20 years have passed since the Commonwealth of Independent States (CIS) was established in the aftermath of the dissolution of the Soviet Union in 1991. It was initiated by 12 newly independent states, excluding the 3 Baltic republics, in order to discuss issues of common interest and cooperate with each other based on independent and equal status. However, due to the non-binding nature of the CIS, most of the agreements among member states were concluded in vain. Nevertheless, they kept up efforts to form various integration schemes, such as the Customs Union of Russia, Belarus and Kazakhstan. The Customs Union was basically the first successful case of economic integration among CIS countries. The formation of the trilateral union was completed by introducing a common customs tariff on 1 January 2010 and removing internal border controls on 1 July 2011.
The overall GDP of the Customs Union amounted to USD 1,677.5 billion in 2010, or 86% of the GDP of the CIS and 2.66% of world GDP. Since the weight of the three economies in the CIS is considerable, it is expected that the Customs Union will have some repercussions for Korea, as well as its neighboring countries. In addition, increase in membership is likely to have greater impact. Currently, Kyrgyzstan and Tajikistan have applied for membership in the union. At this moment, an analysis of the 2 year-old Customs Union and the search for its implications for Korea has great meaning. Composed of five chapters, this study provides an overview of the developments of economic integration in the CIS region, followed by an in-depth analysis of the main components of the Customs Union and its economic impact on Korea. Based on this analysis, this study puts forward a number of recommendations for Korean policy towards the Customs Union.
With no internal duties, the Customs Union imposes common customs tariffs towards third countries. Only Kazakhstan is granted a five-year transitional period for levying a different customs tariff for some 400 tariff lines. As for external non-tariff barriers, the legal regime of the Customs Union, such as quantitative trade restrictions, technical regulations/standards, sanitary/phytosanitary measures and trade remedies, is based largely on relevant World Trade Organization (WTO) rules. Simply put, the Customs Union is a single market, which shares trade remedies and other regulatory measures. If a product passed, for instance, a sanitary/phytosanitary test of a member country, it is automatically permissible in other member nations. 
Following Russia’s accession to the WTO, the common customs tariff will be aligned with Russia’s bound rates. Also, WTO rules will become an integral part of the Customs Union’s legal system. For now, the regional integration agreements (RTAs) including free trade agreements (FTAs), the existing agreements and documents among the three countries do not provide sufficient details on the Customs Union’s policy concerning RTAs with third countries. Nevertheless, the Customs Union countries have been jointly involved in the FTA negotiation process with CIS countries, New Zealand, EFTA, Vietnam and Mongolia.
Meanwhile, the share of the Customs Union in Korea’s overall trade is relatively marginal, representing only 1.8% (USD 8.4 billion) of exports and 2.4% (USD 10.3 billion) of imports. According to the CGE-model analysis, Korea's welfare level falls by USD 4-6 million. This implies that the ripple effect of the Customs Union on Korea is insignificant. Regarding the impact on industrial sectors, manufacturing of textiles/apparel and automobiles/transportation equipment will shrink slightly, by 0.17% and 0.08% respectively. The effect of the enlargement of the Customs Union in the near future and establishment of the Single Economic Space, a higher form of integration, in early 2012; on Korea will increase. Therefore, the Korean government needs to reconsider its economic cooperation policy towards the CIS region in general and the Customs Union in particular. We recommend the Korean policymakers to take following implications into account.
As the economy grows and consumer incomes rise, demand for imports will also rise. It will also lower common customs tariffs and WTO accession can intensify the trend. All these add up to opportunities for Korean companies to increase their exports to the Customs Union. To fully utilize this chance, the Korean government and industries should jointly develop marketing strategies to diversify exports. In addition, larger membership of the Customs Union can lead to a bigger trade creation effect within the union while trade with non-members would not rise at the same rate. This implies higher costs for market access for non-member countries, such as Korea. For industries that face export reduction, expanding direct investment toward the member countries can offer a solution. Thus, the study recommends Korean companies to increase outward direct investments to the Customs Union in order to compensate for loss of exports.
Regarding investment, the Customs Union has removed a number of intra-state economic and administrative restrictions such as customs control, which will contribute to improvement of the overall investment environment there. Therefore, the Korean government and the private sector should collaborate more closely to study Korea’s competitiveness and the investment climate in the three economies, to extend ODIs to the Customs Union. Briefly speaking, Kazakhstan has a favourable tax system with the lowest VAT and income/corporate tax rates in the Customs Union. However, this is overshadowed by comparatively high transportation costs, which is borne by Korean producers based in the region. In the case of Belarus, investors have developed great interest in the country owing to its cheap labor and real estate, as well as the potential to become a logistical hub between the European Union and Russia. Yet its overall investment climate is quite unsatisfactory. Thus CIS-based Korean companies are advised to consider the possibility of relocating production sites in light of these and other relevant factors, including those stemming from the launch of the Customs Union and future developments (e.g. the common tariff, common market etc.).
Attractive investment sectors for Korea, firstly, in Russia would be consumer goods, transportation and medical equipment, plants business and others. As for Belarus, the promising sectors are IT (software), commercial vehicles, chemicals, potassic fertilizers or construction materials, and agriculture. Attractive industries for Korean investment in Kazakhstan include petroleum refining, petrochemistry, agriculture (inc. livestock), renewable energy, and innovation. Meanwhile, Korea needs not only to boost its direct investment to the countries, but also to make efforts to induce ODIs from Russia and Kazakhstan. ODI from the two countries has been rising rapidly owing to energy export surpluses. Increasing bilateral investment can potentially create good grounds for horizontal investment cooperation.  
After  accession of the Customs Union to the WTO, competition for market entry among other countries will become fierce. That is because the Union ensures reduction of tariff and non-tariff barriers over time and that the legal base of the Customs Union comply with rules for multilateral trade. Particularly, Russia’s entry to the WTO is expected to provide a momentum for revitalization of a Korea-Russia project on the Bilateral Economic Partnership Agreement (BEPA), although it is very likely it will proceed in a new format involving the Customs Union as a whole.

China’s Shandong province is one of the regions where Korean companies have invested most intensively. 36.1% of Korean investment in China is concentrated in this region at the end of September 2011. This is the result of Shandong having the advantage of being close to Korea, making it possible to utilize cheap labor and reduce cost of transport, for many Korean companies intensively engaged in processing trade in China.
However, recently, due to related factors such as increase of production costs such as minimum wages, land price and lack of labor, many companies are experiencing difficulties in management. In addition, due to strengthened environmental regulations, urbanization policy, industrial restructuring policy; a heavier burden has been placed upon most small and medium Korean companies that entered China, most of which are in processing.
As the burden of management increases and production environment degenerates locally, it is required that to assess various investment environment, we need to extricate ourselves from investment information fixated on production costs. Thus, in this study, by focusing on four coastal areas of Shandong (Rizhao, Weifang, Dongying, and Binzhou) which have shown rapid economic growth recently, we attempt to provide information for various aspects concerning investment environment; including industrial policy, production cost, and investment preference of these areas. In addition, based on the analysis, this report also suggests types of businesses which may be suited to investment in each region.
As a result of research of Korean companies in China and also the investment environment of each region, it is possible to suggest the following implications for companies who are trying enter the four coastal cities cited above: First, in order to cope with the quickly-changing business environment, there is need to get out of decision making based on contents of investment incentives suggested by local governments. Second, though the cities are located in the same region, production networks and industrial clusters are different, so emphasis should be on analysis of industrial environment of each (except for information of production cost) when making decisions for investment. Third, after taking into account  industrial policies from each area when making decisions on investment, there should be support policy for relevant industry, direct and indirect.
By considering that most Korean companies in Shandong are small, active support by the Korean government is necessary for medium and small business to move into the area or make new investments, especially,  in the form of information on investment environment of the area concerned. For this, the first thing required would be to investigate and accumulate information for investment environment of prefecture-level cities; there is a great need to pool information dispersed in several institutions together and increase access to information by managing and operating that integrated database. Second, considering that Korean companies entering the Chinese market place greater priority on  producer markets over consumer markets, there is a need to accumulate information related to industrial environments by reducing focus on production costs alone. Third, there is a greater need to reinforce economic cooperation between the central government of Korea and local governments of Shandong. Shandong is an area where Korean companies entered most intensively and have experienced much difficulties due to recent changes in the local business environment. Therefore, the reinforcement of economic cooperation with Shandong would be of enormous help to businesses of Korean companies advanced already, and in this sense, it is possible to say that it will have significant implications in promoting economic cooperation with Shandong, in the context of recent trends to reinforce economic cooperation between Korean government and local governments in China.

After 20 years from the establishment of diplomatic relations between Korea and China in 1992, China became the largest investment destination from as well as the trading partner of Korea. China is the major location of investments not only by large firms but also small and medium-sized enterprises(SMES) in Korea. However, during the recent years the business environments in China have rapidly changed, which poses substantial challenges to Korean SMEs. Hence, we need to better understand the current situation of Korean SMEs'. We select specific region and industry where the Korean SMEs have been operating in China.
The purpose of this study is to suggest implications to both the Korean government and the SMEs which have tried to foster competitiveness, moving beyond production-base building (which mainly utilizes cost advantages), and further to aim at expansion into China’s domestic market. We design this study based on the case studies of Korean manufacturing SMEs located in Jiangsu Province, China.
As a methodological approach, we first define competitive china-FDI enterprises as the enterprises which spent a “reasonably long” period of time in China after the initial investment and which self-assessed that they achieved the expected return. Next, we analyzed the reasons for the location choice (investment in Jiangsu Province), the performance variations, the factors to threaten long-term success for the Korean SMEs in Jiangsu Province. The research had two rounds of field visits between July and September 2011 and the locations included Suzhou, Nanjing, and Wuxi.
Chapter 2 introduces the theoretical background of this study. Chapter 3 examines the status quo for the investments of Korean manufacturing SMEs in Jiangsu Province, and the characteristics of Jiangsu Province as an investment location in comparison with Shandong Province, Zhejiang Province, and Guangdong Province. Chapter 4 illustrates our case studies that consist of labor-intensive, capital-intensive, and knowledge/technology-intensive industries in Jiangsu Province. Chapter 5 discusses how the eclectic model designed by Dunning (1977) is applied to Korean manufacturing SMEs in Jiangsu Province.
Finally, we suggest some implications for the government and the businesses. Korean government is advisable to provide more research service for the Korean SMEs in China, and to continue negotiations with Chinese government in order that the Chinese government should enhance the institutional transparency. As for business, Korean SMEs need to pay more attentions to the localization strategies and the networking with Chinese enterprises. In addition, a complete level of subsidiary autonomy should be guaranteed for further growth in China. Korean SMEs also have to improve human resource management and to actively recruit local employees as sales staffs.

The three countries in Central Asia – Kazakhstan, Uzbekistan, Turkmenistan – are attempting to establish Special Economic Zones and Free Industrial Economic Zones (SEZs hereafter). These countries are setting up SEZs for the purpose of boosting their economies through the development of new industries, as SEZs are widely recognized as effective policy instruments for economic development, especially for countries that are less competitive in manufacturing and high-tech industries.
Three countries share a similar economic picture. Agricultural and mineral sectors are important sectors of their economies. Despite the strong economic performance recently, there is little doubt that Kazakhstan, Uzbekistan, Turkmenistan need to diversify and upgrade their respective industrial structures; for which attracting foreign investment is essential. This is precisely what the three governments want to achieve through operation of SEZs.
Yet though their current economic circumstances may be similar, their SEZs have important differences in terms of industries. The main industries of SEZs in Kazakhstan will be IT, logistics, and textiles. In Uzbekistan, the main industry will be small electronic and consumer products. Turkmenistan’s SEZs will focus on tourism.
Of the three countries, Korean companies have a special interest in the Navoi Free Industrial Economic Zone in Uzbekistan. In particular, Korean Air is participating actively in the development of an intercontinental logistics center in this region.
It is expected that the number of SEZs in Central Asia will increase, all playing important roles in the development of economies in these countries.

Korea has achieved rapid economic growth through export-oriented strategy. As a result, people place high value on exports but have a negative perception on imports. However, it is well known that promoting competition through imports also brings significantly positive economic effects.

We study the effects of market openness on competition structure of the market and how economic effects of the openness vary depending on the market structure and competitive structure. Based on these, we identify whether market openness itself roles as a competition policy, and we draw industry liberalization strategy by exploring in which market structures the effects of market openness are maximized.
For these purposes, we analyze the effects of the openness measured by imports and investments on market structure and market performance using six countries’ industry-level data since 2000. Also we study how differently the effects of the openness depends on market structure and competition structure by using computable general equilibrium (CGE) model allowing imperfect competition assumption.
According to the empirical results for the relationship between the openness and market concentration, foreign direct investment lowers the degree of market concentration, while import penetration’s effect is not statistically significant. This is because market concentration is measured as companies’ market shares, however, import does not increase the number of firms in the market. To explore the effects of trade liberalization on firms’ profit, the equation for profit performance indicators is estimated. The estimation results show that market concentration increases profit but imports lower profit. we cannot find a statistically significant effect of foreign direct investment on profit performance.
We analyze how the effects of openness depend on market structure by using a imperfect competition CGE model. If there is a severe product differentiation, the effect of openness measured as real GDP growth rates is relatively small. If the technology of an industry has economies of scale, the effect of openness is very large because of a decline in average cost of production. Especially in an oligopolistic market, the effects are from 2.5 to 6 times larger than other market structures because of the presence of excess profit.
Also we study the effect of openness in the case where the openness affects the degree of competition in an oligopolistic market. if the degree of competition increases by 10 percent due to trade liberalization, real GDP growth rate increases by 4.63 percent. As the degree of competition is intensified, real GDP growth rate increases.
Based on the results, three policy proposals were drawn. First, in the case of Korea, the competitive structure improvements by trade liberalization have been relatively minimal. Thus, more active policy efforts toward trade and investment liberalization are required in order to increase domestic consumers’ welfare and the degree of competition. Also industry-differentiated liberalization strategies should be made by taking competitive structure and characteristics such as technologies into the consideration. Because particularly in industries with an oligopolistic market structure, the effect of openness is expected to be greatest, the effort to open these industries should be considered. Opening by itself can serve as competition policy, but institutional complements is also required to promote and enhance competition through trade liberalization.

In recent years, as several developing economies have built up significant financial and technical capacities, new patterns of economic partnership as well as development cooperation among the Southern countries are emerging. This presents a substantial opportunity to change the landscape of international development that has so far been largely a North-South phenomenon through the addition of a complementary and growing South-South Cooperation (SSC). The financial surpluses available to some developing countries such as China and Brazil made possible transfer of some of the resources amid the global financial crises and concerns over the possible decrease in aid volume from traditional donors. As a new source of development finance and knowledge transfer, the role of Southern countries as a development partner is being highlighted more than ever.
This policy paper is to examine the role of Korea as a donor to contribute to raising the effectiveness of development cooperation though South-South Cooperation. As the newest donor who has retained memories of its own development, Korea has substantial potential to work as a partner in South-South Cooperation. To better facilitate and participate in SSC as a new donor, Korea needs to understand the current picture of SSC through a comprehensive and systematic review and this research is expected to serve this requirement.
This research first reviews the history and background of SSC in a broader context and analyzes the current discussion of SSC at a global level. Furthermore, it presents a series of case studies of various aspects of development cooperation among developing countries in three different regions of Asia (China, India and Thailand), Africa/Middle East (South Africa, Turkey and Middle East) and Latin America (Brazil and Chile). In addition, the contribution of international organizations including the UN, regional development banks and other major regional organizations in SSC was reviewed.
Based on that research, this paper concludes by suggesting a few policy options for Korea as a partner in SSC, focusing on triangular cooperation in particular. They include strengthening cooperative mechanism with emerging donors such as China, India, Brazil and South Africa to complement Korea’s current bilateral development cooperation. Also the paper suggests that Korea should utilize this new approach to enhance its aid effectiveness and synergy of its efforts in progress by adopting the knowledge and knowhow of its Southern partners.
In order to fully realize this potential, Korea needs to build up institutional foundations to set the direction of South-South and Triangular Cooperation and to provide policy guidelines. It also needs to identify appropriate level of technology and policy applicable to developing countries in partnership with pivotal countries and organizations in the South. To best grasp the comparative advantages of developing countries, it will be useful to set up a platform to share the specific knowledge and know-how of developing countries based on their extensive experience in collaboration with partner countries and multilateral organizations. This means that the functioning of feedback mechanisms to monitor and evaluate the program as well as information sharing would be very important. Lastly, Korea should further strengthen the partnership with multilateral organizations and other donors to learn from practices of SSC that are effective and combine the lessons with Korea’s efforts to cooperate with developing countries.
Despite the ongoing global financial and economic hardship, the long-term prospects for continued expansion of SSC remain high. There is also a growing expectations and interest amidst Southern partners concerning the role of Korea as an SSC partner. Given Korea’s potential position as a bridge between the developing countries and established donors, Korea should move towards greater participation and involvement in discussions in the SSC.

Services industry facilitate vertical and horizontal integration between industries, and make significant impact on productivity by effective use of a given nation’s internal resources. That also makes developing countries more vulnerable to impacts from opening its services market. But, as the opening of services markets has recently become a standout issue in WTO DDA and bilateral FTA negotiations, studies about international trends in opening of the services sector and strategies for coping with a more open market is being conducted actively.
Among Korea, China, and Japan, several issues about opening of the services market is being discussed through the trilateral Joint Research Project for CJK FTA. In addition, diversification of sectors for investments into China is necessary, in light of China’s recent industrial policies involving greater focus on development of high-tech industries and services. As interest on opening of services rises, various research about this issue is being conducted. Previous studies have focused mainly on characteristics of existing FTA’s of the 3 countries(Korea, China, and Japan) and status of China's service market. This study focuses on finding actual obstacles through research on institutional and non-institutional market entry barriers, and proposing various policy suggestions for promoting mutual intra-regional investment, especially about the three major service sectors; namely wholesale/retail trade, finance/insurance, and construction.
According to assessment of international organization such as the OECD FDI regulation index and the World Bank FDI & Business Environment analysis, China maintains relatively high levels of regulation on investment in services. Various surveys, evaluations and analyses point out that China also has severe restrictions on the scope and type of foreign investment. On the other hand, Korea and Japan have relatively favorable business environments; however, there still exist hidden obstacles for businesses such as negative public views concerning foreign investors, inconvenient distribution structure and commercial customs.
The numerous obstacles to mutual intra-regional investment among the three countries cannot be tackled with institutional remedies such as FTAs or investment agreements alone. While an FTA can be utilized to lower China’s high institutional restrictions on foreign investment, greater effort is necessary to lower unofficial obstacles such as commercial customs and negative public views on foreign investors in Korea and Japan.
Accordingly, this study suggests policy issues for stimulating mutual intra-regional investment among the three countries. First, common commercial customs, practices and regulation status classified by industry must be shared among three countries by constructing an active information exchange network. Second, a Korea-China-Japan FTA should be utilized as a strategic instrument for stimulating mutual intra-regional investment. Third, governments should make various efforts to encourage domestic firms to invest abroad via M&As, which is an effective means by which industries can bypass the entry barrier of service markets in each country. Fourth, in order to attract investment into Korea’s service market, the market needs to become more specialized and competitive through SME(Small and medium enterprises) support, human resource development, and reform of domestic market regulations.

North Korea, experiencing chronic economic hardship, has been attempting to make partial policy changes to expand external economic relations and to attract foreign investors since the early 2000s. For the expansion of trade and foreign investment, the North Korean regime attempted to establish special industrial zones in 2000s and took some reform measures in their legislations and administrative system. In 2002, North Korea announced expansion of special economic zones as a follow-up measure from the ‘July 1st Economic Reform Measures.’ Starting with the announcement of Sinuiju Special Administrative Zone in September of 2002, the country designated and announced the Mt Kumgang Tourism District in October and the Gaesong Industrial Zone in November as new special industrial zones in the same year. In June 2011, North Korea and China’s joint development plan was announced with the groundbreaking ceremony for Rasun Special Zone and Hwanggeumpyeong area near Sinuiju. Indeed, since the mid-2000s, legislation related to foreign investment was revised. For example, International Trade Arbitration Committee was first formed under the trade department in 2004, and law firms were opened for foreign legal consultancy within North Korea, which in turn is for resolving legal issues regarding investment in North Korea.
In addition to the changed attitude and increased interest of the North Korean regime towards foreign direct investment, foreign companies’ interest in investing in North Korea grew in the 2000s with such reasons of development of natural resources, utilization of cheap labor and/or sales of their products in North Korea. Although the volume of foreign investment flow into North Korea has been very low compared to most transitional economies like Vietnam and Third World developing countries, both quantitative and qualitative change has taken place in North Korea’s foreign investment attraction since the early 2000s. Centered on resource development area, North Korea attracted foreign investments in such areas as manufacturing, finance, product distribution, telecommunications, and construction. Foreign companies including Chinese, European, and South Korean, not only moved into special industrial zones of Gaesung Industrial Complex and Rajin Seonbong District, but also to major cities such as Pyeongyang, Nampo and Cheongjin. Because of the increase in the volume of investment, number of foreign companies and investment area, the impact of foreigners’ investment on the North Korean economy has increased.
The most significant feature in North Korea’s recent foreign investment policy and performance is that Chinese investment in North Korea has largely increased and North Korea’s economic dependence on China has further deepened. Chinese investment in North Korea, which remained in operations of restaurants and retail shops by small businessmen and traders in the past, emerged as the largest foreign investing country since the full-scale advance into the development of natural resource by Chinese state-owned enterprises in the mid-2000s. Chinese companies also invest in such areas as manufacturing, domestic sales and service industry. Moreover, in the connection of the development plans of the three Northeastern provinces in China, China’s investment in industrial infrastructure of Sino-North Korea border area has recently been visualized. In 2011, North Korea and China announced their plan for the joint development and management of Rasun and Hwanggeumpyeong districts as special economic zones. As a part of implementing Changjitu development plans by Jilin Province of China, China seeks to secure the right to use the Rajin port and Chongjin port in North Korea. In return, North Korea pursued to construct and develop the infrastructure facilities within Rasun area. China is developing Hwanggeumpyeong district in connection with economic development projects of Liaoning province as well, and in return, North Korea has provided development rights of its Hwanggeumpyeong district to China.
There are both positive and negative aspects in the increase in China’s investment towards North Korea and the expansion of North Korea and China’s bilateral economic cooperation. When the transportation infrastructure of North Korea and China’s border is improved through China’s investment in Rasun and Sinuiju areas, the potential for regional development in these areas will increase significantly. In addition, when the Rasun and Sinuiju areas become developed through a joint management with the Chinese authority, there is a possibility that the economic cooperation of North Korea and China will bring positive impact to the recovery and marketization of the North Korean economy.
However, North Korea’s large reliance to China’s investment has taken place during the ongoing deterioration of North Korea’s foreign relations due to its nuclear problem. The close economic relations between North Korea and China could create negative consequences by subordinating the North Korean economy to China in terms of its economic structure. In the early 2000s, the North Korean regime attempted to promote partial economic opening and pushed for diversification in economic cooperation by improved relations with South Korea and several European countries. But, due to its continued nuclear ambition, North Korea’s international isolation has once again intensified. Moreover, inter-Korean relations became idle with series of incidents like North Korea’s Yeonpyeong Island shelling. As a consequence of the decreased investment in North Korea by the South following the worsened relations in the late 2000s, North Korea’s dependence of foreign investments to China has been growing. North Korea’s heavy reliance on China has caused the problem of limiting North Korea’s political and economic cooperation with one particular country, China.
Foreign investment environment in North Korea is still very poor. Foreign companies’ movement into North Korea is being limited due to North Korea’s absence of reform in the internal economic system, outdated industrial infrastructure, poor legal system, rigid administrative system, etc. Though there has been an increase in the investment by foreign companies in 2000s, North Korea’s system of attracting foreign investors shows problems. It is known that foreign companies who considered or implemented investment in North Korea often experienced conflicts with North Korean partners. The reasons behind the deferred or withdrawal of investments by South Korean, Chinese, and European companies who have entered into contract with North Korean mining companies was found to be excessive payment demands by the North Korean authority in the return for the exclusive rights for the development of mines, and incidental expenses for foreign companies entering into North Korea. In addition, there have been several cases where investments were terminated or investing foreign companies withdrew from North Korea with such reasons as conflict with related North Korean agencies, limitation of communication and transportation, and low production quality. Above all, North Korea’s delay in resolving nuclear problem and the economic sanctions from the international community are the major obstacles in expanding and diversifying foreign investments in North Korea. Therefore, the most urgent issues that remain as a challenge for North Korea, the country in need of foreign investments, are the improvement of foreign relations through North Korea’s resumption of six-party talks and denuclearization.
There is limit in specific and comprehensive study on current North Korea’s policy for foreign investments even with the greater academic and policy interest in changes in North Korea’s policy for attracting foreign investors and its implications for inter-Korean economic cooperation. An analysis of the current status of North Korea’s investment policies and the current status of foreign investment in North Korea is important as it is closely connected to the future reform orientation of North Korea. This study examines the changes and characteristics of North Korean policies for foreign investment during the 2000s. It analyzes North Korea’s current management system, legislations and government organizations related to foreign investments. This study then evaluates the status and performance of foreign companies who entered North Korea in the 2000s. In addition, this report specifically examines the actual conditions of Rasun District and Hwangguempyeong of Sinuiju, the areas that China will implement development projects and discuss its future prospects, which are the forefront areas in North Korea’s promotion for foreign investments. The last part of the report studies the future direction of North Korea’s promotion for foreign investments, and it discusses the direction and tasks of inter-Korean economic cooperation. This study on North Korea’s policies in foreign investment could contribute to the increase in our understanding of the North Korean economy and to the development of inter-Korean economic cooperation.

With the arrival of the 21st century, Africa, long derided as a basket case, is now seen as a promising market full of opportunities. With newfound political stability and enormous natural resources, Africa has gone from a continent rife with conflict and without global economic presence, to a new economic frontier fueling competition among the world’s great powers.
The most active of all the major powers in Africa is China, which has entered Africa after realizing its dynamic economy could stall for want of natural resource. China’s now looms large in Africa, involving itself in the continent with large-scale aid and a variety of other means. Though the initial motivation came from natural resources, China has not limited itself in Africa, becoming active in all sectors from infrastructure to small-scale retail. China is not a newcomer, as Communist China was a already in Africa beginning in the 1950s, offering generous aid to African countries despite economic difficulties at home. Chinese presence in Africa increased further as a result of recent visits by China’s top leadership, who promised more aid, and established personal ties with many African leaders. In addition to such political leverage, Chinese firms seeking to enter Africa are taking advantage of financial assistance afforded by public financial institutions including the China Ex/Im Bank, 40% of whose total grants are earmarked for Africa; the China Development Bank (CDB), which has created the 5-billion dollar China-Africa Development Fund (CADF) to provide support for Chinese companies in Africa; there are also the Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB), and China Agricultural Bank (CAB). Support from China’s public finance institutions allowed China’s public corporations to step into high-risk areas in Africa.
Chinese activities in Africa are motivated primarily by their need for natural resources. The most oft-used approach used by China in securing resources from Africa is through ‘package deals,’ which links promises of grants and building of large-scale infrastructure in exchange for resources. This has become known as the “Angola Approach,” after deals that secured for the Chinese oil from Angola. Being a latecomer in the competition for Africa’s natural resources, China is targeting politically unstable countries or new producers of vital resources where competition is not fierce. Such countries include Sudan, DR Congo, and Zimbabwe; countries that are usually shunned by the west due to civil wars or human rights abuses. Aside from utilization of ‘hard’ power including monetary assistance, China is also working hard to spread its ‘soft power’ in Africa, in the form of government-led development emphasized in the Beijing Consensus and welcomed by authoritarian regimes in Africa who chafe at demands for reform by the west or international organizations. China has disavowed all ‘interference in internal matters,’ and Africans believe cooperation with China will expedite their development needs. Given the lack of domestic capital or infusion of capital from the west, many countries of Africa have created opportunities for renewed growth through cooperation with China. The belief that its activities offer tangible benefits for Africa has caused friction between China and west, which emphasize such values as transparency and good governance. Africa thus represents a test case as to whether China can indeed attain global influence.
Increasing Chinese presence in Africa has elicited concern from the US, seeking to increase its own presence in Africa through development aid, increased trade, and creation of security frameworks. Once a ‘national interest backwater’ for the US, Africa has returned to prominence in US foreign policy due to rising terrorist threats and as an alternative source of oil imports that can reduce America’s dependence on the Middle East. Aside from its prominent position in US energy security, Africa is also witnessing a rise in US military presence, namely in the form of the US Africa Command (AFRICOM). AFRICOM is charged with elimination of terrorist threats and is also a strategic set piece designed to limit the spread of Chinese influence on the continent. US efforts to increase economic exchange with Africa is highlighted by AGOA (African Growth and Opportunity Act), which has led to a growth in US-Africa trade. There is a caveat, however, in that oil and other energy products constitute over 80% of items traded via the AGOA framework. Given the fact that a significant portion of China’s oil imports now come from Africa and is likely to increase in the future, US-China competition for African oil is expected to heat up, especially in the oil-rich Gulf of Guinea in the west coast of Africa.

 World's 7th largest economy in 2010, 5th in population and territory, Brazil is emerging as a new center for economic growth fostered by successful reform policies based on abundant natural resources. Also fueled by upcoming events such as the 2014 World Cup and the 2016 Olympics, infrastructure and investments in oil production, Brazil is expected to continue its stable growth, at 4 to 5 % annually. Reflecting on this growth, Global Insight, a world-renowned economic organization, expects that in 2011, Brazil will become the world's 5th biggest economy after the USA, China, Japan and Germany. If Brazil becomes one of the world's 5 largest economies, it will achieve the status of the so-called "Triple Big-5" country, meaning top 5 in economic scale, territory and the population.
Aiming at Brazil's high potential for economic growth, Korea has been making efforts to expand industrial cooperation with Brazil. However, due to lack of understanding concerning Brazilian industries and industrial development level, absence of industrial cooperation strategies in the medium and long term, lack of efforts to discover schemes for specific industrial cooperation and etc., there was no tangible achievement. In particular, the problem is that Korea has not yet discovered any intriguing flagship projects for Brazil.
Maintaining a critical eye on this situation, this study first analyzes the following topics: how industrial competitiveness of Brazil is changing as its economy is emerging, what policies Brazil has implemented, how competing countries are cooperating with Brazil in order to take advantage of the opportunities, and the level of industrial cooperation between Brazil and Korea. This study then suggest several strategies for industrial cooperation with Brazil in the medium and long term, and also specific schemes for industrial cooperation. The main results of the study are as follows.
Brazil's economic emergence is manifest in five paradigm shifts. After the official launch of former administration in 2003, Brazil has gone through five important changes: it has ① entered into a stable economic growth cycle ② stemmed the high inflation rate ③ become a net creditor country for the first time in its history ④ ended the vicious cycle of excessive government expenditure ⑤ resumed the medium and long term industrial policy. Prompted by this paradigm shift, Brazilian economy has doubled its size in 10 years and joined the ranks of the world's seven biggest economies in 2010. It is expected to become the fifth largest economy in the world by 2013, but such success was not without side effects. Supported by the primary product boom, exports have increased and hence drew in dollars which led to large trade surpluses. Also, portfolio investment as well as foreign direct investment has surged dramatically. Consequently, this has raised the value of the real and eventually diminished competitiveness in exports.
Even though the exchange rate effect burdened the manufacturing sector, the overall industrial competitiveness in Brazil has improved, according to the study. First, we studied Brazil's competitiveness in terms of industrial technology in infrastructure. As a result, the R&D expenditure relative to GDP has been rising continuously, reaching 1.2% in 2010, the highest figure in 20 years. The size of Brazil's R&D expenditure is slightly lower compared to the rest of the OECD but it is not small relative to other BRICs countries. The size of the work force in the R&D sector has doubled in the past 10 years (2000-2009). Especially, Brazil has showed outstanding performance in producing papers in science & technology over the past 30 years (1981-2009). More specifically, Brazil made contributions in fields such as Agriculture, Plants and Animals, Microbiology and etc. worldwide. Britain's noted research institute "DEMOS" used the term "Natural Knowledge Economy" in order to refer to the Brazilian economy which is very competitive in technology utilizing natural resources. At the same time, Brazil is estimated to have high competitiveness in some manufacturing sectors such as airplane, automobile, steel, and petrochemicals. The Council on Competitiveness of the U.S. forecasted that Brazil's competitiveness in manufacturing will become the 4th most competitive by 2014 in the world, surpassing the U.S.
Despite the positive evaluation shown in forecasts for Brazil's industries, there is still much work to do to improve Brazil’s overall industrial competitiveness. In particular, while Brazil is relatively competitive in the basic sciences, its competitiveness is quite low in applied and industrial technologies. For instance, Brazil has not been performing well in the patent area. It also ranked nearly at the bottom among countries compared in technical infrastructure sector of the IMD report 2011. Brazil's low ranking in the applied technology sector was again seen in the Technology Achievement Index 2009.
One of the biggest changes observed in Brazil's recent economic policy is that it has resumed overall industrial policy planning which has been at a standstill for the last 20 years. In fact, the Brazilian economy had been driven by government-led industrial policy. The import substitution industrialization policy maintained through the 1970 is a good example. For the past 20 years, Brazil was mired in macroeconomic instability marked by high inflation rates, debt crises, foreign debt crises, and unstable foreign exchange rate; meaning there was no room for Brazil to push ahead with medium and long term industrial policies. Until the end of 1990s, Brazil's economic policy was focused on addressing this macroeconomic instability. However after Luiz Inacio Lula da Silva was inaugurated as president in 2003, the inflation, foreign exchange rate and other economic indicators have stabilized, allowing the government to turn its attention to industrial policy. From the Lula administration to the Rousseff administration, there have been 3 industrial policies that were put into action, namely the PITCE (2004.3), PDP (2008.5) and PBN (2011.8). Although there were several changes in their goal setting based on the starting period, their goals remained similar: to improve Brazil's competitiveness in the manufacturing sector by enhancing competitiveness in technology. Specifically, the Rousseff administration has pursued an industrial policy focusing on restoring competitiveness in manufacturing, seeing the world economy in a bad situation such as global economic crisis, currency war, etc. In order to achieve its goal, the Rousseff administration has implemented an industrial policy with three main pillars: investment in production and promotion of innovation; protection of domestic industry and markets; encouragement of exports and trade protection.