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

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

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

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

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

This study examines various potential international risk factors for the Korean economy in a medium-term perspective. The report highlights the different characteristics of the risk factors between the 1990s and 2000s in particular. First of all, the effects of oil price shocks on the Korean macroeconomy are investigated. Since Korea is an oil-importing country, it is natural that an oil price hike increases imports. However, VAR analysis found that an oil price rise raises exports as well as imports, since Korea imports crude oil and exports petroleum products. An export increase after the oil price shock was not observed in 1990s, since the ratio of petroleum product exports to total exports was relatively low in the 1990s but it has been increased in 2000s. Due to the fact that an oil price rise increases the exports, we also found that an oil price rise increases Korean industrial production in the short-run. Considering the asymmetry of the oil price shocks, the analysis shows that an oil price fall also increases industrial production, and moreover the impact is greater than in the case of an oil price rise.
Second, we empirically investigate the effects of exchange rates on Korean trade. It is widely believed that exchange rate depreciation would promote exports and reduce imports. However, we cannot find the evidence that the depreciation of exchange rates does boost exports, while it is found that depreciation decreases imports. Moreover, it is found that the volatility of exchange rates deters exports after the Asian currency crisis. Therefore, the stabilization of the foreign-exchange market is important for Korea to promote exports.
Third, the effects of the Chinese economy on the Korean economy are investigated empirically, focusing on exports and price levels. An empirical analysis found that the appreciation of the Chinese Yuan promotes Korean exports to China, by enhancing the price competitiveness of Korean products. Chinese exchange rate appreciation raises all three kinds of Korean exports: final goods, intermediate goods, and capital goods; while the impact of the final goods is the biggest among overall. It has also found evidence that Chinese inflation can be transmitted to Korea through rises in Korean import prices. Empirical analysis reveals that Chinese inflation had no significant impact on Korea’s inflation rate in the 1990s, while it became one of the main external causes of Korea’s inflation along with oil prices in the 2000s.
Lastly, we analyse the potential regional risk factors which can be realized in the medium-term. We considered the deterioration of the Eurozone fiscal crisis, US double-dip, and Chinese hard-landing as the risk factors. If the Eurozone sovereign debt crisis results in the disorderly defaults of some member countries, the world’s economy may experience recession like the global financial crisis of 2008. In the worst scenario of the Eurozone crisis, the world’s GDP will fall to 0.7%p in 2012 and 2.0%p in 2013. With regard to the US economy, it is not very probable that it faces a double-dip in 2012, but the recovery process from the subprime mortgage crisis could be longer than expected. If a US double-dip is realized in 2012, the world’s GDP may fall to 0.9%p in 2012 and 0.5%p in 2013. Finally, China’s hard-handing scenario does not seem to be happening in the near future. However, it is needed to carefully monitor the China’s bubble problem of asset markets and banking sector stability. If China’s hard-landing scenario becomes realized in 2012, the world’s GDP may fall to 0.4%p in 2012 and 0.9%p in 2013.

One of the most significant changes in North Korea is that it has emphasized economic enhancement through economic cooperation with other nations. Since the 2000’s, North Korea has acknowledged practical interest in economic relations with others and that increases in volumes of trade and foreign direct investment are strategies to fulfill its interests. In order to enlarge the scope of its economic cooperation, the North has set priorities in policy agenda as follows: stimulate trade, business cooperation through equity joint venture and joint venture, proactive exchange in knowledge and human resources in IT with advanced countries, and increases in financial transaction activities. Since the 2000s, the North has attempted several changes, such as revision of policies and laws regarding trade and foreign direct investment and reshuffling of the administration system. For example, the North modified laws and regulations in the mid-2000s, raised the status of Rajin to a “metropolitan city” in 2009, and announced special laws for development and management of the Rajin-Sunbong Special Economic Zone in 2010. The North established North Korea Development Bank in 2009 in order to attract more foreign direct investors, and it also set up the Committee for Equity Joint Investment in 2010. Despite the extensive efforts by North Korea to revitalize foreign economic cooperation, in trade and foreign direct investment in particular, North Korea has come to depend heavily on China economically. The said dependency is deepening due to the nuclear crisis, different types of international economic sanctions levied upon the North, and political problems in relations between the North and the US. In order to minimize negative economic impact from sanctions, the North should try to extend its scope in economic cooperation not only with China but also with different countries such as nations of the Middle East, Europe, and Southeast Asia. Since the 2000’s, there have been positive changes in the North regarding foreign economic cooperation, including increase in trade volumes, after stagnating through the 1990s. During the same period, the North gave most priority to increasing foreign direct investment. The North pursued modernization and technology improvement, normalization of industrial production, obtaining foreign exchange, and improvement of standards of living. Such changes reflect that the North changed its thinking on and direction of its economic policy. In the past, the North regarded foreign economic relations as a tool for enhancement of political alliances, but in the present days, the North straightforwardly recognized it as a means to economic development. Accordingly, economic cooperation with other nations was raised to a higher status from its former status as a secondary instrument to a primary one for building a self-reliant national economy. Efforts by the North to attract foreign investors have been more aggressive since 2000. Humanitarian aid toward North Korea in the international community has decreased due to certain issues such as nuclear crisis, violation of human rights, and transparency problems in distribution of aid. The international aid in the mid-1990s alleviated not only the food crisis in North Korea, but also worked out as a window for dialogue between the international community and the communist country. But in spite of continued assistance from the international community, famine and economic crisis in the North remain ongoing challenges. Furthermore, the international community has expressed its concerns about nuclear weapons development in North Korea. The community still argues for the legitimacy of aid toward the North amidst the nuclear crisis and its effectiveness for the resolution of North Korea’s economic crisis, and food crisis in particular. Again, one of the most significant changes in the 2000s is North Korea’s increasing dependency economically on China, while economic cooperation with others shrank. Due to its nuclear weapons testing, North Korea’s relations with the US and Japan is near-nonexistent and the scope of economic cooperation with EU and nations in Southeast Asia decreased significantly. In particular, relations with Japan, which was the North’s second-largest trade partner until the early 2000s, is at an all-time low due to unresolved issues such as kidnapping of Japanese nationals and nuclear tests. Even though North Korea’s foreign economic cooperation in the 2000s was more vigorous than in the past, the North still faces numerous challenges with respect to resolving the current economic crisis and normalizing its industrial system. One of the challenges is that the North cleaves to a planned economy and a rigid doctrine of self-reliance at the cost of decreased efficiency. Economic sanctions by the international community are another factor keeping North Korea from consistent economic development and extending the scope of foreign economic cooperation. Failure to build a partnership with most advanced countries due to the nuclear weapons issue is the most critical factor limiting North Korea’s economic development. In order to improve relations with the international community, in particular with advanced countries, and to maintain steady development economically; the North should put forward special efforts to defuse the lingering nuclear crisis, normalize relations with the US and Japan, persuade the international community for removing sanctions, adoption of an open market economy, and implement an open-door policy. Without effecting fundamental social changes, it will be difficult for the North to resolve economic crisis. The paper studies changes in foreign economic policies, laws and regulations of North Korea in the 2000s and finds actual conditions in its trade, foreign investment, and international assistance in the same period of time.

The United States government has launched the NEI (National Export Initiative) as an effort to increase U.S. exports to overcome the world-wide economic slowdown. The NEI has five main components. First, the Administration plans to improve advocacy and trade promotion efforts for U.S. exporters. Second, the Administration plans to increase access to export financing. Third, the Administration will reinforce their efforts to remove the trade barriers. Fourth, the United States will enforce trade rules. Fifth, the Administration will pursue policies at the global level to promote U.S. economic growth. For the success of the Initiative, the Administration established an EPC (Export Promotion Cabinet) to improve advocacy and promotion to enhance export assistance to SMEs. The NEI activity in concern with U.S. SMEs can be summarized as follows. 
First, the Administration increased the Export-Import bank of the United States’ budget for FY 2010, which would allow the bank to make more credit available to SMEs. Second, the federal government increased the USDA FY 2011 budget to amplify export promotion activities. Third, the federal government increased the Department of Commerce’s ITA (International Trade Administration) FY 2011 budget to expand its trade expert staff, to put a special focus on increasing the number of exporting SMES by 50 percent over the next five years, increase U.S. SMEs’ export opportunities in major emerging markets such as China, India, Brazil, and to develop a comprehensive strategy to seek new opportunities overseas for small businesses in key export sectors such as environmental goods and services, biotechnology, health care, and clean energy.
The United States is also making efforts to overcome exporting barriers for increasing small business export activities. First, U.S. SMEs plan to combine forces with other firms in the same industry, either through trade associations or through less formal consortia. Second, U.S. SMEs plan to collaborate with a single larger firm or a distribution agent. Third, U.S. SMEs plan to take advantage of government programs that assist SME exporters such as the Department of Commerce’s U.S. and Foreign Commercial Service and the Department of Agriculture’s MAP. In support of these efforts, the federal government is taking further steps to better survey SMEs’ barriers to exporting and taking the results into account when implementing financial and non-financial export promotion programs.
Korean SMEs are also facing difficulties in exporting, especially when competing with developed countries’ advanced technology goods and services and developing countries’ cheaper goods and services. Key barriers to export for Korean firms are little experience in overseas markets, lack of overseas network, lack of information and analysis capability towards overseas markets and technologies. Thus, to improve Korean SMEs’ global competitiveness, sustainable and organized export assistance and customized information on foreign markets and up-to-date technologies are needed.

By comparing development cooperation of China, Japan and Korea vis-à-vis Cambodia, this study strives to draw some policy implications for Korea’s development cooperation vis-à-vis Cambodia as well as Korea’s overall ODA policy.
In terms of the size of ODA, China overtook Korea in 2004 and came closer in 2009 to the level of Japan, which was the top bilateral ODA donor to Cambodia. However, China’s ODA consisted mostly of concessional loans. The said concessional loans were much larger than grants in Korea’s ODA, while grants were much more important than concessional loans in Japan’s ODA.
The financing structure of ODA was also reflected in the distribution of ODAs by purpose. In general, bilateral ODAs were mainly used for social infrastructure and services. However, China’s ODA went mainly to economic infrastructure and services, and road construction in particular. A greater portion of Korea’s ODA was destined for economic infrastructure and services than social infrastructure and services, whereas Japan’s ODA was equally destined for economic and social infrastructure and services. 
Thus, although aid from China, Japan and Korea was helpful for road construction, which was a particularly weak area for Cambodia; the three countries’ support for education and health, which were also weak, were very limited. Among the three countries, Japan contributed much more to education and health than Korea, while China did not contribute at all.
In terms of correlation between ODA and economic ties, it seems that there exists some correlation between China’s ODA and her economic ties, while Korea’s case was still too early to tell given the modest scale of its ODA. As for Japan, there was no correlation between them.
The size of Korea’s ODA is smaller than those of Japan and China, and in terms of development cooperation experiences, Korea is in-between. Under these circumstances, one of the most important tasks of Korea’s ODA policy will be how to differentiate Korea’s ODA from theirs. In this regard, this study suggests the following policy implications: First, we have to differentiate our ODA from China’s by reducing substantially aid destined for road construction. Second, we have to change our focus from building of “hard” infrastructure to “soft” infrastructure and services such as human resource development and health-related areas, where Korea has some comparative advantage. Third, in order to change our focus from hard infrastructure to one dominated by soft infrastructure, we should increase grants relative to concessional loans.

 This paper studies changes in competitiveness of Korean product, measured by Trade Specification Index (TSI) in order to analyze the effect of Korea’s free trade agreements (FTAs) with Chile, Singapore, European Free Trade Area (EFTA), and ASEAN. Additionally, it analyses the trend in change of tariff under the FTAs to show how changes in competitiveness of products are related with those, and measures usage rate of FTAs’ benefit from the lowered tariff lines the agreements. This paper  empirically tests the effect of FTA to the competitiveness of product using a panel model, which is originated from export functions.  
According to the results, the FTA with Chile may not lead substantial changes in competitiveness to Korean products, but FTAs with Singapore, EFTA, and ASEAN did. In addition, due to the relatively small changes in tariff after FTAs, the effect from the lowered tariff would be negligible, and there is no evident relations between the usage rate and TSI. Last, according to empirical analyses, the effectuation of FTAs would be a significant factor to improve competitiveness of products, but surprisingly the lower Korean tariff lines would result in more competitiveness and it even turns out that more usage on lowered tariff worsen competitiveness of product.
From the above, the following policy implications are derived: First, it would be desirable for Korea to pursue more FTA in order to improve competitiveness of its products and second, more effort would be required to raise usage rate on FTAs’ benefit from the lowered tariff. Third, comprehensive approaches that consider enhancement of efficiency and welfare improvement of entire economy should be emphasized.