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KIEP Newsletter

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[KIEP Webzine] Newsletter Vol.7 No.16

  • Date2019/08/09
  • Hit1,770
KIEP Newsletter Vol. 7 No. 16

KIEP Newsletter Vol. 7 No. 16 | August 9, 2019 | Print

KIEP Surmounting Global Challenges, Creative Response! Korea Institute for International Policy (ISSN: 2288-0348)


The Growth of the ASEAN Infrastructure Market and Its Implications for Policy Makers in Korea Sungil Kwak and Mi Lim Kim / World Economy Brief 19-13

As of October 2018, Korean construction firms have received a total of 98.9 billion U.S. dollars in orders (or 40.9 percent of all orders) within the New Southern region, which includes ASEAN Member States (AMSs). The figure exceeds the 85.7 billion U.S. dollars in orders to the Middle East (35.5 percent of the total), indicating that the New Southern region has become Koreas largest origin of orders. We provide comprehensive information on the ASEAN infrastructure market to policy makers in Korea. In addition, we survey Korean construction firms to evaluate their business environment and performance. Furthermore, we search for lessons to be gained by analyzing the support measures of Japan for its firms in ASEAN infrastructure markets.
Based on the results of the previous analysis, we suggest policy implications for policy makers in Korea to provide support for its construction firms actively engaged in the ASEAN infrastructure market. First, given that construction firms from Korea have difficulties in hiring local technical personnel, policy makers could consider expanding the Technology Advice and Solutions from Korea (TASK) program from the manufacturing sector to the construction sector as well to supply adequately trained workers. Second, a support system for Korean construction firms to facilitate their localization is required. Third, the policy makers in Korea could devise and provide customized support for SMEs. Fourth, we need to increase the size of policy funds related to overseas infrastructure markets. Fifth, a system should be established to identify flagship projects for the New Southern Policy. Sixth, policy makers in Korea may help ASEAN to set up technical standards in the infrastructure sector.


    The Distributional Effect of Market Power and Its Implications for Inclusive Growth in Korea / Minsoo Han

    In the absence of competition and effective regulation, market power leads to an increase in prices relative to marginal costs. These higher prices hurt consumers but benefit business owners, corporate managers, and executives, who are concentrated at the top of income distribution, by disproportionately shifting extra profits towards these top income earners. In recent research, Ju H. Pyun and I empirically explore the multi-faceted aspects of the increase in market power. In our baseline estimation, we find that an increase in market power is positively associated with rising income inequality. More interestingly, even within top income earners (top 10% income group), higher income groups (top 1% for instance) tend to disproportionately benefit more from an increase in market power than lower income groups (either top 5% or 10%). All of our main results seem to be robust with alternative data and methods. Despite its limitations, our preliminary analysis suggests that, to be more effective, the income-led growth model needs to shift from a narrow focus on pro-labor distributional policies to a more comprehensive approach that considers the risks of market concentration and restrictive business practices.


    2019 U.S.-Korea Opinion Leaders Seminar (OLS)

    The Korea Institute for International Economic Policy (KIEP) held the 2019 U.S.-Korea Opinion Leaders Seminar (OLS) at the Korea Economic Institute (KEI) of America in Washington, D.C. on July 15th to 17th, 2019. The seminar has been held annually since 2002 in joint by KIEP and KEI, and has become an opportunity for Korean and U.S. opinion leaders to conduct in-depth discussions on diplomacy, security, political and economic issues surrounding the two countries.
    This year’s event discussed the importance of cooperation between Korea and the U.S. on security and trade sectors amid the global uncertainties in the rapidly changing Korean Peninsula and global economy.
    President Jae-Young Lee noted in his opening remarks how the recently stalled dialogue between North Korea and the U.S. has been revitalized by the “surprise” summit at Panmunjom in early July. He emphasized the first practical step toward North Korea’s denuclearization is revitalizing inter-Korean economic cooperation, including the resumption of operations at the Gaesong Industrial Complex. Furthermore, he mentioned that Japan’s export restrictions on South Korea are disturbing the global supply chain, and ultimately will harm all involved.
    Attendants from the Korean side included Mr. Se-hyun Jeong, Chairman of the Korean Peninsula Forum (former Minister of Unification), Mr. Su-hoon Lee, former South Korean Ambassador to Japan, Mr. Jung Chul Lee, Professor of the Soongsil University, Mr. Soo-hyung Lee, Senior Research Fellow at the Institute for National Security Strategy and Dr. Seok Hwan Kim of KIEP; and from the American side President Kathleen Stephens of KEI (former U.S. Ambassador to South Korea) together with other distinguished guests from the government and think tanks.
    Meanwhile, on the 17th July, the second day of the event, KIEP hosted a press conference with Washington, D.C. correspondents and shared its analysis and prospects for the impact of Japan’s export restrictions against South Korea on the global economy, the importance of the U.S.’ active role in resolving conflicts between Korea and Japan, and future North Korea-U.S. relations over nuclear negotiations.

    - Title: 2019 U.S.-Korea Opinion Leaders Seminar (OLS)
    - Date: July 15-17th, 2019
    - Venue: Korea Economic Institute (KEI), Washington, D.C.
    - Hosts: Korea Institute for International Economic Policy (KIEP), Korea Economic Institute (KEI)
    - Contact: Mr. Hyuk Ju Kwon, Senior Researcher, Americas and Europe Team (hjkwon@kiep.go.kr)


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    ​KIEP Panel Discussion on Japan’s Export Restrictions

    The Korea Institute for International Economic Policy (KIEP) held a panel discussion under the topic of “Analysis and Future Prospects of Japan’s Export Restrictions against South Korea” at the KIEP conference room in Sejong on July 12th, 2019. KIEP experts, including President Jae-Young Lee, attended the forum and discussed the current status of Japan’s export restrictions against South Korea, initial responses from the U.S. and China, and a legal review of the issues based on international trade law.
    President Jae-Young Lee of KIEP chaired the debate, starting off by explaining that Japans export curbs on three key materials for South Korean industries look to be a reflection of uneasiness on the part of Japan’s leadership, mainly due to the reversal of industrial competitiveness between the two countries, which could also have the unintended consequence of strengthening China’s economic power and leadership. He added that these restrictions not only damage the trust between Korea and Japan, but are disruptive to the World Trade Organization (WTO) system and violate the principle of common prosperity based on a democratic market economy.
    Dr. Gyu-Pan Kim from the Japan and East Asia Team at KIEP explained the recent developments since the export control measures were announced by the Ministry of Economy, Trade and Industry of Japan. He noted that although the type of photoresists Japan has decided to place restrictions on are not directly related to memory semiconductors, the current mainstay of the Korean semiconductor industry, the measures may threaten the growth potential of Koreas semiconductors in the mid- to long-term.
    Following this, Dr. Gu Sang Kang from the Americas and Europe Team and Dr. Sang Hun Lee from the China Regional and Provincial Research Team provided a summary of U.S. and China’s positions on Japans export regulations against South Korea. Dr. Kang explained there are no indications that the U.S. will actively involve itself in the current conflict between Korea and Japan at the government level, as of yet no damage is being caused to U.S. industries. If, however, any damage spreads to U.S. domestic industries, the situation could change with President Trump calling for more active measures in line with his “America First” stance. Dr. Lee shared the situation in China, which is concerned that Japan’s restrictions on exports will cause significant damage to Chinese companies as China imported 51.7% of its memory semiconductors from Korea last year. He added that the Chinese government may act as an arbitrator if necessary.
    The last presentation was made by Dr. Cheon-Kee Lee from the Trade Agreement Team, who pointed out that Japan’s export curbs violate WTO rules in three respects. First, he cited Article 11 of the General Agreement on Tariffs and Trade (GATT), which prohibits WTO member countries from imposing quantitative export restrictions against WTO members. In addition, imposing more strict regulations on exports to Korea than other “white list” countries constitutes a violation of most favored nation treatment (MFN) stipulated under Article 1 of GATT, he argued. He also pointed out that Japan’s restrictions violate the obligation to enforce domestic trade rules in a uniform, impartial and reasonable manner (Article 10 of GATT).
    KIEP experts, including Senior Vice President Chul Chung, Senior Director General Choongjae Cho from the Research Planning & Coordination Department, Dr. June Dong Kim from the Strategic Committee, and numerous reporters from the Ministry of Economy and Finance attended the event on this day.

    - Title: KIEP Panel Discussion on Pending Issues
    - Topic: Analysis and Future Prospects of Japan’s Export Restrictions against South Korea
    - Date & Time: July 12th, 2019, 10:00-11:30
    - Venue: KIEP conference room (4th floor), Sejong
    - Host: Korea Institute for International Economic Policy (KIEP)

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  • Call for Research Topics for KIEP

    KIEP is seeking innovative, timely and essential topics for research. We sincerely hope to receive any suggestions you might have for research topics, which you believe KIEP should pursue. We would like to listen to opinion of experts from various areas and make significant contributions to the governments decision-making process.
    Your insightful ideas and suggestions will be carefully reflected in our planning of new research projects and contribute ultimately to formulating policies for a more open international economic order. Please send us your ideas and suggestions via email, fax, or post at your convenience.

    View More Research Activities

  • Call for Papers for the East Asian Economic Review

    - The East Asian Economic Review (EAER) is an economic journal, for the promotion of interdisciplinary research on international economics. Published as a quarterly by the Korea Institute for International Economic Policy, a Korean government-funded economic think-tank, the Journal is global in perspective and covers both theory and empirical research. The Journal has recently changed its title from Journal of East Asian Economic Integration (JEAI) to the EAER. Your attention and support would be highly appreciated.

    - The Journal aims to facilitate greater understanding of all issues pertinent to diverse economies of East Asia through publication of rigorous analyses by renowned experts in the field. The EAER connects policy and theory, providing empirical analyses and practical policy suggestions for the economies in the region.

    - Topics for articles in the EAER include, but are not limited to: Trade and Investment, Economic Integration; International Finance; International Monetary Cooperation; Bilateral and Multilateral Economic Cooperation among East Asian Countries; and International Economic Cooperation for Korean Unification.

    Visit EAER Website

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