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Policy Analyses
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What can North Korea Learn from Transition Economies' Reform Process?
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 t..
Hyung-Gon Jeong Date 2009.09.25
Economic reform, North Korean economyDownloadContentI. 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
AppendixSummaryThis 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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The Relationship between Outward Direct Investment and Exports in the German Manufacturing Sector
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. H..
Kyuntae Kim et al. Date 2009.08.30
Trade structure, Overseas direct investmentDownloadContent-SummaryDespite 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 Trends in Post-2012 Climate Change Negotiations and their Implications
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 ..
Sung Chun Jung et al. Date 2009.08.30
Multilateral negotiations, Environmental policyDownloadContentSummaryInternational 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.) -
India's Professional Manpower and Growth of Service Industry : Implication for Development of Knowledge Service Industry of Korea
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 ..
Soon-Cheul Lee et al. Date 2009.08.20
Labor market, Industrial policyDownloadContentSummaryThe 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) -
Entry Strategies to Russian Market: Korean Companies' Experiences
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..
Jae-Young Lee et al. Date 2009.07.13
Economic cooperation, Overseas direct investmentDownloadContentSummaryGiven 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.
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Intra-Industry Trade between Japan and Korea: Vertical Intra-Industry Trade, Fragmentation and Export Margins
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 internationa..
Yushi Yoshida Date 2009.06.30
Trade structure, Trade policyDownloadContentExecutive 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
ReferencesSummaryThis 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. -
The Nordic experiences in aid untying: policy implications for South Korea
This paper explores the Nordic experiences in aid untying. In an attempt to draw implications on Korea's ODA, the authors review the evolution of aid untying polices and practices of Sweden, Norway, and Denmark, that are often col..
Yul Kwon et al. Date 2009.06.20
Economic development, Economic cooperationDownloadContentSummaryThis paper explores the Nordic experiences in aid untying. In an attempt to draw implications on Korea's ODA, the authors review the evolution of aid untying polices and practices of Sweden, Norway, and Denmark, that are often collectively called as Nordic donors. The possible membership in the OECD Development Assistance Committee (DAC) in 2010 will pose challenges as well as benefits to Korea. As the Aide Memoire on the Admission of New DAC members specifies, any country applying for DAC membership must implement the DAC Recommendation on Untying ODA to the Least Developed Countries (LDCs) and Heavily Indebted Poor Countries (HIPCs). With the ratio of untied bilateral ODA substantially lower than the DAC average, Korea faces an urgent challenge to further untie its aid.(The rest is omitted) -
Firm Heterogeneity in the Choice of Offshoring: Evidence from Korean Manufacturing Firms
Using firm-level data on offshoring of Korean manufacturers, the paper examines the relationship between firm heterogeneity and the probability of adopting offshoring. The results of the paper suggest that firm productivity may no..
Hea-Jung Hyun Date 2009.06.10
Business management, Overseas direct investmentDownloadContentExecutive Summary
I. Introduction
II. Data Description
III. Model
IV. Empirical Results
V. Conclusions
References
AppendixSummaryUsing firm-level data on offshoring of Korean manufacturers, the paper examines the relationship between firm heterogeneity and the probability of adopting offshoring. The results of the paper suggest that firm productivity may not be an important determinant for Korean firms' offshoring decision. Firm's global sourcing decision may rather depend on other characteristics such as factor intensity, R&D intensity, ICT level, and affiliation with foreign markets, when industry specificity is controlled for. -
Using Panel Data to Exactly Estimate Income Under-Reporting by the Self‑Employed
The income of the self-employed is often assumed to be understated in economic statistics. Controversy exists about the best method for estimating the extent of under-reporting and about the resulting measures of the size of the u..
Bonggeun Kim et al. Date 2009.06.10
Labor market, Tax systemDownloadContentExecutive Summary
I. Introduction
II. Methodology
III. Empirical Analysis
IV. Discussion and Conclusions
References
AppendixSummaryThe income of the self-employed is often assumed to be understated in economic statistics. Controversy exists about the best method for estimating the extent of under-reporting and about the resulting measures of the size of the underground economy. This paper refines a method developed by Pissarides and Weber (1989) and uses discrepancies between food shares and reported incomes of the self-employed and other households to estimate under-reporting by the self-employed. In contrast to previous studies our panel data methodology distinguishes income under-reporting from transitory income fluctuations of the selfemployed, and provides an exact estimate of the degree of underreporting rather than just an interval estimate. Using panel data from Korea and Russia we estimate that 38 percent of the income of selfemployed households in Korea and 47 percent of the income of Russian self-employed households is not reported.