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

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

2. Boom-bust Cycles Revisited: The Role of Credit Supply

Author:
Hyo Sang Kim, Sangyup Choi, and Yuri Kim
Publication Date:
02-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This study investigates the impacts of credit supply on economic growth and financial crisis. Excess credit supply can make the economy and financial markets more vulnerable. While credit supply can drive economic growth by reallocating resources, it can also make the economy and financial markets more fragile. Asset prices sharply fall when deleveraging occurs in the case of a negative shock to the financial or real sector in a system where credit is excessively supplied. Furthermore, economic activity might be substantially reduced, extending the length and breadth of the recession.
Topic:
Markets, Financial Crisis, Economy, Economic Growth, and Credit
Political Geography:
Global Focus

3. Changes, Challenges and Implications of Fiscal and Monetary Policy Directions in the Post Pandemic Era

Author:
Sungbae An
Publication Date:
05-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
COVID-19 has changed the way of our lives since it started emerging as a pandemic early 2020. The global experience leave a trauma, and eventually work as a main driver to reconsider and improve our system. The need for change becomes even bigger as the pandemic continues beyond initial expectations. With that, we are now entering the era of the great transformation. The brief focuses on examining the policy environment changed by the COVID-19 pandemic and analyzing the points to be considered when implementing future fiscal and monetary policies.
Topic:
Monetary Policy, Economy, Fiscal Policy, Pandemic, and COVID-19
Political Geography:
Global Focus

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

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

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

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

6. COVID-19 and Global Value Chain

Author:
Hyoungmin Han
Publication Date:
03-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
The ongoing spread of COVID-19 has increased biological risks from infectious diseases and limits the movement of human and material resources. Various evidence supports that there is a significant correlation between COVID-19 and the globalized production network. This study aims to analyze the changes in the global value chain structure “before and after” the spread of COVID-19 and derive government-level countermeasures and policy tasks using quantitative data, empirical analysis, case study, and corporate survey.
Topic:
Economy, Global Value Chains, and COVID-19
Political Geography:
South Korea and Global Focus

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

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

8. Foreign Firms Investment in Inter-Korean Economic Cooperation

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

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

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

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

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

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

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

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

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

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

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

14. Australia’s Strategic Responses to the US-China Rivalry and Implications to Korea

Author:
Ina Choi, Sunhyung Lee, Jaeho Lee, and So Eun Kim
Publication Date:
08-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
As in other Asia-Pacific countries, boosting trade with China has provided a growth engine for Australia's economy. Australia shared concerns over security threats posed by China’s military expansion, but up until the mid-2010s hard balancing against China did not seem to be an option for Australia. Australia’s recent moves against China, however, signal that Canberra has reset its China policy, with an overhaul of its national security and defense strategy. The shift of Australia’s China policy is an interesting case to explore how the regional order is likely to evolve in the growing US-China competition. Assessing Australia’s recent foreign policy is also relevant to Korea, both in terms of navigating Korea’s relations with the US and China and enhancing strategic ties between Australia and Korea. Against this backdrop, this study unravels Australia’s strategic responses to the changing regional order and draw implications for Korea's foreign policy.
Topic:
Security, Foreign Policy, National Security, Economy, Trade, and Rivalry
Political Geography:
China, South Korea, Australia, Asia-Pacific, and United States of America

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

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

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

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

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

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

18. The Determinants and Welfare Implications of Labor Share

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

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

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

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

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

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

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

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

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

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

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

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

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

25. COVID-19 and the Exacerbation of Gender Inequality: How the Pandemic Disproportionately Affected Women around the World

Author:
Jennifer Dikler
Publication Date:
12-2021
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
The gender wage gap, or the idea that women have historically and consistently earned less than men, has been widely studied and accepted over the past few decades. This gender wage gap exists globally and serves as a powerful indicator of the gender inequality experienced by women. As of 2019, according to data amassed by the Organization for Economic Cooperation and Development (OECD), South Korea’s gender wage gap among full-time employees is the largest among the countries that make up the OECD, coming in at 32.5%. Japan was second at 32.5%, followed by Mexico, the United States, and Canada at 18.8%, 18.5%, and 17.6%, respectively. Notably, in countries with higher levels of racial diversity, the gender wage gap is usually significantly exacerbated for women of color. Despite narrowing in recent years, the gender wage gap is extremely stubborn, and very much existent, as is the general global gender inequality that it reflects. In the past 18 months, the world's population and the global economy have been significantly upended by the COVID-19 pandemic. The virus has affected virtually every country in the world, especially nations with fewer resources to help combat its spread. Studies are also beginning to confirm that COVID-19 has had a disproportionate economic effect on women in many countries, amplifying the gender inequality that persisted in the global economy even prior to the pandemic. For example, as outlined in a study published by McKinsey in July 2020, “Women make up 39 percent of global employment but account for 54 percent of overall [COVID-19- related] job losses” (Madgavkar et al. 2020). However, the widening of the gender gap during the pandemic has been far from universal, with some countries seeing the opposite results. This brief seeks to provide an initial exploration, specifically highlighting how variably the pandemic has affected the United States, South Korea, El Salvador, Guatemala, Nicaragua, the Honduras, Australia, the United Kingdom and Germany. When it comes to global gender equality, where progress is so essential and yet so slow, it is extremely important to explore the economic setbacks created by the pandemic. If not addressed properly, these setbacks might not only slow the fight toward gender equality, but could also slow down the global economy.
Topic:
Gender Issues, Women, Inequality, Economy, and COVID-19
Political Geography:
Global Focus

26. Merger Review Regimes in the ASEAN Region and Case Analysis of Grab-Uber Merger

Author:
Yungshin Jang and Gu Sang Kang
Publication Date:
09-2021
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
In 2018, the largest yet cross-border M&A deal between digital platforms in Southeast Asia was reached, namely the Grab-Uber M&A case. The local digital platform Grab consolidated the regional operations of San Francisco, California-based Uber, a development which had significant effects on competition and consumer welfares in the Southeast Asia digital market. The competition authorities in the region independently initiated their investigation and started to deliberate the merger case to determine the anti-competitive effects on their domestic market, and to decide whether this transaction should be restricted or approved. Even though the two merging and merged firms completed their transactions, each authority applied different logic and imposed different remedies in deciding the case. Authorities in some member states such as Singapore and the Philippines decided that the Grab-Uber merger was anti-competitive, while others such as Indonesia and Viet Nam considered the merger not anti-competitive. Upon this backdrop, this article reviews the competition policies and laws of four major ASEAN countries – Indonesia, Singapore, Viet Nam, and the Philippines – from institutional and legal perspectives, focusing on M&A review regimes. Then, we briefly introduce how these com-petition authorities decided on the Grab-Uber merger case, also analyzing the competition effects of the case on the ride-hailing market in the countries. Based on the analysis results, we propose overseas competition policies for Korea.
Topic:
Markets, Economy, Business, ASEAN, Economic Competition, and Mergers and Acquisitions
Political Geography:
Indonesia, South Korea, Vietnam, Philippines, and Singapore

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

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

28. Reshoring: An Overview, Recent Trends, and Predictions for the Future

Author:
Jennifer Dikler
Publication Date:
08-2021
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
With the rise of globalization beginning in the 20th century, came the inevitable rise of offshoring — companies moving at least some parts of their operations abroad in order to cut costs and increase profits. In recent years, however, international developments, such as the rise of wages in what were typically considered low-cost countries, coupled with uncertainties created through global political tensions, have incentivized companies to move their operations back to their respective home countries or to make new investments in United States-based facilities. This phenomenon, known as reshoring, has only increased in 2020 and 2021, amidst US - China tensions and the COVID-19 pandemic. Reshoring is growing in popularity particularly among companies based in the United States. In May 2021, for example, a US solar energy systems manufacturer called GAF Energy announced that the company would relocate its operations from Asia to Silicon Valley, expecting to add 400 jobs in research, engineering, and manufacturing roles (Szal, 2021). Around the same time, cycle and treadmill machine maker Peloton announced that it would invest $400 million to build its first US-based factory, citing heightened demand and the pandemic highlighting uncertainties that come with its global supply chain (Thomas, 2021). The company, which has announced that the US factory will be based in Troy Township, Ohio, stated that it expects to create over 2,000 jobs in the area. Also, in May 2021, Ford Motor announced a joint venture with South Korean battery maker SK Innovation to manufacture battery cells for electric vehicles in the United States (Wayland, 2021). The venture will be based in the US, marking a significant decision for Ford Motor, which operates worldwide and has notably been in the press in recent years for its decisions to offshore operations. Though an increasingly important and growing phenomenon, reshoring has not been studied nearly as much as offshoring. Experts predict that reshoring will only continue to increase as global supply chain uncertainties get revealed through political tensions and fallout from the pandemic. As companies gain a deeper understanding of the vulnerabilities in offshoring their production, they will become more incentivized to invest in their home country-based facilities. As such, it is more important than ever to understand reshoring, the reasons behind why companies decide to reshore, the recent trends among companies moving operations back home, and predictions about how reshoring is likely to evolve in years to come. This paper offers an overview of the aforementioned points, specifically focusing on companies based in the US, which are some of the more likely companies to make the decision to offshore and subsequently reshore.
Topic:
Economy, Industry, Supply Chains, and Reshoring
Political Geography:
South Korea and United States of America

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

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

30. The Impact of Intellectual Property Protection through FTA on International Trade

Author:
Hyunsoo Kim, Sangjun Yea, Hyeyoon Keum, and Min Ji Kang
Publication Date:
08-2021
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
The importance of intellectual property rights (IPRs) for innovation has grown and the protection of intellectual property in international trade has also been strengthened. AI-related patent applications have been increasing rapidly and many AI patents are being filed in various industries. Intellectual property also represents one of the main controversies of U.S.-China trade relations in the past three decades and remains one of the core issues behind the two countries’ recent trade conflicts. As a result, global protection for IPRs has been expanded in recent decades. This article investigates changes in the trend regarding the IP protection level in FTA and how the IP protection through FTAs has affected the composition of aggregate trade flows of member countries in order to provide basic findings necessary to formulate the FTA policies regarding the protection of IPRs in Korea.
Topic:
International Trade and Finance, Intellectual Property/Copyright, Economy, and Artificial Intelligence
Political Geography:
China, South Korea, and United States of America

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

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

32. The Reform of the WTO's Appellate Body: An Economic Perspective

Author:
Sangjun Yea
Publication Date:
05-2021
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
Throughout this study, I consider some possible changes that may occur when the WTO’s AB is reformed based on the opinions stated by the US. Especially focusing on the issues of activist AB and its reviewing member countries’ domestic law, I conclude that banning the AB’s activist role may result in more opportunistic and inefficient policy choices on the part of member countries as to importing industries with less disputes cases. Regarding the latter issue, I argue that limiting the AB’s standard of review does not much change strategic decisions of member countries.
Topic:
Reform, Economy, and WTO
Political Geography:
Global Focus and United States of America

33. WTO Industrial Subsidy Regulation: US-EU-Japan Joint Statement of January 2020 and Afterwards

Author:
Cheon-Kee Lee
Publication Date:
04-2020
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
On 14 January 2020 the United States, the European Union, and Japan (hereinafter referred to as “US-EU-Japan”) issued a trilateral joint statement, proposing a set of new rules to strengthen WTO regulation on industrial subsidies. While a total of seven joint announcements have been made so far, this is the first time that three WTO Members have presented specific ideas on how to amend existing subsidy rules. Many of the proposed amendments seem to primarily target China’s trade policy and practices. Among the six amendment items proposed in the Joint Statement, it seems that the United States is paying particular attention to the sixth item, i.e. in making explicit the possibility of using the out-of-country benchmark and on introducing necessary requirements to do so in measuring the benefit conferred and, ultimately, in calculating the amount of the countervailing duties (CVDs). Against this backdrop, in this Brief the author analyzes the relevant WTO provisions and GATT/WTO jurisprudence, and discusses various scenarios on future negotiations on WTO Reform on industrial subsidies.
Topic:
World Trade Organization, Economy, Negotiation, Trade Policy, and Industry
Political Geography:
Japan, China, United States of America, and European Union

34. Analysis of the Turkish Services Industry and Korea-Turkey Cooperation

Author:
Cheol-Won Lee, Hyun Jean Lee, Mahmut Tekçe, and Burcu Düzgün Öncel
Publication Date:
04-2020
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
The Agreement on Trade in Services and the Agreement on Investment between Korea and Turkey came into effect in August 2018. This article focuses on the construction sector and the cultural contents sector to seek possible cooperative measures between the two countries.
Topic:
International Cooperation, Treaties and Agreements, Culture, Economy, Investment, and Industry
Political Geography:
Turkey, Middle East, Asia, and South Korea

35. The Economic Effects of Multinational Corporation Withdrawal and Policy Implications

Author:
Minsoo Han, Hyuk-Hwang Kim, Hyelin Choi, Danbee Park, and Jisu Kim
Publication Date:
03-2020
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
The shutdown of the GM Koreas Gunsan plant in May 2018 heightened social interest in the withdrawal of mutlinational corporations (MNCs). Against this backdrop, the forthcoming research The economic effects of multinational corporation withdrawal and policy responses studies the previous cases of MNC withdrawal, estimates the effects on labor market., and provides policy directions to address to the withdrawal. This note summarizes some of its important results.
Topic:
International Trade and Finance, Economy, Multinational Corporations, and Economic Policy
Political Geography:
Asia and Korea

36. North Korea’s Trade System and Implications for Inter-Korean CEPA

Author:
Jang Ho Choi and Yoojeong Choi
Publication Date:
02-2020
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This study examines changes in trade-related legal systems in North Korea and ac-tual trade transactions, and analyzes them in accordance with international standards (the WTO regulatory framework). Through this process, we will draw up measures to im-prove North Koreas trade system to open up the external economy as well as signing of a Comprehensive Economic Partnership Ar-rangement (CEPA). The results of this study will contribute to understanding the main characteristics of trade-related laws and sys-tems within North Korea and suggest promis-ing directions for their improvement.
Topic:
Bilateral Relations, Partnerships, Economy, and Trade
Political Geography:
Asia, South Korea, and North Korea

37. An Analysis of Service Trade Regulation in ASEAN and Its Implications

Author:
Meeryung La
Publication Date:
02-2020
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
The Korean government has been pursuing a New Southern Policy (NSP) focusing on the “3P” areas of cooperation ‒ People, Prosperity, and Peace. The NSP puts people at a center of policy, and emphasizes the enhancement of cultural conversation and people-to-people exchange between Korea and ASEAN. The majority of services trade, an area with a low level of cooperation between Korea and ASEAN, is inherently based on the exchange of people. Promoting services trade flows between Korea and ASEAN could contribute to achieving the vision of a People-centered community in the region. Also, when taking into account the fact that services are integral to the working of GVC, the government should pursue policies to promote services trade and to enhance cooperation with ASEAN in the services sector. To this end, we aim to identify the current status of service trade and service trade barriers between ASEAN and Korea. This report briefly covers ASEAN’s trade in services and the restrictiveness of service trade regulations in ASEAN, and then suggests policy recommendations based on the results.
Topic:
International Cooperation, Regulation, Economy, Economic Policy, and Trade
Political Geography:
Asia and South Korea

38. Development of the Russian Far East in 20 Years of the Putin Era: Seeking New Directions for Deepening Cooperation between Korea and Russia

Author:
Joungho Park, Seok Hwan Kim, Boogyun Kang, Pavel A. Minakir, Artem G. Isaev, Anna B. Bardal, and Denis V. Suslov
Publication Date:
12-2020
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This study is the outcome of a joint research project commemorating the 15th anniversary of the establishment of the cooperative relationship between the Korea Institute for International Economic Policy (KIEP) and the Institute for Economic Research of the Far Eastern Branch of the Russian Academy of Sciences (ERI). As is well known, the year 2020 marks the 30th anniversary of diplomatic relations between Korea and Russia. Therefore, it is time for the two countries to prepare for the “2.0 Era of Korea-Russia Cooperation” while comprehensively evaluating existing achievements and tasks. In particular, in order to build a sustainable relationship between the two countries, it is necessary to establish a strategic contact point between Korea’s New Northern Policy and Russia’s New Eastern Policy, which can be realized through bilateral and multilateral cooperation in the Far East. In this regard, the main purpose of this study is to understand the main directions, key objectives, and political and economic implications of Russia’s policies in the Far East, which have been strategically pursued since the launch of Putin’s fourth term, and to explore new opportunities and possibilities for development cooperation in the Far East. We hope that this book will serve as a useful guide to open a new path for Far East development cooperation marking the 30th anniversary of Korea-Russia diplomatic relations.
Topic:
International Cooperation, Politics, Bilateral Relations, Economy, and Putin
Political Geography:
Russia, Asia, and Korea

39. Approaches to Labor Demand Forecast in Developing Economies and Their Implications for Korea's ODA

Author:
Young Ho Park, Yejin Kim, and Minji Jeong
Publication Date:
08-2020
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This study aims to develop systematic labor forecast methods, thereby contributing to increasing the efficiency of TVET ODA. This study suggests a new labor demand forecast methodology that combines quantitative and qualitative analyses and applies it to Vietnam, estimating labor demand by occupations in the country’s wireless communication equipment industry. This methodology starts with a statistical projection of Vietnam’s future labor market and industry. Subsequently, this study uses an enterprise survey and stakeholder interviews to complement missing information, as Vietnam's statistical system, like that of many other emerging economies, lacks some detailed data. Currently, the “element occupations” group takes the largest portion in the labor demand by industry and occupation. According to our results, however, the “plant and machine operators and assemblers” group is expected to gradually increase, thus becoming the largest occupation group in the wireless communication equipment industry in the near future. Given the various circumstances surrounding the labor market in developing countries, other alternatives in addition to our hybrid method of combining quantitative and qualitative analysis can also produce well-founded labor force projections. This study suggests analytical methodologies using global value chain (GVC) and big data as innovative alternatives, which can complement the shortcomings of traditional evaluation methods. ODA implementing agencies would benefit from paying attention to the labor forecasting methods presented in this research, and devising policies supporting these methods in order to properly apply them in reality.
Topic:
Communications, Labor Issues, and Economy
Political Geography:
Asia, Vietnam, and Korea

40. The Way Forward for WTO Reform: Agricultural Subsidies and Special and Differential Treatments

Author:
Jin Kyo Suh, Ji Hyun Park, and Min-Sung Kim
Publication Date:
10-2020
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
The multilateral trading system has been in crisis. The world economy has changed significantly since the WTO replaced the previous GATT system and new challenges are quickly piling on top of the old ones. The rising emerging countries and the relative decline of traditional economic members, together with the need to deal with complex new issues such as climate change and e-commerce and digital trade, are shaking the foundations on which the WTO was built some 25 years ago. There is also growing momentum among many WTO members to ‘modernize’ the WTO, including the Appellate Body although the details and feasibility of reform are unclear at this stage. In this perspective, we suggest some ideas on both trade-distorting farm subsidies and S&DT which are the two important issues in the WTO negotiations.
Topic:
Agriculture, Reform, Economy, Multilateralism, WTO, and Subsidies
Political Geography:
Global Focus

41. How Chinese Local Governments are Expanding Foreign Economic Cooperation

Author:
Sanghun Lee, Hongwon Kim, Joohye Kim, Jiwon Choi, and Jaehee Choi
Publication Date:
10-2020
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
As the Chinese economy becomes more advanced and the internal and external economic environment surrounding China changes, so too does China’s strategy for external openness and economic cooperation. Accordingly, specific policies are diversifying from the past focus on manufacturing and foreign direct investment to services, overseas investment, bilateral and multilateral FTAs, and bilateral investment treaties (BITs). As the central government’s policy stance changes, China’s local governments are also promoting external openness and cooperation based on regional development stages, industrial structure, and regional development policies, reflecting the central government’s strategy. In particular, after the 19th Party Congress, the central government showed a strategic stance expanding external openness. In response, local governments have moved away from the traditional method of cooperation in the manufacturing sector centered on industrial complexes, and in recent years various cooperative methods have been promoted, including regional economic integration, service and investment, the use of FTAs, and innovations in institutions to expand external openness. Along with the shift in China’s foreign economic strategy, the economic cooperation environment surrounding Korea and China is changing as well, including the strengthening of protectionism, structural changes in the Chinese economy, the Korea-China FTA coming into effect, and the launch of follow-up negotiations. Therefore Korea needs to find new strategies and measures for economic cooperation with China, making it time to find new ways to expand cooperation with China’s central and local governments. Against this backdrop, this study aims to analyze the strategies, detailed policies and major cases of China’s central and local governments’ external openness and economic cooperation, and to draw policy implications for strengthening economic cooperation between Korea and China in the future.
Topic:
Government, Foreign Direct Investment, Economy, and Economic Cooperation
Political Geography:
China and Asia

42. Determinants of FDI in Transition Economies and Implications for North Korea

Author:
Cheol-won Lee, Hyung-gon Jeong, and Min-suk Park
Publication Date:
11-2020
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
North Korean authorities have been seeking changes in North Korea’s economic policy since the Kim Jong Un regime took power. Along with decentralization, the government is trying to increase efficiency and productivity within the socialist economic system, and as part of this policy it has designated 27 economic development zones to attract foreign investment. Foreign direct investment plays a crucial role in economic growth for low-income countries such as North Korea, which lacks capital and technology. This study discusses North Korea's foreign investment policy and tasks ahead of its government to revitalize the economy, based on the premise that nuclear negotiations between North Korea and the US proceed smoothly. First of all, in order to derive policy tasks, we compared and analyzed the achievements and policies of transition countries in Asia and Eastern Europe in terms of attracting FDI, also analyzing the determinants of FDI inflows, after which we present policy tasks for North Korean authorities. As South Korea may very well become the largest investor in North Korea, our study also discusses tasks for the Korean government to pursue in order for Korean companies to successfully invest in North Korea.
Topic:
Foreign Direct Investment, Economy, and Transition
Political Geography:
Asia and North Korea

43. Belt and Road Initiatives: China and South Korea's Economic Ties with South Asia and Nepal

Author:
Bama Dev Sigdel
Publication Date:
04-2020
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
The main objective of this article is to assess the effect of the Belt and Road Initiative (BRI) in terms of economic interrelations between Asian countries mainly China, Korea, India and Nepal. China’s Belt and Road Initiative (BRI) is one of the most ambitious economic strategies in modern times that alters the economic, political and social relationship between Eastern and Western societies. It not only improves transport networks and facilitates trade, but also raises GDP of many economies. For China, BRI manifests its intention to become the next global power through bigger market access and economic opportunities. Although South Asia is less developed economically, it has high strategic utility for the BRI, which has drawn attention from China to deepen its relations in the region. On the other hand, South Korea has also emerged as a soft power in Asia. It has been playing a significant role in Asia by contributing the majority of its aid, i.e., 35 per cent in Asian economies and a major share of its FDI, i.e., 34.1 per cent. With the rapidly increasing growth of South Korea, it also has a growing relationship with ASEAN and other South Asian economies such as India to reduce its dependence on traditional trade allies. Moreover, for least developed economies like Nepal, the BRI can bring improved infrastructure, needed technology, managerial talents and greater connectivity to the world. South Korea can yield higher benefits through its relation with South Asia and especially Nepal through expansion of export and market access, access to cheap workable manpower to cope with its rising aging population, and less dependence on traditional allies through its investment in South Asian region.
Topic:
International Relations, Economics, Economy, and Belt and Road Initiative (BRI)
Political Geography:
China, South Asia, Asia, South Korea, and Nepal

44. Asia-Pacific Stock Market Connectedness: A Network Approach

Author:
Young-Joon Park
Publication Date:
10-2019
Content Type:
Special Report
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This paper addresses network connectedness in stock returns and volatili-ties across the Asia-Pacific economies over the pre- and post-GFC periods. This study also uses the MSCI-classified group-specific latent factors to ex-amine their connectedness among the developed and emerging markets in different Asia-Pacific regions. We find that (i) based on the return connected-ness measures, global financial hubs - Singapore and Hong Kong - and Aus-tralia play an important role as efficient return information transmitters across stock markets, (ii) the United States is an overwhelming volatility transmitter as a net source of shocks during the global financial crisis, and subsequent volatility spillovers spread the crisis shock to each other in the region, (iii) comparing the results between the pre- and post-GFC periods, Canada was a net volatility transmitter before the GFC but has changed to a net volatility receiver after the GFC, and Korea has magnified the position of a net volatil-ity receiver after the GFC, and (iv) in terms of the degree of total spillovers in returns and volatilities at large, stock market connectedness in the Pacific Rim was reinforced after the GFC. These findings support the potential fea-sibility of financial cooperation and uphold a cause of regionally coordinated macro-financial policies against systemic risk vulnerability.
Topic:
Economy, Networks, Stock Markets, and APEC
Political Geography:
Asia-Pacific

45. The Effects of Minimum Wages on Wage Inequality and Gender Pay Gap in APEC Economies

Author:
Seongman Moon
Publication Date:
11-2019
Content Type:
Special Report
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This paper investigates the effects of an increase in minimum wages on wage inequality and gender pay gap in APEC economies using unbalanced economy-level panel data from 1990 to 2017. We estimate both linear and quadratic models of the effective minimum wage, while controlling for mac-roeconomic variables that could affect wage inequality as well as gender pay gap. The increase in the minimum wage has the effect of alleviating the wage inequality at the lower-tail of the wage distribution. The effect is much greater for women than for men, which contributes to reducing gender pay gap. On the other hand, the rise in the minimum wage does not affect the wage ine-quality at the upper-tail of the wage distribution for both women and men.
Topic:
Gender Issues, Income Inequality, Economy, and Minimum Wage
Political Geography:
Global Focus

46. Rethinking Monetary and Financial Policies in China

Author:
Il Houng Lee, Murtaza Syed, and Da Young Yang
Publication Date:
09-2014
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
There is partial consensus that the size of money―or liquidity―in China should be large reflecting the high savings rate. Even so, with a sense of a liquidity overhang from the recent monetary expansion, many caution against expanding liquidity further lest it translate into a property bubble. Instead, they argue for ways to speed up the circulation of liquidity―in other words to raise velocity―to stimulate the real economy. The recent growth of the non-banking system adds to these concerns, and has been criticized as falling short of promoting effective financial intermediation. Some even claim that the monetary authorities may be losing control over the growth of key monetary aggregates. Against this background, this paper reviews recent monetary developments in China and considers how monetary aggregates and the financial system may have to change to support the rebalancing of the economy.
Topic:
Monetary Policy, Finance, and Economy
Political Geography:
China and Asia

47. Delayed Overshooting: It's an 80s Puzzle

Author:
Seong-Hoon Kim, Seongman Moon, and Carlos Velasco
Publication Date:
09-2014
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
We re-investigate the delayed overshooting puzzle. We find that delayed overshooting is primarily a phenomenon of the 1980s when the Fed was under the chairmanship of Paul Volcker. Related findings are as follows: (1) Uncovered interest parity fails to hold during the Volcker era and tends to hold in the other periods considered. (2) US monetary policy shocks have substantial impacts on exchange rate variations but misleadingly appear to have small impacts when monetary policy regimes are pooled. In brief, we confirm Dornbusch’s overshooting hypothesis.
Topic:
Economy and Overshooting
Political Geography:
Korea and Global Focus

48. Trade Liberalization and Aggregate Matching Function in India

Author:
Woong Lee
Publication Date:
09-2014
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This article investigates the link between trade liberalization and the job matching process in India. The aggregate matching function in India is estimated by incorporating the trade openness as a proxy for trade liberalization. The monthly data are drawn from Employment Exchange in India, the only public employment service in the country. Overall, it appears that trade liberalization leads to a decline in new hires. However, the analysis of period decomposition shows that correlation between trade-to-GDP ratio and new hires is negative and significant only in the period of the Ninth Plan, 1997 to 2002, when political influence delayed economic reform. The suggestion is made that the negative relationship between trade liberalization and new job creation does not hold except for the period of political influence and thus the Indian government should continue to promote external reform.
Topic:
Economy, Trade, Job Creation, and Liberalization
Political Geography:
South Asia and India

49. A Risk Map of Markups: Why We Observe Mixed Behaviors of Markups

Author:
Seong-Hoon Kim
Publication Date:
09-2014
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This paper proposes an explanation for mixed evidence on the behaviors of markups. The key mechanism consists of two complementary channels of risk internalization that arise when firms face uninsurable business risks. One channel is based on passive risk consideration, through which firms raise prices to abide by riskier business thereby associating higher production with higher prices. The other channel is based on active risk management, through which firms lower prices to handle riskier business thereby associating higher production with lower prices. The relative responsiveness of the two channels to a shock depends on each firm’s fundamental characteristics and leads to a sharp division of markup cyclicality across sectors.
Topic:
Economy, Business, and Risk
Political Geography:
Global Focus

50. A Proposal for a New Regional Financial Arrangement: The Reserve Liquidity Line

Author:
Young-Joon Park
Publication Date:
12-2014
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This paper examines the limitations of the Chiang Mai Initiative Multilateralization (CMIM) as a regional financial safety net in East Asia, and proposes a new regional financial arrangement. To overcome the drawbacks of the CMIM, which has never been activated so far, a new regional financial arrangement suggests that ASEAN+3 members establish a regional reserve system based on a supranational regional reserve asset. The new regional financial arrangement, so-called “Reserve Liquidity Line” (RLL), guarantees a degree of automaticity in liquidity facility, based on upfront funding instead of pledge funding. As a backdrop of the regional reserve system, some market movements have been manifested to reduce excessive U.S. dollar dependency in East Asia and to enhance the use of local currencies. Establishing the RLL mechanism could find a way of making up for the weak points of the CMIM and responding to the regional needs for effective regional financial arrangements. The proposed operational mechanism of RLL comprises (i) institution building of ASEAN+3 Reserves System (ARS) to manage the Regional Reserves Asset (RRA), (ii) an Operations Account and a Substitution Account, and (iii) a sort of basket exchange rate for RRA valuation.
Topic:
Finance, Economy, Multilateralism, International Reserves, and Liquidity
Political Geography:
Global Focus