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K-shaped Scar of COVID-19 on the Global Economy
KIEP Opinion K-shaped Scar of COVID-19 on the Global Economy

COVID-19 crisis has exacerbated global economic inequality. Two main reasons behind this K-shaped scar are (1) the imbalance in the supply of vaccines among countries and (2) the difference in the ability of governments to financially support the economy. Besides cross-country gap in growth rates, the discriminatory impact of the pandemic can also be seen in the labor market. With rising interest rates and shrinking financial market, governments should effectively allocate their limited resources to support the economy. First, they need to come up with an orderly exit plan for smooth restructuring of the economy. Second, they should restore supply chain networks and find alternative sources of goods to control inflation. Finally, governments need to engage in deeper international cooperation so that vaccines are distributed more evenly across countries.

Sang-Ha Yoon
Green New Deal for Carbon-neutrality and Open Trade Policy in Korea
World Economy Brief Green New Deal for Carbon-neutrality and Open Trade Policy in Korea

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.

Jukwan Lee, Jong Duk Kim, Jinyoung Moon, Jun-Hyun Eom, Ji Hyeon Kim and Jungmin Suh
Immigrants and COVID-19 Travel Restrictions
World Economy Brief Immigrants and COVID-19 Travel Restrictions

This study attempts to examine the impact of the presence of foreign workers on COVID-19 related border closures. In the countries that are highly dependent on foreign workers, there have been difficulties in supplying labor due to entry restrictions and border closure during the COVID-19 pandemic. The empirical analysis shows that the entry restrictions were passively imposed where the share of immigrant is high. This trend was observed more conspicuously in high-income countries where various policy combinations could be used in addition to entry restrictions. The cost of entry restrictions could be alleviated by placing other measures which are deemed more efficient, including 3T (test, trace/isolate, treatment) strategy and Special Entry Procedure. It is necessary to develop policies to minimize negative effects on immigration and immigrants, while controlling epidemic waves at the same time.

Young-ook Jang
Evaluation and Direction of U.S. International Economic Policies Under Neo-Protectionism
World Economy Brief Evaluation and Direction of U.S. International Economic Policies Under Neo-Protectionism

This study analyzes and evaluates the impact of foreign economic policies implemented during the Trump administration's four-year tenure, and aims to predict the direction of international economic policies under the Biden administration launched following the 2020 presidential election. The former President Trump put 'America First' as the slogan of economic policies and imposed import restrictions and tariffs on trading partners based on Sections 201, 232, and 301 of the U.S. trade acts. In addition, the Trump administration strongly promoted renegotiation, claiming that some existing trade agreements had been concluded unfavorably to the U.S.

Gu Sang Kang
Food Security Challenges in Developing Countries during COVID-19 Pandemic
KIEP Opinion Food Security Challenges in Developing Countries during COVID-19 Pandemic

The food insecurity rates increased significantly in developing countries due to COVID-19. The main reasons are as follows: (1) Unemployment rapidly increased in the short run as a result of lockdowns and the public health response. The reduction in working hours leads to a decrease in household income. (2) Rising food prices also deteriorate the food security status in developing countries because food consumption accounts for a larger share of household expenditure. (3) Social welfare programs are not well structured in developing countries, making it difficult to utilize existing systems to help low-income households. International cooperation is vital for resolving the food security problem. Each country should stand for a free trading system and avoid restrictive measures. In addition, we need to raise agricultural productivity to stabilize food prices in response to increased demand for food.

Seung Jin Cho
Impacts of New International Tax System on Multinational Firms’ FDI
World Economy Brief Impacts of New International Tax System on Multinational Firms’ FDI

In this study, I present a theoretical model to quantitatively assess the economics impact of Pillar 1 and Pillar 2, especially focusing on the changes in the FDI patterns of multinational enterprises (MNEs). Pillar 1 offsets the incentives of MNEs' profits-shifting for tax-planning purposes, thereby reducing the inbound FDI into the countries with low corporate income tax rates. Pillar 2 burdens MNEs with 'top-up' taxes attributed from the subsidiaries in low tax countries. As the profits after tax (PAT) of MNEs shrink at the global level, innovation and R&D investment for new products will decrease, and as a result, global FDI flows will hamper.

Sangjun Yea
The Trade-Technology Nexus in the Asia Pacific
KIEP Opinion The Trade-Technology Nexus in the Asia Pacific

The COVID-19 pandemic has accelerated the digital transformation and created opportunities to encourage innovation and technological adoption. Notwithstanding, the glaring missing piece in the global trade perspective has been the rules conducive to digital trade. The IPEF might be a viable option to fill in the gap with the multilateral trading system represented by the WTO in crisis. One of key priorities of APEC 2022 includes the Free Trade Area of the Asia-Pacific (FTAAP). It is time to establish a trade-technology nexus in the Asia Pacific through a new regional cooperation platform such as the IPEF or FTAAP, together with APEC and existing regional frameworks including CPTPP and RCEP for further cooperation and common prosperity.

Chul Chung

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