Acknowledgement
Contributors

1. The Sphere of Services as the Main Factor of Maintenance Employment and a Diversification of Economy of Uzbekistan / Tagaev Behzod
Introduction
Body
Conclusions

2. Education for Development: India and East Asia / Shovan Ray
Introduction
Literacy Imperatives Around the World: A Brief Sketch
The Chinese Experience
Prologue on Japan
Taiwanese Experience
The South Korean Experience
The Indian Experience
Contributions to Endogenous Growth Theory and HumanDevelopment
Conclusions

3. Free Trade Agreement between Korea and Turkey:Challenges, Opportunities and Economic Cooperation / Mahmut Tekce

Introduction
Economic Relations between Korea and Turkey
Turkey’s Trade Policy in the Context of the EU’s Free TradeAgreements
Effects of Korea-Turkey FTA: Risks and Opportunities
Potential Exports to Korea for Turkish Products
Beyond a Free Trade Agreement: Economic Cooperation between Korea and Turkey
Conclusion

4. ASEAN Economic Community: Prospect for Regional Monetary Cooperation in East Asia / Umi Karomah Yaumidin
Introduction
ASEAN Economic Community
The Prospectus of Regional Monetary Cooperation
Future Implications for Indonesian and Korean Monetary and Fiscal Management
Concluding Remarks

5. Cross-Strait ECFA Should be the Stepping Stone for Taiwan Joining in the East Asia Economic Integration / Chaw-Hsia Tu
Introduction
Economic Thinking of ECFA and the Possible Impacts on Cross-Strait Relations
ECFA and the Economic Effects on Taiwan
Policy Implications for other East Asia Countries
Conclusions

6. Korea's FTAs and their Implications for the Korean Wine Market / Timothy John Beal
Introduction
Korea's FTAs and their Implications for the Korean Wine Market
Conclusion

7. Korean Trade and Political Risk / Whitney Haring-Smith
Introduction
International Country Risk Ratings
Korea’s County Rating Systems
Comparison of Korea ExIm Bank Rating System to International Rankings
Korea’s Increasing Exposure to Country Risk
The Export-Import Risk Gap
Korean FDI Exposure
Case Study Review
POSCO in India
Daewoo Logistics in Madagascar
Conclusions

8. Research on Exit and Transformation of China’s Economical Stimulus Policies in the Post-Crisis Era / Du Feilun
Introduction
China’s Macroeconomic Stimulus Policies after the InternationalFinancial Crisis
The Conditions of China’s Economic Stimulus Polices Exit
The Route of China’s Economic Stimulus Polices Exit
The Direction of China’s Economic Policies Transformation in the Post-Crisis Era
Conclusion

9. Research on the Urbanization Problem of South Korea / Huang Zhengxue
Introduction
The Phase of Urbanization Development
To Upgrade Industrial Structure
To Improve the Structure of the Urban Hierarchical System
To Enhance the Construction of Infrastructure
Coordinated Development Between Urban and Rural Areas
To Play the Role of Government
Conclusion

Korea Institute for International Economic Policy (KIEP) has expanded its cooperative relations with the world since it took the role of the hub of regional studies in public research areas of Korea. As a part of our systematic efforts to foster international exchanges and build the knowledge based through interdisciplinary collaboration, The Center for Regional Economic Studies (CRES) initiated a researcher-exchange program called CRES Visiting Fellows Program in 2008. The program brings together influential professionals from academia and the public sector to advance individual, institutional and national understanding of regional economic matters and to improve international cooperation on related research. This volume is a part of our achievements through the program and we hope this proceeding would work as another channel to deepen the understanding of regional economies in Korea.

Japanese government and enterprises have been reorganizing and rebuilding their expansion strategy into Asian emerging market since the global financial crisis that hit the world in 2008. The Japanese government has made it clear that they were willing to increase their infrastructure exports and take the initiative in Asian sub-regional development programs, and support BOP (Base or Bottom of the Economic Pyramid) business of their enterprises in Asia’s emerging markets. Japanese manufacturing firms have also gradually been changing their traditional marketing strategy of concentrating on high-end products into one with increased focus on low-end and low-price products for Asia’s emerging markets.
This report sheds light on the Japanese government and enterprises’ strategies for expanding into emerging markets in Asia. To begin with, in chapter 2, we look into the background context of change in Japanese government and corporate strategies for Asia’s emerging market since the global finance crisis. We place emphasis on the fact that both the economic potential of Asia’s emerging markets and the limited prospects for the future Japanese domestic market are what motivated the reorganization and rebuilding of Japan’s expansion strategy. Second, we analyze the Japanese government’s Asian market strategy, focused on the support policy involving ‘package-type’ infrastructure export, which the Japanese government has accepted as one of their principal course of action for the Asian market in the ‘New Growth Strategy’, along with the BOP business support policy for Asia’s emerging markets. Third, in chapter 4, we pick up on and analyze the Asian sub- regional development programs in which the Japanese government is attempting to take the initiative. These include, for example, the Comprehensive Asia Development Plan (CADP) and Delhi-Mumbai Industrial Corridor (DMIC) project, and the Indonesia Economic Development Corridor (IEDC) project. Fourth, we investigate the changes in strategies of Japanese manufacturing firms and their focus on the low-end/low-price strategy for Asia’s emerging markets. We regard this strategic change as an inevitable response on the part of the Japanese to their weakening competitive position in Asia’s emerging markets.
Some implications for Korean government and manufacturing firms can be drawn from the reports in the above analysis. First, we suggest that the Korean government and manufacturing firms need to strengthen their competition strategy but also, implement a cooperation strategy with their Japanese counterparts at the same time. Second, the Korean government needs to work out effective ways of getting involved in Asian sub-regional development programs, considering that the Japanese government is attempting to take the initiative in these programs. Third, we suggest that the Korean government establish ‘BOP business support centers’ to provide information on Asia’s emerging markets for Korean enterprises, and to match Korean enterprises’ manufacturing capability with local demand, and so on. Finally, we suggest Korean enterprises should be more active in promoting their products to local markets, and strengthen their localization strategy to prepare against low-end/low-price strategy that will be employed by Japanese manufacturing firm’s in Asian markets.

Preface /Wook Chae

Contributors

Introduction and Overview / Lee-Jay Cho

1. A Northeast Asian Bank for Cooperation and Development: Revisited / Lee-Jay Cho and Stanley Katz
1.1. What Area would the Bank Cover?
1.2. Developing a Regional Transportation and Logistics System
1.3. Natural Gas as a New Energy Source
1.4. Developing Telecommunication Infrastructures
1.5. The Rationale
1.6. Who Pays?
1.7. Some Political Implications
Conclusion

2. Role of Northeast Asia after Crisis and NEABCD / Rak Yong Uhm

3. In Support of a Regional Development Bank in Northeast Asia: Provision of Regional Public Goods / Chung Lee

4. The Establishment of the NEADB and the Countermeasure of Local Government: From Conception to Promotion / Li Gangzhe
4.1. Preface: From Conception to Policy
4.2. Suggestions for the Establishment of NEABCD
4.3. Basic Assumptions for a NEABCD
4.4. Strategies and Action Programs for Implementing a NEABCD
4.5. The Possibility of the Establishment of a NEABCD and the Participation of Local Governments

5. Key Points of the Proposal to Establish and Manage a NEABCD / Jaewoo Lee
Introduction
5.1. Justification for the Establishment of the NEABCD
5.2. Required Public Funding and Financial the Gap in Northeast Asia
5.3. Issues Surrounding the Establishment of the NEABCD
5.4. NEABCD Operations
Conclusion: Future Research Plans

6. Korea Eximbank’s Plan for Financial Cooperation in Northeast Asia / Jai Min Lee
6.1. Brief Description of the Export-Import Bank of Korea
6.2. Plan for Financial Support in Northeast Asia Development
6.3. Financing Instruments
6.4. Cooperation between Kexim and NEABCD
Summary and Conclusion

7. The Prospects of the Northeast Asian Bank for Cooperation and Development / Tsuyoshi Saito
Introduction
7.1. Background
7.2. Northeast Asian Bank for Cooperation and Development
7.3. Responses of Countries and Different National Interests
7.4. Benefits and Problems for Japan
7.5. Future Tasks: What Needs to be Pursued?
Conclusion and Implications

8. Strengthening Northeast Asian Financial Cooperation and Promoting Regional Common Development / Du Qiang
8.1. Background
8.2. Tianjin Promotes Financial Reform and Innovation
8.3. Enhancing Financial Exchange and Cooperation in Northeast Asia
Conclusion: Cooperation to Improve the Regional Financial Reform and Innovation 1

9. Financing and Project Management of Cross-border Project of the World Bank and the Asia Development Bank / Ma Junlu
9.1. Introduction to the World Bank Cross-border Projects
9.2. Case Analysis of World Bank’s Cross-border Infrastructure Projects
9.3. Project Finance and Project Management of Asian Development Bank
9.4. A Case Study of Capital Raising and Management of ADB’s Cross-Border Program

10. Asian Financial Cooperation and Asian Bond Fund 2 / Jai Woong Lee
Introduction
10.1. Asian Financial and Economic Integration: Organizational Behavioral Approach
10.2. Multilateral Asian Cooperative Framework: APEC, ASEAN+3, EMEAP and ASEM
10.3. Characteristics of ASEAN+3 East Asian Countries
10.4. EMEAP (Executives Meeting of East Asia and Pacific Central Banks) and Asia Bond Fund (ABF)
10.5. ASEM as Coordinator between Asia and EU (European Union)
10.6. Performance of Asian Financial Cooperation
10.7. Recent Implementation of the Asian Bond Fund 2
10.8. Future Forecasting

11. Memorandum: NEADB－Future Work & Fast-TrackApproval / Stanley Katz

Summary and Conclusion

Appendix: Agendas and Ulaanbaatar Declaration

The Northeast Asian region is one of the most dynamic economic regions in the world, which includes the major players of China, Japan and Korea, with productive linkages to resource-rich Russia and Mongolia and to the United States. In contrast to the region’s robust economic growth regional security has long been fragile, mainly due to the geopolitical condition resulting from the Cold War era.
  If the countries in Northeast Asia wish to further their development and prosperity, they will have to learn to harness their dynamic economies and create a region in which peaceful coexistence and common prosperity prevail. Northeast Asia has a northern subregion that includes North Korea, Mongolia, the Russian Far East, and the northeastern provinces of China - an area that is well- endowed with latent natural and human resources. This subregion has the potential of becoming an important source of natural resources for the entire region, and what is needed is to realize that potential through infrastructure investment.
  Energy security and environment is for example, an important area of cooperation, as the three major countries are heavily dependent on energy imports and are highly vulnerable to energy crisis. Financing requirements for the necessary cross-border infrastructure are likely to be large, and a regional development bank is a key in meeting that financing need.
  This volume, which is a sequel to the first volume, Financing for Regional Economic Integration for Northeast Asia, is comprised of papers, research reports and summaries of a main conference and several specialized meetings, as well as affiliated activities, that took place under this project. The results of this project represent a considerable beneficial to the region and have been carried out in a spirit of cooperation that we esteem.

In 2009, those of us at KIEP had designated four main research topics we deemed most pertinent to current circumstances, and engaged in twenty major projects in line with those topics. These include negotiations for liberalization of the services market and other multilateral trade issues in response to WTO regime reforms and other changes in the world trading environment; economic cooperation in APEC and other regional issues; and current bilateral trade issues including free trade agreements. KIEP conducted research to address changes in the macroeconomic environment surrounding Korea, such as changes the internationalization of the Korean won as a result of Korea's increasing prominence on the international economic scene, and presented basic resource materials and provided directions to prepare for changes in North Korea. Policy responses to global inequalities in light of the current rapid transnational movement of capital were forwarded, in addition to measures to facilitate Korea's entry into foreign markets and attract foreign investment. In recognition of rising demand for research on the world's regions, KIEP did not limit itself to providing data on Korea's major trading partners such as the US or China, but made efforts to provide basic data on Central/South America and Africa that had hitherto been lacking.

In order to maximize management efficiency of state-owned enterprises (SOE), privatization of SOE was the main trend in 1980s among OECD countries. In 1980s Korea also started to sporadically propelled privatization of SOE, and then the progress of privatization became more active after the IMF period. Since then there have been increased researches on foreign privatization cases, such as British experience, in order to provide privatization strategies for Korean SOEs.
As an extension of such efforts, this study attempts to draw policy implications for the privatization of SOEs in Korea through comparative analysis on privatization policy of Korea, China, and Japan. Above all, although Korea, China, and Japan are on different development stages, comparing the three will be valuable, since both similarities and differences are found in their process of privatization policy making. Furthermore, this comparative analysis is also significant, since the privatization of SOEs in each country will provide a foothold to vitalize mutual investments among the three countries. Especially, the privatization of Japan, the most advanced nation among the three, is worth to be benchmarked for Korea and China, and the privatization of China, the most active pursuer of OECD guidelines for privatization, is also worth to be reviewed.
Thus, this study comprehensively analyzes main characteristics, core issues and transition process of privatization policies in the three countries, especially compares and summarizes the results of researches by 1) definition and type of SOEs, 2) governance of SOEs, 3) background and purpose of SOE reform, 4) core issues by each reform periods, and 5) accomplishments and problems of SOE reform policy. As a result, definition and type of SOEs are shown to be similar, while governance of SOEs is clearly different among the three countries. China shows centrally collective governance (Central Model) by ‘State-owned Assets Supervision and Administration Commission of the State Council’. Japan shows the decentralized governance (Sector Model) by competent Ministries overseeing corporations with special legal status. Korea shows both the central governance by Ministry of Strategy and Finance and decentralized governance by competent Ministries (Dual Model). Problems of SOE policy in the three nations are also closely related to such difference of governance. However, in the case of China, incapability of corporations and government organization to realize effective governance is more significant problem than institutional inertia.
Based on the comparative analysis results of SOE policy in Korea, China and Japan, this study suggest the following policy recommendations. First, in light of the China’s reform case, policy efforts should be concentrated on maximizing autonomy of management according to OECD guidelines. Second, China’s SOE privatization should be utilized to vitalize and diversify Korean investment into China. Third, it is necessary to predict the target enterprises and the progress of Korean privatization based on Japan’s precedent, and relevant researches must be done in advance. Forth, the privatization strategy of Japan’s Sector Model can be the appropriate solution to gain both efficiency and publicness.

This research basically aims to fully understand the classification of Non-Tariff Measures(NTMs) and the method of estimating Ad-Valorem Equivalents(AVEs) of NTMs. Especially, of those ASEAN countries, it has studied Indonesia where has relatively large market and lately introduced a range of  Non-Tariff Barriers(NTBs). Also it has estimated AVEs of NTMs on specific steel products.
Since 2008, new classification system has been suggested with UNCTAD as a centre and it can be categorized into import measures and export measures. And the import measure is divided into technical measures and non-technical measures. Particularly the distinction of technical measures can be understood as a cause of the dramatic growth in Technical Barriers to Trade(TBT) and Sanitary and Phytosanitary measures(SPS).
After global financial crisis, Indonesia has introduced the restriction of import policy on main import goods. This was for improvement of trade balance caused by export reduction, short-term native industry protection and long-term local industry promotion. Moreover, Indonesia supports from natural resources to manufacturing business in agriculture, shoes and steel industry to be expanded to export industry, as well as, they contribute various benefits to local industry in order to develop trade-related local service industry like financial and distribution.
For the AVEs of NTMs, firstly estimation method based on trade volume through gravity model and comparative advantage theory, is recently increasing rather than direct price comparison. This is because information securing on non-tariff item by item has become easier than before. Especially, statistics database such as TARINS of World Bank and UNCTAD has released the details of NTMs including SPS and TBT for each product. CoRe NTMS Database which is led by the United States international Trade Commission(USITC) has recently been introduced and the details of NTMs for major trade countries have also been released.
This research has estimated AVEs on NTMs of steel products in a whole world. Although it is under the similar condition of NTMs in accordance with the characteristics of those countries’ products, there is a big difference between the influences. Especially the product  having more elastic demand has shown much higher effect of trade protection.

This study analyzes structural problems of the Japanese Public Pension Scheme in a rapidly changing socioeconomic environment; brought on by population aging and low economic growth. It also aims to present the direction of reforms proposed by the Democratic Party of Japan for the Public Pension Scheme, in order to resolve the above issues. Low economic growth has received relatively little attention compared to population aging in Korea, yet it should be carefully reviewed since increasing unemployment and hiring of greater numbers of temporary workers could affect the pension scheme.
First, this paper systematically presents structural features and problems of the Japanese Public Pension system. The Japanese Public Pension Scheme consists of the Basic Pension without independent finance, the employees’ Pension Insurance (pay-as-you go method based on the social insurance system), differences in burden among workers and wages depending on occupation and corporate burden of welfare pensions. Because of this apparently complicated structural feature, Japanese Public Pension Scheme is facing difficulty in responding to changes in the social environment such as population aging and low economic growth. As a result, Japan’s Public Pension Scheme is facing questions as to whether it is sustainable, since it could become a cause of instability in pension finance, inter- and intra-generational inequality and overall vulnerability of the social security system.
However, the Japanese government did not attempt radical reforms that could respond effectively to changes in the socioeconomic environment, but only paid attention to reform limited to ‘shoring up’ the present system, in that they only consider increases in the insurance rate and reduction of wages. It is a foregone conclusion that the restructuring of Japanese Pension Scheme, at the fundamental level, is very necessary. The nationwide consensus on the need for pension scheme reform definitely led to a new political environment, resulting in a change of government for the first time in 54 years.
Then, can we expect the Democratic Party (new regime) of Japan to solve pending issues and restructure the country’s Public Pension Scheme? It may be too early reach a final conclusion as the Democratic Party’s reform has yet hit full stride; however, it has revealed enough of its outline for evaluation on the direction of the reform and its practicability. A positive aspect in their reform proposal emerges in that it clearly considered environment change such as population aging and low economic growth. However, they have yet to discuss even the most basic elements for the implementation of minimum security pension in the form of taxes, making us question whether they are genuinely determined about reforms the pension.
Korean Public Pension Scheme faces similar issues with its Japanese counterpart, such as instability of pension finances, the question of fairness between generations and possible blind spots. This paper elicits several implications for Korea by analyzing the Japanese case. First, it is very important to figure out actual conditions of the Public Pension Scheme and then take preemptive action against population aging. Second, we need to pay attention to low economic growth since it creates blind spots in terms of pension benefits, which could threaten the stability of thepension finance system in a long term. Third, Korean pension scheme has received much attention in relation to low fertility and population aging, but not low economic growth. This paper emphasizes importance of improving the pension scheme to prepare for the twin threats in the form of population aging and low economic growth.

In the post-Cold War era, there are growing transnational threats such as terrorism, spread of weapons of mass destruction, drug trafficking, human trafficking, organized crime, piracy, natural disasters and diseases, and global warming. These threats transcend national boundaries and sovereignty so that a country alone cannot resolve these threats. With increasing transnational threats, a sustainable economic development and growth has also been threatened in the world and in Southeast Asia. As the number of people earning money from illicit trade of drug and human trafficking through organized crime and piracy increase over time, individual and social health and international peace and security are affected negatively.
To tackle with these transnational threats, international organizations and regional cooperative mechanisms have made efforts to reduce the drug and human trafficking, organized crime, and piracy and yet have not successfully resolved these transnational threats so far. In order for Southeast Asia to attain a sustainable economic development through international trade, it is necessary that countries in Southeast Asia take cooperative measures to tackle with these transnational threats with shared vision for drug, crime and pirate free Southeast Asia.
Therefore, this project is designed to analyze the current state of the transnational threats in Southeast Asia and to recommend alternative regional cooperative measures in tackling with these threats with the involvement of countries of Northeast Asia to be led by the Republic of Korea. As ROK endeavors to become a global Korea by making contribution to the creation of public good, regional mechnism which will be beneficial to all the countries in Southeast Asia and in Northeast Asia, working on transnational security threats will be able to become top priority policy agenda for the ROK government for years to come. The ASEAN countries also began to realize the importance of resolving problems of transnational threats collectively rather than individually because the network of transnational threats is rapidly growing and a country can not resolve these threats individually. However, Southeast Asian countries feel the lack of expertise and money to resolve these threats successfully. Therefore, ROK needs to help them to reduce and remove these transnational threats by providing top class experts and install regional cooperative mechanisms.
Because of limited financial support the ROK National Research Council for Economics, Humanities, and Social Sciences this year, our research project focuses on four transnational threat areas such as drug, human trafficking, organized crime, and piracy out of eight areas of the entire transnational threats in Southeast Asia. The next year project will focus on the remainder of the eight areas of transnational threats such as terrorism, spread of weapons of mass destruction, natural disasters, and global warming.
The research findings disclose the seriousness of drug trafficking, human trafficking, organized crime, and piracy issue, while the piracy issue is less serious than the former three issues in Southeast Asia.
First, the drug problem becomes more serious over time in Southeast Asia. Opium is under control, whereas the amphetamine type stimulants (or ATS) becomes more serious. Below the half of the world’s ATS uses are the users of East Asia and Southeast Asia, while over half of the world’s methamphetamine seizures are people in Southeast Asia.
Second, more than 60 percent of the world’s human trafficking is taking place in Southeast Asia and almost one third of the human trafficking in targeting women and children in Southeast Asia. In Southeast Asia, women coming from all over the world through human trafficking suffer from sexual harassment, becoming victims of sex business.
Third, the drug and human trafficking becomes more serious when these two crimes are intermingled with the international organized crime. In Southeast Asia, there have been so many losses incurred by the Russian Mafia, Japanese Yakuza, and Chinese Samhaphoe. These organized criminals are connected to the drug manufactures in the Golden Triangle Area along the Mekong River.
Fourth, 33 percent of 4,586 piracy cases that happened in the world between 1991 and 2008 occur in the Southeast Asian sea. Although the trend of Southeast Asian pirates shows a decline, economic losses associated with pirates entail massive losses that can not be recovered including ship damage, insurance costs, robbery, casualties, transportation delays, etc.
Since these transnational threats incur not only economic losses but also human losses, Southeast Asian countries have endeavored to resolve these problems individually so far with limited efforts regionally and internationally.
This research analyzed the limitations of the current approaches taken by the individual country, the bilateral approach, and the international approach to resolve these problems. Countries in Southeast Asia feel the need to combine and coordinate the individual approaches to achieve a shared goal of the drug and crime free Southeast Asia. Outstanding among these cooperative efforts to reduce and remove these transnational threats are ASEAN and ARF, while the Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP) is a regional institution building to resolve the piracy issue in Southeast Asia in spite of the limited success of the ReCAAP so far.
Therefore, this research project intended to develop alternative cooperative measures on the region-wide basis. As result of intensive study of the problems both through field interviews of those who are working to combat the crimes and pirates and through extensive literature surveys, this research result discovered that there should be two different approach to the four problems areas. On the issue of drug, human trafficking, and organized crime, there should be an integrated and combined approach to these three problem areas because the organized and networked crime organizations facilitate the drug and human trafficking mostly. On the issue of the piracy issue that occurs in the ocean, a different approach needs to be taken.
In order to reduce and remove transnational organized crimes associated with drug and human trafficking, we need to address four sub-topics: Establishing information and intelligence sharing mechanism among concerned countries; Capacity building of governments and public institutions to enforce law and regulations; Establishing multinational criminal law enforcing institutions, and; Establishing mechanism to prevent, detect, and forfeiture money laundering in cooperation with all the countries involved. In this light, this research report wants to recommend four alternative policy measures to reduce and remove transnational organized crime and drug and human trafficking. First, countries in Southeast Asia with the help of the Republic of Korea, China and Japan should strengthen ASEANPOL like EUROPOL to turn the current police chiefs’ meeting among ASEAN member countries into a strong and cooperative mechanism to combat transnational organized crime, drug, and human trafficking collectively with an installment of information sharing center. Second, ASEAN countries with the help of ROK, China, and Japan need to institutionalize the Towards AsiaJust Program which aims to support countries in Southeast Asia and Northeast Asia to develop a more solid network of judges, prosecutors, and law enforcement officials to fight transnational organized crimes. The network needs to be strengthened and sophisticated to outsmart the rapidly growing criminal network. Third, ASEAN countries need to be encouraged by ROK, China, and Japan to launch in a full-fledged effort the Prosecutor Exchange Program (PEP) that South Korea initiated in association with the UNODC in Bangkok, Thailand, in order to facilitate joint research, promote exchange of prosecutorial expertise, to strengthen prosecutorial capacity, and to provide educational opportunities to those who are relatively weak in terms of prosecutorial capacity. Fourth, ROK, China, and Japan need to take the lead to form a collective fund to provide material support to the ASEANPOL, AsiaJust Program, the PEP, etc.
With regard to the piracy issue, we need to strengthen the ReCAAP that has been launched by the Japanese lead in 2006 and fourteen countries including all the countries in Southeast Asia and Northeast Asia participate in. Since the main function of the ReCAAP is confined to the information sharing center, we need to broaden and deepen the mission of the ReCAAP by hosting navy officers and maritime police from each member country. Though South Korea contributed $100,000 annually to the ReCAAP and send one director level official to the ReCAAP, this is not enough to turn the current ReCAAP into a capable institution to prevent, seize, and penalize pirates occurring in Southeast Asia. In addition, ROK, China, and Japan need to conduct joint naval exercises by using the naval ships sent to Somalia to combat pirates there because those ships pass through the Southeast Asian sea. ASEAN plus three countries need to install education programs to teach the laws and regulations to prohibit the pirates and launch local development programs to improve living conditions of the residents who live in seashore of Indonesia, Malaysia, and Philippines under the poor conditions. The South Korean ODA(official development assistance) needs to be linked intelligently and efficiently to the area of reducing and removing pirates that occur in the sea around Indonesia, Malaysia, and Philippines to make sea lanes of communication safer and beneficial to the flow of South Korean export and import.

The economic relationship between Korea and ASEAN countries has deepened over the past few decades. The geo-political importance of ASEAN has magnified as ASEAN members enter into free trade agreements with Korea, China and Japan. Also, as the regional underdeveloped countries like Vietnam and Cambodia started to grow fast in the current decade, the ASEAN is believed to strengthen its status in the world economy and politics in the future. Undoubtedly, the changing status of ASEAN urges Korea to extend its economic and political relationship with the countries in this area.
The purpose of this study is to evaluate the socio-economic development of Vietnam, Cambodia and Myanmar. Sustainable development of these countries are in conformity with Korea’s interests as Korea regard these countries as strategic partners and plan to provide substantial portion of her ODA resources to these countries. It’s hard to consider Korea’s ODA policy has been systematic and efficient so far. As a member of Development Assistance Committee of OECD, Korea plans to increase her ODA resources significantly, which makes it indispensible to conduct a serious research on the recipient countries as well as to reframe its overall ODA policy. In this regard, this study not only provides a systematic method to evaluate socio-economic development of these countries but also evaluate the status of these countries. The main feature of the method is to establish consolidated indices for socio-economic development taking advantage of a variety of existing data. Secondly, a field study is conducted to complement the above method in order to reflect qualitative features of socio-economic development. Extensive interviews were conducted with local experts, government officials, scholars and international agencies with respect to Vietnam. Finally, the identification of most problematic areas enabled us to provide possible areas for cooperation between Korea and these partner countries. It is hoped that this study provides a good foundation in the process of ODA policy formulation to these countries.
It is not surprising that the ASEAN underdeveloped countries face similar challenges in the course of their socio-economic development. Actually, in almost every area of development capacity, the ASEAN underdeveloped countries are lagging behind those countries which they are targeting to catch up with. Obviously, it is not realistic for Korea to provide her ODA resource to help improve all the areas of problems considering Koreas limited ODA capacity and experience. Therefore, this study identified several areas of cooperation on which Korea should focus in formulating its ODA strategy.
For economic development, these areas include enhancement of infrastructure, institutional development for market economy, technological cooperation. Considering that industrialization is one of the most important development goals of these countries, strengthening these selected areas directly support the strategy by enhancing production capacities of these economies. Furthermore, this study take into consideration of the fact that Korea has comparative advantages in the above areas. For social development, health and education are selected for areas of cooperation. Peoples of these countries are exposed to various diseases like HIV, tuberculosis and malaria. Also, these countries do not provide adequate education service which is an essential element of sustained economic and social development. For these areas, this study provides general directions of ODA policy for Vietnam, Cambodia and Myanmar, respectively.