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.)

The demand for service industry in India has been increasing recently with rising incomes. Furthermore, its weight and importance have grown and now accounts for 60% of India's GDP. In particular, knowledge-based service industry has risen as a new engine of development and has become the most important factor for improvement of productivity in the economy overall, by being used as a factor stimulating production for other industries as well. India's service sector is especially strong in the IT service sector, as made apparent by increase of the proportion of software and business service exports to 65.5% in 2007/8, up from 14.4% in 1980/1. The analysis shows that India's abundant professional manpower has played a key role for the recent development of service sector, including IT.(The rest is omitted)

Given are the findings of research based on the data of sociological surveys conducted in Moscow and Vladivostok in 2007 and 2008 among 46 companies of the Republic of Korea. A wide range of issues related to doing business in the Russian market is considered. Recommendations on working out optimum strategies of entering the Russian market are given. The present edition is designed for representatives of government institutions,members of foreign companies, and research workers.
Key words: survey, strategy, entry, incentive, Russian market, trade, investment, Korean companies.

Executive Summary

I. Introduction

II. The Measurement of Intra-Industry Trade and Export Variety
1. Grubel-Lloyd Index for Intra-Industry Trade
2. Hummels-Klenow Indices for Export Margins

III. Overview of International Trade of Japan with Korea in the Last Twenty Years
1. Exports and Imports
2. Japanese FDI into Korea
3. Intra-Industry Trade Between Japan and Korea

IV. Disaggregation of Japan-Korea Trade by Sub-regions
1. Prefecture Intra-Industry Trade
2. Prefecture Extensive Margins and Intensive Margins

V. A Deepening of Existing Trade or a Growth in Variety?
1. The Traditional Determinants of IIT
2. Extensive Margin and Intensive Margin on IIT
3. The Transformation of the IIT Index
4. The Data
5. The Empirical Results

VI. Discussion and Conclusion

References

This paper contributes to the existing empirical investigation of Japan-Korea international trade by providing new evidence of intraindustry trade between Korea and Japanese sub-regions. Taking advantage of a Japanese international trade dataset disaggregated by sub-regions, we calculate the Grubel-Lloyd intra-industry trade index for 41 regions of Japan with respect to Korea for the period between 1988 and 2006. By restricting the flows of intra-industry trade to sub-regions, the Grubel-Lloyd index is more likely to capture the effect of the fragmentation of production than the traditional index, which is based on the national level. By using the Japanese prefecture international trade data, it is revealed that intra-industry trade is still pervasive even when it is restricted to trade flows between prefectures and Korea. In intra-industry trade regression models, we introduce extensive and intensive margins of prefecture exports as new explanatory variables. We find that a rise in intra-industry trade is driven by the introduction of a new variety of exports, while intra-industry trade is discouraged by an increase in the trade value of products already exported.