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External Adjustment after the Pandemic: Valuation Effects of Net Foreign Asset Positions
KIEP Opinion External Adjustment after the Pandemic: Valuation Effects of Net Foreign Asset Positions

The global financial markets have the most vulnerable economic backgrounds ever. Thus, small shocks in the financial markets can trigger an enormous crisis in 2008, or even to a larger extent. External adjustments on foreign assets and liabilities will play an important role in international risk sharing and consumption smoothing for individual countries. As Korea cumulates safe assets abroad, Korea would be seen in a better position.

Hyo Sang Kim
India’s Second COVID-19 Wave: A Hit to the Country’s Economic Recovery
KIEP Opinion India’s Second COVID-19 Wave: A Hit to the Country’s Economic Recovery

Amidst fears of a third wave, India is beginning to reopen after the second wave of COVID-19 infections that wreaked havoc in the country in April and May 2021. The number of average daily cases has fallen to just over 50,000 in recent days, down from the peak of around 400,000 on May 9. Several factors are behind the second wave of the pandemic in India. Among many factors, election rallies and religious festivals were blamed for the second wave. The situation only got worse as India's health system collapsed during the second wave. India was on a good track for economic recovery after a devastating loss in 2020. In January‒March 2021, right before the second wave, India’s annual economic growth rate was estimated at 1.6 percent, recording a slight pick-up compared with the previous three months. Also, GDP growth in the year 2021 was estimated to be in double digits initially. However, India’s economic recovery will now be slowed down due to the economic damage from an enormous second COVID-19 wave, and further localized mobility restrictions since March 2021. As of June 2021, the second wave appears to be over with most of India’s major cities easing restrictions and reopening the economy. We can expect India will be back on track for economic recovery as manufacturing and export restart. But this does not mean that India's economy can recover to the pre-pandemic level anytime soon. There is already talk about the next wave with medical experts making predictions of a possible third wave in September. The solution to the impending crisis and minimizing an additional economic hit from the third wave would be speeding up the vaccination programs.

Yoon Jae Ro
The Regional Comprehensive Economic Partnership: Text Overview and Outlook for Entry into Force
KIEP Opinion The Regional Comprehensive Economic Partnership: Text Overview and Outlook for Entry into Force

At the Regional Comprehensive Economic Partnership (RCEP) Summit held on November 15, 2020, Korea, China, Japan, Australia, New Zea-land and 10 ASEAN countries concluded and formally signed the agreement. The RCEP is called a “mega-FTA” because of its large scale involving 15 countries in Asia and the Oceania region, with the economies of RCEP-participating countries accounting for about 30% of the world's production, trade and population. The RCEP agreement includes chapters on trade in goods and services, investment, SPS, TBT, e-commerce, intellectual property rights, as well as SMEs and cooperation, covering the entire economic relationship. Especially, the RCEP rules of origin integrate the various origin standards into a unified system, and have regional cumulative rules so that goods and materials of a member country which are used in the production of another good or material is considered as worked or processed in the region). In addition, a self-certification of origin by exporters or producers was introduced. Improvement of these origin rules is expected to increase the utilization of RCEP by companies and promote the formation of regional value chains. The e-commerce chapter can be evaluated to reflect most recent trade rules, including provisions for promoting cross-border e-commerce, such as paperless trade, electronic authentication, and trade facilitation using electronic signatures, as well as provisions related to the location of computer facilities and cross-border transfer of data. In addition, the intellectual property chapter includes provisions on the protection of IP rights covering copyrights, trademarks, industrial designs, and patents. The biggest significance of the RCEP agreement is that the world's largest mega-FTA was concluded amid the spread of new protectionism, and in the midst of the global economic slump due to COVID-19, thus providing an opportunity for economic recovery through regional free trade and expansion of investment. Korea is expected to be able to expand new markets and strengthen economic cooperation in the ASEAN region through the RCEP. As for the entry into force of the RCEP, if at least six of the ASEAN signatories and three or more of the non-ASEAN signatories complete the domestic ratification procedure, the ratification agreement between the countries will enter into force 60 days later. So far, Singapore, China, Thailand and Japan have completed ratification. After completing the impact assessment by June, Korea is expected to be able to ratify it by the end of 2021 or early 2022.

Soo Hyun Oh
Digital Platform Markets of ASEAN and India: Implications for Cooperation with Korea
World Economy Brief Digital Platform Markets of ASEAN and India: Implications for Cooperation with Korea

The growth of digital platform markets in ASEAN and India is prominent. With COVID-19, demands for economic and social activities centered on digital platforms are expected to rise further; especially five sectors (e-commerce, sharing economy, education, healthcare and fintech) are fast growing seectors. Korean is a potential partner of ASEAN countries and India. Korea's Digital New Deal policy now stresses tasks such as sharing and utilizing data, convergence of 5G and artificial intelligence across whole industries, spreading digital education, digital healthcare, etc., which are closely related to the economic and social needs of ASEAN countries and India. In order to promote regulatory harmonization and cooperation with ASEAN and India, it is necessary for Korea to promote digital economy and trade agreements.

Jeong Gon Kim, Seung Kwon Na, Jaeho Lee, ChiHyun Yun and Eunmi Kim
Digitalization in Asia-Pacific Region: Ready for Growth, but Ready for Inclusion?
World Economy Brief Digitalization in Asia-Pacific Region: Ready for Growth, but Ready for Inclusion?

The Asia-Pacific Economic Cooperation (APEC) has been promoting digital transformation as a key mean for regional economic growth and economic integration. The digitalization agenda within APEC is further accelerating since the COVID-19 pandemic. Recently at the APEC Leaders’ Meeting in November 2020, the APEC Putrajaya Vision 2040 was adopted, which includes “Innovation and Digitalization” addressing inclusive economic participation through digital economy and technology as a focus area for the next 20 years. However, it is still difficult to expect visible outcomes in the field of digital inclusion within APEC. Upon this backdrop, this article examines the progress of digitalization in the Asia-Pacific region, compares and analyzes the digital transformation policies of major economies in the region, demonstrates the effect of the digital gap on economic performance in the region, and goes on to produce policy implications.

Yungshin Jang
Why North Korea Chooses Self-Sufficiency: Changes in the North Korean Economy in the First Quarter of 2021
KIEP Opinion Why North Korea Chooses Self-Sufficiency: Changes in the North Korean Economy in the First Quarter of 2021

Aiming to discuss the changes in North Korea's economic strategies and policies, and the reasons why North Korea suddenly resumed trade with China in March 2021, this article is largely composed of two parts. The second section introduces the debate between South Ko-rean economists about North Korea's economic strategy and policy changes. The last section attempts to analyze the reasons why North Korea has suddenly resumed imports. The COVID-19 pandemic and recent sanctions against North Korea are causing rapid chang-es in the North Korean economy. In the academic community studying the North Korean economy in South Korea, various topics are being discussed about these changes in the North Korean economy. The first topic is how the North Korean economy is seeing rapid changes in its economic strategy. The second topic is why North Korea's economic management system is showing horizontal centralization. The last topic is why North Korea does not resume imports to China despite increasing eco-nomic difficulties. Why North Korea suddenly resumed trade with China in March 2021. North Korea resumed trade with China on a small scale in March 2021. Trade has reportedly been resumed, but exports have been negligible and only a small amount of goods have been imported. Imports were completely suspended for six months from mid-September 2020 to mid-March 2021, and then imports were abruptly resumed in March 2021. Imports from Chi-na totaled $12.98 million, and exports to China totaled $4.55 million from January to March. The imports conducted in March were non-commercial in nature and led by the authorities. Most of the imports came from the necessities required for industrial production, especially in the agricultural sector. Agricultural materials, that is, fertilizer raw materials (urea, ammonium phosphate, organic sulfur compounds ‒ 71.0%), agricultural vinyl (8.2%), pesticides (insecti-cides, herbicides ‒ 5.4%), etc. were mainly imported. Other imported goods included news-papers and printing paper (8.3%), detergent raw materials (sodium hydroxide ‒ 2.7%), and low flash point fuel for steel production.

Jangho Choi
The Indian Startup Ecosystem and Policy Implications
World Economy Brief The Indian Startup Ecosystem and Policy Implications

A startup refers to a company with ideas and innovative technologies, which have a short period of experience. Recently, startups are leading the fourth industrial technological innovation and affecting job creation and industrial productivity growth, so that its economic importance is increasing. In particular, India is emerging as a startup powerhouse based on its fast-growing economy and relatively cost-efficient excellent talent pool. Also, global investment towards the Indian startup market is increasing. While the number of Korean companies entering the Indian startup market is increasing, only a few have made stable inroads into the market. Based on quantitative data, literature analysis, corporate case analysis, surveys, and in-depth interviews, we objectively identified the Indian startup ecosystem and drew policy implications to increase the accessibility of Korean firms to the Indian market.

Hyoungmin Han, Jeong Gon Kim, Jeong Gon Kim, Sunghee Lee and Jong Hun Pek

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