Policy Analyses
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Policy Analyses
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An Analysis of Micromechanisms for Efficient ODA and Its Policy Implications
As Korea became a member of the Development Assistance Committee(DAC) under the Organisation for Economic Cooperation and Development(OECD) on November 25, 2009, the scale of Official Development Assistance(ODA) is expected to gro..
Kitae Sohn et al. Date 2009.12.30
Economic development, Economic developmentDownloadContentSummaryAs Korea became a member of the Development Assistance Committee(DAC) under the Organisation for Economic Cooperation and Development(OECD) on November 25, 2009, the scale of Official Development Assistance(ODA) is expected to grow substantially in the near future. This study introduces and analyzes microeconomic mechanisms and derive policy implications to enhance efficiency in ODA, which is gaining importance in scale.
Specifically, this study outlines the major limitations of past aid and five reasons for their failures. Also forwarded by this study are several reasons for provision of aid to four of the major factors of economic growth; namely education, health, institution, and finance. Especially emphasized is a full understanding of microeconomic mechanisms for the efficient implementation of aid. This emphasis is elaborated with two experimental examples for each factor. In addition, the case of an aid project in progress through the World Bank is critiqued to help plan and execute aid in an efficient manner with application of microeconomic mechanisms.
Since the Marshall Plan in the immediate aftermath of WWII marked the real beginning of aid, most of the aids have actually revealed serious limitations in promoting economic growth in developing countries or have even become impediments to growth. However, this should not lead us to conclude that aid is unnecessary. In fact, more aid might be needed to stimulate economic growth. This study does not deemphasize aid itself. Instead, it sheds light on problems inherent in implementing aid and tries to address the problems.
This study argues that the lack of a strong incentive for the efficient use of aid money, on the part of both donors and recipients, is the main and outstanding cause of failure of most aid. At present, a connection appears to be weak between results and rewards/punishments for policy makers for the provision of aid. The policy makers face few punishments even when living standards of the poor are not improved. Thus designing proper mechanisms to strengthen an incentive for the efficient use of aid money is absolutely necessary to improve the living standards of the poor.
It is suggested that the policy makers should give greater consideration to unique characteristics and environments facing the designated beneficiaries and focus on gradual improvement of human capital and social infrastructure. This would allow for greater efficiency in improving the living standards of the beneficiaries, which can be achieved through a system of incentives based on market logic.
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Analysis on the Effects of Logistics Efficiency on Trade Flows in East Asian Countries
This paper analyzes how logistics efficiency affects trade flows in East Asian countries. Based on a gravity regression framework, the analysis suggests that measures to improve logistics efficiency have the positive effects in ex..
Ho-Kyung Bang Date 2009.12.30
Economic cooperation, Trade policyDownloadContentSummaryThis paper analyzes how logistics efficiency affects trade flows in East Asian countries. Based on a gravity regression framework, the analysis suggests that measures to improve logistics efficiency have the positive effects in expanding East Asian country trade.
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The Economic Effects of Potential Outcome of the Doha Round and its Implications for Korea's Stance
The multilateral negotiation engaged in Doha in November 2001 has reached a very crucial point. Draft modalities have been finalized by the chairmen of the agriculture and Non agricultural market access (NAMA) committees. However,..
Jin Kyo Suh et al. Date 2009.12.30
Multilateral negotiations, Trade policyDownloadContentSummaryThe multilateral negotiation engaged in Doha in November 2001 has reached a very crucial point. Draft modalities have been finalized by the chairmen of the agriculture and Non agricultural market access (NAMA) committees. However, the multilateral agreement, and the ultimate fine tuning of the proposals missed target of reaching a consensus. Still negotiations resumed and helped removing some stumbling blocks.In the stage of political lack of will among the main actors of a possible deal, it is utmost importance of precisely quantify the potential gains associated with the completion of the Round and how these gains are shared among countries.The study used here to assess the consequences of the negotiations are highly technical and complex, pointing to the imagination of the negotiators to find a politically acceptable deal. The state of the art lies in the measurement of border protection at the most detailed level affordable, and in the computation of actual liberalization resulting from a tariff-cutting formula. Bound and applied duties (whether ad valorem, specific, mixed or compound) have to be measured at the HS-6 digit product level.Using computable general equilibrium model of the world economy (GTAP), we simulate the impacts of the December 2008 drafts circulated by the WTO. The most important finding at the aggregate, global level is that any of the plausible trade scenarios will produce only modest gains, a one-time increase in world real income of $58 to $136 billion. This represents an increase of 0.1~0.3 percent of current global gross domestic product (GDP). The limited nature of the gains from the Doha Round goes far in explaining the lack of urgency demonstrated by WTO negotiators.Given relatively low gains, the adjustment costs to which countries expose themselves when they change trade policies may loom larger than in the past. The modest overall gains would have quite different economic effects on different countries and regions. The biggest gainer is both China and Korea with gains ranging from 1.1 to 1.4 percent of GDP under different scenarios. More than half of these gains would be reaped within 5 years of implementation only.In conclusion the crunch has come: 2011 is a real dead line. If Doha fails, it seems inevitable that the WTO's slow decline will accelerate. If it succeeds, then victory will have been snatched from the jaws of defeat. Either way, serious thought needs to be given to future methods of negotiation. In these process, Korea needs to participate actively in the negotiation, particularly with a possible compromise on essential issues such as SSM and sectorals. -
Korean FX Rates Analysis During the Financial Crisis: Effects of Foreign Bond Investments and FX Hedged Foreign Fund
The global financial crisis, triggered by the subprime mortgage crisis in 2007, has put the Korean economy into the recession with financial market turmoil. This paper examines the role of foreigner's investment in bonds and the F..
In Huh et al. Date 2009.12.30
Financial policy, Financial systemDownloadContentSummaryThe global financial crisis, triggered by the subprime mortgage crisis in 2007, has put the Korean economy into the recession with financial market turmoil. This paper examines the role of foreigner's investment in bonds and the FX-hedged foreign equity fund as driving forces of KRW-USD exchange rate changes. Our empirical analysis using VAR (Vector Autoregressive) model reveals that the increases of both interest-rate arbitrage opportunity and the net asset value of foreign funds have negative relations with KRW-USD exchange rate, and vice versa. According to impulse responses, the two reasons account for about 40% of the exchange rate variations between 2008 and 2009. This significant result suggests policy implications that the authority's intervention in currency swap market and appropriate regulations on the portion of FX hedged foreign fund help stabilizing Korean FX market.
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Korea's Agricultural ODA Policy toward Africa
Currently over 3 hundred million people suffer from absolute poverty in Africa, which represents 40% of the population of the entire continent. Yet there is a bigger concern: it is highly likely that the population living in absol..
Young Ho Park et al. Date 2009.12.30
Economic development, Economic cooperationDownloadContentSummaryCurrently over 3 hundred million people suffer from absolute poverty in Africa, which represents 40% of the population of the entire continent. Yet there is a bigger concern: it is highly likely that the population living in absolute poverty will increase to 4 billion by the year 2015. In 2001, the international community adopted the UN's Millennium Development Goals (MDGs) to alleviate poverty and spur development in the world's poorest countries by 2015. However, it is predicted that Africa will fail to achieve many of the goals outlined in MDGs by the time given. There is a broad consensus that agricultural and rural development should be the priority in order to address the issue of poverty trap and initiate take-off economic development in African continent. It is because poverty in African is predominantly rural. More than 70 percent of the continent's poor people live in rural areas and depend on agriculture for food and livelihood. Without a developed industrial sector that can contribute to the national growth, agriculture plays a role as a key industry in most of African countries. Yet, subsistence farming remains the main agricultural activity in Africa. In many countries, the rural situation is marked by continuing stagnation, poor production, low incomes and the rising vulnerability of poor people. Furthermore, conditions prevailing in African agriculture are dismal. African farmers are vulnerable to increasingly volatile environments, land degradation, and suffer from limited market access and decreases in foreign aid. While Asia and Latin America raised food production dramatically by expanding irrigation facilities, developing new varieties of crops and increasing the use of fertilizers, Africa is still at a standstill due to lack of basic fundamentals and poor natural and socio-economic environment.
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Analysis of North Korea's International Economic Activities and Policy Implications
North Korea is in the midst of an economic crisis that began back in the 1990s. Though statistics indicate a cycle of fluctuation between growth and downturns not unlike other economies, the North Korean economy remains in a disma..
Myung-Chul Cho et al. Date 2009.12.30
North Korean economyDownloadContentSummaryNorth Korea is in the midst of an economic crisis that began back in the 1990s. Though statistics indicate a cycle of fluctuation between growth and downturns not unlike other economies, the North Korean economy remains in a dismal state.
The crisis that befell North Korea's economy stems from a number of reasons, but it was necessarily brought on by the combination of international conflict arising from the nuclear issue and inefficiencies associated with planned economy operating in a closed environment. Therefore, a fundamental solution lay in the simultaneous establishment of peaceful diplomatic relations and opening of the hitherto self-contained economy. This would make possible massive influx of international aid, which could be coupled with increased efficiency from reform and opening, leading to potentially rapid growth.(The rest is omitted) -
싱가포르, 말레이시아, 인도네시아 3국의 서비스산업 비교 분석
When a country's per capital GDP increases, it is usually accompanied by a corresponding increase in the proportion of the country's services industry in the economy as a whole. This is the pattern exhibited by countries that this..
Kitae Sohn et al. Date 2009.12.30
Industrial structure, Industrial policyDownloadContentSummaryWhen a country's per capital GDP increases, it is usually accompanied by a corresponding increase in the proportion of the country's services industry in the economy as a whole. This is the pattern exhibited by countries that this treatise examines in close detail; namely Singapore, Malaysia and Indonesia. Case in point, when Singapore's per capita GDP was US$50347.1 in 2008, the proportion of Singapore's services industry to its economy stood at 65.6%. Indonesia, on the other hand, had a per capita GDP of US$3705.1 in the same year and the proportion of the services industry was 38.3%, representing less than half of its economy and trailing far behind figures for Singapore. It should be noted that even when Singapore's per capita GDP were similar to Indonesia's current level, its services industry consistently represented over 50% of its economy, mainly due to the fact that Singapore is an urban city-state with extremely low comparative advantage in terms of agricultural production.
As for policies relating to the services industry, Singapore and Malaysia were identical in that both countries designated high-value services industries as one of their main vehicles for economic growth alongside manufacturing; the only difference being that Singapore initiated the policy earlier, as Singapore's per capital GDP was higher during comparable periods. Yet the government of Indonesia, at present, is not making any earnest efforts to have its high-value services industry assume the role as the engine of the country's growth. The Indonesian emphasis on labor-intensive manufacturing and exploitation of mining resources instead of the services industry, is somewhat justified in light of the country's economic development in terms of its per capital GDP or the level of Indonesia's social infrastructure.
The three countries are in different phases in terms of trade and conditions for investment in the services industry; with Singapore's services industry being nearly totally open to the outside world, as opposed to still-substantial barriers to trade and investment in Indonesia's services industry. On the other hand, all three countries are exhibiting a common pattern in that they are lowering their barriers in services as well as manufacturing industries, in response to the establishment of free trade as the firm basis of the global economy and recognition of the positive impact of free trade upon economic growth.
This treatise evaluates the level of economic development of the three countries(Singapore, Malaysia, Indonesia) through their services industries, and takes the analysis a step further in order to elicit key points and facts that will facilitate the entry of Korean firms into the various areas of the three countries' services markets including finance, distribution, transportation, and communications. Trade with the three countries already make up a significant portion of Korean investment into and trade with ASEAN, and it is likely to increase further when the Korea-ASEAN FTA goes into effect. This will create synergy between the real and services trade, as Korea makes inroads into services industries of the three countries in finance, distribution, transportation, and communications; which also form an important part of manufacturing process.
Though real trade is still predominant in trade between Korea and the three countries, opening of the services industry is expected to bring about an increase in trade in services. This would mean Korea's entry into services markets in ASEAN is actually predicated upon a full understanding of the services industries in ASEAN countries; and it is especially important that an understanding of the services industries of the three countries(Singapore, Malaysia, Indonesia) should be the basis for formulation of all entry strategies.
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Korea's Overseas Direct Investment in Latin America: Its Performance and Challenges
Latin America has recently been receiving attention as a new market for investment as a result of the region's economic growth, and for its importance as the treasure house of natural resources. The multinational corporations of a..
Kisu Kwon et al. Date 2009.12.30
Economic cooperation, Overseas direct investmentDownloadContentSummaryLatin America has recently been receiving attention as a new market for investment as a result of the region's economic growth, and for its importance as the treasure house of natural resources. The multinational corporations of advanced economies including the United States, EU, and Japan, and corporations from emerging economies like China and India are increasing their investment to take advantage of the 'Latin America Opportunity.' The investments of multinational corporations are diversifying from simple assembly production of electrical and electronic equipments, textile, and automobile to IT services and bio-energy. Also, investment goals are changing from simply securing the market to gaining a firm foothold in the global market, and/or R&D investment.(The rest is omitted) -
A Study on Japan's Low Carbon Strategy
'Low Carbon Society' is a keyword in the 21st century. Many developed countries are trying to transform their economy into low carbon society, which is defined as a society limiting the emission of green house gases to such a leve..
Sung Chun Jung et al. Date 2009.12.30
Industrial policy, Environmental policyDownloadContentSummary'Low Carbon Society' is a keyword in the 21st century. Many developed countries are trying to transform their economy into low carbon society, which is defined as a society limiting the emission of green house gases to such a level that there is no artificial harm to the climate system. Japan is one of those leading countries pursuing the value of low carbon society. Several visions and strategies were issued recently by Japanese government. These visions and strategies show that Japanese government has a strong will to change its society into low carbon society and at the same time to make use of climate challenges as a chance to boost economic activity.(The rest is omitted) -
The Development of Retail Industry in China and its Implications
China's retail industry has been growing rapidly since the liberalization of the distribution industry after China became a member of WTO. The increase of consumption due to the growth of disposable income affected the liberalizat..
Seungshin Lee et al. Date 2009.12.30
Economic cooperation, Industrial policyDownloadContentSummaryChina's retail industry has been growing rapidly since the liberalization of the distribution industry after China became a member of WTO. The increase of consumption due to the growth of disposable income affected the liberalization process as well. In addition, the Chinese government's policies and measures that expanded domestic demand and acceleration of urbanization also facilitated the growth of consumption and retail industry.(The rest is omitted)
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