This paper examines the determinants of portfolio capital flows of both advanced and emerging markets and aims to obtain better understanding of detailed characteristics and patterns of cross-country capital flows. We investigated separate effects of push and pull factors in cross-country capital flows of both debt and equity markets. There is also an analysis of the effects of changes in monetary policy stance and capital market volatility on both international investments in equity and debt securities. In addition to macro analysis of international capital flows, we also expand the scope of our analysis to micro-level data and derive comprehensive implications, which do not appear frequently in current literature.
Our results suggest push factors such as global capital market volatility had significant effect on net equity capital flows in emerging markets, whereas pull factors such as financial market developments had significant effect on net debt capital flows. We also found that significant determinants of capital flows to advanced market were different from flows to emerging markets. Moreover, there were a number of factors whose effects displayed significant changes since the global financial crisis, reflecting changes in the international capital market environment. The negative effect of global capital market volatility on the net flows to emerging equity market stayed at about the same level before and after the crisis, however the effects of some of the pull factors such as financial market development on the portfolio capital flows increased considerably, especially on the flows to debt markets.
Our analysis of the effects of monetary policy changes on the portfolio capital flow suggests that the increase in real short term interest rates does not significantly decrease the capital flows to both equity and debt markets in emerging economies. The seemingly insignificant response of emerging capital markets to the increase in real interest rates has to be interpreted with caution, however. The short-term real interest rates may not truly reflect the changes in monetary policy because the transmission channel of the short term interest rate is very wide and complex. Therefore there is a risk that the increase in real interest rates alone may not capture all the effects of monetary policy. On the contrary, a rise in global capital market volatility actually increased the net flow to equity markets of advanced economies and decreased the flows to emerging markets.
Lastly, we examined the effects of investor base concentration on the international capital flows. We found that higher investor base concentration was associated with higher volatility of capital flows and that high participation rate of hedge funds had positive association with high capital flow volatility. When we divided the entire sample into advanced and emerging markets, we found positive and significant effect of investor base concentration on capital flow volatility in emerging markets. On the contrary, we did not find similar results in advanced economies. In our analysis, the sample period was divided into periods before and after the global financial crisis. We thus confirmed that there was a similar level of importance of the investor base concentration for capital flow volatility. Moreover, we found considerably more capital had flowed into countries with high investor base concentration after the crisis.
Summarizing our findings above, there are several interesting implications for international capital flows. First, country fundamentals are very important determinants of overall international capital flows, despite there being some parts of the capital market with greater susceptibility to shocks from global factors. Therefore, it is suggested that policy makers in emerging economies may benefit from improving fundamentals and from differentiating one’s economy from other emerging economies, although it is still important to build strategies in response to changes in global factors.
Secondly, in the likely scenario of policy rate hike during the course of normalization of super easy monetary policy, capital outflow is likely to take place in advanced economies rather than emerging ones. Since this conclusion is drawn from the analysis of international capital allocations by U.S. investors only, the conclusion is a limited one in that we do not have complete data for investors from other advanced economies. It is also possible that the insignificant reaction in emerging market portfolio capital flows could be due to varied level of responses within emerging countries, as we saw in connection with the first implication stated by our paper. In the scenario with increased global capital market volatility, our result suggests capital will flow into equity markets of advanced economies and flow out of equity markets of emerging economies. If the rate hike is accompanied with increases in volatility, we expect to see capital out flows from debt markets of advanced economies and equity markets of emerging economies.
Finally, we found that capital flow was concentrated in countries with higher potential for volatile capital flows. Therefore, caution is warranted in those countries. After the global financial crisis, we saw large increase of capital flow towards emerging economies whose investor base was concentrated. Recalling that a higher concentration of investor base was associated with higher capital flow volatility, we can deduce that the countries with concentrated investor base can exhibit rapid reversal of capital flows in the even of increased global volatility.

Korea announced that it had reached a bilateral free trade agreement (FTA) with China in November 2014. This agreement signifies the strong interest of the Korean government and companies in entering the domestic market of China, including its cultural sectors.
This study considers cultural industries as an important sector in the cooperation between Korea and China. A comparative analysis was conducted on the development of local cultural industries of China in three environments: industry, market, and policy. Based on the results from the comparative analysis, the study provides suggestions for furthering Korea–China cooperation in the cultural sectors.
The primary findings of this study can be summarized as follows: In Chapter 2, we analyze the overall environment of the Chinese cultural sectors. The cultural industries of China have maintained a steady growth of 20% CAGR over 10 years since 2004; its cultural market was the third-largest in the world in 2012. The Chinese government has fostered its cultural industries since the beginning of the 10th Five-Year Plan period (2001–2005) to strengthen the competitiveness of these industries in preparation for joining the World Trade Organization in 2001. Korea–China cooperation in the cultural sectors has been active, particularly in the export of online games and co-production of films and animation. Trade and investment are expected to further increase once the Korea–China FTA is signed and various entry barriers are eliminated.
In addition, we compare the current situation of the Chinese cultural sectors by region and suggest regional groups in the cultural sectors. Beijing, Shanghai, and Zhejiang comprise the first-tier group, having well-endowed industry, market, and policy environments. The second-tier group includes locations in the east coast with relatively better infrastructure, such as Jiangsu, Fujian, and Guangdong Provinces. Tianjin and Guizhou are noted for their similarities in display of strong willingness to provide policy support for cultural industries.
In Chapter 3, we compare the regional environments by sub-sectors. In the broadcasting sector, Beijing, Shanghai, Zhejiang, and Shandong as well as Hunan, Sichuan, and Shaanxi are selected as ideal locations because these regions possess the requisite environments in industry, market, and policy for development of the broadcasting sector. In the film sector, Beijing, Shanghai, and Zhejiang are the major regions. While three locations all have excellent environments, most resources are concentrated in Beijing, which implies that development of the Chinese film sector will be centered on Beijing for the foreseeable future. In the online game sector, the availability of communication infrastructure greatly affects development in the sector. Thus, industry and market are developed mainly in Beijing, Shanghai, and Guangdong where the communication infrastructure is well-established. In the animation sector, Shanghai represents the best location in terms of industry, market, and policy environments together, followed by Beijing, Jiangsu, Zhejiang, Hunan, Guangdong, and Fujian.
In Chapter 4, we propose a cooperative direction and cooperation strategies in detail by region-sector matching, on the basis of previous analytical results and suggest four groups for 31 provinces/municipal cities, namely, first-, second-, third, and fourth-tier groups. The first-tier group (i.e., Beijing and Shanghai) has cultural sectors with an excellent infrastructure and competitive sub-sectors, such as broadcasting, film, online game, and animation. The second-tier group (i.e., Fujian and Sichuan) has a small number of competitive sub-sectors; at the same time, the local governments are active in fostering cultural industries. The third-tier group (i.e., Henan and Tianjin) requires a medium-term approach compared with the previous two groups. Finally, the fourth-tier group (i.e., Jilin and Neimenggu) requires a long-term approach through continuous monitoring.
In addition, we argue that the characteristics of each sub-sector should be carefully considered for the local-level cooperation in cultural sectors. In the film and online game sectors, a small number of major players are dominating the market or industry of the country. In such situation, regional grouping is not very useful. Strengthening cooperation with major regions, such as Beijing and Shanghai, seems to be a better strategy. In contrast, in the broadcasting and animation sectors, the development of industry or market is partly determined by the support from the local government or relevant companies. Therefore, facilitating cooperation with a number of regions is recommended for the broadcasting and animation sectors.
Finally, we propose that collaboration in the cultural sector between Korea and China should thoroughly examine the locational context involving industry, market, and policy environments. Depending upon the level of strength of industry, market, and policy environment, a customized strategy can be formulated in a manner to induce maximum benefits from the local environment. On the basis of the preceding analytical results, we suggest the cooperation strategy of the general cultural sector (Shanghai and Henan), broadcasting sector (Beijing, Zhejiang, Shandong, and Sichuan), film sector (Beijing and Zhejiang), online game sector (Sichuan), and animation sector (Guangdong and Hubei).
In Chapter 5, we discuss the strategies for the Korean government and companies to expand cooperation with China in the cultural sectors. First, regarding cultural services, the Korean government should adopt a gradual approach in the course of post-FTA negotiations with China. In other words, the Korean government can utilize the reservations list similar to that in the Korea–U.S. FTA for future liberalization in the cultural services, include the “Protocol on Cultural Cooperation” in the FTA, and discuss the opening of the online game sector with the Chinese government. Moreover, the Korean government should build a foundation for cooperation with China, enhance support for Korean companies entering the Chinese market, and improve the existing system related to the cultural industry.
With regard to the Korean companies, we suggest that they should strengthen their planning capability and creativity, diversify business partners and products, and carve out a niche market. In addition, localization (i.e., establishing a subsidiary or an R&D center in China) can be adopted as a long-term strategy.

After Vladimir Putin won the 2012 Russian presidential elections, one of his first Presidential decrees involved creation of a ‘strong Russia’. In particular, the post-Soviet space has been given renewed focused, because the world powers including Russia have tried to reorganise their power relationship in and around this region. The post-Soviet sphere has become an area for strategic competition where pro-Russian regional groups and anti-Russian or pro-European multilateral organisations co-exist.
In 2014, the Russian government adopted three goals in connection with its foreign policy, and one of goals is to strengthen regional integration in the Eurasian Continent, efforts for which is to be led by Russia. In this sense, the Eurasian Economic Union (EEU) which came into existence officially on January 1 2015 has implications as Russia’s ambitious regional integration project for the CIS area.
From these perspectives, this research has three goals: the first goal is to examine the economic significance of EEU in terms of spatial reorganisation of the global economy; the second is to analyse EEU’s political impact from the perspective of Russia’s international strategy; and the third goal is to examine the response or policies of relevant countries (world powers such as US, EU and China and countries in the CIS area) regarding the EEU. This research eventually leads to providing implications and policy directions for the Korean government’s Eurasia Initiative.
The second chapter of this research covers the background and current situations related to regional structural changes in the global economy, which also serves as the theoretical background for this research. The next chapter analyses Russia’s international strategy and EEU’s expansion policy. The analysis in this chapter shows Putin’s ambition to build up strong regional power groups. The fourth chapter examines strategies and policies towards EEU of major global powers such as the US, the EU and China, each of which has different policies and/or strategies depending on its economic and/or political relations with Russia and countries in Central Asia. The fifth chapter demonstrates how various countries in post-Soviet sphere set up their strategies and/or policies towards EEU, in particular, focusing on whether countries in this region joined the EEU; Kazakhstan and Belarus as members of Customs Union which automatically become the member of the EEU.
This research will contribute to a better understanding of the internal dynamics and future perspectives of Eurasian regional integration, spatial changes connected to international relations in the post-Soviet space, and energy-related relations from the beginning of EEU. In addition, this research could lay a foundation for the Korean government in setting up mid-to-long-term strategies towards the EEU.

The world’s food demand has been increasing due to population increase, increasing incomes of developing nations and the resulting changes in diets, and the increasing use of biofuels. However, grain production and exports is greatly dependent upon only a few countries, and with the recent global climate change, questions over sustainability have been increasing steadily. Korea’s case looks particularly serious because most of its grain supply, except for rice, is imported This study analyzes how to secure a stable supply of grains with a high level of reliance on imports, and examines our current efforts to secure primary grains, which include wheat, corn, and soybean. It also looks at other countries in similar situations and their current trends in securing grain supply; potential partnerships with those countries are also discussed as well as policy implications.
Our analysis suggests each grain needs to be matched with a partner country based on its characteristics and with a specialized plan. Also this study focuses on grain import trends and policies for grain procurement in China and Japan, whose sufficiency patterns look similar to ours and could pose political implications for our use. Based on the analysis, this study suggests the following tasks to secure a stable grain supply, with the first task being the national grain procurement system, initiated in 2010, which entails a joint effort between a private enterprise and the government to secure a grain distribution network and their intentions on selling grains domestically and also exporting to Korea or other countries nearby. In the long term, a national grain procurement system requires strategy, large capital, and expertise related to the international grain market, and ultimately requires participation from private enterprises with capital, professionalism, and a quick decision-making process.
The second task is a long-term plan to support private enterprises by organizing an investment environment, ODA, provision of relevant information, and etc. For instance, Japan, whose sufficiency patterns look similar to ours, could pose political implications for our use. The effort by the Japanese government has lasted over a long period of time and has yielded success stories such as the Cerado farm in Brazil. Additionally, aside from the government, general trading companies played a key role in creating cooperation between private enterprises.
The third task is supply and demand control via public stock increase. Expanding overseas agricultural development and securing an overseas grain distribution network stocks represent long-term plans, as we need to have a stable stores domestically in order to cope with sudden grain price hikes or supply restrictions in producing countries.
The fourth task is risk management via domestic commodity futures listing. Domestic grain market insecurity spreads instantly and globally in the form of price fluctuations, and an ultimate solution call for a way to control risk in price fluctuations instead of simply securing grain supply. If a grain commodity future is listed on the domestic exchange, current spot trades will become more diversified, and we will have measures to minimize risk that comes with price fluctuations.
And finally, we can invest in agriculture overseas with global cooperation. Securing a stable grain supply is not only Korea’s concern but a universal condition for survival, and it must be addressed by global cooperation. Many countries have realized the importance of agriculture and created investment funds to support agriculture from a long-term perspective and to yield not only quick monetary results but also improvements in other grain-supply-related areas. Likewise, the Korean government must look further and consider aggressive cooperation and investment in not only grain production but also the front-back industry including transportation, storage, and distribution by means of close partnerships with countries in similar situations.

 The government of India has recently legislated coverage and classification standards for Micro, Small and Medium Enterprises (MSME) of India based on the size of investment in accordance with the Micro, Small and Medium Enterprises Development Act amended in 2006.
According to the census of Micro, Small and Medium Enterprises implemented in 2006/07 based on the newly amended Act of 2006, a number of MSMEs and employment as of 2012 is estimated to be 47 million and hundreds of millions, respectively. And, total production and fixed asset is estimated to be US$344 billion and US$220 billion dollars, respectively. Meanwhile, a proportion accounted for by MSMEs in total production of manufacturing industry and GDP has decreased, respectively, to 37.5%-7.3% in 2011 from 42%-7.8% in 2006 and 2007.
Most MSEMs of India are classified as Micro-enterprises with small scale of investment (under Rs. 2.5 million for manufacturing, Rs. 1 million for non-manufacturing). These enterprises are unregistered so that they are not qualified for any incentives and support from the government, and account for over 90% (in average) of production, investment and employment of total unregistered MSMEs. Meanwhile, in case of registered enterprises, micro-enterprises comprise about 95% of their number, a level similar to the unregistered sector; they accounts for about 40% of total production and investment, which is smaller in relative terms than the unregistered sector.
As mentioned, although most MSMEs of India are small, their contribution to the Indian economy is very significant, especially for generating employment and balancing the regional economy, in addition to boosting exports. MSMEs of India account for about 40% of total employment, and exports from MSMEs have increased by 16% over the last 10years.
To enhance competitiveness of MSMEs, the Indian government provides MSMEs with various support programs and policies such as the National Manufacturing Competitiveness Program and 12th 5-year national development plan.
Entrance of Korean small and medium enterprises into India increased after the mid 2000s and most are from the manufacturing sector. Small and medium companies from Korea tied to large companies have expanded market share with highly valued products. However, the pace of expansion of small and medium, along with large companies, has been slowing down due to the recent economic slowdown.
Recently, Korean small and medium companies are facing difficulties related to securing market information, land acquisition, local financing; and also excessive dependency on large companies. These represent obstacles that could hinder sustained market expansion of Korean companies in the Indian market. Furthermore, Korean small and medium companies are out of coverage regarding any incentives from the Indian government, because the average size of investment of Korean small and medium companies is about US$1.6 million, far beyond the investment cap to be recognized as an MSME in India.
The Korean government needs to review some creative policies for supporting small and medium companies and promoting cooperation between MSMEs of two countries. First establish a ‘Korea-India Public-Private Cooperation Center for MSME’ in both countries so that it could provide a single window, one-stop service. Second, establishment of a ‘Creative Economic Innovation Center’ is also recommended. It would be able to play the role of promoting and developing innovative agenda for Korean small and medium companies trying to enter the Indian market. Lastly, Korean and Indian governments need to consider creating a joint fund for MSMEs that are trying or have already entered the other side of the market, offering an effective solution for companies experiencing financial problems. The India-Israel joint fund is available for anyone looking for a reference and benchmark.

Korea and ASEAN have actively pursed the movement of free trade with other Asian countries. As a result, they participated in many Free Trade Agreements (FTAs) not only with Asian countries but also with other continental countries. In order to pursue the further economic liberalization, both parties feel the needs of liberalization of labor movement between Korea and ASEAN, especially from ASEAN to Korea. Both Korea as the labor importer and ASEAN as the labor exporter aware of the potential positive economic benefits generated from liberalization of labor movement between them. In particular, even though ASEAN countries realizes the importance of remittance from labor export, there is only few research dealing with this issues. In this study, we tried to find out the magnitudes of potential economic effects from further labor movement liberalization between Korea and ASEAN by using computable general equilibrium (CGE) model, then we suggest useful policy implication to enhance economic freedom between two groups. At the end we suggest the ways to utilize foreign labor forces in domestic labor market.
Social problems such as aging and low birthrate in Korea will dampen its future economic growth due to the shortage of labor. To handle with this issue properly, we realize that it is the right time to analyze the economic effect of further liberalization of labor movement and to set up proper application plan of foreign labor based on the simulation results. When foreign labor force is expanded, we predict it can generate some positive economic effects through the expansion of usable domestic work force. At the same time, we face the negative aspects of labor liberalization as well.
The aim of this study is to show the economic effect of labor movement liberalization between Korea and ASEAN, and to suggest useful policy implication to utilize foreign labors in domestic labor market. By designing various simulation scenarios, we find the changes of macroeconomic variables such as economic growth, terms of trade, wages, remittance etc due to the liberalization of labor movement.
The summary of research results is as following. First, Korea as of a labor importer will experience positive growths of GDP and welfare while labor exporters such as Indonesia, Philippines, Vietnam, Cambodia and Laos will confront decreases of GDP and welfare. The result of basic scenario that assumes 3 percent increase of ASEAN labor movement into Korea shows that Korea’s GDP and welfare will increase 1.17%, and USD 5.7 billion respectively. Second, the real wage of skilled labor and unskilled labor will be decreased by 1.25% and 1.37% respectively. However, the return rate of capital in Korea will be increased by 0.62%. Third, remittance of labor exporters can play very important role in boosting of economic growth in developing countries. The simulation result shows that the total size of remittance will reach about USD 18 billion. Each ASEAN labor exporting country will receive about 4.2~4.9 remittance when Korea government expand 3 percent of labor import. Forth, basically CGE model takes the assumption of imperfect substitutability between domestic labor and foreign labor. When we take the perfect substitutability assumption between two different labor groups, the economic effects that we found in previous scenarios will be turned into negative. This implies that strengthening of policy that introduces labor force with high substitutability will magnify the economic effect from labor shifts from ASEAN to Korea. Fifth, when we differentiate the quality of labor between domestic and foreign labors we find the previous result is over-evaluated. That is, when we assume the productivity of foreign labor is 80% of that of domestic labor, the overall result will be reduced.
Even though the simulation results show positive economic impact from further liberalization of labor movement between Korea and ASEAN, it is not proper that we just suggest that Korean government should reduce the existing regulations on foreign labor import because the CGE model does not consider other social costs generated from labor import. As more of labor force come into our economy, some negative social problems such as additional social security cost and socal integration cost will be accrued. If this is the case, the positive economic effect will be reduced. In order to maximize economic benefic and minimize the negative side effect, Korean government will expand liberalization of labor movement in the areas of agriculture, fishery, some service sectors such as domestic service, nursing or care service, and unskilled-low income manufacturing sectors.
Even though this study shows positive effect of labor liberalization, it does not necessary mean that we need to eliminate all restrictions on foreign labor employment. Instead of eliminating the existing regulations that restrict free movement of labor, we need to modify regulations elastically because we need the room to consider the use of Korean residents abroad and North Korean workers after South-North Korea unification. Finally, we need to deliver the importance of remittance to governments of developing countries from our experience. Korean government conducts many Knowledge Sharing Program with Asian developing countries such as Vietnam, Malaysia, Sri Lanka etc. Through this program, we need to consult on management of remittance to those governments.

 In May 2013, Korea gained the status as an observer to the Arctic Council at the Foreign Ministers' Meeting in Kiruna, Sweden, which opened new doors to participating in the discussion and joint response to the arctic issues in the Arctic Council. Therefore, it is expected to strengthen future cooperation with member countries in research and economic development in the Arctic. This study reviews the current status and future changes of the Arctic Council and the coastal states' arctic policy, and elicits policy implications for multilateral and bilateral cooperation in this region.
The major issues that the Arctic Council is dealing with are divided into four categories: Environment and Climate, Biodiversity, Oceans, and Arctic Peoples. The Arctic Council has been delivering collaborative responses to these issues mainly based on six working groups. Recent trends focus on ensuring the presence and participation of indigenous peoples in the Arctic.
In addition, building bilateral cooperation with coastal states of the Arctic Ocean should also be taken into consideration. Five arctic coastal countries (USA, Canada, Russia, Norway, Denmark) emphasize the following: national security and sovereignty, environmental protection and climate change, indigenous protection, collective response to the issues and intensification of cooperation, enhancing economic benefits through energy development and promoting sustainable development, bolstering the foundations for research, emphasis on cooperation among five Arctic coastal states and strengthening their status in the Arctic Council in accordance with their arctic policy.
Governance in the Arctic council is facing changes due to a change in the chair state and reinforcement of economic development in the region. Thus, it is required to understand the task forces’ issues that reflect what the Arctic Council is currently focusing on. Arctic council initiated individual task forces for Circumpolar Business Forum, Arctic Marine Oil Pollution Prevention, Action on Black Carbon and Methane, and Enhancing Scientific Cooperation in the Arctic, and establishes policies and regulations.
Cooperation channels in the Arctic region can be summarized in two: multilateral and bilateral cooperation. It is essential for Korea to contribute on a multilateral level by participating in projects and working groups of the Arctic Council. Given the fact that the observer status in the Arctic Council is renewed, depending on the evaluation that takes place every four years, Korea is due to update its status in 2017. Therefore, more concrete and practical cooperation and contribution are required. The bilateral cooperation will also make it easier when these multilateral cooperation is given support. On the other hand, it is also required to study the legal system and mechanisms of the Arctic Council as a soft-law regime, which is expected to serve as an example upon which to build and participate in similar multilateral cooperation activities in the future.