The study examines methodologies for quantitatively analyzing the impact of global supply chain fragmentation and applies these approaches to scenarios involving critical minerals. It identifies two primary analytical approaches: microeconomic and macroeconomic.

Microeconomic methods provide detailed insights at the item or firm level but face challenges due to limited access to specific supply chain data. Macroeconomic methods, while suitable for industry- or national-level analysis, often rely on unrealistic assumptions when applied to item-level fragmentation. Despite the significant macroeconomic effects of disruptions in critical supply chains, existing item-level analysis techniques struggle to capture these impacts accurately. For instance, efforts to link item-level analysis with GDP using linear programming or inoperability input-output analysis often encounter limitations due to rigid assumptions about input-output structures. High-tech items, in particular, pose challenges due to their complex supply chain interdependencies and their significant influence on final production.

To address these issues, the study proposes an integrated methodology combining machine learning techniques for microeconomic analysis with the OECD METRO model for macroeconomic evaluation. This approach considers key issues and transmission channels identified in previous research. The study also reviews critical mineral management policies in major economies such as the United States, European Union, China, and Korea. The United States identifies critical minerals essential for economic and national security through legislative measures like the 2020 Energy Act and has implemented strategies to strengthen North American supply chain resilience. The European Union has updated its critical raw materials list every three years since 2008 and enacted the Critical Raw Materials Act in 2024 to expand production capacity and enhance international cooperation. China, despite lacking a clear legal definition of critical minerals, strengthens its resource management through export controls and cooperation with resource-rich countries. Korea designated 33 minerals as critical through its 2023 Critical Minerals Securing Strategy, prioritizing 10 strategic minerals essential for industries like electric vehicles and semiconductors. However, Korea’s reliance on imports for most critical minerals highlights its vulnerability.

The study conducts a vulnerability analysis of Korea’s critical mineral supply chains using indicators such as the Trade Specialization Index (TSI) and Herfindahl-Hirschman Index (HHI). It identifies high global supply chain concentration in minerals like cobalt, lithium, and neodymium, which are crucial for secondary batteries and electric vehicles. To assess geopolitical risks, it examines import trends from China across seven countries from 2017 to 2023. Sharp declines in imports of gallium, graphite, and rare earth elements suggest potential disruptions due to trade conflicts or export controls.

The study employs a Dual-Stage Attention-Based Recurrent Neural Network (DA-RNN) model to predict the impact of critical mineral fragmentation on Korea’s exports of key items like batteries and semiconductors under three scenarios involving germanium, graphite, and rare earth elements. The results show significant decreases in export values across all scenarios. For example, restrictions on germanium imports led to a 3.9% decline in battery exports, while rare earth element shortages caused a 10.8% drop.

Using the OECD METRO model, the study evaluates the macroeconomic impact of critical mineral fragmentation under two approaches: direct analysis of import disruptions (Approach 1) and integration of microeconomic results into macroeconomic simulations (Approach 2). The findings indicate that germanium fragmentation could reduce Korea’s real GDP by 0.15%, while graphite and rare earth element disruptions could lead to decreases of 0.14% and 0.89%, respectively.

Based on these findings, the study recommends strengthening supply chain monitoring systems by integrating fragmented platforms across government agencies and establishing a centralized control tower. It also suggests diversifying procurement strategies, promoting R&D for substitute materials, and supporting SMEs through digital-based supply chain management platforms. Additionally, it emphasizes harmonizing policies with major economies to prevent over-securitization and redundant investments while expanding international cooperation for joint mineral exploration and development projects.

Executive Summary

1. Introduction

2. Descriptive Facts

3. Gravity Models of International Migration

4. Empirical Analysis

5. Robustness Checks

6. Conclusion References

In recent decades, European Union (EU) enlargement has substantially altered the continent’s economic and political landscape by lowering barriers to trade, labor mobility, and capital flows. Migration emerges as a central factor in this transformation, especially following the accession of Central and Eastern European countries. This enlargement has intensified interest among policymakers and researchers in the factors driving intra-European migration and its economic and social implications.

This study specifically investigates the interplay between EU enlargement, the Freedom of Movement (FOM) agreements, and Brexit on labor mobility. Although EU enlargement has generally been associated with deeper economic and political integration, its most profound impact may lie in facilitating international migration. By distinguishing between the timing and impact of EU membership and the Freedom of Movement (FOM) agreements—often introduced at different times— the analysis provides a nuanced view of their respective roles.

Employing a gravity model framework with Poisson Pseudo-Maximum Likelihood (PPML) estimation and a heterogeneity-robust difference-in-differences (DiD) approach, this study examines bilateral migration flows across 224 origin-destination country pairs. The results reveal that EU membership significantly increases migration flows, particularly from newer to older member states, indicating a pronounced east-to-west asymmetry. This effect remains robust after accounting for FOM implementation, and further robustness checks confirm the consistency of the findings under different policy timelines and the inclusion of external mobility agreements.

Additionally, the study explores the impact of Brexit on return migration, uncovering a substantial rise in flows from the UK to EU member countries—especially those that joined after 2000—following the 2016 referendum. These patterns highlight the heterogeneous and asymmetric effects of different EU migration policies and suggest that Brexit exerts a stronger influence on return migration than FOM.

Consequently, the findings highlight the importance of policy-specific analysis in capturing the complexities of migration responses to institutional changes within the EU.

As the competition for technological hegemony intensifies between the U.S. and China, major advanced countries around the world, including the U.S., are increasingly strengthening their strategies to protect and foster their technologies and industries in core science and technology fields. The governments of individual countries are expanding R&D investment, reorganizing legal and institutional foundations for technology protection and fostering, and aiming to strengthen national security and industrial ecosystems as well as securing technological competitiveness.

Major advanced economies, such as the U.S., the UK, and the EU, are formulating sophisticated policy frameworks aimed at promoting the growth of core science and technology fields. These frameworks involve easing unnecessary regulations while introducing new measures to safeguard critical technologies. Accordingly, it is essential to conduct a comparative analysis of these countries’ strategies for science and technology development, their approaches to fostering innovation ecosystems, and their industrial policy directions by examining the legal, institutional, and policy innovation strategies in major advanced countries.

Amid intensifying competition for technological hegemony between advanced countries, each country is focusing on securing technological independence and sustainability. The U.S. is intensively fostering high-tech industries such as semiconductors, AI, quantum technology, and biotechnology through its “America First” strategy, and is also restricting foreign investment and controlling technology transfer. The UK is strengthening its strategic choices to overcome the problem of low economic growth following Brexit and improve the UK’s global competitiveness in core technologies, while pursuing R&D investment and regulatory reform in fields such as AI and quantum technology. The EU is working to convert its technological innovation policy, which used to be centered on individual member states, into a more common strategy at the EU level, and is carrying out large-scale R&D investment and regulatory reform to secure the EU’s global competitiveness.

In addition, China has made science and technology independence its top priority in the face of U.S. countermeasures and is accelerating its own technology development in fields such as semiconductors, space-technology, biotechnology, and high-tech manufacturing. As such, major advanced countries are implementing strategic policies to strengthen their technological sovereignty and secure leadership in the global technology competition, underscoring the need for Korea to respond quickly and systematically. Korea also needs a strategic approach to respond to the intensifying global competition in technology, particularly by overcoming the limitations of existing systems and by innovating regulatory reforms tailored to the evolving technological landscape. There is a growing demand for the need to remove institutional barriers that hinder the development of science and technology and to establish a flexible regulatory framework that can accommodate new emerging technologies. In particular, as the perception that regulatory innovation is directly connected to national competitiveness spreads, now is the time for Korea to take active policy measures in response.

In the fields of science and technology, changes in the R&D, production, delivery, and transaction methods of new technologies are leading to conflicts with existing laws and systems, as well as the emergence of new regulatory issues. The phenomenon of “regulatory delay”—caused by the absence of appropriate laws or regulatory gaps—is becoming increasingly severe, posing obstacles to the commercialization of new technologies by companies and research institutions. To address this, major advanced countries are making continuous and focused efforts to promote regulatory innovation. Analyzing these strategies can help us better understand how regulatory innovation is being implemented in the fields of science and technology in major advanced countries.

By investigating and analyzing the implications, promotion strategies, detailed focus areas, and key characteristics of regulatory innovation strategies pursued by major advanced countries to achieve global technological leadership and foster innovative growth in related industries, this study aims to present effective response strategies for Korea to prepare the rapidly evolving future regulatory environment in the fields of science and technology, through a multifaceted analysis of regulatory innovation strategies by areas—that has not been fully addressed in existing research areas.

The first step in investigating and analyzing regulatory innovation strategies in the fields of science and technology in major advanced countries is to select three advanced countries to be studied. The U.S. was selected for its leadership in science, technology, and industrial ecosystems, as well as its global influence on national regulatory innovation strategies. The UK was chosen for its pioneering role in regulatory innovation strategies in the fields of science and technology, and the EU was selected for its role in driving innovative demand in new industrial sectors. These three entities were identified as the major advanced economies to be included in the study.

The next step is to select some fields to be investigated among the various fields of science and technology. In 2024, the Ministry of Science and ICT announced three major game changer technologies (AI-semiconductor, advanced bio, quantum), on the basis of which a total of four science and technology fields were selected: semiconductors, advanced biotechnology, AI, and quantum technology.

The final step is to categorize various areas—such as institutions, governance, standards and certification, ethics, international cooperation, subsidies and tax incentives, experimental testing and scientific-technological capabilities, hostile response policies and strategies, and public/private protection (safety and security)—into three major groups; ① system and governance, ② Fostering and advancing the science and technology ecosystem and ③ technology security. Based on this classification, the study systematically analyzes the regulatory innovation strategies of major advanced countries in the fields of semiconductors, advanced biotechnology, AI, and quantum technology the perspective of these three categories.

Subsequently, the findings of major studies that have investigated and analyzed regulatory innovation strategies in core science and technology fields - such as semiconductors, advanced biotechnology, AI, and quantum technology in the U.S., UK, and EU are summarized as follows.

In the field of semiconductor, the three major advanced economies are working to promote semiconductor production and innovation within their borders, execute export control regulations, and respond to a supply-crisis caused by semiconductor shortages in order to protect their respective technological advantages. Each country is promoting innovative policies that include subsidies, tax incentives, and R&D policy funds in its innovative regulatory framework. The UK is strengthening its strategic choices to maintain and expand its strategic advantage in this sector based on its strengths in semiconductor design and intellectual property, compound semiconductors, and the world’s best research and innovation systems, with a relatively smaller amount of support than the U.S. and EU. In Korea, the so-called “K Chips Act” (amended by the Restriction of Special Taxation Act) was passed at the National Assembly plenary session in February 2025 to strengthen tax incentives for investment, such as the expansion of semiconductor companies’ factories. In addition, special laws for strengthening the competitiveness of the semiconductor industry and innovative growth are being discussed by the relevant committees of the National Assembly.

In the field of advanced biotechnology, the U.S. has been continuously implementing innovation policies to improve the regulatory environment through the Coordinated Framework for the Regulation, the federal government’s basic guidelines for regulating biotechnology products. The UK is pushing for the government’s smart regulatory program to remove regulatory barriers and prepare for the future of regulatory frameworks by explaining regulatory issues related to engineering biology through RHC(Regulatory Horizons Council). In addition, the regulatory sandbox for engineering biology is being promoted through the EBRN. The EU is focusing on simplifying regulatory pathways through a series of measures to promote biotechnology and bio manufacturing in the EU, and is implementing measures to further promote the establishment of regulatory sandboxes to quickly launch them in the market. Korea has enacted and is currently implementing the Biotechnology Promotion Act, which aims to efficiently foster and develop biotechnology by establishing a solid research foundation and promoting the industrialization of biotechnological advancements. In January 2025, the National Bio Commission was launched, and the government unveiled the “Korea Bio Great Transformation National Strategy,” which aims to position Korea among the world’s top five biotechnology leaders by 2035 through sweeping transformations in infrastructure, R&D, and the bioindustry.

In the field of AI, although the US has long led the world in AI technology and scientific advancement, its AI regulatory framework only began to take full shape in 2024. That year, President Joe Biden issued a new executive order titled the “AI Executive Order on Safe AI.” This executive order establishes new standards for the safety and security of AI, protects privacy, promotes civil rights, fosters innovation, and introduces stronger regulations to prevent the misuse of AI.

The UK, through its National AI Strategy, has proposed short-, medium-, and long-term measures aimed at achieving three core priorities: investment in the AI ecosystem, ensuring that the benefits of AI are distributed across all sectors and regions, and establishing effective AI governance. Furthermore, to lead responsible innovation in artificial intelligence (AI) and maintain public trust in the technology, the UK became the first country in the world to publish an AI regulatory white paper titled A Pro-Innovation Approach to AI Regulation, which provides guidance on the use of AI. The UK government subsequently published a Government Response that compiled and addressed questions from various relevant institutions regarding the white paper, thereby presenting a foundational regulatory framework for AI. In addition, the UK is building its AI governance structure by establishing the world’s first government- supported AI Safety Institute and forming a Regulator Ecosystem composed of multiple regulatory bodies. The EU finally approved the “AI Act,” the world’s first comprehensive AI technology regulation, on May 21, 2024. The EU AI governance system has been established as a separate AI Board consisting of the EU Commission, its AI Office, and delegations from EU member states.

Recently, Korea became the second country in the world, following the European Union, to enact an “AI Basic Act,” which is scheduled to take effect in January 2026.

Korea’s AI Basic Act includes provisions for the establishment and implementation of a national AI master plan every three years, the formation of a national-level AI governance structure and support for the innovative development of the AI ecosystem through measures such as securing professional talent, designating AI industrial clusters, building AI testbeds, promoting AI data center policies, and facilitating international cooperation. The Act also addresses AI technology standardization, the establishment of ethical principles, the expansion of financial resources for AI industry promotion, and the prevention of AI-related risks, including administrative fines. It defines “high-impact AI” as a target for regulation and outlines obligations for transparency, safety assurance, and provider responsibility. However, generative AI is largely exempt from the major regulatory provisions.

The US has adopted a strategic and agile approach to AI governance by issuing sector-specific guidelines and recommendations, executive orders, and fostering collaboration with companies and research institutions. This allows for a rapid and flexible response to the fast-evolving AI landscape. Similarly, the UK is pursuing a pro-innovation and flexible regulatory approach, introducing measures to address the misuse of AI and establishing regulations tailored to specific AI use cases. In contrast, the European Union has implemented a risk-based regulatory framework that classifies AI systems into categories such as “unacceptable risk/high risk/limited risk/minimal risk.” It imposes explicit regulatory obligations on AI systems falling under the “unacceptable/high-risk” categories, and includes provisions for general-purpose AI models. Korea, for its part, defines “high-impact AI” and outlines obligations related to transparency, safety, and provider responsibility. However, generative AI remains largely outside the scope of major regulatory provisions.

In the field of quantum technology, the U.S. has developed a comprehensive and broad-based regulatory framework to maintain and develop global leadership. In particular, the U.S. seeks to enhance national security and economic competitiveness through a strategic regulatory framework for quantum research, development, and science and technology. The UK has outlined 13 Priority Actions under its National Quantum Strategy and established the Office for Quantum within the Department for Science, Innovation and Technology (DSIT), which regularly reports to the National Science and Technology Council chaired by the Prime Minister.

In February 2024, DSIT’s RHC released a report recommending a regulatory policy for nurturing the UK’s innovation-friendly quantum ecosystem. The report is based on four core principles—proportionality, adaptability, accountability, and balance—and was prompted by the growing need for proactive discussions on the timing, scope, and form of regulations to ensure stable investment and development in quantum technology. The RHC made 14 recommendations emphasizing the need to establish strong governance, including the development of a quantum technology regulatory framework and the need for a regulatory framework based on standards, guidelines, and responsible innovation practices. DSIT is working on ways to identify regulatory requirements in the future, such as conducting horizon scanning for future regulatory requirements and adjusting proportional regulatory initiatives.

The EU launched its Quantum Technology Flagship in 2018, following the issuance of its Quantum Manifesto in May 2016. This flagship initiative brings together research institutions, industry players, and public funding bodies to consolidate and expand Europe’s scientific leadership and excellence in quantum technologies.

In the Strategic Research and Industry Agenda (SRIA) 2030 roadmap, the EU emphasizes the need to develop independent capabilities in quantum technology development and production to secure global leadership, protect strategic interests, ensure autonomy, and strengthen security—while avoiding dependence on third countries. The EU aims to establish the world’s leading ecosystem that translates lab-scale research into mass production across various scientific and industrial applications. Moreover, the EU highlights the importance of leveraging the economic and societal potential of quantum technologies to strengthen its position as a global player in this transformative field, ultimately positioning Europe as the world’s “Quantum Valley.” Korea’s Quantum Technology Industry Act, along with the National Quantum Strategy and various quantum initiatives, represents a set of innovative policy measures aimed at establishing a research foundation for quantum’s science-technology and systematically fostering the quantum industry. These efforts reflect the pursuit of multi-faceted innovation strategies across the key domains identified in this study. However, concrete strategic initiatives focused on identifying regulatory challenges in the quantum science and technology sector and anticipating future regulatory environments remain limited.

As a strategic response to such regulatory innovation policies in advanced major countries, the following approaches can be considered.

First, it is necessary to establish governance that support innovation across the broader economy while providing recommendations on the prioritization of regulatory reform in alignment with the regulatory environment in the fields of science and technology. Next, it is essential to proactively establish systems and strategies for scanning anticipatively regulatory environments and requirements in the fields of science and technology, and to strengthen integrated regulatory approaches starting from the R&D stage. Next, it is important to establish robust regulatory frameworks for core fields of science and technology and to advance innovation strategies—such as large-scale financial support—in order to secure technological leadership and foster a resilient and competitive ecosystem.

Furthermore, there is an increasing need to enhance global cooperation strategies aimed at ensuring alignment and harmonization with international regulations, grounded in active participation in the development of global technical standards and regulatory frameworks. Additionally, enhancing regulatory sandbox systems in core fields of science and technology will be essential for promoting timely and flexible responses to technological innovation.

As a final consideration, the rapid advancement of technology is increasing the need to redesign anticipative regulatory innovation roadmaps in established fields, and the cycle of these rolling plans is expected to become shorter. It is also a time to initiate discussions on setting the cycle of these rolling plans, establishing clear procedures, and defining the legal basis for their implementation.

Since the onset of the U.S.-China trade dispute, economic tensions between the two countries have persisted, with the Biden administration maintaining a hardline stance on China. With the recent return of the Trump administration, a large-scale tariff war is once again anticipated, making thorough analysis and policy responses increasingly critical. This study examines the impact of the tariff war triggered by the U.S.-China trade dispute on the Korean economy, and derives policy implications based on the findings.

First, the U.S. tariff increases on Chinese goods have led to a decline in Korea’s exports to the U.S. and a reduction in imports from China, thereby reshaping trade flows. However, the strengthening of U.S. non-tariff barriers has increased Korea’s exports to the U.S., particularly in consumer goods, suggesting that Korea can play a crucial role as an alternative supplier. Consequently, the Korean government and businesses must diversify their markets beyond key trading partners by expanding into emerging markets such as Southeast Asia and Latin America to mitigate trade risks. To achieve this, the government and research institutions should systematically collect and analyze data on the economic, political, legal, and consumer trends of these emerging markets and provide relevant insights to businesses.

Furthermore, to diversify its export industries, Korea must enhance its manufacturing competitiveness and foster high-value-added industries. Given the complementary nature of Korea’s exports of industrial goods to the U.S. with those of China, an increase in U.S. tariffs on Chinese goods could potentially lead to a decline in Korea’s exports to the U.S. Therefore, Korea should diversify its export portfolio to include not only industrial goods such as semiconductors and machinery but also consumer goods, thereby mitigating the negative impact of trade disputes. To achieve this, Korea should continuously invest in research and development (R&D) to advance products and services while enhancing industrial processes through expanded investments in Fourth Industrial Revolution technologies and R&D. Additionally, policies should be implemented to support small and medium-sized enterprises (SMEs) by promoting technological innovation and providing tax incentives to strengthen overall industrial competitiveness.

Additionally, a systematic response to non-tariff barriers is required. Amid ongoing trade disputes and rising protectionism, non-tariff barriers have been reinforced alongside tariffs, often offsetting the effects of tariff policies. Thus, focusing solely on countering the negative effects of tariff measures may introduce unnecessary uncertainty, underscoring the need for a comprehensive response that also addresses non-tariff barriers. Accordingly, response strategies should take into account the simultaneous impact of systematic trade policies, including tariff and non-tariff measures. Moreover, a preemptive monitoring and early warning system should be established to continuously track trends in non-tariff barriers and enable swift policy responses.

Next, adjustments to foreign direct investment (FDI) strategies are necessary. Following U.S. tariff increases on Chinese goods, Korean multinational corporations (MNCs) have shown a tendency to increase their FDI in the U.S., a trend particularly evident among large enterprises. Meanwhile, although the number of subsidiaries of Korean MNCs operating in China has been declining—particularly among firms with higher import shares and heavily dependent on the global value chain—, the overall scale of FDI to China has not significantly decreased. This suggests that firms are reallocating their investments in China more efficiently. In particular, U.S. tariff measures on Chinese goods have created opportunities for Korean firms to expand their investments into third countries such as ASEAN, leading to increased FDI in this region. This trend reflects ASEAN’s advantages, including low production costs and strengthened connectivity with both the U.S. and Chinese markets, positioning it as an attractive alternative investment destination for Korean firms. Therefore, the Korean government should formulate policies to support the FDI strategies of Korean businesses while also considering measures to prevent the hollowing out of domestic industries.

Finally, ensuring flexible macroeconomic stability policies, including foreign exchange market and monetary policies, is crucial. Analyzing past U.S. trade policy shifts reveals that as U.S.-China trade conflicts intensified, trade policy uncertainty increased before tariff adjustments. This led to a depreciation of the Korean won against the U.S. dollar and heightened exchange rate volatility. The impact of trade policy uncertainty did not have a statistically significant effect on Korea’s key macroeconomic variables, as its influence on exports and imports was offset by the depreciation of the Korean won. However, U.S. tariff increases negatively affected Korea’s total production and dollar-denominated exports, partially explained by changes in the won-dollar exchange rate and price levels. Therefore, it is essential to ensure that Korea’s macroeconomic policies can respond more swiftly and flexibly. Coordination between monetary, fiscal, and foreign exchange policies should be strengthened to maintain economic stability.

In summary, changes in U.S.-China trade policy have significantly increased trade costs between the two countries, leading to reduced trade volumes and rising import costs, with substantial structural impacts on third-country economies, including Korea. Consequently, the Korean government and businesses must develop strategies to adapt flexibly to the evolving trade environment, followed by further research and policy discussions should continue. In particular, to minimize the negative impact of the prolonged U.S.-China trade dispute on Korea’s trade environment, more sophisticated trade policies should be formulated, and measures should be implemented to support Korean firms’ FDI strategies amid growing protectionist trends.

Additionally, policy support should be strengthened to enable Korean firms to respond flexibly to the restructuring of global value chains. Furthermore, institutional improvements are needed to enhance the speed and flexibility of macroeconomic policies, allowing for effective responses to exchange rate volatility amid increasing uncertainty in U.S. trade policy. Through these measures, Korea must establish a comprehensive strategy to ensure continued economic growth and competitiveness despite the U.S.-China trade conflict and shifts in U.S. trade policy with other countries.

In December 2023, the Houthi rebels in Yemen launched attacks on commercial vessels in the Red Sea, escalating the Israel-Hamas conflict into a broader geopolitical risk encompassing the Red Sea region. This development disrupted the logistics supply chain between Asia and Europe, which had previously relied heavily on the Suez Canal. As maritime routes shifted from the Suez Canal to the Cape of Good Hope, countries worldwide, including South Korea, faced increased shipping and insurance costs. This situation posed the dual challenges of weakened export competitiveness and rising inflation.Simultaneously, the Red Sea crisis underscored the need for alternative land and maritime logistics networks to ensure supply chain stability. This led to heightened international interest in establishing new logistics hubs. Notably, discussions surrounding the Indo-Middle East-Europe Economic Corridor (IMEC), announced at the 2023 G20 Summit, and the Development Road project, actively promoted by Turkiye and Iraq, gained traction following the Red Sea crisis. For South Korea, an export-driven economy, the continued geopolitical uncertainty around the Red Sea presents significant threats. Rising logistics costs and decreased reliability in maritime shipping could undermine export competitiveness. Consequently, there is an urgent need to explore alternatives beyond the Cape of Good Hope, including expanding overland logistics via China’s transcontinental high-speed rail.

This study aims to address two key questions: (1) What impact has the Red Sea crisis had on South Korea’s logistics network and trade? (2) What implications do the economic corridors, actively pursued by Western countries, India, the Middle East, and Turkiye, hold for South Korea in terms of supply chain connectivity and logistics hub development?

Chapter 2 focuses on the background of the Red Sea crisis and its impact on maritime logistics. The crisis began after the Houthi rebels declared solidarity with Hamas, launching attacks on key commercial vessels using a range of weapons. In response, major shipping companies diverted routes from the Suez Canal to the Cape of Good Hope, leading to increased transit times and costs. This shift has expected to contribute to global inflationary pressures. The crisis significantly reduced vessel traffic and cargo volumes through the Suez Canal and Bab-el-Mandeb Strait. Notably, shipping companies continue to prefer the Cape of Good Hope route, raising concerns that maritime trade through these chokepoints may not recover in the mid-to-long term. Major global ports also experienced temporary declines in vessel traffic and cargo volumes, with reductions lasting up to six months compared to the same period in the previous year. Focusing on South Korea’s external trade, the volume of trade with Europe declined from January to September 2024 compared to the previous year. In contrast, trade volumes with the U.S. remained relatively stable, indicating that the Red Sea crisis negatively impacted Korea-Europe trade beyond mere logistical delays. Key export items, including automobiles, electronics, chemicals, steel, and mineral fuels, all showed declines in the European market. Conversely, exports to North America and Asia increased, suggesting that South Korean companies may have diversified their export markets, considering the U.S., Oceania, and Asia as alternative destinations. While overall exports to the Middle East decreased, imports of mineral fuels, such as petroleum, rose, leading to an increase in trade volume. Considering the impact of the crisis on ports beyond Jeddah, such as Jebel Ali and Salalah near the Strait of Hormuz, the decline in exports to the Middle East appears to result more from changes in maritime logistics networks than from risk- averse corporate behavior.

Chapter 3 explores South Korea’s potential for logistics diversification, focusing on the Development Road and IMEC as alternative routes. Both corridors aim to reduce dependency on the Suez Canal. The Development Road project focuses on connecting Al-Faw Port in southern Iraq to Europe via Turkiye through highways and railways, driven primarily by the geopolitical interests of Iraq and Turkiye. In contrast, IMEC consists of an eastern corridor linking India with Gulf countries and a northern corridor connecting the Gulf with Europe. IMEC reflects broader global objectives, including countering China, maintaining the Arab-Israeli detente momentum, and facilitating the energy transition. A SWOT analysis of both corridors reveals that weaknesses and threats outweigh strengths and opportunities, suggesting low feasibility in the short term. External factors, such as interference from China, Iran, and ISIS, pose significant risks to both projects. Despite limited immediate incentives for South Korean participation, it is advisable for the government and businesses to actively consider engagement in these corridors. Diversifying logistics routes is crucial for managing geopolitical risks, especially given the potential for escalating instability in the Middle East. Furthermore, with the inauguration of a second Trump administration in the U.S., there may be increased pressure for South Korea to expand into new markets such as India and the Middle East. Participating in emerging economic corridors in the Middle East could also deepen Korea-Middle East economic relations by extending cooperation into manufacturing and logistics sectors.

Chapter 4 summarizes the research findings and proposes short- and long-term policy recommendations to enhance the resilience of South Korea’s maritime logistics industry. In the short term, the government should: (1) Develop public-private partnerships (PPP) and investment-driven projects for port construction and operations, and (2) Establish logistics cost support funds for small and medium-sized shippers to build new logistics networks and manage crises effectively. In the long term, participation strategies should differ based on each corridor’s characteristics. For IMEC, cooperation should focus on PPP models based on existing intergovernmental MOUs. In contrast, South Korea should pursue multinational consortiums and Official Development Assistance (ODA) initiatives for the Development Road project.

This study analyzed the impact of the Red Sea crisis on the global economy, South Korea’s maritime logistics, and trade from December 2023 to October 2024. The analysis primarily covered broad categories of goods and regions, lacking detailed assessments. Additionally, as the Development Road and IMEC are still in preliminary stages, their specific impacts on global and domestic logistics systems remain unassessed. Future in-depth studies are needed to address these limitations.

Until the mid-20th century, tangible assets were the primary drivers of economic growth. However, with the rise of digital transformation and the Fourth Industrial Revolution, the role of intangible assets has grown significantly in the 21st century. Traditional forms of intangible assets—such as software, R&D, branding, intellectual property rights, design, and organizational capital—have become central to enhancing firm-level and macroeconomic competitiveness. More recently, advanced technologies such as artificial intelligence (AI), big data, and cloud computing are emerging as new forms of intangible capital that contribute to innovation, productivity, and growth. Against this backdrop, this report analyzes the role of intangible asset investment in both major economies and Korea, and provides policy insights by examining its relationship with key economic indicators such as growth, productivity, and firm performance.

This study is composed of four chapters, excluding the introduction and conclusion. Chapter 2 investigates the relationship between intangible asset investment and economic growth using EKIP data. The analysis confirms a positive correlation between intangible investment and productivity growth, although the strength of this relationship varies considerably across countries and industries. Growth accounting results show that while the contribution of tangible assets to growth is declining, the contribution of intangible assets is on the rise—particularly for those included in national accounts. A regression analysis further reveals that economies with higher concentration of intangible asset investment tend to experience stronger medium-term growth. Additionally, the impact of intangible investment appears to vary depending on the economic size of each country group.

Chapter 3 employs a macroeconomic model with optimal intangible asset investment by agents, calibrated separately to Korean and U.S. data. The results show that the distribution of intangible assets is less dispersed in Korea than in the U.S. Model simulations suggest that increasing intangible asset investment—driven by supportive policy—can lead Korea toward a pattern seen in the U.S., where larger firms expand employment and productivity rises. However, this transformation is also accompanied by a deterioration in income distribution, highlighting the trade-offs involved.

Chapter 4 analyzes the relationship between intangible assets and firm performance using data from the Korean Survey of Business Activities between 2006 and 2021. While the proportion of firms holding intangible assets and their total value have increased steadily, the ratio of intangible to total assets has declined since the mid-2010s. Regression results show that greater intangible asset holdings are associated with improvements in sales, labor productivity, and export performance, both in the short term (1 year) and medium to long term (5 years). The positive effects on sales and productivity are particularly persistent. While the impact on export value weakens over time, intangible assets consistently enhance a firm's likelihood of participating in export activities.

Chapter 5 examines the short-term effects of AI exposure on industries in Korea and the U.S. based on data from 2019 to 2022—prior to the widespread adoption of generative AI. In Korea, AI exposure is positively correlated with some employment indicators, but these correlations are not statistically significant once labor productivity is controlled for. Moreover, AI exposure shows a negative relationship with per capita sales and labor share, indicating that technology adoption does not affect all outcomes equally. In contrast, in the U.S., AI exposure is significantly and positively associated with employment, hourly wages, and labor compensation, suggesting that AI adoption may enhance employment and earnings even in the absence of direct productivity gains.

Based on these findings, the report presents several policy implications. First, given the increasing economic contribution of intangible assets, governments should strengthen tax incentives and public support for R&D, software development, and organizational capital—especially in manufacturing and ICT industries—while promoting digitalization in the financial sector. Second, to address the gap in intangible asset accumulation between large firms and SMEs, policies such as easing credit constraints, expanding tax benefits, and providing innovation vouchers for SMEs are needed. At the same time, expanded investment in intangible assets calls for stronger policies on worker retraining to mitigate income polarization. Third, given the demonstrated benefits of intangible assets for firm performance, it is essential to improve access to finance for SMEs through the development of intangible asset–backed lending and to establish policy frameworks for valuing new types of assets such as AI- and big data–driven technologies. Lastly, since the employment and wage effects of AI adoption differ across countries, Korea should focus on strengthening AI-related job training for existing workers, supporting the adoption of AI by SMEs and traditional industries, and implementing labor protection policies for AI-affected sectors.

As Korea’s Official Development Assistance (ODA) continues to grow, so does the need for a more coherent research ecosystem to support effective policymaking. This reference study aims to inform policy discussions on the development of Korea’s international development research infrastructure by exploring the roles, functions, and contributions of leading research institutes in the field. Focusing on their institutional characteristics, operational models, and relevance to Korea’s policy environment, the study provides foundational insights for building a more strategic and integrated research system.

Chapter 2 provides a comprehensive review of research trends in Korea and abroad. In Korea, while academic research on development cooperation has declined over the past five years, policy- and project-oriented studies commissioned by ODA implementing agencies have increased significantly. This reflects growing policy demand, but also highlights several limitations: many of these studies are short-term, conducted on an ad hoc basis, narrowly focused on immediate issues, and often lack coherence, making it difficult to ensure continuity or generate long-term strategic value. The fragmented nature of Korea’s ODA system—where multiple ministries and agencies not only implement projects but also commission research independently—further hampers efforts to build a coherent knowledge base, foster collaboration, and strengthen long-term research capacity.

While Korea currently lacks a dedicated research institute for development cooperation, some leading international cases demonstrate more integrated and multifaceted approaches. Given the multidisciplinary and practice-oriented nature of development cooperation, specialized research institutions are expected to perform a range of functions that go beyond traditional knowledge production. These include policy advisory, monitoring and evaluation, capacity building, knowledge dissemination, global networking, discourse shaping, and responsiveness to emerging global issues.

Chapter 3 examines ten major international research institutes engaged in development cooperation, focusing on their operational models, roles, and core functions. These institutes conduct both academic and policy-oriented research, respond to emerging and priority development issues, and actively contribute to global discourse. They also disseminate knowledge through a variety of platforms and channels.

Common thematic areas include sustainable economic and social development, climate change, peace, and governance—often approached from the perspective of global public goods. Many institutes also take the lead in advancing research on topics they have strategically prioritized, such as human security, social and economic justice, and digital transformation, while conducting country- and region-specific studies in parallel. Increasingly, they are placing emphasis on evidence-based evaluations of development effectiveness and impact.

These institutions play a key role in shaping international discourse by identifying timely research agendas and spotlighting emerging issues. Their ability to offer relevant, policy-oriented insights enhances both their strategic value and practical influence. In addition, they actively promote outreach, collaboration, and global partnerships, reflecting the inherently international and problem-solving nature of development cooperation.

From an institutional standpoint, many of these research institutes operate with flexible staffing structures and conduct multi-year research projects, often in collaboration with external experts and networks. Given the complexity and multidimensionality of development challenges, such long-term engagement—supported by sustained data collection and rigorous analysis—is essential for generating credible findings. In Korea, where government budget cycles tend to constrain multi-year research, establishing a dedicated research institute with a continuous mandate could help ensure coherence and overcome the inefficiencies of fragmented, one-off studies.

Based on this analysis, the study identifies key roles and functions for establishing a specialized research institute in Korea. These include conducting regular foundational and reference studies on critical development issues, building robust knowledge repositories, facilitating knowledge sharing and dissemination, and supporting timely policy responses to international development challenges. A dedicated institute could enhance the quality, continuity, and responsiveness of research efforts, while also strengthening Korea’s engagement in global development discourse.

In the short term, it is essential to articulate a clear vision and operational framework for such an institute, and to lay the groundwork—both in terms of institutional infrastructure and government support systems—for a continuous research ecosystem. Over the longer term, efforts should focus on building institutional capacity through stable staffing, sustainable funding, deepening expertise, and strong networks. Ultimately, the institute could serve as a national knowledge hub for development cooperation research.

Executive Summary

Chapter Ⅰ. Introduction
1.1 Background
1.2 Literature Review
1.3 Data
1.4 Structure of the Report

Chapter II. Consumer Behavior in India
2.1 Consumption patterns in India
2.2 Household Financial Portfolio in India

Chapter III. Optimism and Consumer Behavior
3.1 Introduction
3.2 Estimation Strategy
3.3 Household Consumption and Saving in India in Relation to the Direction of Forecasting Error
3.4 Category 2 Consumption Expenditures Relative to Income
3.5 Food Subcategories
3.6 Saving Rate
3.7 Household Financial Portfolio
3.8 Conclusion of Chapter 3

Chapter IV. Conclusion
4.1 Summary of the Research
4.2 Discussion

References

Appendix Tables: Household consumption by region and gender

This study examines Indian household consumption and financial behaviors using data from the Consumer Pyramids Household Survey (CPHS), focusing on how spending patterns and financial strategies evolve in response to economic conditions, demographic factors, and forecasting errors.

Chapter 2 analyzes household consumption patterns, revealing that food accounts for nearly half of total expenditures, emphasizing its critical role in household budgets and food security. Non-food consumption is more dynamic, with significant shifts during the COVID-19 pandemic. Spending on non-essential categories like entertainment and dining declined, while healthcare saw a modest increase. Education and healthcare remain smaller components of spending, reflecting budgetary constraints, particularly among lower-income households where post-pandemic financial pressures further limited these expenditures.

The chapter also highlights regional and demographic disparities. Rural households allocate a larger share of their budgets to food, reflecting subsistence needs, while urban households spend more on non-food items due to higher incomes and market access. Female-dominated households allocate slightly more to health and education, suggesting a prioritization of family welfare and human capital investment influenced by socio-cultural factors. These findings underscore the need for targeted policies to address disparities in essential spending areas like health and education.

Chapter 3 explores how forecasting errors—discrepancies between expected and actual financial outcomes—shape household financial decisions, including consumption, savings, and borrowing. Households with optimistic errors increase non-food consumption while reducing savings, particularly in liquid assets like fixed deposits, favoring immediate consumption. Conversely, pessimistic households reduce spending on non-essential services while increasing savings across all asset types as a precaution against economic uncertainty.

Urban households with optimistic errors show stronger tendencies to reduce formal savings and increase spending on food and services. Rural households with pessimistic errors prioritize informal savings mechanisms but reduce food expenditure more significantly. Post-COVID trends reveal that pessimistic households intensified precautionary savings across all asset types while reducing debt exposure, reflecting heightened economic caution.

Borrowing behavior also varies with forecasting errors. Optimistic households favor informal borrowing channels like shop-based credit, especially among low-income groups with limited access to formal financial institutions. Pessimistic households broadly reduce debt exposure across both formal and informal sources, with this effect being more pronounced in rural areas. Post-COVID analysis shows that the cautious approach tied to pessimistic errors has intensified, while the impact of optimistic errors on borrowing has diminished. Overall, this study highlights how Indian households adapt their financial strategies based on economic conditions and sentiment-driven forecasting errors. It underscores significant regional and demographic variations in these behaviors, emphasizing the need for targeted policy interventions to promote balanced growth in essential areas like health and education while enhancing financial resilience across household segments. These insights are critical for designing policies that address disparities and foster stability in the face of economic uncertainty.

This study aims to examine the importance of intellectual property rights(IPR) protection in digital content trade, particularly focusing on the economic impacts of the international diffusion of IPR protection. Additionally, it seeks to identify the appropriate roles and responsibilities that can be assigned to platforms, which play a significant role in the international distribution of digital content, in order to protect IPR in digital content trade. The study also explores the necessity of international cooperation to facilitate these efforts. In Chapter 2, we examine the trends in Korea’s digital content market and trade to understand the changing significance of digital content in the economy. The revenue of Korea’s digital content industry increased from 20.3 billion USD in 2013 to 45.8 billion USD in 2021, with an average annual growth rate of 10.7%. During the same period, revenue per business entity in the digital content industry grew by an average of 11.6% annually, and revenue per employee also increased by an average of 8.8% annually, indicating an overall improvement in business performance. Exports of Korea’s content industry rose from 9.62 billion USD in 2018 to 13.24 billion USD in 2022. The trade surplus in the content industry expanded significantly from 8.4 billion USD in 2018 to 12.09 billion USD in 2022, with substantial trade surpluses recorded in industries such as gaming, music, broadcasting, character, and content solutions.

Chapter 3 outlines the trends in discussions on IPR protection for digital content from a trade perspective. IPR protection issues for digital content have been heavily addressed through bilateral or other agreements. In order to track developments in IPR protection provisions in bilateral agreements, we create a database containing the level of IPR protection for digital content in Free Trade Agreements (FTAs) globally. The digital content-related IPR provisions in FTAs were categorized into three areas: i) compliance with the WTO TRIPS Agreement and adherence to international IPR treaties under WIPO, ii) provisions on copyright and related rights, and iii) enforcement- related provisions. We find a steady increase in the FTAs which include digital content-related IPR provisions.

Additionally, we look into regulatory trends concerning global platforms that dominate the distribution of digital content and services but, due to their vast scale and influence, create challenges that existing regulations struggle to address. To this end, the main features and characteristics of the EU Digital Services Act (DSA) were summarized. Previously, platforms were often granted exemptions from liability for copyright infringements occurring on their services. In contrast, the DSA emphasizes platforms' responsibility for copyright infringements. This reflects the growing significance of platforms in content distribution and copyright infringement cases.

Chapter 4 empirically analyzes the impact of IPR protection in FTAs on digital content trade. We explore the effects of FTAs with TRIPS-plus provisions for digital content (referred to as IPAs) identified in Chapter 3 on digital content trade. The analysis distinguishes between countries that signed IPAs between 2005 and 2019 and those that did not, comparing their global and bilateral trade patterns to derive the trade effects of IPAs. The study focuses on industries closely related to digital content such as telecommunications, computer and information services; royalties and license fees; and personal, cultural, and recreational services. In terms of total imports, countries with IPA experienced a relative increase in imports in the telecommunications, computer, and information services, and personal, cultural, and recreational services sectors compared to countries without IPA. On the export side, personal, cultural, and recreational services exports showed a positive relationship with IPA adoption. We also analyze by income level and find that the relative increase in imports of telecommunications, computer, and information services through IPAs was primarily led by lower-middle-income countries. In contrast, the relative increase in exports of telecommunications, computer, and information services was statistically significant in high-income countries, suggesting that IPA may have facilitated cross-border supply from high-income to lower-income countries in this sector. These results align with theoretical and intuitive predictions about how IPR protection could influence cross-border supply.

Chapter 5 looks into the necessity of imposing copyright protection liabilities on global platforms. Using a two-country theoretical model, we examine when it is necessary to impose copyright protection obligations on digital platforms from a global perspective that considers the total welfare of both countries. We also explore how the incentives to impose such obligations differ between countries when strengthening copyright protection liabilities from a total welfare perspective, and whether these countries can enhance such obligations through voluntary agreements, such as FTAs. From the perspective of total welfare, regulations that strengthen platforms’ copyright protection obligations positively impact innovation in both countries, thereby increasing producer surplus for content creators. However, consumer surplus may either increase due to the availability of more content or decrease due to reduced competition among creators resulting from monopolistic supply. In such circumstances, if regulations strengthening copyright protection obligations lead to a positive impact on consumer surplus compared to the monitoring level voluntarily chosen by platforms, the total welfare of the two countries is always positively affected. The analysis also examines whether each country independently has an incentive to impose stronger copyright protection obligations on platforms. It demonstrates that even if there is an incentive to enhance platforms’ copyright protection efforts from the perspective of total welfare, such regulations are unlikely to be implemented when each country makes decisions independently. In this situation, if the two countries are relatively symmetric in terms of the scale of content providers and consumers, we show that there is an incentive to strengthen copyright protection obligations through voluntary agreements such as FTAs.

Based on these findings, implications for Korea’s current EPA policy are presented. Countries with which Korea is pursuing EPAs can be broadly categorized into three groups based on the level of IPR protection in their existing FTAs and the current state of their domestic IPR legal frameworks. Countries in Group 1 have already signed FTAs with a relatively high level of IPR protection and established strong domestic legal frameworks to protect IPR. For Group 1, ensuring the effective enforcement of digital content copyright is critical. It is necessary to introduce provisions regulating IPR enforcement, particularly in digital environments. The enforcement clauses included in recent FTAs signed by the UK could serve as a useful reference. Countries in Group 2 have included comprehensive IPR protection provisions in their existing FTAs but whose domestic legal systems are insufficient to effectively protect digital content copyrights. For Group 2, it is worthwhile to include protection provisions not covered in their existing FTAs. Especially, many countries in this group are not parties to the WIPO Internet Treaties so their accession to these treaties should be a priority. Countries in Group 3 have not signed FTAs with significant IPR protection provisions and have domestic legal systems that make it challenging to efficiently protect digital content copyrights. For Group 3, it is more important to assist these countries in establishing and growing a foundation for the content market rather than immediately introducing high-level IPR protection provisions in the EPA. This can gradually increase the necessity of IPR protection. For instance, including agreements on joint content production or cultural cooperation protocols within the EPA can help create a foundation for the content industry by fostering skills and expertise through international joint production efforts. Additionally, sharing Korea’s experience in developing its content industry through strengthened IPR protection via initiatives like the Knowledge Sharing Program could further enhance the interest and participation of partner countries.

Since the establishment of General Agreement on Tariffs and Trade in 1947 and the launch of the World Trade Organization multilateral trading system in 1995, trade liberalization has led to an increase in global trade and the internationalization of production through the globalization of supply chains. More recently, however, as non-trade values such as national security, domestic industry development, labor rights, and environmental protection have become important considerations, supply chains have become an end in themselves rather than a means of pursuing efficiency, and are subject to regulation to achieve various policy goals pursued by governments. Major trading partners, including the United States, are moving away from supply chains based on efficiency and focusing on building supply chains that share values and ideologies, and as economics and security are closely linked, major countries are strengthening their national-level responses by announcing economic and security strategies and utilizing various policy measures, including subsidies, to build their own local production and supply chains.

The problem then lies in the fact that traditional WTO/FTA international trade rules do not adequately address the proliferation of such unilateral measures that regulate global supply chains linked to various non-trade issues, including national security, environment, labor, and human rights. Due to the legal limitations of international trade rules, affected companies are facing increased compliance costs from emerging supply chain regulations, despite their legitimate expectations of market access (previously) promised in trade agreements under existing bilateral agreements. In light of these issues, this study identifies and characterizes the phenomenon of global supply chain regulation, whether international (mainly bilateral) or unilateral, and identifies the status and limitations of current international trade rules in this regard, and draws policy implications for the future direction of our foreign trade policy and domestic legislation.

Chapter 2 identifies the various legal, institutional, and policy efforts aimed at regulating global supply chains and characterizes the emerging phenomenon of unilateral supply chain regulation. Given the current geopolitical and geoeconomic conflicts, nationalism, and the trend of strengthening domestic industry protection, most unilateral supply chain regulations are focused on supply chains such as key minerals and raw materials, industrial subsidies, and high-tech industries, as well as national security, labor rights, and environmental protection. In light of this, Chapter 2 examines the main areas of recent unilateral supply chain regulation, categorized by supply chain and security, environment, labor, and other issues, and provides a detailed review of the measures.

Chapters 3 and 4 examine unilateral supply chain regulation itself and the trade law issues that arise from its implementation. Chapter 3 discusses the current state of international trade rules governing supply chain regulation and their limitations, focusing on the WTO’s multilateral trade rules. It focuses on the role that international trade rules have played in the formation of unilateral supply chain regulation in terms of who, what, and how it is formulated and implemented, its categorization according to the legal nature of the measures, and its legitimacy, as well as the extent to which it is applicable and whether it is actually deterrent. It also looks at the possible evolution of the case law on the legality of trade measures based on non-product-related process or production methods or “NPR PPMs” and the future development of the national security exception.

Further this study reviews the current state of disciplines in bilateral and multilateral trade rules, including FTAs, on unilateral supply chain regulation, focusing on the chapters on trade in goods. Overall, FTAs’ chapters on trade in goods directly incorporate or contain similar provisions as the WTO’s multilateral trade rules, but in some cases provides for “WTO plus” provisions that go beyond the disciplines of the WTO agreements. This study assesses whether this bilateral and multilateral approach may have the effect of reducing incentives for unilateral supply chain regulation.

For more recent examples of sectoral agreements and memoranda of understanding that are specific to supply chain issues, this study reviews the critical minerals sector. Leading examples include the IPEF Supply Chain Agreement, the U.S.-Japan Critical Minerals Agreement (CMA), the U.S.-EU CMA under negotiation, the Minerals Security Partnership (MSP), and the EU’s Strategic Partnership. Characterize recent developments in the formation and discussion of supply chain-related international rules and draw implications for the development of new components of national trade agreements and new types of international (trade) agreements to promote security of critical minerals and related supply chain stability.

Chapter 4 discusses (i) trade secret protection issues in the course of unilateral supply chain regulations, and (ii) what should be prepared for in light of the increasing involvement and influence of private actors in supply chain regulatory regimes. As major supply chain regulation cases have demonstrated that regulators are leveraging their markets to demand information from regulated companies on a fairly comprehensive range of production and processing methods throughout their supply chains, this paper will examine the current state of trade secret issues in international law and in the national laws of major countries, and suggest responses at the international and national law levels. The phenomenon of private actors’ participation in supply chain regulation at the government level is not a case of unilateral supply chain regulation, but it is indirectly related. It focuses on the trend of public participation and emphasis on corporate responsibility that has been in full swing since the Facility-Specific Rapid-Response Labor Mechanism or “RRM” under the USMCA.

Chapter 5 provides the following policy implications for how to respond to each type of unilateral supply chain regulation, both as recipients and as designers and addressers of domestic policies that may affect global supply chains. Firstly, as an addressee of unilateral supply chain regulation, it is important to have sufficient information prior to the adoption of a particular country's policy that may affect our supply chain and to respond quickly at the pre-policy formulation stage to minimize concerns for our companies and industries. In order to reduce dependence on certain raw materials in the supply chain and to ensure stable supply and demand of key minerals important for clean technology and semiconductor production, it is necessary to diversify import lines, actively participate in international agreements and consultations on key minerals, and strengthen linkages and cooperation among similarly positioned countries. It is necessary to consider how to design and utilize bilateral and multilateral agreements as an international legal policy instrument that can effectively support Korea’s core mineral supply chain policy direction and cooperation among countries. Regarding supply chain regulations related to forced labor, companies may have limitations in assessing the actual presence of forced labor and monitoring various partners scattered within global supply chains, so the government should consider ways to support companies by proactively assessing the risk of forced labor in countries and providing the results to relevant companies. Given that minimizing the risk of forced labor in supply chains may be the duty of the state as well as companies in the context of sustainable development, it is also necessary to consider strengthening domestic legislation to meet global standards so that Korean companies do not face additional burdens in their overseas operations.

As for the exposure of corporate trade secrets to unilateralist supply chain regulation, Article 1.9 of the U.S.-China Phase 1 trade agreement signed in 2020 during the Trump administration can be referenced in multilateral and bilateral negotiations and discussions in which Korea participates. This agreement is the only example of a trade secret protection provision that includes a separate section on “trade secrets and confidential business information” and protects trade secrets from potential leakage in regulatory proceedings. Regarding the trend toward greater public participation and corporate responsibility for labor standards compliance, which is being led by some trading partners such as the United States through domestic legislation or multilateral agreements, efforts should be made through multilateral channels to secure a common understanding among countries on public participation in the international trading environment to ensure a common and uniform standard that is acceptable to all countries, and institutional improvements should be made to safeguards to prevent abuses, and transparency mechanisms to ensure the right of reply and access to information for companies under investigation.

Finally, as an addresser of domestic policies that may affect global supply chains, there is a need for strategic use of policy discretion to the extent permitted under current international trade rules and for institutional design to pursue multiple policy objectives, particularly within climate, labor, and supply chain policies. When pursuing multiple objectives, i.e., where industrial objectives and non- traditional value objectives coexist, careful consideration should be given to the design of measures to ensure that non-traditional value objectives are set as the primary objective. Korea also needs industrial support policies centered on core items and industries, but should be cautious about introducing laws and systems similar to the U.S. Inflation Reduction Act. This study stresses careful design of domestic industry support policies regarding the use of subsidies related to local parts usage requirements (LCRs) and encourages ‘commercial considerations’ in the design of domestic industrial support policies. Further it suggests that the Korean government make efforts to strengthen the external ‘durability’ of domestic legislation and policies in the face of various new trade issues, including new types of industrial support policies, including preparations for possible WTO complaints and consideration of countervailing duties that may be imposed by major trading partners.