To design the cooperation strategy between Korea and Latin America, it is necessary to analyze the sectoral level of technological development of each Latin American country. However, as there is no universally accepted measure of technological development by sector, we adopted several indicators for the measurement, such as: number of BA/MA/Doctoral degrees awarded each year, R&D expenditure, publication of articles registered in SCOPUS, patents registered in US Patent and Trademark Office and the major companies which registered those patents, and Revealed Comparative Advantage (RCA) index.
The results of the analysis show that most Latin American countries have relatively high level of technological development in the areas of agriculture, biology, chemistry related science and technologies, and low level of development in electronics and computer related ones. However, Brazil and Mexico showed relatively high level of technological development in the areas of machinery and energy.
By purpose of cooperation, technological cooperation was divided into diplomatic cooperation purpose, joint research purpose, development cooperation and technology transfer purpose. By form of cooperation, it was divided into resources exchange cooperation, bridgehead securing cooperation, and base research cooperation.
With Brazil, which has a very high level of technological development in some areas, the main purpose of cooperation may be diplomatic purpose as well as joint research, and the areas of cooperation may be agriculture, energy, and aerospace. With Mexico, the cooperation in the areas of energy and machinery seems to be promising. With Argentina, Colombia, Chile, and Peru, cooperation in the areas of biology, marine issues, and mineral resources is recommended. As for other countries with lower income, the cooperation may be more for the purpose of development cooperation and technology transfer in the areas of agriculture, food processing, and clothing sectors.

이 논문집은 신흥경제국에 대한 국내 연구를 활성화하기 위해 대외경제정책연구원(KIEP)이 수행한 2011년 [전략지역심층연구사업]의 일환으로 발간되었습니다.
이 논문집에는 인도 지역에 대한 이해의 폭을 넓히고 인식의 지평을 확대하는 데 기여할 수 있는 경제, 정치, 법, 문화에 대한 10편의 논문이 수록되어 있습니다.

This study aims to review the Islamic political streams and Islamic religious and cultural characteristics; and at comprehensive analysis of the Islamic economy in terms of the structure, operation, and policies. It seeks to provide a background paper for understanding Southeast Asia from a new perspective and for helping to arrange measures for strengthening cooperation with Southeast Asian countries.
Chapter 2 discusses the characteristics of an Islamic economy, focusing on Islamic economic principles, the effect of Islamic cultural aspects on its economy, and the Islamic practice of charitable giving, ‘zakat’. Muslims have historically tried to establish fairness in economic transaction. Aspects of Islamic culture such as fasting, the pilgrimage to Mecca, and zakat are closely related to economic phenomena. After finishing Ramadan, the Islamic month of fasting, consumption, especially consumption of food and beverages, increases greatly. Creation of funds for pilgrimage to Mecca became the basis for the development of Islamic finance. However, two Islamic mass prayers required during working hours can have an adverse effect on productivity. As consumption of halal products increased, the importance of halal certification is emphasized. Zakat, which is a mechanism of redistribution, is a system for helping the needy. As zakat is obligatory for Muslims, it possesses the same characteristics as taxation.
Chapter 3 introduces Islamic finance in terms of its features, methods, and process of development, and considers ways for introducing Islamic finance into Korea. To promote equitable economic relations, Islamic finance prohibits interest (riba) in a financial transaction and helps debtors and creditors to share the risk through transactions backed by real assets.
Better-known forms of Islamic finance include murabahah, istisna, and ijarah for commodity transaction; and mudharabah and musyarakah for investment. The murabahah is consumer credit, where a financial organization pays a seller on behalf of the buyer and the buyer repays the debt. As for the istisna, the producer credit, a financial organization makes loans to a producer. After producing the goods, the financial firm takes over the goods and sells them to a buyer. The ijarah is similar to a lease: a financial organization purchases facilities or buildings, and transfers the right of use only to a user. The user must pay a user fee to the financial organization. By the mudharabah, an investor participates in a certain business through a financial organization, and the entrepreneur manages the business and provides the investor with a portion of the profit according to the profit-sharing rate. Lastly, the musyarakah is an arrangement where both a financial organization and the entrepreneur finance and manage the business together and divide the profit according to a profit-sharing contract.
The Islamic bond, sukuk, is a financial instrument based on Islamic prescriptions for financial transaction. While an ordinary bond contains a contract on principle repayment and interest payments, sukuk is considered a certificate for right to the cash flow and revenue from the project and tangible asset.
In the Islamic areas, insurance industry remains undeveloped. The Islamic insurance, takaful, however, had been brought into being by reasoning that Islamic insurance is indeed possible if it satisfies the principle of cooperation, respect for Islamic law (Shariah), and charity-giving.
The development of Islamic finance first began following the oil shock of the 1970s. Islamic financial organizations were established with oil money accumulated in the Middle East. In the 1980s, many Islamic financial organizations and research institutes were founded, and Islamic finance spread out from the Middle East to Malaysia and Bangladesh. In the 1990s, the Auditing and Accounting Organization of Islamic Financial Institutions (AAOIFI) was established, the first international standards on Islamic finance were set, and subsidiaries of Western banks for Islamic finance were founded. Thus, the Islamic finance had become internationalized. In the 2000s, the volume of Islamic funds soared with the accumulation of oil money and modus operandi of Islamic finance spreaded even to non-Muslim countries. Islamic finance has been greatly standardized as such Islamic financial organizations including the International Islamic Financial Market (IIFM), the Islamic Financial Services Board (IFSB), and the Islamic International Rating Agency (IIRA) were founded. Currently, Islamic finance is growing rapidly as large amounts of oil money has again accumulated in GCC countries, the infrastructure for the Islamic finance has been established, and there is growing interest in its structural stability.
For the long-term development of Islamic finance, it is necessary that Shariah be unified, the Islamic financial law become standardized, and Islamic financial products diversified. To introduce Islamic finance into Korea, it is very much necessary that the government modify related legal systems and examine the issues concerning the change of the rights for collateral caused by the transfer of the ownership of sukuk.

In order to clearly grasp the characteristics of ASEAN, it is important to understand ASEAN’s decision-making structure and practices. ASEAN takes consultation and consensus as the main principles in decision-making and also utilizes various decision-making methods. This study aims to provide a clear and comprehensive description of ASEAN’s decision-making features by examining development of ASEAN’s organizational structure and by studying its decision-making practice in terms of principles, cultural backgrounds, formal characteristics, and informal yet customary practices. In addition, it analyzes actual cases of ASEAN’s important decisions, and discusses the factors regarding changes in ASEAN decision-making. This paper shows that ‘consensus through consultation’, perhaps the most significant element in ASEAN decision-making, has been faced with challenge related to ‘transformation’ and ‘succession’, due to the changes in domestic and international circumstances.
Chapter 2 describes ASEAN’s decision-making structure in terms of changes in environment and its organs. ASEAN has been trying to alter its structure in response to changing circumstances. At the beginning, it focused on security cooperation and close relationships among the member states. In the 1980s, as changes occurred in both the security and economic environments, ASEAN expanded the scope of cooperation and reorganized its structure. Since the late 1990s, it has pursued internal intensification and external expansion. The membership of ASEAN was expanded to include Vietnam in 1995, Lao PDR and Myanmar in 1997, and Cambodia in 1999. After increasing its membership to 10 countries, ASEAN considered various measures to strengthen internal unity and cooperation. To expand externally in response to the 1997 Asian Financial Crisis, ASEAN pursued ‘ASEAN+3’ which includes Korea, China, and Japan.
Currently, the ASEAN Summit, the meeting of the heads of member states or governments, is the top decision-making body of ASEAN. The chair position of the ASEAN Summit rotates in alphabetical order of English names of member states. The ASEAN Coordinating Council coordinates important ASEAN affairs, and the ASEAN Community Councils deal with issues related to integration. The ASEAN Secretariat arranges major projects, resolves differences among the organs and projects, and advises governments on various projects.
Ever since ASEAN was first established in 1967, the organization has gone through changes in several phases. ASEAN began with a loose structure for cooperation between governments and the Annual Ministerial Meeting was its highest decision-making body from 1967 to 2008. However, there were significant changes with respect to other aspects of ASEAN’s structure ever since the 1976 Bali Summit, the first-ever ASEAN Summit. At the Bali Summit, the member states made a decision to establish committees for issues related to strengthening economic cooperation. Moreover, they decided to set up the ASEAN Secretariat to support ASEAN’s activities more effectively. The 1977 Kuala Lumpur Summit specified the decision of the Bali Summit by formalizing the ASEAN Economic Ministers Meeting. ASEAN was then reorganized with three structural pillars: ASEAN Foreign Ministers Meeting, the ASEAN Economic Ministers Meeting, and the meeting of other ministers. To adjust ASEAN’s operating system, to improve efficiency of decision-making, and to accomplish the ASEAN Community by 2015, ASEAN enacted ‘the ASEAN Charter’ in 2008. The ASEAN Summit was thereafter established as its highest decision-making body.
Chapter 3 discusses decision-making in ASEAN in terms of cultural and political background, the specific characteristics of decision-making, the principles and rules for management, and the changes in ‘the ASEAN Way’. One of the more important features in ASEAN’s decision-making practices is informality based on consensus and consultation. ‘The ASEAN Way’ is a reflection of the structure of agricultural society of Java, Indonesia; which focus on mandatory group work, and the slow development of a modern nation in Southeast Asia. As newly independent states face the task of building a nation-state, the ASEAN member countries put emphasis on maintaining national sovereignty and established the principle of nonintervention. This principle first acquired normative status at the 1976 ASEAN Treaty of Amity and Cooperation.
The key principles in the operation of ASEAN are restraint, respect, and responsibility. The principle of restraint refers to patience and nonintervention regarding other states; the principle of respect signifies a strong sense of sovereignty; and the principle of responsibility indicates mutual respect and sacrifice. Based on these principles, ASEAN established ‘the ASEAN Way’ as its modus operandi. The ASEAN way emphasizes nonintervention, informal diplomacy, restraint of public criticism on policies of other member states, and decision-making by consultation and consensus. In ASEAN, therefore, preference is given to informal talks and ‘accommodative diplomacy’. When member states cannot reach an agreement, decision-making was often deferred to a later date to avoid escalation of conflict. It emphasizes confidence-building and preventive diplomacy for dispute resolution. To minimize conflicts among the member states, the elites in the member countries build up close personal relationships among themselves, and place sensitive issues on formal meetings after discussing them in prior informal meetings. In addition, ASEAN-ISIS, a network of think-tanks for Southeast Asian studies, delivers preconcerted results which are difficult to make during formal meetings, acting as a liaison between NGOs and governments.
The ASEAN’s undeclared rules for management and operation are rotation, apportionment, and efficiency. The rules, respectively, of rotation and apportionment reflect the principles of mutual respect for sovereignty and equality; and the rule of efficiency complements the first two rules. According to the rule of rotation, ASEAN countries are assigned to chair the organs in alphabetical order. The rule of apportionment allows ASEAN countries to share the roles for its organs and projects. For setting up the ASEAN Secretariat in Jakarta, the rule of efficiency was applied to complement the other two rules. For assigning an intermediary for negotiation with non-ASEAN countries, ASEAN applies the rule of efficiency. For operation of its economic committees, they are apportioned without rotation. The budget and audit committees are located in Indonesia without personnel rotation so that the ASEAN Secretariat in Jakarta can administer them more efficiently.
As the agendas for regional cooperation are broadened and supranational issues arise due to increased interdependence, the member states have been aware that the principle of nonintervention and consensus should be modified. Since Thailand’s foreign minister suggested the concept of ‘constructive intervention’ and then changed it to a much less forceful ‘flexible engagement’ at the 1998 AMM, the principle of nonintervention has been under discussion. The 1998 AMM adopted the far weaker concept of ‘enhanced interaction’. In this context, ASEAN tried to change its decision-making procedures and tested the tools to supplement the principle of consensus. Moreover, it introduced something called ‘partial withdrawal’ which would not bind the opposing states but to make it possible for approving states to promote cooperation.
ASEAN attempted to change some of its practices with respect to decision-making several times. Regarding discussions on the majority vote, for example, ASEAN has shown growing interest in expediting its institution. In particular, the cases of signing legal binding agreements has increased in ASEAN. In 1996, the mechanism and regulations were introduced to resolve conflicts related to economic cooperation. As for the ASEAN Senior Economic Officials’ Meeting, simple majority voting was applied. ASEAN also adopted the concept of ‘ASEAN-X’. In the case that member states cannot reach an agreement, ‘ASEAN-X’ allows some member states to opt out for a certain agenda without opposing its implementation.
Chapter 4 examines the factors for changes in ASEAN decision-making through case studies. The changes occur due to corresponding changes in international regimes, and active agents and contents of regionalism. In response to changes in international circumstances, ASEAN has promoted ASEAN integration by concluding the AFTA. It is also trying to settle territorial disputes peacefully through international judicial institutions. These are the cases which show the real possibility of ASEAN changing its decision-making practices by adopting systemic operation and rule of law. As the agents in regionalism were altered, the potential for changes in ASEAN’s decision-making practice has increased. As the number of member states increased, flexible decision-making is required to deal with a larger gap among member states. It is also expected that the new officials who went to study abroad could gradually affect the informal aspects of ASEAN. It is very possible that ASEAN’s decision-making practice could indeed be changed, as global powers engage in regionalism. In addition to economic integration, the emergence of non-traditional security issues such as haze (smog) and infectious diseases require a clearer decision- making procedures than what they were traditionally.
The cases analyzed identify the specific factors in ASEAN decision-making and reflect the changes. The case involving territorial dispute confirms that ASEAN’s attitudes has changed in an active way. ASEAN, which had hesitated to discuss sensitive issues, resolved the intra-association conflict through the International Court of Justice which is not an ASEAN organization. Regarding non-traditional issues, the previous practice had to be changed because ASEAN would only emphasize an agreement on the principles through ‘building of trust.’ ASEAN has adopted the documents carrying legal binding force. With respect to the case of the AFTA which compels the member states to honor their commitments on items agreed upon, we can expect that decision-making practice will become stronger. As for the case of drafting the ASEAN Charter, it shows that ASEAN can limit and revise the rules of consensus as situations and needs arise. Establishing and expanding the East Asia Summit is an example that implies inevitable changes in the mode of decision-making in ASEAN.
Chapter 5 concludes the paper by summing up research and discussing the measures for cooperation between Korea and ASEAN. The changes in ASEAN’s decision-making structure not only cause changes in the organizational structure but also in modes of decision-making.
Korea needs to pursue cooperation with ASEAN, while understanding and respecting the principles of ASEAN decision-making and the region’s cultural background. Korea should consider the basic principles for the operation of ASEAN to pursue and strengthen cooperation with ASEAN with due patience. Moreover, the Korean government and research institutes have to pursue closer cooperation with ASEAN think-tanks, considering their role as informal government agencies. It is also necessary to adopt flexible measures to promote economic cooperation. The proper suggestion of ‘ASEAN-X’ and the ‘pathfinder method’ on a case-by-case basis can be considered. Furthermore, for the operation of the Chiang Mai Initiative Multilateralization (CMIM), the majority voting or the qualified majority voting mechanism may also be worth consideration. The decision-making method for effective operation of the CMIM should be actively discussed and institutionalized.

The interest in FDI in South Asia is increasing due to its rapid growth based on large population and recent political stability. Korea also has become interested in South Asia as a emerging market as the global crisis rages in the background, for Korea is in need of new markets. This study analyses the FDI attractiveness of 3 South Asian Countries, through comparisons in four areas: economic structure and policy, natural resources, infrastructure, and institution; and thus suggests policy implications for Korean FDI to South Asia.
According to the analysis, the results of FDI attractiveness of South Asia are summarized as follows. First, in terms of economic structure and policy, Sri Lanka is the most attractive country; followed by Bangladesh and Pakistan, in order. Bangladesh’s greatest merit in terms of FDI attraction is its large labor force. Pakistan is the least attractive for FDI because near-perpetual uncertainty in Pakistan due to frequent incidences of terrorism.
Overall, these countries are not very attractive destinations for foreign investment, as they have low income levels compared to other regions, but they have large populations that foreigners often seek out when investing into a region. Moreover, the FDI inflow is expected to continue in the region as these countries have recently posted steady economic growth with FDI, attracted by efficiency from the abundant pool of labor in the region.
In terms of natural resources, these countries are not as attractive for FDI because of comparatively less abundant deposits. However, Bangladesh and Pakistan have FDI attractiveness for exploiting natural resources with capital investment as their governments have displayed strong willingness to exploit natural resources with foreign capital. Sri Lanka also, which has no energy resources, is attractive for FDI in exploiting the non-metal resources. Tea and rubber in Sri Lanka are also viable industries which can attract foreign capital.
However, these countries have very insufficient infrastructure in general, negating much of their FDI attractiveness. The quality of railways, roads, air and seaports in these countries is the poorest in the world. But, the governments have out forth initiatives to develop infrastructure with financial support from international institutions such as World Bank, ADB, and so on. Thus, roads, ICT, and power generation are good areas for investment in the future given the government support for foreign investment.
In terms of laws and institutions, Bangladesh, Pakistan, and Sri Lanka are making progress in efforts to attract foreigners to invest across the board. They are drawing in foreign investors with tax and subsidy incentives for FDI. However, these countries have burdensome and unwieldy tax systems with respect to operation of companies, making them less attractiveness.
Overall, the study reveals that Sri Lanka is the best destination for investment in the region, followed by Bangladesh. Pakistan is the least attractive for FDI in the region. Even though these countries have small economies, there are still attractive because of their abundant labor force as a productive factor in labor intensive industries. But, Pakistan is relatively less attractive for FDI due to country risks such as terrorism or political instability.
The study suggests that, for markets and efficiency, Bangladesh and Sri Lanka are the most attractive countries. In term of specifics, Pakistan and Bangladesh are best countries for investment in resources, and niche market of Pakistan may be attractive to multinational companies in terms of asset-seeking investment. Therefore, establishing branch and liaison offices have the advantage over subsidiaries for entering the Pakistan market. It is better for companies to enter the Pakistan market with general agency or sales subsidiaries because the Pakistani market is relatively small. Bangladesh has comparative advantages for companies seeking to enter the domestic market and exports to third or neighboring countries, and is the best country for investment in labor-intensive industries. Then again, Pakistan does hold the advantages for FDI in the petrochemical industry. The regions potential for investment is considerable if the strong regional advantages in the region can be linked up to form a coherent network.
The study reveals some challenges for investment in South Asia. The Korean government may consider FTA with Pakistan and SAARC to expand economic cooperation. Korea also needs to collect and distribute information for investment environment, supporting the MSEs to invest in the region. Korea must observe closely and engage in continuous research on the investment environment in South Asia.
The investment into South Asia has to be achieved based on accurate and detailed information, along with correct assessment of the regional investment environment. In ending, the Korean government must support investment in South Asia by formulating appropriate strategies. New strategies for the countries in South Asia are necessary for further economic cooperation, considering South Asias huge potential as the emerging market for the near future.