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

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

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

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

Its rising international status after joining the OECD DAC and changes in the global environment including the expansion of the international procurement market along with enlargement of the global economy have increased pressure on Korea to actively participate in international development and cooperation. Due to changes in the global environment, demand for manpower in international cooperation specialized in specific fields and regions is expected to increase. This research presents measures to establish a system for Human Resources Development (HRD) through study of the background, necessity, current status and challenges along with the analysis on HRD systems in advanced countries.
In Korea, most of the experts in the field of international development and cooperation are concentrated in government ministries, specialized agencies and organizations implementing the projects (affiliates of ministries, universities, private consulting agencies, etc.). This research sets itself apart from existing research in that it focuses on the HRD system and analyzed it in different stages (pre-introduction, introduction, and project implementation) depending on the period of its introduction.
In the pre-introduction stage of international development and cooperation, primary and middle school textbooks dealt with globalization, global village, international society and politics, national development and global community, and outlooks on the global market and Korean economy; which are somewhat related to international development and cooperation. The challenge during this period was that there were no specialized curriculum and no teachers exclusively teaching the related courses were available. Even graduate schools of international studies often did not have a variety of courses, and local courses were insufficient in quantity. Many universities created curriculums related to international development and cooperation, but shortage of teachers and difficulty in securing competent teachers limited the HRD in terms of responding quickly to global issues.
In the introduction stage of international development and cooperation, experts in the field were being trained and nurtured. KOICA's International Development Education Academy was established to increase understanding of ODA and international development and cooperation. Its main role was education related to implementing projects; however demand was growing for education on general qualification and skills for work in the field including human nature, language, expertise, report writing, leadership, health conditions. With the change in Korea’s international status, increasing number of Koreans are willing to work in international organizations. As these global agencies prefer candidates with working experience, measures to respond to such demand are essential.
The government has recently been trying to create jobs and solve youth unemployment through international development and cooperation. While many consider these policies to have been effective in terms of their role, continuous attention and support is required to prevent it from becoming a one-time project.
In the project implemention stage, activities of agencies specializing in international development and cooperation is divided into two categories ­ grants and loans, with different aims in their operation. The demand for wider use of experts and increase in development and consulting projects are growing. NGOs for international development often have weak financial foundations, however, and working experience in such organizations is very important in acquiring knowledge in the field. As these NGOs have relatively plentiful job vacancies, systematic support for the training of experts is essential. As the MDB procurement market is expected to expand and would require higher participation from private consulting agencies; the government needs to help promote and systemize the project implementation process and enhance competencies in operating such projects.
Some of the more important issues in establishing the HRD system in international development and cooperation include establishing systems with variety and consistency, multifaceted systems to respond to centralization in international development and cooperation, information sharing system, and reinforcement of policies for increasing employment.
Measures to establish an HRD system in international development and cooperation are provided separately by government ministries, specialized agencies, graduate schools of international studies, NGOs, industry, and private consulting agencies. The government should support studies on manpower projection, reeducation system for professionals, development of a long-term HRD system, cultivation of on-site experts, and creation of a flexible labor market. For higher education institutions, some of the proposals for establishing HRD systems in international development and cooperation include promoting graduate schools of international studies to concentrate on its specialized fields, capacity building for research institutes in colleges and universities, promotion of consulting agencies to strengthen cooperation between the government and the private sector, and utilization of social enterprises. We also advise mid- to long-term plans to secure professionals and expertise, establish infrastructure, and assistance for participation of experts from outside the field of international cooperation and development.

India’s economic growth in the last two decades (1991-2011) improved significantly spurred by the cumulative effect of the major economic reforms initiated in 1991. Particularly, during the Xth Five year Plan (2002-03 to 2006-07) India achieved remarkable success in main economic fronts including GDP growth, foreign trade and FDI flow. It is found that many industries, notably, automobile, electronics and steel industries, have been benefited by competitive policy and become global players. The findings of the study show that despite these remarkable economic performances, the gap between the rich and the poor, and inter-state disparity have been widening due to failure of trickle-down effects of the economic reforms which has compelled the present ruling party and the government of India to pursue an “inclusive growth policy.” The direction of the reforms in future, therefore, will be substantially carried out on the path of inclusive growth as the policy principle. Further, this study also found that there has been lack of coordination between the central government and state governments regarding the nature of and direction of the economic reforms.
This study suggests four important tasks ahead of the future economic reforms in India. These include building infrastructure, undertaking the second green revolution and developing human resource, managing the environment, and stabilizing energy demand-supply. Regarding the prospects of the reforms in India, this study argued that the economic reforms of the last two decades had been predominated by the central government in meeting the larger economic needs of the country. It seems, however, the state governments will have a crucial role to play in pursuing the economic reforms in future in meeting their own local economic needs. In this process, competition among state governments for the development of their respective states will be substantial by attracting more FDI and business. In fact, this kind of competition has already been started in some states like Gujarat and Bihar. In this direction, Korean government as well as enterprises need to devise suitable policy strategies to engage with India’s future economic development. There are many thrust areas such as the second green revolution, infrastructure development, etc., in which Korean industries and government can seize the business opportunities. At the end, the study emphasizes that that Korea should prepare to deal with the post reform generations of India who have market friendly thinking and attitudes.

This policy paper aims to review the current situation of regional development and human resources in Indonesia, the main themes in the ‘Master Plan: Acceleration and Expansion of Indonesia Economic Development 2011-2025 (MP3EI)’, and to deliberate ways for the long-term economic cooperation between Korea and Indonesia. MP3EI is an ambitious and comprehensive plan which contains strategies and policies for serious development of the Indonesian economy, based in the Indonesia Economic Development Corridor(IEDC). Through the plan, Indonesia is attempting to introduce new institutions, review established systems, and forge a new direction for infrastructure development.
Chapter two reviews the current situation of economic cooperation between Korea and Indonesia. Indonesia is Korea’s tenth biggest trade partner, and trade between the two countries shows that the volume continues to increase and the sector is concentrated on natural resources. Korean investment to Indonesia is focused on the manufacturing sector with increasing investment in large scale projects. Because trade and investment are centered on natural resources and the petrochemicals sector, they could be vulnerable to external shocks from fluctuations in crude oil prices. Therefore, it is necessary to diversify sectors in terms of trade and investment. Presently, Korean assistance to Indonesia is concentrated in infrastructure, regardless of grant or credit. Since Korean assistance geared mainly for infrastructure makes it difficult to show Korea’s competence, it is necessary for Korea is necessary to find out and diversify the assistance areas where Korea has an advantage.
Chapter three examines the current situation of the economic cooperation between Indonesia and Japan, China, and Singapore. Japan is ① the largest official development assistance (ODA) donor to ② the largest importer from and ③ the second biggest investor to Indonesia. Since the late 1960s, Japan has employed ODA to Indonesia as a tool for natural resource diplomacy by providing assistance for infrastructure and securing natural resources in return. Currently, Japan has extended economic cooperation with Indonesia even to fields such as renewable energy and energy saving. It is also peculiar that Japan has aligned competitiveness of the Japanese firms with Indonesia’s demands for utilizing ODA. China has seldom provided ODA to Indonesia since the economic cooperation between two countries began, but has become the second largest trade partner for Indonesia both in exports and imports. China also considers Indonesia a supplier of natural resources and approaches it in sectors such as electricity and machinery, where it possesses price competitiveness. It implies that Korean firms would have stiffer competition in Indonesia from Chinese firms as well as from Japanese firms. China, as the sixth largest investor to Indonesia, has invested much more than Korea since 2004. Singapore secures the position of the largest exporter and investor to Indonesia, due to its proximity to Indonesia. With ODA programs in technology cooperation, Singapore contributes to human resource development in Indonesia. In the process of establishment and operation of special economic zone (SEZ) of Indonesia, Singapore has been deeply involved in building industrial complexes and developing resorts. Regarding this, Korea could consider participating in establishment and operation of SEZs in Indonesia. It would be necessary for Korean firms to consider expanding investment towards sectors Indonesia wants to invite Korea into. We should also watch for designation of additional SEZs in Indonesia, which the Indonesian government is deliberating nowadays.
Chapter four discusses regional development of Indonesia. We study the plan for regional development centered on IECD which the Indonesian government is currently promoting. In addition, we review the metropolitan priority area(MPA) project, being driven forward by Japan. Japan has played a central role in the process of establishing a regional development plan for Indonesia. In terms of regional development of Indonesia, Japan is proceeding with economic cooperation emphasizing infrastructure development and improvement of the environment for Japanese firms.
Chapter five reviews human resource in Indonesia. Currently, the strategies and policies for human resource development in Indonesia is not tightly related to MP3EI. Therefore, the Indonesian government should connect MP3EI concretely to strategies and policies for human resource development and back up economic development by developing necessary education and technology. To sustain high economic growth, Indonesia should transform the economic structure and the source of competitiveness from ‘low wages’ to the higher value-added sectors and service industries. To effect changes in the economic structure of Indonesia, however, would require a highly educated and skilled labor force with a fair amount of mobility. In order to do that, Indonesia could consider benchmarking Korea’s success in enhancing competitiveness and transforming the economic structure, accompanied by rapid increase of productivity. Currently, the centralized education and training system of Indonesia does not fit the demands of the market and is not well aligned with industrial needs. Korean methods for consolidating human resource development with economic development could serve as a reference point for Indonesia. It would be a useful exercise to adapt Korean education policies to the Indonesian situation.
Chapter six discusses policy implications for deepening the economic cooperation between Korea and Indonesia, focusing on the creation of an  implementation plan for MP3EI, policy measures for the economic cooperation, regional development, and human resource development.
In order for Korea to contribute to the creation of an MP3EI implementation plan, we must identify priorities in MP3EI implementation which the Indonesian government is contemplating, to reestimate project costs precisely, to evaluate any shortage of funds, and to readjust priorities of the projects. It is also necessary to review conformity of MP3EI to reform measures that the Indonesian government is considering. To do that, we should define the role of ‘the Jakarta executive office for economic cooperation (the Jakarta office)’ and clearly identify the tasks of  Korean research institutes and government. It is desirable that the Jakarta office, as a channel for cooperation, plays a coordinating role for affairs related to the formulation of the MP3EI implementation plan. The Korean research institutes should study the Indonesian laws and systems intensively to provide background information needed for the MP3EI implementation plan. The Korean government should also establish a framework for effective cooperation between the Jakarta office and the Korean research institutes, and coordinate their cooperation. It is also necessary that various Korean personnel communicate with their Indonesian counterparts in diverse ways. Regarding this, we must consider gaining, in particular, an understanding of the Indonesian system for public-private partnerships and employ it for economic cooperation between Korea and Indonesia.
It is necessary that the Korean ODA to Indonesia be closely connected to economic cooperation with Indonesia. To achieve it with ODA, we should consider developing natural resources efficiently, expanding infrastructure, and constructing industrial complexes related to SEZ development in Indonesia. It is also necessary to actively proceed with ODA that conform to the green growth strategy, because it is distinct from ODA strategies of other major countries. Korea could enhance the level of economic cooperation by sharing the policies and technologies related to green growth with Indonesia.
Korean firms should carefully consider entering IEDC projects unilaterally, as they might want to allow for Japanese initiative in the IEDC. Since the possibility of cooperation with Japanese firms is fairly high, it is desirable that Korean firms deliberate initially going into the IEDC projects with Japanese firms together. It is necessary that the Korean government set the basic policy direction in order to support the investment into Indonesia, first in the manufacturing sector in which Korea is competitive globally, and then allowing Korean firms to further expand economic cooperation with Indonesia.
With regard to regional development, Korea could consider participating in building new towns around Jakarta where urban development is urgent, because Korea has competitive advantage in urban development with experience in new town construction. With participation in setting up a master plan for new town development and by joining in the projects, Korea could contribute to improving living conditions through efficient provision of housing. We should especially take note of the ‘Sunda Strait Bridge(the Bridge)’. It is highly probable that development plans for Sumatra and Java could be impacted drastically if the two islands are connected with the Bridge. Considering this, it is necessary that Indonesia set up the MP3EI implmentation plan, allowing for the development of opposing coastline areas in the two islands along with construction of the the Bridge. Because the value involved in developing these areas is expected to increase with the Bridge, it is desirable that Korea take part in establishing a development plan for them at the early stage.
 As Korea devised a system that corresponds to the changing economic environment, Indonesia can learn from Korea by reforming the system of education and job training in order to adapt to the demands of the market. To enhance effectiveness, it is necessary that Korea offer help  to Indonesia by linking human resource development to industrial development, transferring some of Korea’s competitiveness to Indonesia. In order to do that, Korea should provide needed and appropriate technologies for Indonesia and share development experience, focusing on areas where Korea has an advantage; a very efficient way of human resource development.

As the Chinese government pushes forward its domestic demand-driven growth strategy, trade and FDI in China are facing  changes at the structural level. Trade based on export-oriented simple processing is decreasing, while general trade linked to domestic demand is increasing. Korea’s share in China’s imports for domestic demand, however, is relatively small. According to import statistics compiled by Chinese customs which we have acquired for this research, Korea’s share in China’s domestic demand import market was 5.9% while its share in total import market of China is around 10%.
Compared with other countries or regions, the pattern of Korea’s exports to China is similar to that of Taiwan. As for major economies such as Japan (11.6%), USA (8.3%) and Germany (7.5%), they enjoy larger shares of China’s domestic demand import market. In categorizing domestic demand into primary, intermediary, and final goods; we have found that Korea’s exports to China is heavy in intermediary goods, at 76.3%. Taiwan’s percentages and structure are similar to that of Korea; however the greater proportion of Japanese, American and German exports consist of final goods and less intermediate goods.
Further investigation of the trend of Korea’s export to China reveals that intermediary goods exports for domestic demand has been increasing since 2008. In 2010, when Korea’s intermediary goods export reached USD28.8 billion, sharp growth in exports of General machine parts (64.3%), Petrochemicals and Coke (50.2%), Automobile parts (57%), Plastics (19.5%) and Chemical materials (14.3%) contributed to the increase. On the other hand, export of final goods for domestic demand increased by 52.9% in 2010 and reached USD8.3 billon. Precision Optical Instrument (35.7%), Vehicles (63.1%), General Machines (68.2%), Special Machines (74.1%), Electric Devices and Equipments (32.7%) and Electronics and Communication (75.6%) also registed major increases.
The main competitors in China’s intermediary goods market are Korea, Japan and Germany. In the market for Korea’s main export product, namely Chemical materials and Plastics, the competitors include Korea, Taiwan and Japan. In China’s final goods market, Japan, USA and Germany are the main competitors. The only industry that Korea possesses a lead is in Textiles and Garments.
As for FDI, investment to China from the rest of the world has rebounded recently from the sharp decrease during the financial crisis and its focus is shifting from manufacturing to service industries. For the research on the trend of Korea’s investment to China and the performance of Korean firms in China, we have analyzed series of data from KOTRA’s and Korea EXIM bank’s survey on Korean firms in China. Through investigation of these materials, we have identified recognizable features in Korean investment to China as follows. First, Korean investment to China reached its ceiling in 2004 and decreased since then. Second, investment to Shandong, Jiangsu and Beijing has decreased and investment to the Huadong region increased. But investment to inland provinces has not shown a clear increase. Third, the weight of manufacturing has decreased but still remain around 70~80%. This is a much higher figure compared with the world average, 46.9%. Fourth, the amount of investment per contract is growing. Fifth, large firms make adequate profits but small and medium-sized enterprises do not. Sixth, sales of manufacturers exploded before 2007 but has leveled off since. Seventh, several emerging service industries such as Lodging and Catering, Commercial Service, Mass Media and Health Care show congestion or reduction in their sales whereas Wholesales and Retail, Transportation and Leisure show significant growth. Eighth, Korean firms understand that the investment environment has improved in terms of institutional transparency but degenerated in terms of economic aspect such as wages. These patterns coincide with actual facts. Ninth, Korean firms emphasize the Chinese domestic market, which brings more profit than Korean or the third country markets. Its share, however, is increasing very slowly. Tenth, as the procurement of parts and material is localized, trade balance improvement effect of investments to China is decreasing. Nevertheless, export of parts and materials are still increasing. Eleventh, Korean firm’s intention to invest to China is getting weakened.
To respond to the above, the strategy for making inroads into China’s market for domestic demand is required. Chinese investment environment is becoming unfavorable for manufacturing and processing but consumption is on the rise as household income grows and inland provinces become richer. As a matter of fact, various markets such as luxury goods, low-price goods, 2nd and 3rd tier cities, rural areas, 80-90 hou and women are emerging.
This report has investigated a few successful foreign firms in emerging domestic markets. Media-Markt, a German home appliance distribution company; Shimadzu, a Japanese precision chemical device manufacturer; Nongshim, a Korean food company and Another Group, a Hong Kong clothing chain store are selected. These companies are engaged in aggressive marketing activity focused on Chinese consumers. They have entered China’s mid-western and northeast regions seeking increasing market shares there, aside from Beijing and Shanghai. They are supported by sufficient capital and are cooperating with localized firms. They established R&D bases in China to satisfy local demands. In addition, their cooperation with the Chinese government played a very important role.
As for export strategies, this report classifies intermediary and final goods for domestic demand into ‘excellent items’, ‘growth items’ and ‘competing items’. The 5 Excellent items of intermediary goods need to retain/maintain their buyers in China. Competitive items such as Plastics and Chemical materials are Korea’s 1st and 2nd export product respectively, and will need to diversify buyers. The most representative among competitive final goods items, such as Precision Optical Instruments, comprise the 1st and main export products for Korea. Its status would be impacted much by the ECFA between China and Taiwan and will require special attention. On the whole, it is necessary that Korea examine the demand for each intermediary product to enter the Chinese import market. Moreover, the competitive advantage of products in the growth items category should be studied with respect to their foreign competitors. Besides, the consumer market should be differentiated and each market should be approached with its own set of strategies.
Concerning investment strategies, the report describes Korean firms’ activities in China by a SWOT analysis framework. First, Korean firms have competitive manufacturing capacity. Second, Korean firms are not doing very well in the domestic consumption market nor investing in non-manufacturing areas. Third,  the Chinese domestic market is growing rapidly and investment opportunity continues to burgeon along with development in China’s mid-west region. Fourth, factor costs such as wages are increasing rapidly and the government is being selective with foreign capital, which will worsen the investment environment. According to such analyses, specific investment strategies could be deduced as follows. First, manufacturing investment could continue in China’s mid-west provinces where Korean firms’ competitive advantage can be maintained for a while and local governments are looking to attract foreign production facilities. Second, distribution channels for Korean products should be secured for access to the domestic market. Third, a few existing Korean industrial complexes in China could be expanded or new ones be established. Fourth, cooperation between Korean and Chinese small and medium-sized enterprises could be promoted. Korean SMEs are suffering from lack of local distribution channels while Chinese ones are deprived of opportunities for cooperation with foreign firms by large state-owned enterprises.

 CEPA (Comprehensive Economic partnership Agreement) started from January, 2010 between Korea and India is expected to be catalysis to bridge two countries in many areas such as economic collaborations, cultural understandings, diplomatic partnerships, and human interactions. As CEPA emphasizes human relations, interactions of labor and human resources will bring about huge economic effect to both countries.
India has the second largest population in the world. This made India rich in laborforces and higher economic growth especially past 5 years. India demonstrates about 8% annual GDP growth with increasingrate of education level of population. Korea regards India as a key trade partner in various areas. 2000’s see phenomenal increase in trade to India, especially after CEPA,economic collaboration accelerated trade amount about 40% growth to 17billion dollars. This counts 7th largest trade partner in Korea. Nevertheless, human resource exchange does not follow the trade growth pattern. In 2010, only 50 thousand Indians visited Korea, where 80 thousand Koreans visited India in 2009.
The research intended to provide basic methodologiesto develop partnerships in both human resource interactions and economic collaborations. The research has two perspectives. The first view is the research for Indian labors working in Korea.
The study hired both structured questionnaire survey andin depth interview. The study found that Indian human resources are relatively satisfied with the working conditions and wages. However, the keen sense of considerations such as education of children and spouse daily activities are required.
The second view is the research for Korean human resources working in India. As the number of Koreans working in India is scarce, the study adopted in-depth personal interview method. Theresult shows that most Koreans are hired for marketing purposes to Korea. Koreans are suffered by lack of utilities such as water, electricity and sewage. Mostly they were not satisfied with the wage level.
The research found the situations and recommendations for both countries. The recommendations from the research are two folds. Firstly, in order to compensate the lack of domestic labors, we need to have longer term relationships with Indian partners such as colleges and universities and some other research institutions in India. Secondly, in order to develop job opportunities in India, institutional support rather than individual relations are essential. As most needs for Korean labor forces are limited to correspond to Korean institution, institutional relations are more effective.
The research is without limitations. As the sample size is quite limited, the sampling bias is the main limitation.The study may lack in external validity. However, the study can shed a light concerning Indian and Korean labor exchange and mutual benefit by labor collaboration.