU Member States (Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia) with third parties, their markets structure, existing customs regulation, trade barriers, and possible export potential. The research evaluated the EEU's possible enlargement effects on the Member States' economic indicators. The research aimed to assess the possible consequences of EEU expansion and signing free trade agreements, considering Pakistan, Korea, and Malaysia as potential trade partners. Modeling the effect of an FTA assumes horizontal zeroing of tariffs between partners. Then, using the GTAP model, a new state of general equilibrium was calculated corresponding to the changed parameters of customs and tariff regulation. In this case, most variables, such as change in GDP, production output, and export-import volumes, were estimated, manifesting the economic effect of trade liberalization.
Topic:: Economics, International Trade and Finance, Regional Cooperation, and Trade Liberalization
Political Geography:: Europe, Eurasia, and Asia

98. Place-based policies and agglomeration economies: Firm-level evidence from Special Economic Zones in India

Author:: Holger Görg and Alina Mulyukova
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: This paper exploits time and geographic variation in the adoption of Special Economic Zones in India to assess the direct and spillover effects of the program. We combine geocoded firm-level data and geocoded SEZs using a concentric ring approach, thus creating a novel dataset of firms with their assigned SEZ status. To overcome the selection bias we employ inverse probability weighting with time-varying covariates in a difference-in-differences framework. Our analysis yields that conditional on controlling for initial selection, SEZs induced no further productivity gains for within SEZ firms, on average. This effect is predominantly driven by relatively less productive firms, whereas more productive firms experienced significant productivity gains. However, SEZs created negative externalities for firms in the vicinity which attenuate with distance. Neighbouring domestic firms, large firms, manufacturing firms and non-importer firms are the main losers of the program. Evidence points at the diversion of inputs from non-SEZ to SEZ-firms as a potential mechanism.
Topic:: Economics, Business, Special Economic Zones, and Geography
Political Geography:: India and Asia

99. Who Lends to Africa and How? Introducing the Africa Debt Database

Author:: David Mihalyi and Christoph Trebesch
Publication Date:: 03-2022
Content Type:: Working Paper
Institution:: Kiel Institute for the World Economy (IfW)
Abstract:: Africa’s sovereign debt markets are not well understood, partly due to a lack of data. This paper introduces the Africa Debt Database (ADD), the most granular and comprehensive dataset on external borrowing by African governments thus far. Our project moves beyond existing aggregate datasets and instead releases information on individual loans and bonds, in particular on the financial terms of each instrument. Taken together, we cover nearly 7000 loans and bonds between 2000 and 2020, with a total volume of 644 billion USD. Using this data, we study Africa’s record lending boom of the 2010s in detail. The debt boom was mainly driven by large sovereign bond issuances in London and New York, as well as growing lending by Chinese state-owned banks. The micro data also reveal a large variation in lending terms across countries, time, and creditors. Sovereign external bonds have interest rates of 6 percent, on average, Chinese banks charge 2-4 percent, and multilateral organizations just 1 percent. Strikingly, many governments in Africa simultaneously borrow large amounts from both private and official creditors, at vastly different rates. The large differences in debt servicing costs are indicative of a cross-creditor subsidy, as cheap concessional loans can be used to pay the high interest to private or Chinese creditors.
Topic:: Economics, Foreign Aid, Credit, and Influence
Political Geography:: Africa, China, and Asia

100. Crisis in Kazakhstan: Protests, Regime Stability, and Regional Security

Publication Date:: 01-2022
Content Type:: Video
Institution:: The Harriman Institute
Abstract:: How did the protests erupt and how will recent events influence government policy? Who is in charge? Will Kazakhstan’s foreign policy orientation change? And what is the significance of the CSTO’s intervention? Our expert panelists will address these and other questions, as well as ponder what the future holds for the country widely considered as Central Asia’s economic engine.
Topic:: Foreign Policy, Economics, Governance, and Protests
Political Geography:: Central Asia, Kazakhstan, and Asia

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