Working Papers
RESEARCH
Working Papers
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Green Transition Policy and Implications of Chinese Cities
As a strategy to promote green transition, Chinese cities are increasing their proportion of renewable energy consumption by diversifying and scaling small solar power, wind power, biomass, and geothermal power, and striving to su..
Wonseok Choi et al. Date 2022.12.30
Economic Reform, Industrial Policy ChinaDownloadContentSummary정책연구브리핑As a strategy to promote green transition, Chinese cities are increasing their proportion of renewable energy consumption by diversifying and scaling small solar power, wind power, biomass, and geothermal power, and striving to supply eco-friendly energy by activating green electricity transactions between regions. In addition, policies to reduce pollution and carbon emissions and establish a green manufacturing system are being promoted with a focus on cities where industrial complexes are situated. The green transition in China’s transportation sector also takes on the character of an industrial policy that utilizes urban green transition to foster industries, such as fostering the new energy automobile industry centering on large cities where automobiles and public transportation are concentrated. In this respect, this study classified the green conversion policy of Chinese cities into policies in the energy, industry, and transportation sectors, and identified the policy implementation system and characteristics of each field. In addition, based on the characteristics of major policies and implementation cases in each field, policy implications and cooperation measures necessary for Korea to pursue a green transition in the future were identified, as well as matters to keep in mind.Chapter 2 of this report deals with the background and strategies for promoting green transformation in Chinese cities. Since the 1980s, after the reform and opening up, China’s urbanization has progressed rapidly, with coastal cities being the center of industrialization, and these cities serving as hubs for international trade. However, the indiscriminate expansion of Chinese cities is evaluated as an unsustainable model, and the Chinese government is pursuing a green conversion policy of cities to reduce environmental pollution and to grow the economy centered on high value-added manufacturing and services. The green transition promotion strategy of Chinese cities aims to set low-carbon transition targets for each city and build an eco-friendly energy system. At the same time, it promotes green conversion of industrial complexes located in cities, and promotes investment and consumption in the private sector through policies that lead the supply of new energy vehicles in public institutions and public transportation. In this regard, China is expected to strategically induce the demand for technologies and products needed for green transformation throughout urban areas, convert them into new engines of economic growth, and maintain industrial competitiveness and global market leadership through green transformation of the manufacturing industry. In addition, it is expected to establish a renewable energy generation system centered on cities to pursue social stability through energy stability and household income increase, and to strongly promote green transformation of cities as a means to respond to international pressure on carbon reduction.Chapter 3 looked at China’s green transformation of the city’s energy sector from the perspectives of expanding production of non-fossil energy, establishing a low-carbon energy supply system, and low-carbon and high-efficiency fossil energy production. In the 14th Five-Year Plan period (2021-2025), China’s key to “expanding production of non-fossil energy” is to expand wind and solar power and nuclear power projects in coastal areas. In the field of wind and solar power generation, it plans to encourage the use of production sites first, expand large-scale wind and solar power generation projects and clean energy production bases. In Chinese cities, the promotion of rooftop-distributed photovoltaic power generation, among renewable energy sources, is evaluated to be capable of intensive development, reduce power peak load, and induce residents to consume green energy. In addition, since wind and solar power are greatly affected by the climate, nuclear power generation projects with low carbon emissions and stable power supply will be operated in pilot cities and expanded to other regions according to the results. In particular, during the 14th Five-Year Plan period, the development of the latest technologies such as small modular reactors (SMR) and the comprehensive use of nuclear power are emphasized. In addition, in order to lay the groundwork for increasing the utilization of renewable energy, the Chinese government plans to promote the maintenance of the transportation power grid system, the strengthening of inter-regional power grid connectivity, building smart distribution networks for decentralized renewable energy power, as well as to encourage the construction of smart energy systems and small power grids. In particular, it aims to stabilize energy supply and expand new and renewable energy supply by promoting “small independent power grid + distributed energy source” projects in cities along with existing large renewable energy plants. Green conversion in China’s fossil energy sector is exiting coal mines or coal-fired power plants as before, but rather than rapidly removing fossil energy for stable power supply, it focuses on low carbonization and high efficiency of power generation.Chapter 4 classifies and analyzes policies to reduce pollution and carbon emissions, increase energy use efficiency, improve resource use level, and achieve improvements in green manufacturing systems in the urban industrial sector. First of all, in order to reduce pollution and carbon emissions, China intends to control the total amount of emissions with the goal of reducing emission intensity (pollutants 10%, carbon 18%). Major policies include reducing pollutant emissions in production processes and innovating related technologies, reducing emissions according to product life cycles, low carbonization of low-cost CCUS and industrial energy sources, strengthening production capacity control and evaluation of high-emission industries, fostering specialized institutions related to emission calculation systems and emission management information systems, and tax and financial support. Increasing energy utilization efficiency in the industrial sector is a major means of reducing carbon emissions in China, as the sector accounts for about 65% of total energy consumption. Accordingly, China plans to reduce the energy consumption per value added of industrial enterprises (annual sales of 20 million yuan or more) by 13.5% by 2025 compared to 2020. It also aims to improve the energy efficiency of major energy-intensive industries such as steel, petrochemical, non-ferrous metals, and building materials. To this end, the 14th Five-Year Plan will focus on the development and application of energy consumption reduction technology,introductionofhigh-efficiencyenergy-saving general-purpose facilities throughout the industry, and energy saving measures at data centers and base stations. In particular, the Chinese government presents the power efficiency of new large and large data centers as a detailed goal in line with the digital transformation trend of the industry, and emphasizes policies to include energy savings in data centers in key projects. To improve the level of resource utilization, China plans to increase the level of comprehensive use of manufacturing resources over the next five years by enhancing the comprehensive utilization rate of industrial solid waste and expanding recycling and re-manufacturing of major renewable resources. It plans to increase the recovery rate of waste non-ferrous metals and establish a management system for waste-powered batteries as a way to secure strategic metal resources such as copper, aluminum, cobalt, and lithium. In addition, the Chinese government plans to expand the use of large-scale industrial solid waste in areas such as building material production, infrastructure construction, and charging underground mining areas, and build 40 pilot bases for comprehensive use of large-scale industrial solid waste. Finally, China wants to further develop its green manufacturing system. As a policy goal, the government plans to distribute 10,000 green products and build and develop green low-carbon factories, supply chains, and industrial terminals to promote green transformation of SMEs to raise the level of clean production.In particular, it plans to focus on establishing a green standard system and a green manufacturing public service platform, strengthening the role of leading companies in driving small and medium-sized enterprises, and strengthening green manufacturing-related market functions. China continues to expand financial support for pilot projects (products, factories, industrial complexes, supply chain management companies) selected on the green manufacturing list, and is pushing for internationalization of standards and certification of green factories, supply chains, and products. During the 14th Five-Year Plan period, the central government’s green manufacturing system improvement and development policy is focusing on strengthening public platform functions that will promote organic linkage and green transformation among green manufacturing pilot units. Accordingly, each region in China is also emphasizing qualitative improvement, such as strengthening and improving evaluation and standards systems, and seeking to expand the role of public service platforms. It is also worth noting that some regions are simultaneously presenting specific goals of green manufacturing pilot units by key field/industry, reflecting the industrial structure of the region and the characteristics of low carbonization by industry.Chapter 5 analyzes China’s policies to reduce emissions, expand the supply of new energy vehicles, and strengthen green transportationtechnologies,whicharefocusedinthe transportation sector, through central and local policies and pilot cities.Toreduceemissions,Chinaispushingaheadwith regulations on internal combustion locomotives at the level of advanced countries by raising its emission standards beyond European standards and requiring related government agencies to transmit exhaust information during actual internal combustion locomotives in real-time. It is also promoting a ‘dual credit’ policy as a means of controlling the supply of internal combustion locomotives in China. The dual credit policy is operated by ‘CAFC credit’ obtained by automobile manufacturers meeting the fuel consumption standards of internal combustion locomotives, and NEV credit obtained by supplying a certain percentage of new energy vehicles according to the number of internal combustion locomotives produced. This dual credit system has a strong administrative regulation, such as banning automakers from producing internal combustion locomotives when they fail to meet the NEV credit level designated by the Chinese government for a year. In this regard, the dual credit policy acts as a management burden for existing internal combustion locomotive companies, but acts as an opportunity for new companies that produce only new energy vehicles as a means of fostering the new energy automobile industry in China. Above all, large Chinese cities are promoting the purchase of new energy vehicles through various support policies such as subsidies along with restrictions on the use of internal combustion locomotives. As such, policies are being comprehensively promoted through consideration of how to reduce internal combustion locomotives as well as fostering new energy vehicles. In order to expand the supply of new energy transportation vehicles, China focused on mandatory conversion of electric vehicles in the public sector, subsidies for new energy vehicles, and charging infrastructure. The Chinese government has gradually reduced the size of purchase subsidies by increasing the standard for electric mileage of new energy cars and suspending payments to companies with annual sales of less than 10,000 units, but is extending current subsidy policies to boost sluggish consumption due to COVID-19. In particular, major cities such as Tianjin, Suzhou, and Shenzhen were selected as pilot cities for the supply of new energy vehicles, and are in the top ranks in terms of the number of new energy vehicles owned. In the future, many pilot policies necessary for green conversion in the transportation sector are expected to be implemented. The development of green transportation technology is mainly focused on accelerating the expansion of new energy and clean energy transportation equipment, energy saving, accelerating the use of key environmental technologies, and completing the green transportation standard system. In particular, various integrated transportation services are being promoted in large cities such as Beijing and Shenzhen, and Guangdong Province is also promoting pilot operations in the area of power market construction using V2G technology and development of hydrogen battery automobile technology.Finally, Chapter 6 summarizes the policy implications, areas of Korea-China cooperation, and risk factors that the green transformation promotion plan of Chinese cities can present to Korea based on the issues discussed in Chapters 3 to 5. In the energy sector, Korea also needs to lay an institutional foundation for the use of new nuclear technologies such as small reactors as well as renewable energy. In addition, it is necessary to seek CCUS cooperation measures in the field of Korea-China thermal power generation and to cooperate in the field of maintaining and operating mutual dialogue channels on nuclear safety. As a risk factor, it is necessary to prepare for the risk of importing solar power-related materials to China that may occur while focusing on decentralized solar power generation using rooftops in Chinese cities. In addition, Korea also needs to strengthen cooperation and government financial support analyzed as the main characteristics of China’s green transformation policy in the industrial sector, foster green transformation-related service industries for SMEs, and strengthen support to improve energy utilization. In addition, it is necessary to expand cooperation in standards/certification related to green manufacturing, cooperation with China’s industrial green transition-focused areas, and cooperation in emission reduction technologies such as steel/cement. On the other hand, from the standpoint of Korea, where the manufacturing supply chain with China is closely connected, it is necessary to prepare for the risks of enhancing China’s green manufacturing capacity. Finally, in the transportation sector, Korea also needs to gradually promote roadmaps and related policies to reduce internal combustion locomotives, and suggested seeking cooperation in Tianjin, Suzhou, Shionjeon, and Guangdong in green transportation technologies such as hydrogen and V2G. Suggested measures also include response to changes in the business environment due to stricter regulations on internal combustion engines in China, the importance of securing technology gaps to strengthen the competitiveness of Chinese electric vehicles, and the supply risk of major materials (lithium, elements, etc.) due to green conversion efforts in China. -
China’s Green Finance Strategy: the Policy and the Market
China is a leading nation in the area of green finance, deeply recognizing that carbon neutrality should be accompanied with green finance to boost development of the green industry and actively working to develop green financial ..
Jiyoung Moon and Hyojin Lee Date 2022.12.30
Financial Policy, Capital Market ChinaDownloadContentSummaryChina is a leading nation in the area of green finance, deeply recognizing that carbon neutrality should be accompanied with green finance to boost development of the green industry and actively working to develop green financial markets. In 2016, China published the “Guidelines for Establishing the Green Financial System,” which provides core guidelines for establishing the domestic green financial market. These guidelines define the concept of green finance in China, namely as providing financial service to support projects such as for environmental protection, renewable energy development, and green infrastructure construction for response to climate change and efficient use of resources in economic activities. Viewing green finance as an important strategic policy tool for China to achieve its carbon neutrality goal, this research explores China‘s green finance strategy in terms of policy establishment and market formation, the tools for supporting domestic green industry development, and global cooperation, while also aiming to provide suggestions for Korea-China cooperation in the green finance field.Chapter 2 studies China’s policy establishment and market status in terms of green loan and bond markets, which are the main components of China’s green finance market. China’s green loan market is largely operated by state-owned banks and some large commercial banks as major players. These provide loans for domestic green projects to boost China’s green economy development. The support provided by these banks has increased the size of China’s green loan market to over 15.9 trillion RMB, making it the largest market in the world in 2021. China’s green bond market, as well, is one of the largest in the world. Its size recorded 1.56 trillion RMB in 2021, and according to the Climate Bond Initiative it is the second largest green bond market in the world after the United States. In China’s green bond market, local governments and corporations act as major suppliers of green bonds. According to the issuance type and purpose of use, China’s green bonds can be classified into various categories including finance bonds, intermediate bills, commercial bills, corporate bonds, and enterprise bonds. Also, there are various management guidelines according to the bond type and entity ownership. These guidelines have different requirements about supervisory authority, requirements of information disclosure, and necessity for evaluation, and are adopted based on the issuing entity. One of the characteristics identified in this study is that China’s green bond market is largely led by state-owned companies. This may because of the government’s differentiated management structure for state-owned companies and local governments, which benefits them more than non-state-owned companies by providing relatively lenient requirements when issuing green bonds.Chapter 3 analyzes China's green finance utilization strategies in terms of supporting green industry development, attracting foreign green investment, and expanding foreign cooperation channels. First, China uses green finance to support green development, especially focusing on clean energy development, renewable vehicles, and green architecture. Various supportive measures are provided, including credit evaluation standards to expand green project financing, encouraging green architecture through local government financial support, and green loans and subsidies to increase the consumption of renewable energy vehicles. Second, in order to boost domestic green economy development, China also implements financial policy support measures to attract foreign investment in green industries. The main method is to enlist emerging green industries in the “Catalogue of Industries for Encouraging Foreign Investment,” which includes areas such as renewable energy; hydrogen power generation; green transportation; carbon capture, utilization, storage (CCUS); environmental protection; and resource circulation. These emerging industries are significant for green economy development but still require massive capital support to solve technology bottlenecks. Therefore, the Chinese government has opened its green economy market to foreign investment not only to promote emerging industries but also to find solutions to technical bottlenecks hindering expansion of the market. Third, China intends to solidify its role as a rule-maker by vitalizing international discussions on green finance on multilateral cooperation platforms. Since 2016, China has continued to expand green finance cooperation on both multilateral and bilateral cooperation platforms with the EU, UK, France, and Germany, among others. These actions convey an image to the global community that China is one of the leading nations in the global discussion on green finance. Also, it provides opportunities for China to expand its influence on the establishment of green finance global standards.Regarding China’s green finance strategy, our study assesses that Korea could leverage various opportunities to cooperate with China in the field of green finance by: 1) expanding Korea-China investment in the green industry, 2) actively participating in international green finance cooperative organizations, and 3) strengthening institutional cooperation between Korea and China in the green finance field.First, Korea and China could cooperate in green industry investment. As both countries have a manufacturing-based economic development structure, they share similar needs for green economy transformation, such as developing renewable energy and green vehicles. Korea could consider investing in cooperation with China in these industries, especially for those areas where China encourages foreign investments such as wind power, solar power, hydrogen energy, and renewable cars. By doing so, Korea could retain its share in related Chinese markets, and could also utilize Chinese market as a test bed to commercialize green technologies.Second, Korea needs to join multilateral cooperation platforms to actively participate in the global discussion on green finance. According to China’s strategy to utilize international cooperation platforms, we analyze that China is participating in these platforms not only to lead the global discussion on green finance and strengthen its global leadership, but also to secure its position as a rule-maker in this field. However, while Korea has joined some of these platforms, the current level of participation is insufficient to assume a leading position on global green finance discussion. Therefore, Korea would benefit from joining multilateral platforms such as the Global Green Finance Leadership Program (GFLP) and International Platforms on Sustainable Finance (IPSF) in order to expand its global leadership and assume a leading position in the establishment of green finance standards in the international community.Third, it is necessary for Korea to cooperate with other countries to establish an international green financial system, regarding which China could be the starting point. In 2021, China announced the Common Ground Taxonomy (CGT) with the EU, a joint classification system for green bond issuance which draws on the EU Taxonomy. This was a significant development because it signifies cooperation with a nation leading development of the green taxonomy in the international community, the EU, thus confirming China as a rule maker of green finance international standards. In this regard, Korea must make efforts to promote institutional advancements in the green finance market. Korea’s announcing its green classification system, the “K-Taxonomy,” in 2020, could be an opportunity to pursue institutional cooperation with China on the Green Bond Taxonomy with China, and further on with the EU.Finally, in order to realize the aforementioned green financial cooperation between Korea and China, it is necessary to establish a cooperative body that can coordinate this during the renegotiation process of the Korea-China FTA. The cooperative body could enable Korea to hold regular discussions on supplementary and improvement plans for green finance cooperation with China.As carbon neutrality and the development of green industries are significant missions for both Korea and China in this era of great green transition, we hope this study can add further momentum to cooperative relations between Korea-China in the field of green finance. -
A Study on Establishing a Model for Strengthening ‘Emerging Security’ Cooperation with ASEAN
South Korea needs a paradigm shift in its traditional diplomatic and security strategies to secure its strategic autonomy in new strategic areas - such as the Indo-Pacific region, cyber domain, emerging technologies, and space - a..
Il Seok Oh et al. Date 2022.12.30
Economic Security, International SecurityDownloadContentSummarySouth Korea needs a paradigm shift in its traditional diplomatic and security strategies to secure its strategic autonomy in new strategic areas - such as the Indo-Pacific region, cyber domain, emerging technologies, and space - and to guarantee its survival and prosperity while enhancing its national value. To achieve this strategic goal, South Korea, with its advanced ICT technologies and economic capabilities, should strengthen cooperation with ASEAN to ensure the autonomy of its diplomatic and security strategies and develop the flexibility to demonstrate its geopolitical value in new areas.South Korea should also shift its perception of ASEAN countries as mere destinations of economic interest and strive to enhance its emerging security cooperation with ASEAN to secure its diplomatic and security autonomy and establish a strategic area. In other words, the government should incorporate a flexible and transformative stance in performing its role as ASEANS’s emerging security cooperation partner to guarantee regional peace, ensure social safety and protect people's lives from the threats of climate change, infectious diseases, food shortages, cyber attacks, adverse effects of emerging technologies, and resource/energy shortages.Globalization and industrialization brought about new risk factors, which through quantitative and qualitative transformations, can develop into critical issues threatening national security. Emerging security refers to the security-wise response to such critical issues. According to the features, speed of proliferation, and responding actors of emerging security threats, it is possible to derive management models for environmental security, health security, cyber security, and resource (energy/food) security.New security threats emerge at the initial development stage of a sector. However, through a quantitative and qualitative accumulation process, such threats may increase beyond a critical point and expand to unconnected sectors. The repetition of such a phenomenon can create a dynamic that generates geopolitical issues and conflicts. Thus, it is crucial to establish a response model for each phase and actor to prevent new threats from escalating into macro-level geopolitical security threats. In other words, ASEAN-Korea emerging security cooperation should focus on each stage of the emerging security threat cycle: initial development-criticality-proliferation.In order to build a model to strengthen the emerging security cooperation between South Korea and ASEAN, it is necessary to consider the governance structure and securitization process of the ASEAN member states in response to emerging security threats, along with each member’s stance on the global bipolar order. The contents of emerging security cooperation should reflect each stage of the securitization process (initial development–criticality-proliferation). Environmental security, health security, cyber security, and resource security are sectors that receive humanitarian assistance and administrative cooperation. However, cooperation with diplomatic, security, and military means must also be guaranteed to strengthen emerging security cooperation. The possible provision of humanitarian assistance and administrative cooperation in the initial development stage of securitization raises the need to consider diplomatic, security and military cooperation in the criticality and proliferation stages. -
GVC and RVC of Latin America under the US-China Competition
Competition between the U.S. and China has intensified since the imposition of tariffs in 2018, and can be observed across various sectors. The competition between the U.S. and China, originating in the trade sector, is now expand..
Sungwoo Hong et al. Date 2022.12.30
Economic Security, Economic CooperationDownloadContentSummaryCompetition between the U.S. and China has intensified since the imposition of tariffs in 2018, and can be observed across various sectors. The competition between the U.S. and China, originating in the trade sector, is now expanding into areas such as technology, ideology, and supply chains. As globalization progresses and the global division of labor continues to evolve, the impact of U.S.-China competition becomes increasingly complex and widespread due to the naturally established global value chain involving various stakeholders. This study examines the current state of U.S.-China competition in Latin America and analyzes its effects on the global value chain of the region.Chapter 2 explores the different types of competition between the U.S. and China in Latin America. This is achieved by reviewing their investments in Latin America and public funds, as well as summarizing the recently announced U.S. initiatives in the region. The review shows that U.S. investment in Latin America and ODA aims to create forward links to the United States and China in the value chain of the region. Notably, while the U.S. has prioritized Official Development Assistance (ODA) through development cooperation agencies, China has focused on Other Official Flows (OOF) through state-run banks. However, the United States is likely to encourage private investment due to the limitations of securing ODA resources.In response to China’s initiatives in Latin America, including the Belt and Road Initiative and the China-CELAC Forum, the Biden administration announced a new cooperation initiative for the region. Besides the ongoing challenges of economic growth, poverty, anti- corruption, and rule of law in Latin America, the Biden administration’s initiative aims to promote leadership in the areas of environment, labor, and digital economy. Furthermore, the initiative highlights the differences between China’s cooperation efforts and the value- oriented approach promoted by the United States. It serves to check China’s influence, emphasize partnerships with major allies, international organizations, businesses, foundations, and civil society, and promote a multilateral approach.Chapter 3 examines the progress of U.S.-China competition in Latin America’s manufacturing and mineral resources sectors, which are key areas of contention between the two countries. The U.S. has taken steps to strengthen support for nearshoring in Latin America through bills, such as the Latin American Nearshoring Act (H.R.7579) and reshoring, which presents an opportunity for the region to become a major production location. However, in the manufacturing sector, it appears that there is no specific industrial policy in place for Latin American countries to leverage the U.S.-China competition to their advantage. The competition between the United States and China in the mining sector should be viewed in the context of the electric vehicle supply chain. Ultimately, the U.S. aims to establish domestic production for all stages of the electric vehicle supply chain, from mining core minerals like lithium to manufacturing finished cars. However, given the short-term impracticality of commercial lithium production in the United States, the U.S. plans to source it from a third country or one that has signed an FTA with the United States rather than from China. On the other hand, China is moving towards vertical integration, starting from raw material production such as lithium, and moving towards battery production, even in third countries like Latin America.Chapter 4 examines the level of forward and backward linkages of major Latin American countries using the export value-added decomposition methodology developed in previous researches. It also analyzes the formation of the value chains in Latin American countries and the impact of U.S.-China competition on them. As a result of the analysis, first, Brazil, Chile, and Mexico have emerged as hubs in Latin America, and regional integration in Latin America has improved in terms of forward links. Second, it is noteworthy that during the U.S.-China competition, the proportion of intermediate goods from Latin America used for China’s exports to third countries increased. On the other hand, the fact that the proportion of Mexican intermediate goods included in U.S. exports has decreased slightly suggests that active incentives, such as investment incentives, must be supported in Mexico to turn the U.S.-China competition into an opportunity factor, such as near-shoring in Mexico. Third, the proportion of foreign value added included in Brazil and Chile’s exports to China increased. This result can be interpreted as the expansion of the input of intermediate goods from other countries, including China. Fourth, except for Guatemala, the proportion of foreign value added inherent in exports to the United States has increased in major Latin American countries, indicating that major Latin American countries have strengthened their backward linkages with the United States. In particular, it is noteworthy that the value added of the U.S. in exports to the U.S. by major Latin American countries has increased slightly. This supports the fact that U.S. companies attempted near-shoring to some Latin American countries during the intensifying competition between the U.S. and China, or that U.S. investment in Latin America increased slightly. Therefore, like China, the U.S. still remains an important partner for Latin American countries by forming a value chain with Latin American countries amid the intensifying competition between the U.S. and China. Finally, the value chains of Latin America and the United States are highly linked forward across various industrial sectors in Latin America, whereas the value chains of Latin America and China are primarily formed in the mining sector. Moreover, as the competition between the U.S. and China intensified, the value chain between Latin America and the U.S. has become more consolidated in various industries, while the value chain between Latin America and China has somewhat weakened around mining.Chapter 5 presents implications based on the research results. The fact that Latin American countries, including Mexico, are mentioned as candidates for near-shoring for U.S. companies, suggests that Korean companies seeking to enter North America or increase their market share in North America need to watch changes in Latin America more closely than in the past. In particular, due to the enactment of the U.S. Inflation Reduction Act (IRA), it is necessary to pay attention to Latin American countries that have signed FTAs with the U.S. or so-called like-minded countries that pursue common values. Mexico and Brazil, with high backward links in U.S. trade, are base countries for entering or incorporating supply chains centered on North America.Since 2013, the Korean government’s support for overseas resource development has declined, while Japanese and Chinese companies have continued their active overseas resource development with support from their respective governments. While the results of the value chain analysis indirectly confirm the influence of China and Japan in Latin America, the establishment of the value chain between Korea and Latin America is relatively weak compared to China and Japan. Taking into account the cases of China and Japan, and in light of the recent emphasis on economic security, it is imperative for the government to strengthen its role by regarding Latin American countries, which are major producers of minerals like lithium, as crucial partners in securing a stable and diversified supply chain for key minerals. In particular, considering that the trend of resource nationalism in Latin American countries such as Mexico, Chile, and Bolivia is strengthening, it is difficult for private companies to independently discover and promote development and exploration projects. Thus, the role of the government has become more important. -
50 Years of ROK-Indonesia Partnership: A Vision for Future Development
South Korea (hereafter Korea) and Indonesia celebrate their 50th anniversary of diplomatic relations in 2023. Since establishing a strategic partnership in 2006, the two countries have developed close ties based on mutual trust an..
Ina Choi et al. Date 2022.12.30
Economic Cooperation, International Politics Southeast Asia OceanDownloadContentSummarySouth Korea (hereafter Korea) and Indonesia celebrate their 50th anniversary of diplomatic relations in 2023. Since establishing a strategic partnership in 2006, the two countries have developed close ties based on mutual trust and respect. In recognition of the growing common interests and strategic values perceived by each other, Korea and Indonesia elevated their bilateral relations to a “special strategic partnership” in 2017. Indeed, amid intensifying strategic competition between the U.S. and China, Indonesia has emerged as a major partner for Korea to diversify its economic and diplomatic relations. And with the Russia-Ukraine war adding to the woes in the global supply chain already disrupted by the Covid-19 pandemic, Indonesia has become a key partner for Korea to expand its supply chain cooperation. From Indonesia’s perspective, Korea is considered a major economy that can contribute to the modernization of its manufacturing industry, relocation of the capital city and the growth of its defense industry. Among other things, as middle powers in the Indo-Pacific region, the two countries share the common goal of promoting inclusive regional order amid the increasing Sino-U.S. rivalry. Against this background, this study evaluates 50 years of Korea- Indonesia relations and analyzes what opportunities and challenges lie ahead for upgrading bilateral cooperation. Based on the above analysis, the study provides policy recommendations for further strengthening strategic partnership between Korea and Indonesia.Chapter 2 reviews the development of diplomatic and security partnership between Korea and Indonesia. The two countries gradually increased diplomatic exchanges after the Cold War and set out to intensify their partnership in the late 1990s in line with Korea’s enhanced cooperation with ASEAN. In particular, defense industry cooperation – where mutual interests are identified – has been the primary driver of enhancing strategic bilateral ties in the field of defense and security cooperation. Since the 2000s, Korea has established itself as a major arms importer for Indonesia and defense cooperation between the two sides has led to the joint development of fighter jets. Based on the trust built up through close cooperation in the defense industry, Korea and Indonesia have expanded bilateral defense cooperation through high-level personal exchanges and multilateral joint exercises. The two countries have also continued to cooperate on diverse regional security issues, including those surrounding the Korean Peninsula, through the ASEAN-led multilateral dialogue platforms. Notably, Indonesia has been the most active ASEAN member in supporting inter-Korean dialogue. In addition, Korea and Indonesia, as members of both the G20 and MIKTA, have developed a middle power partnership on a wide range of global challenges. The opportunities and areas where the two countries can collaborate have recently been expanded further. Above all, amid growing strategic competition surrounding the Indo-Pacific region, Korea and Indonesia share the common goal of shaping inclusive regional order and securing strategic autonomy. Indonesia played a pivotal role in rolling out the ASEAN Outlook on the Indo-Pacific (AOIP), with which Korea’s new Indo-Pacific strategy shares a similar stance. Given the growing importance of Indonesia as Korea’s strategic partner, Indonesia is expected to play a key role in pushing ahead with Korea’s new Indo-Pacific strategy and its new policy towards ASEAN – the Korea-ASEAN Solidarity Initiative (KASI). There is sufficient room for further enhancing strategic ties between the two sides, but the different key interests held by each other – promoting peace in Korean Peninsula for Korea and securing its independent and active (bebas aktif) foreign policy for Indonesia, respectively – are challenges to be addressed. It is important that the two countries continue to strengthen strategic dialogues and thereby deepen their understanding of respective core interests and develop mutual trust as a reliable security partner.Chapter 3 assesses Korea-Indonesia economic cooperation over the past 50 years, with the provision of future directions for upgrading the bilateral partnership. Since the establishment of diplomatic ties, Indonesia has been a major supplier of natural resources – particularly wood, crude oil and liquefied petroleum gas (LNG) – for Korea. Korea has maintained a trade deficit in trade with Indonesia, but given how the raw materials imported from Indonesia contribute to the growth of Korea’s manufacturing industry, it can be seen that the two countries have developed a complementary form of economic cooperation. Korea’s investment in Indonesia, which originally began with mining and labor-intensive manufacturing, has recently expanded to high-tech manufacturing and financial sectors with the gradual growth of the Indonesian economy. In particular, Indonesia’s rich natural resources and fourth-largest domestic market in the world have attracted large-scale investments from Korea in areas such as steel, automobiles, petrochemicals and electric and electronics. Despite the economic downturn caused by the Covid-19 pandemic, Korea’s direct investment to Indonesia reached a record high of 183.2 million USD in 2021. This large-scale investment to Indonesia can largely be attributed to Indonesia’s policy to support growth in the high value-added manufacturing industry, for example through the “Making Indonesia 4.0” initiative announced in 2018. In fact, Korea is increasingly seen by Indonesia as an important partner for promoting its industrial policy aimed at becoming a “high-tech manufacturing powerhouse.” As supply chains have emerged as a critical issue since the Covid-19 pandemic, there is a growing consensus in Korea that Indonesia is not just a raw material importer but a strategic partner to cooperate for the establishment of stable supply chains. In particular, as Indonesia attempts to develop downstream manufacturing, capitalizing on its position as a key provider of critical minerals, large-scale investments from Korea have recently been made in electric vehicles and battery production. In addition, infrastructure development has emerged as one of the most promising areas of cooperation between the two countries as the Indonesian government embarks on building a new capital city in East Kalimantan. On the occasion of President Yoon Suk-yeol’s visit to Bali in November 2022, Korea and Indonesia reaffirmed their mutual desire to strengthen economic cooperation with a series of MoUs signed in the field of supply chains for critical minerals, strategic cooperation in high-tech sectors and various development projects for the new capital city. As Indonesia, the world’s top 10 carbon emitter, pledges ambitious carbon emission cuts, room for bilateral cooperation on climate change is increasingly growing. Given that the Land Use, Land Use Change and Forestry (LULUCF) sector takes more than half of Indonesia’s Nationally Determined Contribution (NDC) target, and that Indonesia accounts for 75% of Korea’s overseas afforestation projects, cooperation on forestry management is also promising. Yet, the instabilities in the global supply chain and Indonesia’s resource nationalism are considered challenges for enhancing strategic partnership between the two countries.Chapter 4 reviews the socio-cultural partnership between Korea and Indonesia, with an analysis on the achievements and limitations of their bilateral exchanges. Although the two countries established diplomatic ties in 1973, it was not until the 2000s that the bilateral people-to-people exchanges began in earnest. Mutual exchanges between the two peoples have gradually increased over the past 20 years, but are yet to show impressive achievement compared to other ASEAN members such as Vietnam and the Philippines. Furthermore, the outbreak of the COVID-19 pandemic has dramatically reduced the number of people migrating or traveling between the two countries for both short-term visits and long-term stays. The pandemic led to a dramatic drop in people-to-people exchanges with all ASEAN member countries, but it is worth noting that Indonesia’s rate of reduction was particularly high against the overall decline rate of ASEAN people living in Korea. This implies that Korea is not a preferred country to live in for Indonesians. The low public perception of cultural diversity in particular creates an unfavorable environment for Indonesian Muslims to reside in Korea. In order to recover the bilateral people-to-people exchanges which dropped due to the Covid-19 pandemic, more efforts are required by Korea to increase public awareness of cultural diversity. Meanwhile, we have witnessed dramatic development in cultural exchanges between the two countries over the past 20 years, as the Korean Wave has sparked the public interest in Korean culture and language within Indonesia. It is important to note, however, that the level of understanding regarding the Indonesian culture and language still remains relatively low within Korea. Similarly, while the popularity of Korean studies is growing in Indonesia, awareness of Southeast Asian studies, including Indonesian studies, is still low in Korea. Such asymmetrical and unbalanced cultural exchanges are the major challenge for Korea to overcome in strengthening socio-cultural ties with Indonesia.Based on the above analysis, Chapter 5 provides policy recommendations for further upgrading the Korea-Indonesia strategic partnership. Under the vision of forging a comprehensive strategic partnership for a peaceful, inclusive and prosperous Indo-Pacific, this study suggests four major objectives to strengthen bilateral relations: 1) strengthening the basis of cooperation; 2) realizing major advances as a trusted partner in addressing regional and global challenges; 3) consolidating an open, future-oriented and mutually beneficial economic partnership; and 4) promoting sustainable people-to-people exchanges and raising mutual awareness. First, in order to advance the special strategic partnership, it is necessary to strengthen the basis of trust as key strategic partners. As vigorous summit meetings have played a critical part in deepening bilateral relations, it is important to hold regular summit exchanges to enhance mutual trust. Intensifying high- level strategic dialogues will also help the two countries share key issues faced by each other and maintain consistency in their cooperation regardless of leadership change. For key areas of cooperation identified through summit talks and high-level dialogues, the establishment of a joint committee or working group is required to put relevant agendas into action. In addition, 1.5 and 2-track dialogues should be held more actively so that expert groups of Korea and Indonesia can gain better understanding of each other. Second, in order for the two countries to strengthen their status as strategic partners, Korea and Indonesia should more actively cooperate on addressing each other’s key security agendas, as well as promoting stability in the Indo-Pacific region and global peace. In particular, the two countries should closely work together to enhance ASEAN centrality and promote peace on the Korean Peninsula, which are the core interests of Indonesia and Korea, respectively. In addition, building upon their close partnership at the United Nations and MIKTA, Korea and Indonesia should strengthen their cooperation on tackling various global challenges. Most importantly, the two countries should step up efforts to address complex security challenges in the Indo-Pacific such as maritime security, counter-terrorism, and humanitarian and disaster relief (HADR). Finally, as defense industry cooperation has been a key driver of growth in their bilateral defense partnership, the two countries should solidify their status as key defense industry partners by establishing a win-win strategy to boost defense industry ties. Third, capitalizing on the growing opportunities of cooperation, the two countries should build a mutually beneficial economic partnership. Apart from boosting trade and investment further, the two countries should seek to strengthen supply chain cooperation on key minerals in particular. Furthermore, Korea and Indonesia need to strengthen cooperation in the fields of electric vehicles, batteries, digital economy, and start-ups, while expanding cooperation in sustainable infrastructure, including the new capital construction project. It is also necessary to bolster bilateral cooperation for renewable energy and forestry, while enhancing partnership in maritime environmental management. Fourth, as the transition to a digital society is a key factor to facilitate more people-to-people and cultural exchanges between the two countries, Korea should support the development of science and technology in Indonesia, as well as foster talented youths that can lead Indonesia’s creative industry. Most importantly, more efforts should be made to increase awareness between the two peoples through various cultural and educational programs – for example, the establishment of an Indonesian cultural center in Korea and the promotion of Korean studies in Indonesia, and vice versa. -
Russia's Relations with China in the Era of US-China-Russia Strategic Competition
This study comprehensively examines the development of Russia’s strategic relationship with China amid intensifying strategic competition among the United States, China, and Russia. Specifically, we analyze the basic meaning and ..
Joungho Park et al. Date 2022.12.30
Economic Relations, Economic Security United States of America China Russia EurasiaDownloadContentSummary정책연구브리핑This study comprehensively examines the development of Russia’s strategic relationship with China amid intensifying strategic competition among the United States, China, and Russia. Specifically, we analyze the basic meaning and direction of Russia’s strategy toward China in the process of shaping a new global order, and the key features and characteristics of cooperation between the two countries in a wide range of fields spanning politics, diplomacy, security, military, economy, society, and culture. Accordingly, this research seeks to derive useful policy implications for Korea based on evaluation of the direction and level of Russia-China cooperation from the Russian perspective.This study consists of four major chapters. Chapter 2 examines the background and strategic significance of Russia’s political, diplomatic, and security relations with China. The deterioration of US relations with China and Russia, which is currently progressing at the global level, is acting as a decisive factor pushing Russia and China closer to each other. In order to grasp the dynamics of US- China-Russia relations and Russia’s perception of the international order, we seek theoretical and historical approaches to the strategic triangle relationship, while examining the possible formation of a new type of triangle relationship. Based on this, the chapter describes Russia’s perception of China and its policy direction, as well as the evaluation and prospects of Russia-China relations.Chapter 3 analyzes the background and strategic significance of Russia’s economic, trade, and industrial relations with China. First, Russia’s perception of economic security and the background of deepening economic relations with China are comprehensively identified. In particular, we examine the opportunities and constraints associated with Russia-China cooperation in the fields of advanced technology, energy, and finance, which are key strategic areas for strengthening Russia’s economic security in the face of intense Western sanctions against its economy.In Chapter 4, the development process and strategic significance of Russia’s social and cultural relations with China are examined. To this end, we explore the current status and characteristics of cooperation in the fields of education and research, culture and arts, mass media, tourism, sports, and healthcare.Chapter 5 concludes with a summary of the main research contents and presents policy implications for Korea. In particular, promising directions and tasks for the Northern Policy are suggested, as it faces a major turning point in the changing external environment. These include establishing a cooperative environment for stable management of Korean Peninsula issues, creating a cooperative model to secure external status as a “pivotal middle power,” setting national interests at a strategic level, and raising social awareness of the strategic value and importance of the northern region, etc. -
Effects of Environmental Changes on Migration and Labor Market Outcomes
This report provides a comprehensive investigation of environmental migration, which is expected to accelerate in the future due to the direct and indirect effects of climate change and natural disasters. The report is the first K..
Youngook Jang et al. Date 2022.12.30
International Immigration, Labor MarketDownloadContentSummary정책연구브리핑This report provides a comprehensive investigation of environmental migration, which is expected to accelerate in the future due to the direct and indirect effects of climate change and natural disasters. The report is the first Korean-language study to address the various aspects of environmental migration and employs various research methods, including field research, expert interviews, case studies, literature review, and empirical analysis.Chapter 2 classifies migration due to climate and environmental factors into three categories: i) displacement due to extreme weather events and disasters, ii) displacement due to gradual climate change, and iii) displacement due to a combination of factors. It reviews the current status, cases, and prospects of each category. This chapter also highlights the impact of various environmental factors such as typhoons, floods, extreme heat events, earthquakes, and volcanic eruptions, which can cause immediate displacement of large numbers of people.Chapters 3 through 5 conduct case studies in Central America, Africa, and Southeast Asia, respectively. Chapter 3 provides case studies of Mexico, Guatemala, El Salvador, and Honduras, examining how climate change and the frequent occurrence of intense natural disasters are linked to migration in these countries. In these countries, declining agricultural productivity, particularly among subsistence farmers and seasonal laborers, is likely to worsen the socioeconomic situation, leading them to choose migration as a last resort climate change adaptation mechanism.Chapter 4 examines climate and environmental factors and migration trends in Morocco, Senegal, Nigeria, and Somalia. This chapter illustrates how climate change and environmental change are driving migration in these countries through case studies and field research. The impact of drought on migration in Morocco, Senegal, and Nigeria is particularly significant, with increased internal, international, temporary, and permanent migration due to drought. The more agriculturally dependent and drought-affected communities are, the more likely they are to choose to migrate themselves or their family members as an adaptation to environmental change.Chapter 5 explores the cases of environmental migration in four Southeast Asian countries: the Philippines, Indonesia, Vietnam, and Thailand. The findings presented in the chapter reveal that the Philippines experienced the most severe environmental impacts, with the highest increase in temperature and precipitation, and the most frequent natural disasters such as storms and floods, leading to the highest number of out-migrants. Indonesia also faced frequent floods and earthquakes, resulting in significant human and economic losses and domestic migration due to natural disasters accounting for the majority of migration. While Thailand experienced less severe floods and storms than the other countries, the back-to-back floods in 2010 and 2011 displaced over 2.5 million people.Chapter 6 reviews the literature and conducts empirical analysis to examine the impact of climate and environmental change on migration and labor markets. The analysis shows how temperature changes, precipitation changes, and natural disaster in sending or receiving countries have a significant impact on bilateral migration. Additionally, environmental change is found to lead to migration outflows only in low- and middle-income countries, while income decline has a deterrent effect on migration in low-income countries. This chapter also highlights the scarcity of research on the impact of climate change on labor markets as a route to migration and suggests expanding research in this area.Finally, in Chapter 7, the report draws policy implications based on its findings. The chapter recommends expanding humanitarian assistance to migrants, strengthening international and development cooperation on climate change mitigation and adaptation, and improving administrative procedures to accommodate the increasing influx of foreign labor. The report emphasizes the need for proactive predictions on the demand and supply of foreign labor and elaborating strategies to accommodate them, given the anticipated demographic changes in South Korea. While the report does not propose specific policy alternatives, its findings are recommended as a basis for future policy responses. -
The Impact of Anti-Russian Sanctions and Implications for the Economy of Central and Eastern Europe
The Russia-Ukraine war and EU sanctions against Russia are having a negative impact not only on Russia but also on the overall EU economy, and these negative effects are expected to continue into 2023 as the war prolongs. Central ..
Cheolwon Lee and Cho Rong Kim Date 2022.12.30
Economic Cooperation, Overseas Direct Investment Europe Russia EurasiaDownloadContentSummaryThe Russia-Ukraine war and EU sanctions against Russia are having a negative impact not only on Russia but also on the overall EU economy, and these negative effects are expected to continue into 2023 as the war prolongs. Central and Eastern European countries, which enjoy relatively strong trade, business and energy-related links with Russia, have been hit particularly hard. Central and Eastern European countries bordering Russia and Ukraine are relatively dependent on Russia for energy, and are expected to suffer the greatest economic damage in terms of trade relations.Policies toward Russia in Central and Eastern Europe have maintained various stances depending on country, ranging from Poland, which consistently maintains an anti-Russian stance, to Hungary, a typical pro-Russian country, or have recently undergone a change in stance. Central and Eastern European countries located on the EU border or those close to Russia and have some legacy of past socialist alliances, regardless of their pro-Russian or anti-Russian ties, generally have close economic ties with Russia. Therefore, after the invasion of Ukraine, the EU’s sanctions on Russia will inevitably have a serious impact on the Central and Eastern European countries in various sectors such as trade, investment, and finance as well as the energy sector, which is expected to suffer a direct short-term impact.In 2004 and 2007, Korean companies entered Central and Eastern Europe in large numbers including the four Visegrad countries (Poland, Czech Republic, Slovakia, Hungary), set production bases in Europe, and then made further investments. The Visegrad V4 countries represent the largest export market for Korea in the EU, accounting for 28.3% of its exports to the EU in 2020. As such, Central and Eastern Europe, where Korea has the most active economic cooperation in Europe, is expected to suffer the most serious and diverse negative impacts from geopolitical crises, including the recent Russia-Ukraine war. We analyze that major countries in Central and Eastern Europe will experience slightly different economic impacts and show disparate policy tendencies toward Russia in the face of geopolitical crises, and accordingly, it will be necessary for Korean companies to prepare differentiated countermeasures. In particular, it is time to review Korean companies’ strategy toward Europe based on an in-depth analysis of the economic impact of the geopolitical crisis on countries in Central and Eastern Europe.The purpose of this study is to analyze the impact of EU sanctions against Russia on Central and Eastern European countries from various angles after the outbreak of war between Russia and Ukraine, and to draw implications for Korea’s economic relationship with Central and Eastern Europe. This study is largely composed of the following three issues. First, it shows how these Central and Eastern European countries have close economic relations with Russia, second, how the geopolitical crisis originating from Russia will affect the Central and Eastern European economy, and finally, third, how Korean companies and governments should respond to economic relations with Central and Eastern Europe. Therefore, following the introduction in Chapter 1, Chapter 2 sheds light on the relationship between Central and Eastern Europe and Russia, including trade, investment, and energy. And in Chapter 3, the EU’s sanctions against Russia and their future trajectory, the impact on the Central and Eastern European economy, and the changes in the local business environment of the companies entering the market were analyzed. Finally, in Chapter 4, based on the above-mentioned analysis and economic relations between Korea and Central and Eastern Europe, implications for Korean companies and governments were derived. -
EU’s Medium- to Long-term Trade Strategies and Korea-EU Cooperation Plans
This study examines recent changes in the European Union’s (EU) mid- to-long-term trade strategy. The trade environment has been greatly affected by the weakening of multilateralism, intensification of the US-China strategic comp..
Youngook Jang et al. Date 2022.12.30
Economic CooperationDownloadContentSummaryThis study examines recent changes in the European Union’s (EU) mid- to-long-term trade strategy. The trade environment has been greatly affected by the weakening of multilateralism, intensification of the US-China strategic competition, COVID-19 pandemic, and the outbreak of the Russian-Ukrainian war. In response, the EU has announced new strategies. This study categorizes the motivations of these strategies into internal and external ones, and identifies ways for Korea and the EU to cooperate in these areas. Specifically, the EU is currently focusing on policy areas such as supply chain reorganization, digital transformation, and climate change response due to internal motivations, and it is passively responding to external pressures in policy areas like the energy crisis and pandemic response.Chapter 2 analyzes the EU’s supply chain reorganization, which includes policies to increase the competitiveness of intra-EU companies in strategic industries and reduce extra-EU dependence. This chapter examines a series of EU policies to strengthen semiconductor and battery supply chains, including the Single Market Emergency Instruments and the Critical Raw Materials Act. To ensure that Korea’s participation in the EU’s reorganization of offshore supply chains increases, it is necessary to actively promote the idea that Korea is a reliable partner. Supporting Korean companies to invest in the EU to strengthen cooperation in the semiconductor industry and actively reflecting the position of Korean companies in setting international standards for batteries are also worth considering. Technical exchanges with relevant organizations and companies in the EU should be actively promoted. Bilateral cooperation in critical minerals, which are necessary to combat climate change, is also promising. EU experts suggest linking respective early warning systems and monitoring of critical minerals to share information and promote joint purchases.Chapter 3 examines the priority areas for digital cooperation between Korea and the EU, based on the EU’s key digital policies and agreements. The chapter identifies several potential areas for cooperation, including the Korea-EU Digital Partnership, which is expected to encompass emerging technologies such as 5G/6G, high-performance computing, quantum technology, artificial intelligence, and blockchain, as well as regulatory areas such as privacy, cybersecurity, online platforms, and data movement. Additionally, the chapter suggests that modernizing e-commerce provisions in the Korea-EU FTA could help facilitate digital trade and strengthen digital economic cooperation. Another area for cooperation is in creating a regulatory environment that enables the digital market to grow appropriately, as digital-related regulations are strengthened in each country. Finally, the chapter recommends upgrading cooperation in digital and information and communication technology (ICT) infrastructure and technical cooperation, including future networks such as 6G, high-performance computing, artificial intelligence, cybersecurity, ICT supply chains, e-government, and R&D. By leveraging their advanced digital technologies and shared interests in promoting and developing these areas, Korea and the EU can deepen their digital cooperation.Chapter 4 examines the key issues of the EU’s climate change response and proposes possible areas of cooperation between Korea and the EU. The EU is implementing one of the world’s most advanced and forward- thinking environmental policies. With the recent announcement of the “Fit-for-55” legislation, the EU is accelerating its eco-friendly structural transformation by reducing carbon emissions by 55% compared to 1990 levels by 2030. Additionally, the EU will ban internal combustion engine vehicles from 2035, raise the target for renewable energy, expand the scope of the emissions trading system, phase out free allowances, and introduce a carbon border adjustment system for offshore countries. Chapter 4 suggests three areas of cooperation: first, cooperative programs to jointly develop eco-friendly technologies; second, joint participation in multilateral discussions on climate change response; and third, joint participation in supporting climate change response and adaptation in developing countries. Climate change is beyond the scope of individual national governments or bilateral issues, and effective responses can only be achieved through multilateral cooperation.Chapter 5 examines the energy situation in the EU and its major member states, and then examines the energy security policies implemented before and after the Russian-Ukrainian war. In response to the green transition discussed in Chapter 4, major European countries have generally sought to expand renewable energy sources such as solar and wind power. However, their stance on nuclear power and natural gas has varied across member states. It is expected that the reliance on nuclear power generation will remain high for the time being, as the deadline for operating or retiring nuclear power plants has been extended to resolve short-term energy supply and demand imbalances. In response, Korea should continue energy cooperation with major EU member states such as Germany, France, and Poland, but consider alternatives for cooperation that are consistent with each country’s policy.Chapter 6 proposes potential avenues for cooperation between the EU and South Korea in the area of public health, based on the EU’s COVID-19 response. The COVID-19 pandemic has significantly impacted the EU, resulting in high numbers of infections and deaths as well as a sharp decline in economic growth. To combat the pandemic, the EU has implemented various policies, including establishing joint response procedures among member states, jointly purchasing and distributing vaccines, providing financial support at the EU level, and actively participating in multilateral cooperation. Korea can continue to cooperate with the EU in three key areas: first, promoting bilateral cooperation to respond to future infectious disease crises; second, jointly participating in multilateral organizations as similarly situated countries; and third, providing technical cooperation in the pharmaceutical field. By improving relevant provisions within the EU-Korea FTA and strengthening cooperation through diplomatic channels, the EU and Korea can continue their cooperation in the health sector.Overall, this study highlights various ways in which Korea and the EU can strengthen their cooperation in areas such as supply chain reorganization, digital transformation, climate change response, and energy security. By working together, both sides can achieve their common goals and respond more effectively to global challenges. -
The Social and Economic Impact of the Spread of Populism in Latin America
Populist forces continue to emerge in Latin America, causing instability and uncertainty across the region. Populist forces in the region first rose to prominence during the beginning of the period of import substitution industria..
Seungho Lee et al. Date 2022.12.30
Economic Cooperation, Political Economy Latin AmericaDownloadContentSummaryPopulist forces continue to emerge in Latin America, causing instability and uncertainty across the region. Populist forces in the region first rose to prominence during the beginning of the period of import substitution industrialization in the 1930s. They emerged taking advantage of the growing demands of the rapidly expanding urban working class for mass politics and the expansion of social benefits. Populism was rampant in Latin America for more than 30 years following the 1930s, but fell into decline with the emergence of military regimes in the 1960s and 1970s. However, populist forces emerged yet again in the 1980s with the wave of democratization and the accumulation of public dissatisfaction due to a series of economic crises. The so-called neopopulist forces took power in Latin American countries in the 1980s and 1990s, combining neoliberal economic policies with the typical ‘us’ versus ‘them’ discourse that is typical of populists.While a rapid transition to neoliberal policies led to various social and economic problems, traditional parties and politicians were not able to respond effectively to those problems. In this context, a new populist wave, combined with what was called the 21st-century socialism, emerged in the 2000s. In the 2010s, new breeds of populism appeared one after another, and the spread of populism is not expected to disappear in Latin America in the near future. Social and economic inequality is worsening across the region in the aftermath of COVID-19, and public distrust of established party politics and existing democratic institutions is growing higher than ever. All in all, there is fertile ground for populist forces to spread even more, claiming that they are the only ones who can eliminate the ‘incompetent and corrupt’ establishment and truly represent the “virtuous” people.With the spread of populism expected to continue in Latin America, there is a growing need to investigate the social and economic impact of populism. Against this backdrop, this study examines the impact of populist forces in power on the inflow of foreign direct investment, the quality of democratic institutions, and the foreign policy directions of Latin American countries. Based on our empirical evidence and qualitative analysis, we provide several recommendations for the Korean government and corporations. The contents of our research are as follows.In Chapter 2, we examine how populism has been defined in the existing literature and provide an explanation about the definition of populism we adopt for this research. This study follows the ideational definition of populism, which conceptualizes populism as a ‘thin-centered’ ideology that considers society to be ultimately separated into two homogeneous and antagonistic groups, the ‘people’ and the ‘elite,’ and which argues that politics should be an expression of the general will of the people. At the core of diverse phenomena labeled ‘populist,’ ranging from classical populism from the 1930s to 1960s and neopopulism in the 1980s across Latin America to recent populism not only in the region but also around the world, there is this ‘thin-centered’ ideology. In addition, we provide in this chapter a literature review that can hint at how the core characteristics of populism may affect our variables of interest.Chapter 3 examines the impact of populist forces in power on the inflow of foreign direct investment, quality of democratic institutions, and foreign policy directions. We conduct empirical analysis using a panel dataset including 18 Latin American countries from 1999 to 2021, employing regression analysis and synthetic control methods. We then complement our empirical evidence with some case studies on populist rule. Our findings are as follows.First, our regression results show that the presence of a populist government or a stronger populist tendency of the ruling government do not necessarily lead to a decrease in foreign direct investment inflow. We find that the negative impact of the presence of a populist government or a stronger populist tendency of the ruling government is pronounced in left-wing regimes. A populist in power or a stronger populist tendency are associated with a larger inflow of foreign direct investment under centrist and right-wing governments. Our findings from synthetic control methods suggest that a populist in power on average leads to a decrease in foreign investment inflow regardless of its ideological orientation. In our case studies, we examine how a number of populist governments in Latin America have implemented their economic policies and how they have affected foreign direct investment inflow.Second, our findings from regression analysis and synthetic control methods suggest that a populist in power and a stronger populist tendency adversely affect the quality of democratic institutions regardless of the ruling government’s ideological orientation. Our case studies illustrate a typical populist strategy to attack democratic institutions, with examples of left-wing and right-wing populist governments from the early 2000s to recent times. They confirm how populism and democracy are inherently incompatible. Moreover, we suggest that the authoritarian tendency of populist governments has strengthened during the recent COVID-19 period, which provided a number of populist governments with an excuse to suppress civil liberties while strengthening executive power.Third, we suggest that a populist in power tends to politicize foreign policy. The role of the governing ideology becomes more important than pragmatism in foreign policy decision-making, which is personalized and has authority concentrated on the ruling populist’s inner circles. In order to secure support from their core constituencies, populist governments attempt to break away from traditional policy directions and follow their governing ideology in foreign policy decision-making. We complement our case studies with our findings from synthetic control methods. We employ a variable quantifying how close individual countries’ voting patterns in the UN General Assembly are to that of the United States as a proxy for their policy stance towards the United States. Our findings show that left-wing populist governments tend to design their foreign policy to decrease dependence on the United States.Chapter 4 presents the implications of our research for the Korean government and businesses. First, it is necessary to pay attention to the recent movement of resource nationalism led by left-wing populist governments across Latin America. One should note that resource nationalism, including nationalization measures, is an important variable to consider for investment and cooperation decisions by the government and companies interested in securing critical minerals and strengthening supply chains across the region. Most of the left-wing populist governments in Latin America seem to be expanding the role of the state in strategic industries such as oil, core minerals, and electricity through anti-neoliberal and nationalist rhetoric. The Korean government and businesses are required to respond actively to the changing political landscape.Second, the Korean government and businesses should keep in mind that once populist rule is consolidated through referendums and constitutional amendments, it can result in a rapid transition from a democratic regime to an authoritarian regime. Meanwhile, the authoritarian tendency of populist governments has strengthened with the spread of COVID-19, which makes the possibility of a regime change even greater in some countries across the region.Third, the foreign policy directions of Latin American countries in which populist forces are in power can be ideologicalized and personalized at any time, breaking away from their traditional policy directions. It is also being observed that like-minded populist governments in Latin America are strengthening their solidarity with other countries both within and outside the region based on ideological similarities. In this context, this study recommends the Korean government pursue its foreign policy based on values and norms while making additional efforts to cooperate with countries under populist rule employing instruments such as economic cooperation or high-level diplomacy.