This study aims to address structural changes in the Japanese economy after the prolonged recession revealed by the global economic crisis. Such changes paved the way for the opposition party's landslide electoral victory over the 'perennial ruling party' for the first time in Japan since 1955. In addition, they provide some lessons for Korea, in that Koreans have witnessed phenomena similar to Japan's in many respects. This also shedslight on the expenditure aspect of Japan's economy, that is, stagnation of household consumption under circumstances of rising dependence on exports.
From 2002 to 2007, Japan experienced a boom driven by unprecedented level of exports, attributable mainly to the devaluation of the Yen and low wages of Japanese workers. The so-called 'centennial stagnation' of Japan's economy following the global economic crisis was a sign that structural limits of the country had been exposed; and that Japan, the world's second-largest economic power where household consumption accounts for more than half of the country's GDP, while exports only consisted about 13% of Japan's average annual GDP during the period although Japan was heavily reliant on them. In this context, Japan's unprecedented export-driven boom during the period was in fact a fragile one and was also the cause of the centennial stagnation that started with the global crisis in 2008. The long-lasting stagnation of household consumption stemmed from sluggish increases in wage levels, yet the other side of the coin was that low wages were the very factor making Japanese firms morecompetitive in terms of prices of its exports.
The household consumption has been slowed down, first of all, by deterioration of wage income levels in Japan. In particular, decrease in wage income stands in stark contrastto increases in incomes of firms, an increase without parallel in history of the Japanese manufacturing sector by virtue of the export boom. The more basic reason can befound in the fact that most Japanese firms conducted large-scale layoffs involving regular employees. They were replaced by temporary workers whose wages are even lower and level of employment protection so weak as to make dismissal much easier than regular workers. The wage level of the total workforce also dropped due to retirement en masse of baby-boomers whose wage levels were at the top of wage profile. Future uncertainty such as employment anxiety or lack of security for the aged further increased inactive household consumption. The failure of Japanese government policy was also among reasons contributing to such uncertainty.
This study provides Korea with some lessons, in the form of examples both good and bad. First, Korea needs to engage in efforts to minimize the volatility of external variables, for stable export growth. Second, it is inevitable for Korean firms to keep wage income levels steady in order to maintain their volume of sales revenues through promotion of household consumption. Finally, Koreans should prepare, for the coming of the 'aged society', where the number of persons more than 65 years of age occupies 14% or more of the total population which is happening in Korea faster than anywhere else in the world, even though Korea's fiscal deficit level is a bit better than Japan's.

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This paper focuses on effects of UN's economic sanctions on exports and imports of North Korea. The analysis is based on applying Difference-in-Difference methods to gravity model. The result of the empirical analysis indicates that UN's economic sanctions against North Korea in 2006 did not have any significant effect on its exports and imports. This paper suggests four aspects of policy implications based on the empirical results.

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FTAs including KORUS FTA and others, negotiated after the announcement of U.S.A's New Trade Policy in May 2006, have incorporated an Article about Environmental Agreements. The Article asks the Parties to the FTAs to adopt, maintain, and implement laws, regulations, and all other measures to fulfill its obligations for the covered Multilateral Environmental Agreements(MEAs).
The covered MEAs are seven MEAs which Parties to the various FTAs are also parties to: (a) CITES(Convention on International Trade in Endangered Species of Wild Fauna and Flora) (b) Montreal Protocol on Substances that Deplete the Ozone Layer, (c) MARPOL(MARine POLlution) 73/78, (d) Ramsar Convention(Convention on Wetlands of International Importance especially as Waterfowl Habitat), (e) CCAMLR(Convention on the Conservation of Antarctic Marine Living Resources), (f) ICRW(International Convention for the Regulation of Whaling), (g) IATTC(Inter-American Tropical Tuna Commission).
CITES and Montreal Protocol apparently have specific trade obligations included in them. IATTC and CCAMLR are either using or tdeing to mobilize trade measures to achieve their own environmental goals. The other three MEAs, however, have no direct relationship with trade. The inclusion of these three MEAs in trade agreements such as KORUS FTA may be the outcome of the simultaneous support of both trade and environment.
Parties to the KORUS FTA also committed not to lower environmental standards. In addition, KORUS FTA is actually following NAFTA's lead, after NAFTA opened new ground by providing specific language on its relationship to a number of MEAs. In cases where NAFTA rules and the obligations of certain trade-related MEAs come into conflict, the latter shall prevail, provided that the measure chosen is at least consistent with NAFTA obligations.
KORUS FTA also stipulated that in the event of any inconsistency between a Party''s obligations under the KORUS FTA and one of the covered agreements, the Party shall seek to balance its obligations under both agreements. But this shall not preclude the Party from taking a particular measure to comply with its obligations under the covered agreement, provided that the primary purpose of the measure is not to impose a disguised restriction on trade.
This shows that regional agreements can act as grounds for creating innovative solutions to trade and environmental issues, where the WTO has made scanty progress. And it highlights an important recent phenomenon that trade agreements can serve as the foundation for international cooperation on non-trade issues such as the environment.
As a result of binding commitments strengthening ties between MEAs and FTAs promoted by the U.S.A., a new community is emerging which is strongly committed to natural conservation or environmental protection. And those countries that have signed an FTA with the U.S.A. after the adoption of the New Trade Policy are expected to have indirect effects on the MEAs covered.
In general, the expansion of regional trade agreements like these will be helpful for sustainable development and conservation, for example, of marine resources as well. This situation could, however, erode the strength of the multilateral system where small countries like Korea have negotiating strength.

Preface

sessionxx I.Denuclearization of the Korean Peninsula and Policy Responses of the International Community for North Korea's Market-Opening

1.Denuclearization of the Korean Peninsula and Policy Responses of the International Community / Charles L. Pritchard
Introduction
Background
The April Missile Launch
Missile Moratorium Primer
Violation or Not
UNSC Presidential Statement
The Nuclear Test
The Way Forward
Conclusion

2.East Asia Peace Community and the Korean Unification / Seungjoo Baek
What is East Asia Peace Community?
Current Northeast Conflicts
East Asia Peace Community and the Unification of the Korean Peninsula
Conclusion

3.North Korea Market Opening and Response of theInternational Community /Yuzhi Qiao
Introduction
Why do North Korea's Reform and Opening Have Limitations and Cannot Be Sustained?
What External Terms Let North Korea to Continue the Reform?
Response of the International Community
Summary and Concluding Remarks

sessionxx II.Prospects of Relations between North Korea and Neighbor Countries in the Post Kim-Jeong-Il Regime and Policy Responses of US, China, Russia and Japan toward the New Regime

4.Prospects for U.S.-North Korean Relations in the Post Kim-Jeong-Il Regime and U.S. Policies toward North Korea / Scott Snyder
Introduction
Three Big Challenges Facing A Post Kim-Jeong-Il Leadership: Implications for U.S.-DPRK Relations
North Korea's Succession Management Process: Implication for U.S.-DPRK Relations
Conclusion

5.China-North Korea Relations in the Post Cold War Era: Review and Prospect / Huji Zhao
Similar Political Ideas and Values Alliances
Changes in Political Ideas and the Weakening of Alliances
The Lack of Common Strategic Objectives and Weakening of the Alliance

6.Prospects of Russia-DPRK Relations in the Post Kim Jeong Il Regime Time and Russia's Policies toward North Korea / Alexander Zhebin
Introduction
Russia in Search of a New Paradigm of Korean Policy
Russia and Nuclear Problem in Korea
Russia and Inter-Korean Relations
Russia's Security Guarantees to the DPRK: Pros and Cons
Russia-North Korea Relations: Pragmatism and Stability
Conclusion

7.Prospect to the Normalization of the Relations between Japan and DPRK / Narihiko Ito

Appendix

1. Discussion Papers for the Part I
2. Discussion Papers for the Part II

Programs

Despite the peaceful environments in most parts of the world, the security tension on the Korean peninsula has increased following North Korea's recent nuclear test. For peace and security on the Korean peninsula and in the East Asian region as well, two critical factors are emphasized. First it is critical for North Korea to relinquish mass destruction weapons which threaten other countries with their peace and security. Second, it is essential for North Korea to adopt a market-oriented economy system for substantial development. The international community faces a significant challenge inducing North Korea to be disarmed and to transit to a market-oriented economy. By being faced with North Korea's second nuclear test, this international conference on North Korea's is timely and important for discussing policy implications.

Message from the President
On Publishing the 2008 KIEP Annual Report
Mission and Brief History

Ⅰ. Overview of KIEP Projects and Activities

1. Overview of Projects
• Outline and Current State of Research Projects
• International Macroeconomics and Finance
• Mid-and-Long-term Trade Strategies
• FTA/DDA Policy
• FDI/ODI
• Regional Economic Studies
• International Development and Cooperation
• Other Policies

2. Affiliated Bodies and Research-related Activities
• Center for International Development Cooperation
• DDA Research Center
• National Center for APEC Studies
• Korea's Official Pool of International Economists (KOPIE)
• SNU-KIEP EU Center
• KIEP Beijing Office
• Korea Economic Institute (KEI) in Washington, D.C.
• Joint KIEP-SAIS Research
• International Seminars and Policy Councils
• KIEP Economic Analysis Model and DB Project
• Asian Economic Panel (AEP) and Publication of Related Academic Journal
• Reinforcement of Regional Economic Studies Project
• Training of Regional Specialists Through Joint Ventures Involving KIEP and
Graduate Schools of International Studies
• Strengthening of Cooperation with Research Institutes Abroad
• Information Management
• Publications
• Informatization
• Public Relations

Ⅱ. Review of 2008 Projects

1. Research Trends in 2008

2. Basic Research Tasks

Multilateral and Bilateral Trade Policy Amidst Changes in the Global Trade Environment
• A Study on Korea's Strategies for Mode 4 Negotiations in Trade in Services:
Implications for Independent Professionals
• Analysis of Main Texts and Commitment Schedules of
China's Previous FTA Service Agreements
• Comparative Analysis of FTA Agreements by Korea, China, and Japan, and
Policy Implications for a Northeast Asia FTA
• The Reformation of the WTO System and Korea's Response
• Empirical Analysis of Factors Affecting Korea's Trade Structure and Current Account
• Improvement of Trade Adjustment Assistance Program as a Social Safety Net
• Korea's FTA Rules of Origin: Review and Future Strategy
• An Analysis on the Characteristics of Japan's EPAs and
Policy Implications on Korea-Japan FTA

Responses to the Changes in the International Macroeconomic Environment
• Major Issues on APEC Economic Cooperation and Policy Implications
• Crisis and Internationalization of the Korean Won II
• Market-Oriented Economy Education in Transition Countries and
Applicability of the Education Experience to North Korea

International Capital Flows
• Development Strategies for Higher Education in an Era of Globalization
• Cross-border M&As and Implications for Korean Direct Investment Abroad
• Changes in the Pattern of International Capital Movements and
Financing of the Current Account Deficit of the United States

Regional Studies and Study of Measures for Cooperation with Various Regions
• China's Consumer Market
• Korean Firms' Investment and Future Agenda in Russia
• Korea's Economic Cooperation Strategies toward Latin America:
A Perspective from Its IDB Membership
• The Assessment of Korea's Capacity as Foreign Aid Donor
• Korea's Systematic Approach of ODA Policy toward Africa

3. Periodical Publications
Journal of International Economic Studies (JIES)
World Economy Update

Ⅲ. Research Projects in 2009

1. Summary of Research Projects in 2009

2. Basic Research Goals in 2009

3. Basic Research Tasks
• The Reorganization of the International financial Order in the Aftermath of
the Subprime Mortgage Crisis and the Implications Thereof
• The Maximization of FTA Effects, and the Direction of
Domestic Policy & Restructuring Efforts
• Outlook for the Development of China's Distribution Service Industry and
Analysis of the Use Thereof-With a Special Focus on Telecommunication Sales
• Analysis of the Current Tasks and Policy Measures
Related to the Actualization of an East Asian FTA
• The Influence of Foreign Capital on the Korean Bond and
Derivatives Markets and Policy Implications Thereof
• Macroeconomic Stabilization Policies in the Face of Global Shocks
• Analysis of the Economic Influence of the DDA and the Current State of
Domestic Policy as Pertains to the Efficient Implementation Thereof
• Economic Impact of an APEC FTAAP and Korea's Future Strategy
• The Development of Korea's Business Service Industry Amidst Changes
in the Global Environment: With a Special Focus on the IT Service Industry
• Analysis of Barriers to Service Trade in Major Countries
and the Policy Implications Thereof
• Analysis of the Domestic Investment Environment as Pertains to
the Promotion of FDI and the Policy Implications Thereof
• Japan's Low Carbon Society Strategy
• Conceptualizing Korea-Russia Economic Cooperation
in the Era of Strategic Partnerships
• The Implications of the United States and Canada's Green Growth Strategy
• Assessment of Korean Enterprises' Investment in Central and
South America and the Implications Thereof
• Study on the Effective Implementation of a KOR-ASEAN FTA –
With a Special Focus on Commodity Trade
• Conveying Korea's Agricultural Development Experiences to Africa
• Analysis of the Korea-China-Japanese Service Industry Trade Structure and
of Their Respective FDI Environments
• Analysis of Obstacles to North Korean Economic Cooperation and the Easing Thereof
• Korea's National Strategy with Regards to the Rise of China
• Analysis of the Effects of a KOR-EU FTA and the Future Direction of EU Trade Policy
• World Economy under the G-20 (mid & long-term trade strategy)

Ⅳ. Appendix

A Glimpse at KIEP
• Organizational Structure
• Main Research Focus
• Staff

In 2008, those of us at KIEP had designated four main research topics we deemed most pertinent to current circumstances, and engaged in twenty major projects in line with those topics. These include negotiations for liberalization of the services market and other multilateral trade issues in response to WTO regime reforms and other changes in the world trading environment; economic cooperation in APEC and other regional issues; and current bilateral trade issues including free trade agreements. KIEP conducted research to address changes in the macroeconomic environment surrounding Korea, such as changes the internationalization of the Korean won as a result of Korea's increasing prominence on the international economic scene, and presented basic resource materials and provided directions to prepare for changes in North Korea. Policy responses to global inequalities in light of the current rapid transnational movement of capital were forwarded, in addition to measures to facilitate Korea's entry into foreign markets and attract foreign investment. In recognition of rising demand for research on the world's regions, KIEP did not limit itself to providing data on Korea's major trading partners such as the US or China, but made efforts to provide basic data on Central/South America and Africa that had hitherto been lacking.

없음

As of 31 December 2008, Russia initiated two anti-dumping investigations and imposed one measure with respect to Korean goods. In light of expanding trade between two countries with Korea posting a trade surplus since 2006, Russia is expected to more frequently use its anti-dumping mechanism against Korean products. The Federal Law on Safeguard, Anti-dumping and Countervailing Measures Relating to the Importation of Goods (2003) is Russia's key anti-dumping legislation. Its provisions largely reiterate WTO's anti-dumping disciplines and include some new elements such as a public interest and anti-monopoly clause.
This study examines substantive and procedural aspects of Russia's anti-dumping law and practice, compares them with WTO rules and explores some implications for Korea from both private and public perspectives.

I. Introduction
II. Summary of Lee and Jeong's Study (2006) to Analyze Initial Conditions of North Korean Economy
III. Analysis on Initial Conditions of North Korean Economy
IV. Comparison of non-economic Initial Conditions between North Korea and Eastern European States
V. Policy Suggestions for North Korea
References
Appendix

This study compares the initial conditions of North Korea with East European countries by using the principal components analysis. Based on statistics from December 2007, the initial conditions of North Korean economy are better than countries like Turkmenistan, Tajikistan, Moldova, and Ukraine in the early 90's, but worse than Albania, Croatia, Hungary, Poland, and the Czech Republic. It is very costly for North Korea to initiate rapid transition, because of strong socialist characteristics that pervade its economy. Therefore, it is more likely that North Korea will promote a slow and gradual reform, considering the initial conditions of its economy and political barriers.

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Despite the recent global financial crisis, outward foreign direct investments (OFDI) of Korean enterprises have recorded gradual increases, while other multi-national companies were less than enthusiastic concerning their OFDI. However, OFDI also gives rise to concerns of contracting domestic investment out to other countries as well as negative impact on domestic employment and exports. Therefore, review of cases from other countries as to how OFDI influences domestic economy is both important and necessary.
This study focuses on the effects of OFDI on exports in the case of Germany. Existing studies on German OFDI are few and far between, at least compared to the numerous studies on the US and Japan. In Korea, as elsewhere, only few studies on German OFDI have been done. Yet, as it was found that Germany exhibits similarities to Korea in economic structure, this study has chosen Germany as the subject of its analysis. Such similarities are as follows: Germany's strength is in the manufacturing industry rather than its services sector, and exports form the mainstay of its economic growth. Moreover, Germany, who is a member of the European Union (EU), is exploiting the economic integration system within the EU for their OFDI and foreign trade. Likewise, for the Korean economy, also in the process of promoting East Asian economic integration such as the Korea-ASEAN FTA, studying Germany's case may help Korea anticipate potential implications.
This study applies an integrated methodology, combining literature survey, statistical analysis, and empirical analysis of OFDI and trade data in the German manufacturing sector. It was observed that German enterprises have augmented their OFDI to new member economies (NMEs) that joined the EU after 2004. International production/distribution system established in these areas brought about international division of labour with the NMEs, ultimately increasing German intermediate goods exports. As a result, incremented off-shoring derived from OFDI positively influenced the competitiveness of the German companies, decreased the commodity price, and enhanced trade. The empirical analysis revealed that German OFDI contributed significantly to its exports. Furthermore, it was discovered that sales of the subsidiary company abroad and the export of the parent company at home complement each other.
As we can see in the German case, overseas expansion of Korean enterprises can lead to increased exports as well as make long-term contributions to the Korean economy and employment in Korea. Therefore, to improve corporate competitiveness of Korean companies and also promote domestic investment and employment, it is necessary to support aggressive efforts to attract foreign direct investment and to maintain a positive view on OFDI of the Korean companies.

International negotiation on Climate Change is now under way through the UN negotiation process. In 2007, the parties agreed to devise an ambitious and effective international response to climate change. 2009 is a crucial year in international efforts to address climate change. International society is now trying to form a new climate regime through the United Nations Climate Change Conference in Copenhagen, to be held from December 7th to the 18th of this year.(The rest is omitted.)