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Policy Analyses
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Ukraine's Economic Reform and Foreign Investment Regime
Ukraine's Economic Reform and Foreign Investment RegimeHyongkun LeeEndowed with vast land and an abundant supply of natural resources, Ukraine possesses great economic development potential as a link between Eastern Europe, Russia..
Hyongkun Lee Date 1997.12.30
Economic reform, Foreign investmentDownloadContentSummaryUkraine's Economic Reform and Foreign Investment RegimeHyongkun Lee
Endowed with vast land and an abundant supply of natural resources, Ukraine possesses great economic development potential as a link between Eastern Europe, Russia, and countries bordering the Black Sea.
After Ukraine gained independence in 1991, its economy remained stagnant due to political chaos and the breakdown of cooperation among the CIS countries. Recently, however, Ukraine's economy has stabilized, receding by only 3.2 percent in 1997 compared to sharp drop of 10.0 percent in 1996. By creating an attractive atmosphere for investment, Ukraine boosted annual foreign direct investment (FDI) by 31.6 percent in 1997 to ＄500 million. Since 1992, Ukraine has attracted FDI totalling approximately ＄2.0 billion.
Since Korea and Ukraine established diplomatic relations in early 1992, cooperation at both the governmental and non-official levels has expanded repidly. Annual bilateral trade jumped by 40.6 percent in 1997 to ＄300 million. Furthermore, as of January 1998, Korean firms have injected a total of ＄25 million in FDI (permission-based, total six cases) since 1996, indicating that Ukraine has emerged as an important investment destination for Korean firms. -
Impact of Fiscal Decentralization on Central-Local Relations in China
Impact of Fiscal Decentralization on Central-Local Relations in ChinaWolla ParkThis paper intends to examine the impact of Chinese economic reform on central-local relations in order to gain a better understanding of the centrifug..
Wolla Park Date 1997.12.30
Economic reformDownloadContentSummaryImpact of Fiscal Decentralization on Central-Local Relations in ChinaWolla Park
This paper intends to examine the impact of Chinese economic reform on central-local relations in order to gain a better understanding of the centrifugal forces swirling in the Chinese political economy. Given that the fiscal decentralization is one of the defining characteristics of the post-Mao reforms, the paper focuses on reconstructing the patterns of fiscal relations between the center and the provinces over the last 20 years. The discussion consists of three main parts. First, an overall sketch of Chinese reform which may be summarized by the phrase "fengquan rangli," that is, to devolve central control over resources and decision-making power to local governments on the one hand and enterprises on the other, is presented. And it suggests that this decentralization reform has transformed the formerly coercive central-local relations into the negotiatory ones, in which the central and local governments are relatively independent actors in a more or less competitive partnership. Secondly, the evolution of the Chinese formal fiscal systems is discussed, with special attention to the various forms of central-provincial revenue-sharing contracts in the 1980s and the adoption of new sweeping fiscal reforms since 1994. Lastly, data is presented on the evolution of fiscal capacity of the Chinese state in order to whether and how the fiscal decentralization actually affected the fiscal decline of the central government and the restructuring of central-provincial relations. -
In Search of an Effective Role for ASEM: Combating International Corruption
ASEM has emerged as an important vehicle for linking Asia and Europe. This paper searches for an effective role for ASEM by suggesting ASEM to take up the contentious issue of combating bribery and corruption. This paper describes..
Jong bum Kim Date 1997.12.30
Economic cooperationDownloadContentSummaryASEM has emerged as an important vehicle for linking Asia and Europe. This paper searches for an effective role for ASEM by suggesting ASEM to take up the contentious issue of combating bribery and corruption. This paper describes the recent international movement to combat corruption against the backdrop of multilateral efforts to develop a framework for investment liberalization. In the process, it is argued that ASEM can play an important role by assisting the discussion on combating corruption in other multilateral bodies. This paper describes the current efforts at ASEM level to combat corruption, and proposes that ASEM should first take up the issue of combating international corruption before tackling domestic corruption issues. -
The Current Status and Prospects of China's Stock Market
The Current Status and Prospects of China's Stock MarketJongkeun KimThe Chinese stock market, created in 1990, has played a vital role in boosting the country's phenomenal economic development and high economic growth. Data publis..
Jongkeun Kim Date 1997.12.30
Capital marketDownloadContentSummaryThe Current Status and Prospects of China's Stock MarketJongkeun Kim
The Chinese stock market, created in 1990, has played a vital role in boosting the country's phenomenal economic development and high economic growth. Data published by the Chinese Stock Supervision and Management Commission, the stock market supplied 1.752 trillion yuan in aggregate capital in December 1997, equivalent to 50% of total investment in China. Specifically, class A shares accounted 1.715 trillion yuan and class B shares totaled $4.4 billion. As one of the main sources of capital to support economic development, the stock market is playing an increasingly important role. The Chinese economy may return to a stable development state, but economic growth is forecasted to at least 8%. Thus a stock market with a consolidated role is essential to the Chinese economy. Additionally, it is necessary for the stock market to adopt new roles in supplying capital efficiently and supporting reform of state-owned enterprises.
In such a fledgling stock market, such problems as implementating laws and regulations and educating domestic investors persist. The unresolved problems of transferring state and corporate shares, and integrating class A and B shares, hold the key to further development of China's stock market. This paper will analyze the current situation and the major problems in China's stock market, then discuss the role of the stock market in the reform of state-owned enterprises. -
International Tax Strategies for Korean Companies in the EU
The EU(European Union), covering a population of 372 million in 15 European countries, has emerged as the world's largest single trading block. In its efforts to create a completely barrier-free single market, the EU has embarked ..
Seong-Bong Lee Date 1997.12.30
Monetary policy, Overseas direct investmentDownloadContentSummaryThe EU(European Union), covering a population of 372 million in 15 European countries, has emerged as the world's largest single trading block. In its efforts to create a completely barrier-free single market, the EU has embarked on a program for economic and monetary union(EMU), scheduled to take into effect on January 1, 1999. Furthermore, the EU has been trying to harmonize tax structures between member countries to better serve the functions of a common market. There have already been several harmonization in the field of corporate taxation and VAT system. However, in order to induce more capital into their respective national economies, member countries within the EU are competing with each other through low tax rates or base.
The deepening of European integration raise crucial challenges for Korean companies with stake in Europe. In particular, the changes in corporate tax system in the EU are forcing Korean companies to establish and implement thorough international tax strategies. In this context, this study investigates the corporate tax system of 4 major overseas direct investment European countries of Korea, namely Germany, United Kingdom, France, and the Netherlands, as well as the tax harmization in the EU. Based on the analysis of tax systems in the EU and Korea, this study presents some international tax strategies for Korean companies investing in the EU. In addition, tax policy implication for reducing the tax burden of Korean TNCs are suggested in the end. -
Reform of State Owned Enterprises in Vietnam
In its transition to a market-oriented economy, Vietnam has recently focused on reforming its state owned enterprises (SOEs). Vietnam's state enterprise reform since the early 1980s has been a gradual and experimental process, shi..
Kwon Yul Date 1997.12.30
Economic reformDownloadContentSummaryIn its transition to a market-oriented economy, Vietnam has recently focused on reforming its state owned enterprises (SOEs). Vietnam's state enterprise reform since the early 1980s has been a gradual and experimental process, shifting from a centrally planned system to a market economy. Subsequent reforms aimed at creating incentives for economic efficiency has continued by promoting financial autonomy in SOEs. The results have shown a significant improvement in economic performance, especially in the industrial sector.
The Vietnamese government has revealed a sincere interest in equitization, despite pilot projects generally regarded as failures, and recently encouraged the establishment of General Corporations, a grouping of numerous enterprises under a single management. However, the private sector still consists primarily of small family firms and household units because of fundamental constraints stemming from government policies that give preferential treatment to SOEs.
This paper concludes that in order to achieve a market economy, Vietnam's state enterprise reform have to focus on eliminating bureaucratic practices still observed in SOEs and agencies that might stifle entrepreneurial spirit. -
Russia's FDI Environment and Korea-Russia Relations
The Korea Institute for International Economic Policy organized an international symposium on 'Russia's FDI Environment and Korea-Russia Relations' with the support of Korea-Russia economic association.This symposium gathered toge..
Chang-Jae Lee Date 1997.12.30
DownloadContentSummaryThe Korea Institute for International Economic Policy organized an international symposium on 'Russia's FDI Environment and Korea-Russia Relations' with the support of Korea-Russia economic association.
This symposium gathered together eminent economists and researchers from both countries in an effort to share visions and to intensify efforts for the two countries' economic cooperation. These proceedings are a collection of the lectures, papers and formal comments made by the speakers and discussants. -
Harmonization of Corporate Governance: OECD Discussion and it's Implication for the Korean Economy
Globalization is having a dramatic impact on the landscape of international business and corporate structure. Business corporations have now to adapt under a fuller exposition to the twin forces of globalization: the growth opport..
Yunjong Wang et al. Date 1997.12.30
Business managementDownloadContentSummaryGlobalization is having a dramatic impact on the landscape of international business and corporate structure. Business corporations have now to adapt under a fuller exposition to the twin forces of globalization: the growth opportunities offered by the global product markets, but also the financial market return standards and additional funding opportunities brought about by global capital markets. In this sense, corporate governance structures in advanced economies have recently shown a tendency to converge and harmonize.
The issue of corporate governance, until recently confined to academic discussions, has become one of key policy agenda. Following the 1995 Ministrial Mandate to undertake work on corporate governance, Organization for Economic Cooperation and Development (OECD) has engaged in extensive internal and external consulations on the suitable content of and format for such a work. After Multilateral Agreement on Investment is successfully completed in 1998, OECD is likely to launch a more active discussion on this issue.
Korea, as a member country of OECD, will have to participate in various OECD committees and work programs related to this important issue of corporate governance. By doing so, Korea will find a lesson how to reform Korea's corporate governance structure and strengthen international competitiveness of Korean companies. -
Economic Evaluation of Three-Stage Approach to APEC's Bogor Goal of Trade Liberalization
The objective of the Asia Pacific Economic Cooperation (APEC) forum, formed in 1989, has been to achieve comprehensive trade and investment liberalization in the region. APEC covers 18 countries throughout most of the Asia-Pacific..
Inkyo Cheong Date 1997.12.25
Economic opening, Trade policyDownloadContentSummaryThe objective of the Asia Pacific Economic Cooperation (APEC) forum, formed in 1989, has been to achieve comprehensive trade and investment liberalization in the region. APEC covers 18 countries throughout most of the Asia-Pacific region. Over the last six years, APEC has grown from an informal discussion group to a formalized organization, providing a framework for discussion of a broad range of economic issues. The leaders declaration from the 1994 APEC meetings (Bogor, Indonesia) sets forth the goal of free trade and investment in the Asia-Pacific region by 2010 for industrialized economies, and by 2020 for developing economies. Even though the accord is not a legal commitment, it is an important milestone.
We perform simulations with computational general equilibrium (CGE) models, described in detail in chapter III. CGE models have been used extensively to address the issues of trade liberalization and economic integration. Even though many authors suggest that trade liberalization in the Asia-Pacific area would accelerate development, there has been little research into the effects of such liberalization. This paper will be focused on the economic effects of post-WTO tariff cuts under five types of regionalism (discussed below) in the Pacific Rim.
In chapter I, the role of APEC in the world wide economy will be reviewed and APECs regionalism will be discussed. Next, the relationship between regional integration and the MFN principle under the WTO will be discussed and related to APECs non-discrimination principle. Chapter II covers the experimental design for the analysis of APEC trade liberalization. This chapter includes the URs trade liberalization. A verbal description of a CGE model will be provided in the chapter III, followed by the description of major parameters used for this study.
This paper also contains the interpretation of the simulation results in chapter IV. The first experiment is to study the effects of APECs own preferential trade liberalization (a closed FTA). APECs reduced tariffs can be offered to non-member nations free of any conditions (unconditional open regionalism), or APEC may require non-member nations to reciprocate with tariffs (conditional open regionalism). The second part covers APECs unconditional open regionalism. The next two experiments will be to examine what happens to the APEC nations and non-member nations when APEC adopts conditional open regionalism. APEC will adopt open regionalism, under which non-APEC nations are not discriminated against with respect to tariffs, as long as non-member nations reciprocate with tariffs of their own. In this paper, the world economy is disaggregated into 17 regions (countries). Of the 17 regions, 15 regions are APEC nations, and the remaining two regions are non-member nations of the European Union (EU) and the rest of the world (ROW), excluding EU and APEC nations. The third experiment is to assume that only EU will reciprocate when APEC reduces tariffs. In the fourth experiment, only the ROW will be assumed to reciprocate. This aspect distinguishes APEC from other regional agreements, and can be important in strengthening the multilateral trading system in that APECs open regionalism may contribute towards global trade liberalization.
The last simulation will be to study the economic effects of global trade liberalization, where APEC reduces tariffs and both the EU and ROW reciprocate. This should be interpreted as the results arising when both the third and fourth experiments are simultaneously performed; however, the effects of the last experiment may not represent the sum of the results of the third and fourth experiments because of the interactions among nations. -
Impact of Trade Liberalization under Alternative Scenarios
This paper evaluates economic effects of five scenarios for APEC trade liberalization, including preferential trade liberalization, unconditional liberalization, two alternative conditional MFN-based liberalization scenarios, and ..
Inkyo Cheong Date 1997.12.15
Free tradeDownloadContentContents
I. Introduction
II. Design of Simulation
III. The Model, Data, and Parameters
IV. Protection Rates
V. Economic Effects of Trade Liberalization in APEC
1. Real Income
2. Wage, Rental Rates, and the Terms of Trade
3. Trade Patterns
4. Industry Structure
VI. Conclusion
References
Appendix I : The Structure of a CGE Model
Appendix II : Simulation Results with Alternative Parameters
Appendix III : Concordance of Model Sectors to ISIC Sectors
국문 요약
SummaryThis paper evaluates economic effects of five scenarios for APEC trade liberalization, including preferential trade liberalization, unconditional liberalization, two alternative conditional MFN-based liberalization scenarios, and global trade liberalization.
APEC and global trade volumes increase substantially in all five scenarios, for both exports and imports. For example, under a preferential trade liberalization, export volumes by APEC economies increase by US$ 354 billion, compared to US$ 420 billion in the global scenario.
As in the case of trade flows, the gains in welfare as measured by gains in real GDP are the greatest in the global liberalization scenario and lowest in the APEC preferential scenario. The APEC region gains over $64 billion in income under preferential liberalization, while gaining $82 billion when global liberalization is achieved. Only in the case of preferential liberalization is there a decline in GDP outside the APEC region. In all other scenarios, APECs external partners experience a net benefit which grows to the extent that they join APEC in liberalizing.
This study suggests that while global free trade produces the most favorable results for APEC economies, unconditional liberalization by the APEC region captures the main part of the potential benefits for its member economies regardless of whether non-APEC regions reciprocate or not. The empirical estimates support the view that its core principle of nondiscrimination forms a sound basis for economic cooperation within APEC. The findings also suggest that member economies should promote the adoption by non-members of APEC liberalization initiatives through appropriate fora.
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