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  • Consumer Responses to Price Shocks of Wine Imports in Korea
    Consumer Responses to Price Shocks of Wine Imports in Korea

    The main purpose of the study is to develop a methodology that divides consumers' responses to FTAs or commodity taxes into quantitative and qualitative margins, which cause exogenous price changes for some specific goods. The use..

    Chul Chung et al. Date 2021.07.30

    Trade policy, Free trade
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    1. Introduction

    2. Literature Review
    2-1. Research on the Effects of FTAs and Consumption in Korea
    2-2. Research on Demand Analysis

    3. Methodology

    4. Empirical Analysis
    4-1. Data
    4-2. Empirical Results

    5. Conclusion

    References
    Summary
    The main purpose of the study is to develop a methodology that divides consumers' responses to FTAs or commodity taxes into quantitative and qualitative margins, which cause exogenous price changes for some specific goods. The use of unit values as a dependent variable for consumers' qualitative choice, unlike the usual method of utilization of unit values as a proxy variable for market prices, showed that qualitative response to price changes exists and its size is significant. The methodology of separating and estimating qualitative responses to income changes as in economic crises is also presented, and the empirical analysis using this methodology showed that much of the existing income effects were qualitative responses. As a key result, the price elasticity of -1.178 estimated by the usual demand model based on a single commodity assumption is reduced to -0.712 for the quantitative margin only, and the qualitative margin is the remaining -0.466, accounting for more than a third of the overall response. The significant degree of qualitative response estimates suggests that policy makers and researchers should consider qualitative response as an important factor when analyzing the effectiveness of FTAs, especially on consumption.
  • KIEP가 함께 한 한국의 FTA 20년
    20 Years of FTAs in Korea with KIEP

    Korea Institute for International Economic Policy Date 2021.07.30

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  • 미국 바이든 행정부 시대 미중 전략경쟁과 한국의 선택 연구
    A Study on the US China Strategic Competition in the Era of Biden Administration: Policy Recommendations for South Korea

       This study aims to understand the US-China strategic competition in the Biden era and explore future strategy and policy options for Korea. The US-China strategic competition has recently increased in science and tech..

    Heungkyu Kim et al Date 2021.07.20

    Political economy, International politics United States of America China
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       This study aims to understand the US-China strategic competition in the Biden era and explore future strategy and policy options for Korea. The US-China strategic competition has recently increased in science and technology, military, and geo-strategic terms on a global scale. This competition has provided Korea with an opportunity to rise as a great power, together with various challenges in diplomatic, security, and economic terms. This process will naturally come with certain difficulties. Korea could face the constant pressure of making choices. The consequences of the strategic competition are uncertain. It accompanies a paradigm shift in which numerous events and behaviors cannot be explained and predicted with given norms, patterns, or practices.

    It is imperative to evaluate the possible consequences of the US-China strategic competition and its implications for South Korea. The following four scenarios are possible:

    - A new form of Cold War
    - Strategic competition with complementary cooperation
    - Strategic cooperation with complementary competition
    - US-China coevolution or compromise

    This study evaluated each scenario and its implications for South Korea.

       Noteworthy is that two broadly accepted assumptions must be reexamined under these new circumstances. First is the assumption that the US-China strategic competition will be protracted. The second assumption lies in the belief of US superiority over China and the solid US-ROK alliance as a constant factor. In reality, we could consider a scenario where China assumes regional supremacy over East Asia. Regardless of any wishes on our part, there is a need to consider all these assumptions as variables, and to remain flexible and creative when formulating counter-strategies.
       This study tentatively suggests strategy to strengthen the ROK-US alliance to the global level. The ROK-US alliance remains the pillar of the ROK’s diplomatic and security policies. However, the ROK must also respect its strategic cooperative partnership with China. More importantly, the ROK has worked hard to establish active collaboration with like-minded countries. The ROK should not fall into the trap of rashly choosing one country over the other, and instead opt for a strategy which minimizes possible costs rather than maximizing potential benefits.
  • 북한 대외 채무의 쟁점과 과제: 국제 규범과 해외 사례를 중심으로
    Issues and Tasks Regarding External Debt of the DPRK: Centering around International Rules and Cases Abroad

       The Democratic People’s Republic of Korea (hereinafter DPRK) holds external debt against the rest of the world yet has not made its position clear on how to repay this after declaring moratorium in 1984. The magnitud..

    Yoojeong Choi and Halin Han Date 2021.07.08

    Economic integration, North Korean economy North Korea
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       The Democratic People’s Republic of Korea (hereinafter DPRK) holds external debt against the rest of the world yet has not made its position clear on how to repay this after declaring moratorium in 1984. The magnitude of the debt subject for repayment is increasing annually as the interest for arrears has accumulated. The issues regarding approaches that the DPRK would take in regards to repayment of its debt were raised when Russia relieved it from its duties for repayment of external debt against the former Soviet Union in 2012. In light of the situation in 2018 and 2019, when rapprochement between the DPRK and the United States was burgeoning, once the former shows its willingness to open its economy and to enter the phase of reformation, it is reasonable to believe that the discussion on how to resolve the mounting external debt of DPRK would be expedited when US-DPRK relations enter this new phase. 
       Against this background, the external debt of DPRK will likely be one of the primary diplomatic and economic matters facing the Republic of Korea in the longer perspective, albeit not an imminent issue to be taken care of. Therefore, this study examines the current state of external debt incurred by the DPRK and international norms on how to manage this, as well as cases abroad to identify the tasks at hand for the Republic of Korea’s government to respond to various scenarios on changes in circumstances on the Korean Peninsula.
       More specifically, it analyzes international standards, cases in other countries, and policy measures to consider when resolving the DPRK external debt issue, separating itself from previous ones in the following four features. First, it covers the estimates of the magnitude of the external debt that the DPRK holds. Second, it delves into international rules on resolving debt. Third, it suggests means to relieve the external debt of DPRK under two different scenarios, one of which is when both Koreas are united, and the other where the two economies are integrated but not the countries themselves. And last but not least, it offers a systematic overview on tasks for both Koreas’ administrations once the DPRK initiates transition to a market economy and the process of economic integration of the two Koreas. Most of the related literature prior to 2020 covered the measures to relieve external debt of the North Korea postulating a situation where the two Koreas are united. In this study, however, a scenario where the two Koreas are united is briefly reviewed, with the primary focus placed on the premise of the two Koreas coexisting with economic cooperation in progress. 
       The details of each chapter are as follows. First, Chapter 2 reviews all the statistics on the external debt of the DPRK. There are various sources of estimates on how much external debt the DPRK holds against its counterparts, showing different ranges and figures depending upon the source. This study aggregated statistics open to the public based upon the counterparts, sources and types of external debt. Chapter 3 covers the international rules that manage the relief/cancellation of public and private debt as well as the international laws on state succession. Chapter 4 examines cases abroad, categorizing the countries into three subgroups: ① countries in transition (Vietnam, Myanmar), ② united countries (Germany, Yemen), and ③ China. The case of China is extremely intriguing as it holds the largest claims against the DPRK and has become one of the biggest creditors for low-income and developing countries recently. This study, unlike the previous literature, takes China into account as one of the biggest creditors of the DPRK, a key variable to consider in the future. The final chapter, Chapter 5, discusses potential measures to relieve/cancel the DPRK’s external debt under two different scenarios for two Koreas’ geopolitical situation. It concludes with the policy tasks for the administration of the Republic of Korea, bearing in mind two different scenarios of geopolitical circumstances surrounding the Korean Peninsula. 
       This study confirms that the DPRK external debt can vary depending on the inter-Korean relationship, negotiations of denuclearization, its gaining membership at international financial institutions, and measures to relieve/cancel debt against China. First, if the DPRK finds itself in the transition process and tries to relieve the debt on its own, restoration of the US-DPRK relationship and joining the IMF will be prerequisites. This is because in order for the external debt to be rescheduled via the Paris or London Club, it is a must to go through programs imposed by the IMF. In order to do so, the US needs to lift its sanctions specifically prohibiting the DPRK from joining the international financial institutions, and the DPRK must be able to show its willingness to transform its country. Second, it is predicted that if the two Koreas are united under an extreme emergency, then it is most likely the Republic of Korea would succeed the external debt of the DPRK, in accordance with international rules and practices. However, the magnitude of the debt that the administration would take on and measures on how to deal with them would hinge upon the Republic of Korea’s tactics towards its neighboring countries. 
       This study substantiates that the DPRK’s external debt against China will be a major factor that would affect not only the process of relieving this debt but also on procurement of potential financial sources after it opens its economy. In light of recent examples of how China handled its claims against developing countries, it would be imperative to determine when to resolve the bilateral debt between China and DPRK within the process of restoration of the US-DPRK relationship. At that point, bilateral talks between the DPRK and China, which potentially would improve economic circumstances within DPRK thanks to a supply of new funds or drastic debt cancellation from China, would challenge the DPRK’s attempt to reinstate its status as a normal nation. 
       It is believed that the outcomes of this study will be able to provide insights to the government of the Republic of Korea when there is significant progress in denuclearization of the DPRK and an attempt to normalize its relations with the rest of the world. 
  • 현안대응자료 요약 모음집(2021 상반기)
    현안대응자료 요약 모음집(2021 상반기)

    KIEP Date 2021.06.30

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  • 한ㆍ중ㆍ일 소재ㆍ부품ㆍ장비 산업의 GVC 연계성 연구
    A study on GVC linkage of materials, parts, and equipment industries in China, Japan and Korea

       China, Japan and Korea (CJK) have been competing and cooperating in many fields in the material, parts and equipment industries due to their geographical proximity and similarity in industrial structure. However, non-..

    Hyung-Gon Jeong et al. Date 2021.06.30

    Trade structure, Industrial policy China Japan
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       China, Japan and Korea (CJK) have been competing and cooperating in many fields in the material, parts and equipment industries due to their geographical proximity and similarity in industrial structure. However, non-economic factors such as COVID-19 and sanctions against Korea by Japan and China pose obstacles to economic cooperation among CJK. Therefore, this study derives policy implications for the efficient management of global value chains (GVCs) in the materials, parts and equipment industries by comparing the supply chain structure of Korea’s materials, parts and equipment industries with Japan and China. The main contents of this study consist of four parts. 

       First, this study analyzes changes in the trade structure and mutual connections between Korea, China and Japan in the materials, parts and equipment industries, from 2000 to 2018.
       Over the past 20 years, Korea’s materials, parts and equipment industries have grown significantly. During this period, the top industries for Korean exports/imports in the materials, parts and equipment  sectors have been electronic components (1st), chemicals and chemical products (2nd), and primary metal products (3rd) ‒ areas of high competition with Japan and China in the global market. 
       The biggest change in Korea’s materials, parts and equipment industries came in 2018, when the import and export rankings of textile products and non-metallic mineral products sharply declined, and the transportation machinery parts and semiconductor display equipment industries rose in their ranking. These changes reflect the fall in production of general-purpose technology industries in Korea, accompanied by an increase in the proportion of industries requiring advanced technology and specialization in related industries. General purpose technology products have changed to a trend of importing from China or third countries.
       Trade in China’s materials, parts and equipment industries also grew rapidly during the same period, and imports and exports of general-purpose technology products increased significantly. The top trade items of China’s materials, parts and equipment industries are electronic products, electrical equipment parts, chemicals and chemical products. China shows very high competitiveness in textile products, but when compared to other industries in terms of export and import data for 2018, these were found to have declined significantly in terms of size and competitiveness against 2001 levels.
       Japan’s materials, parts and equipment industries are still highly competitive. However, the share of industries related to general-purpose technology has been reduced, and only industries specializing in advanced technology fields remain visibly competitive. The remarkable changes in the Japanese materials, parts and equipment industries over the past 20 years have led to a decline in the stature of the textile industry, and the status of the semiconductor display equipment industry has risen far higher than in the past.
       Meanwhile, the characteristics of imports and exports between Korea and China, Korea and Japan, and Japan and China were identified by classifying the materials, parts, and equipment industries into 231 fields. Trade between Korea and China in the materials, parts and equipment industries is concentrated in 20 items, each accounting for more than 1% of the import and export items. As for Japan’s exports in materials, parts and equipment industries to China, there was no detectable phenomenon of specific items dominating exports. The characteristics of Japanese imports from China are similar to those of Korea, but differed in that no items account for more than 1% of imports from China in the equipment industries.

       Second, the study examined the competitiveness of materials, parts and equipment industries of CJK by comparing the share of imports and exports of materials, parts, and equipment industries, and calculating Revealed Symmetric Comparative Advantage Index (RSCA), Export Similarity Index (ESI), and Trade Specialization Index (TSI) for each country.
       When looking at the share of imports and exports of the materials, parts and equipment industries by CJK in the global market, the rise of China (3.2% in 2001 → 14.4% in 2018) is prominent. On the other hand, Japan’s share of exports declined, while Korea’s increased. A field in which Japan occupies an overwhelming position in the export market of the global materials, parts and equipment industries is the semiconductor display equipment industry. The Korean semiconductor display equipment industry relies on overseas sources for over 90% of its procurement, indicating the need for caution of dependence on Japan in the field.
       When analyzing RSCA, Japan had the highest competitiveness, but the gap with Korea has been narrowing since 2016 after peaking in 2011. China continues to show a large gap with Korea and Japan.
    Korea-China, Korea-Japan, and Japan-China ESI has steadily increased over the past 20 years. During the same period, ESI between Korea and China (56.4 → 66.9) increased the most. ESI between Korea and Japan (57.5 → 61.3) and ESI between Japan and China (55.0 → 60.2) also increased.
       When examining TSI data, Korea’s competitiveness in textile products, rubber and plastic products, and semiconductor display equipment has weakened compared to the beginning of 2000. All other 13 fields show improved competitiveness. China has improved its competitiveness in all 16 fields. On the other hand, Japan’s competitiveness in the primary metal products, semiconductor display equipment, and measurement equipment industries has improved, while its competitiveness in the other 13 fields has weakened.

      Third, the study analyzed the changes and characteristics of GVCs in the materials, parts and equipment industries of CJK using the World Input-Output Table.
       Taking into account the structural characteristics of production and trade taking place from 2010 to 2018 in the materials, parts and equipment industries of China, Japan and Korea, the production-induced effects (feedback effects, spillover effects, domestic induced effects, etc.) generated under global value chains in the three nations were calculated. It was also analyzed how each country’s production and trade induce other countries’ production and trade. The analysis results are as follows.

       1) The backward linkage effect of materials, parts and equipment industries in CJK was significantly different in 2018 compared to the year 2000, leading to a significant change in GVC from the perspective of production technology.
       2) It was observed that the level of production-induced effects to partner countries in the materials, parts and equipment industries of CJK has also changed significantly.
       3) The globalization of the economy among CJK is having a significant impact on the GVCs change in the materials, parts and equipment industries. In addition, Korea’s import-dependent GVCs linkage with China and Japan is becoming relatively deeper than that of China and Japan.
       4) All three nations show deeper GVCs linkage of production technology, focusing on key export products such as electrical equipment and electronic parts, primary metals and metal processing products, textile products, general machinery parts and equipment, and transportation machinery parts. Through this, it was confirmed that a horizontal division of labor and competition systems are being established not only in the global market but in partner markets as well.
       5) Measuring the inducement structure of production and trade in the materials, parts and equipment industries of CJK shows that the spillover effects of all three countries increased in each other, indicating the formation of interdependent GVC linkage.
       6) The direction of CJK spillover effect changed from “China → Japan, Japan → China, Korea → Japan” in 2000 to “China → Korea, Japan → China, Korea → China” in 2000, signifying a rise in China’s influence.
       7) When examining the results of direct and indirect decomposition of the spillover effects among the three countries, indirect spillover effects were found to be quite small.
       8) Overall, Japan’s materials, parts and equipment industries are highly concentrated in domestic production and show a relatively low level of production-induced effects for other countries.

       Fourth, GVC linkage was verified through a survey of materials, parts and equipment companies. The survey was conducted on 3,260 materials, parts and equipment companies during January 2021, and 502 valid samples were obtained.
       The importance of China and Japan was once again confirmed as a result of a survey on the need to reorganize the supply chain of the materials, parts and equipment industries in Japan and China caused by COVID-19 and diplomatic issues. The results indicate it will be difficult for a new form of GVCs to replace Japan and China for the time being.
       The importance of Japan and China as trading partners is still high, and there is low possibility of changing sources of procurement from Japan or China. In the end, despite many restrictions due to non-economic issues, Japan and China remain important partners for Korean’s materials, parts and equipment companies. Therefore, the government needs to take this situation into account and actively engage in diplomatic efforts for a win-win approach with China and Japan.
       However, CJK represent one of the most sensitive regions to non-economic shocks such as natural disasters and disputes between the United States and China. Therefore, it is necessary to shift from the existing cost- and efficiency-based global value chains (GVC) management to a rational GVC management based on supply chain stabilization.
       As the trend of strategic weaponization is expected to continue gaining strength in the core materials, parts and equipment industries, it is necessary to move away from monopolistic supply chains and pursue a strategy for multi-polarization of the supply chain, and reasonable decoupling from countries where potential risks exist.
       In addition, domestic self-reliance should be promoted in fields with high foreign dependence, such as the semiconductor display equipment industry. Also, most companies in the materials, parts and equipment industries are small and medium-sized enterprises (SMEs) greatly lacking in terms of  technology development and market dominance, meaning that measures are urgently needed to address this concern.

       Finally, considering the pace of development in China’s materials, parts and equipment industries over the past 20 years, the gap in competitiveness of the materials, parts and equipment industries in CJK will be greatly reduced, and the GVCs of China-centered materials, parts and equipment industries are expected to show significant advances. It will be necessary to prepare countermeasures by the government and companies accordingly.
       The materials, parts and equipment industries in Korea should transition from general-purpose technology to more specialized and advanced technology. Towards this, the policy proposals in this report, based on an analysis of competitiveness and corporate satisfaction with government policies, merit careful consideration.


    정책연구브리핑
  • 아세안 지역 한류콘텐츠 활성화 방안
    Revitalization of Hallyu Content: ASEAN Region’s Perspective

       As people’s interest in Korean popular culture is expanding around the world, the trend of spreading Korean Wave contents is changing. After the period when dramas and movies led the popularity of the Korean Wave, in..

    Jinwoo Choi et al. Date 2021.06.23

    Economic development, Economic relations India and South Asia
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       As people’s interest in Korean popular culture is expanding around the world, the trend of spreading Korean Wave contents is changing. After the period when dramas and movies led the popularity of the Korean Wave, interest and consumption in other genres of Hallyu content such as webtoons and animations are also increasing. In addition, Korean popular culture from Northeast Asia such as China, Japan, and Taiwan in the past to North America, South America, Europe, the Middle East, and Africa. In particular, ASEAN regions, including Vietnam, Indonesia, and the Philippines are also gaining spotlight as a forward base for the Korean Wave. In addition to this, the spread of the Korean Wave is evolving from the conventional method of exporting completed cultural products to a method of simultaneously disseminating the world through digital platforms. In addition to the classic method of determining the export price per episode of a drama or movie, a new entry pattern is emerging. For example, the majority of Korean drama is sold on Netflix, and Netflix has tried the so-called “binge-watching” method, which allows consumers to watch a comfortable amount at a convenient time by providing many Korean dramas. In the era of COVID-19, while each country is struggling to produce and distribute new cultural contents, Korean Wave content is seeing a significant reflection effect by quickly making full use of overseas expansion strategies suitable for the era of digital platforms. As such, the Korean Wave is facing a new phase in many ways.
       Therefore, in the face of the rapidly changing digital platform era, this study aims to raise the awareness on the necessity of preparing a policy for the continuous expansion of Korean Wave contents centered on the ASEAN region. The ASEAN market is a large-scale content market showing rapid growth as well as an economically and politically important diplomatic target area for Korea. In order to continue and expand the consumption of Hallyu content in this region, it is necessary to review the competitiveness of Korean Wave content based on an understanding of local contents consumption status and institutional conditions. Accordingly, this study raises the necessity of preparing new policies for the Korean cultural industry in response to the demands of the times in line with the potential of the ASEAN cultural content market. In addition, with the rise of Korean Wave 3.0, this study aims to prepare policy support measures for stabilizing the cultural industry and increasing the expansion of the content field into overseas markets.
       The subjects of this study are as follows. First, spatially, among ASEAN member countries, six countries, Vietnam, Philippines, Thailand, Malaysia, Indonesia, and Singapore, were selected as target countries for analysis. Brunei, Cambodia, Myanmar, and Laos were excluded because of the limitations of the Korean Wave consumption survey and the fact that the size of Korean Wave exchanges and their own cultural industries were relatively small compared to the selected countries. Second, with regard to the genre of cultural content, the focus was on six areas: K-Pop, broadcasting (drama and entertainment), film, animation, webtoon, and gaming. Third, in the analysis of each country's content genre, we paid attention to three major aspects, such as planning, licensing, and distribution.
       Meanwhile, the study utilizes various approaches such as analyzing the audience aspect in the light of the new media environment and conducting expert interviews with those who have experience in the Southeast Asian market, unlike previous studies that showed a tendency to focus on local market status surveys related to the advancement of Korean Wave content to the Southeast Asian market. In particular, the digital ethnography technique was applied to analyze the cases of Indonesia and Singapore. Based on this research approach, researchers tried to derive policy directions and support tasks that can continue reciprocal exchange along with continuous consumption of Hallyu content. 
       The results of analyzing the regional characteristics of six countries in the ASEAN region and the current status of Korean Wave content consumption are as follows. First, Vietnam's cultural content industry is expected to continue to grow based on its demographic structure with a large proportion of young people, open foreign policies, and ICT policies including e-commerce and 5G commercialization. Control factors such as content regulation in online spaces such as the Cyber Security Act, regulations such as “conditional investment field” in foreign investment exist, but the potential of the cultural industry also exists as can be seen in cultural industry policies such as “2020-2030 Vietnam Cultural Industry Promotion Strategy” and broadcasting policies related to digital transformation, among others. It can be seen as an active Korean Wave consumer destination, with co-productions and IP exports continuing in the field of broadcasting and entertainment, co-production of remakes and theater advances in movies, and localization such as local audition programs and discovering local artists in music.
       In the Philippines, the proportion of young people and children who are active in Internet use in the total population is large, and the government is actively pursuing digital transformation, and consumption potential is increasing as the economy continues to grow. Although the Foreign Investment Act and the domestic industrial protection policy are being implemented, the digital transformation policy is rapidly being implemented in the broadcasting sector. Hallyu content is are recognized in the broadcasting area, leading to attempts of localization through remakes or production of Filipino broadcasting programs using Korean materials, and music being a representative part of Korean Wave contents, idol groups with Filipino members are being nurtured. In the film field, it is a country where joint film production is attempted.
       Thailand has a high level of awareness and consumption of Hallyu cultural content. The Korean Wave was formed amid favorable conditions, including Korea emerging as Thailand's major economic cooperation country and growing interest in the Korean language in Thailand. The demand for reproduction of Korean Wave content based on the Thai context is high, and the Korean Wave is consumed in various fields such as dramas, movies, and music. In particular, as Thailand is a representative Korean Wave consumer among Southeast Asian countries, a localization strategy that actively reflects Thailand's peculiarities is required.
       Compared to other Southeast Asian countries, Malaysia has a higher income level and diversification of consumption trends, which has a high potential for the growth of Korean Wave cultural contents. However, it is necessary to closely examine its Islamic culture and different cultural lifestyles and regulations. Dramas, movies, music, webtoons, and games all show interest in the Korean Wave, and in the case of K-pop, they are actively consuming Korean Wave content by creating their own cultural community. Accordingly, there is a need for a plan to increase the business cooperation model by enhancing the cooperative relationship between the two governments.
       Indonesia has recently been regarded as the country with the most attention among the Southeast Asian markets. Indonesia is a large population country and has the peculiarity that most of its cultural contents are produced in local languages, but the investment of Korean companies is active and its potential as a content market is highly appreciated. However, despite the democratic system, there were restrictions on freedom of expression such as online defamation and blasphemy, and as the world's No. 1 Muslim population, conservative society caused controversy over the Korean Wave. In particular, Korean dramas are popular with all classes, and Korean-style web dramas are being produced locally. The music sector is also very popular with the Korean Wave, as it actively appoints K-pop stars for local corporate marketing. In the case of movies, CGV is advancing into the theater industry, and webtoons have gone beyond the popularity of domestic webtoons, and LINE webtoons are applying a system to discover local authors. What is distinctive is that “influencers” are remarkable, and they are emerging as the leading roles in civilian diplomacy in recent years. 
       Singapore is a multicultural society with a multilingual, multi-religious, and multi-ethnic population in the background, and has developed mobile and internet infrastructure. It is a country with high literacy and purchasing power for overseas cultural contents including Korean Wave content by revitalizing cultural consumption. The government's active support policy is in progress to increase its own content production capability and infrastructure, but there is also the ambiguity of media content regulation and censorship. In particular, it is one of the countries that respond quickly to Korean Wave content as competition intensifies on the OTT(over-the-top) platform. Therefore, it also plays a role as a “test bed” for global competitiveness of Korean Wave contents. As it has an English-based global fan culture and serves as a base for performing arts in ASEAN, it is also necessary to pay attention to the consumption trend of K-pop music.
       As a result of analyzing the current status of the Korean Wave contents market in Southeast Asia and the cultural industry policies and social cultures of major countries, the infrastructure such as platforms and movie theaters of Korean contents companies have been established, but it is linked to the limited aspects of foreign investment. Therefore, rather than co-investment or collaboration, IP-oriented exchanges including format exports have been mainly formed in recent years. Also, although the popularity of the Korean Wave is high, it has tended to attract attention mainly to artists and Hallyu stars. This was confirmed in in-depth interview analysis with experts with experience in the Korean Wave content market in Southeast Asia. Overall, the market potential of the ASEAN region is very high, but due to local production conditions, IP exports or indirect advances are being attempted rather than co-production methods, and more recently, the expansion of the OTT market has been identified as a major issue. In addition, compared to the movie, broadcasting, and music genres centered by large private companies, the government's support policy is effective for indirect entry using platforms such as the webtoon genre, and direct entry of small and medium-sized enterprises appears to be very limited due to the structure of the Korean Wave contents ecosystem.
       Based on the above analysis, this study suggested the following policy directions and activation plans. First, the relevant government ministries and public institutions should establish the principle of “reciprocity” and adjust the tension between the two seemingly conflicting trends of “market” and “exchange,” while supporting the Korean Wave content projects in the ASEAN market from a mid- to long-term perspective. It is necessary to prepare support measures for each genre to secure high-quality IP with a strategic roadmap for supporting Korean Wave contents. Strategies for this can be “raising public awareness and interest in ASEAN member countries,” “expanding exchanges between the two governments and ministries,” “creating a virtuous cycle of Korean Wave content ecosystem,” and “a mutual cooperation between the private sector and the government by genre.” In addition, due to various constraints in this study, on-site interviews could not be conducted. Accordingly, this study suggests that a more comprehensive and specific research be carried out in the future as a follow-up project of full-scale field research, as well as the continuation of ethnographic research. 
  • 포스트 코로나 시대 아프리카 ICT 국제개발 협력수요 및 한국의 협력방안
    Analyzing the Demands of ICT International Development Cooperation in Africa and Developing New Strategies for Africa ODA in the Post-Covid Era

    This study seeks to understand the changes in lifestyles affected by the global Coronavirus pandemic that began in early 2020 in African countries. It uses various research methods and pursues a new strategic direction of the Kore..

    Yeongchul Choi et al. Date 2021.06.21

    Economic relations, Economic cooperation Africa Middle East
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    This study seeks to understand the changes in lifestyles affected by the global Coronavirus pandemic that began in early 2020 in African countries. It uses various research methods and pursues a new strategic direction of the Korean Official Development Assistance (ODA) policy using ICT in response to such change. It is believed that the use of Korea’s remarkable ICT in the fields of public administration, welfare and medicine, agriculture, finance, and education could increase the effectiveness of ODA for Africa in the post-Covid era, and a strategic direction is therefore proposed.
    For the research objective above, this study will use the following research methodology. First, statistical data using domestic and foreign Covid-related statistics and databases are to be used. This includes the statistical data published by domestic and foreign organizations, such as OECD, IMF, World Bank, WHO, KOICA, ITU, and the African Union.
    Second, books, articles, and online data are to be used. Specifically, with regard to online data, data obtained by internet searches, YouTube videos, and African news will also be analyzed. To analyze the situation of how the lives of the African residents have changed in the post-Covid era, YouTube videos will be analyzed. The content of analysis will reflect the system dynamics model for a prediction of demand in Chapter 4.
    Third, surveys and interviews will be conducted on African students. Since it is difficult to visit Africa due to the pandemic, written surveys and interviews using Zoom will be conducted on African students currently studying in Korea as a countermeasure. The results will be used to predict, verify, and supplement the changes in the African social and economic life in the post-Covid era.
    Fourth, social network analysis, AHP (Analytical Hierarchy Process), and system dynamics are to be used. As a method of ascertaining the African resident’s social and economic demands in the post-Covid era, social network analysis using news articles of the African internet news and tweets will be used. The result of network analysis will be used in the setting of the model by system dynamics. Recently, foreign researchers have conducted more precise methodology research through a combination of social network analysis and the system dynamics method. No such attempts have yet been made in Korea. Thus, an integrated system dynamic method will be used in this analysis. Five specialists with experience in ICT ODA projects or research on Africa will be selected, to conduct a specialist analysis regarding the achievements of the projects performed so far and future priorities of ICT ODA. Furthermore, the ICT demands based on social and economic demands in each field will be apprehended and system dynamics will be used to use this for setting the direction of policies.
    The spatial scope of this study included 54 countries on the African continent. Although all of these 54 countries will be dealt with, 7 countries (Ghana, Mozambique, Uganda, Ethiopia, Rwanda, Tanzania, and Senegal) which are the core countries of ODA partnership with Korea will be dealt with in more detail. However, the third core countries of partnership were newly selected in the process of conducting the study. The newly selected countries are Egypt, Ghana, Rwanda, Senegal, Ethiopia, Uganda, and Tanzania, with Egypt newly selected in place of Mozambique. However, this study will use the existing 7 countries as the key subjects.
    The scope of time of this study will generally use the African ODA-related statistics of the past 10 years. However, since the effects of the Covid-19 pandemic will differ greatly from the pre-Covid era, the statistics predicted after 2020 will be primarily analyzed, with particular focus on 2021-2025, the period of focus of the new CPS (Country Partnership Strategy).
    As the scope of content, the international development cooperation activities of the government related to the African ICT (Information and Communication Technology) will be included. That is, the activities of the KOICA, as well as the ODA projects of central government organizations and district governments are included. In this regard, ICT refers to the project included in Information and Communication (ICT, 22040) of the CRS (Creditor Reporting System) code prescribed for the submission of aid-related reports from the DAC (Development Assistance Committee), the committee that manages aid organizations within OECD countries, to aid donor countries. Accordingly, when comparing the scale of ICT ODA of each country, the projects included in this code were classified and applied. Furthermore, during ODA projects in Korea, ICT is not considered an independent classification system, and supported by being included in the projects of agricultural development, public administration, welfare, and education. To resolve this problem, KOICA grants a marker from 0 to 2 to classify the degree of inclusion of the ICT in the ODA project. Accordingly, the projects that have been granted 1 and 2 were applied to the analysis of this study by being classified as ICT ODA projects.
    Meanwhile, although ICT-related activities of the private sector are an important factor, this study focuses on how to approach the changes in life brought by the Covid-19 pandemic in Africa in terms of Official Development Assistance (ODA) activities. In terms of ODA, the role of ICT and the pandemic in Africa, cases in which ICT has been applied in each field of ODA, estimated ICT demands of each field of ODC, an evaluation of Korean ODA that applies ICT, and the future direction of ODA policies that use ICT will be analyzed.
    A summary of the content and conclusion of this study are provided below.
    The changes in demands in relation to ICT ODA in Africa after the Covid-19 pandemic can be summarized as follows. First, in view of 2020 in Africa, there is a possibility of a reverse growth of -3% or more in terms of economic growth, and a loss in GDP of 140 billion to 180 billion dollars is expected. Such loss is expected to have a negative effect in all fields within the society. In addition, there will be changes in international organizations depending on the development of vaccinations and treatments, but it will likely take until at least 2024 to recover, and it is expected to cause many great and small effects. Second, based on the results of the analysis, it is expected that the field that will be the most affected by Covid-19 is the welfare field, and the agriculture and education fields will also be greatly affected. Third, in Africa, it is likely that minorities will be greatly affected due to a lack of ICT infrastructure. Because of this, it is expected that the poor, the disabled, the elderly, migrants, the displaced, and homeless will be extremely affected, and that the number of deaths within these groups will increase. Fourth, in view of the social and economic changes in Africa, it is expected that the role of ICT will be important. Meanwhile, assistance in the welfare field will need to increase, as a sector that requires urgent assistance in the short-term, and in the mid-to-long term, it is expected that support for the construction of ICT infrastructure and the nurturing of manpower will follow.
    The leverage of ICT ODA policies through a causal map analysis in response to such changes in demands is considered below. In this regard, the leverage of policies refers to a means of policies that can greatly increase the effects in response to core problems. First, the importance of the demand of incorporating ICT using medical information and telemedicine. As displayed through a causal map analysis, an effect of a virtuous cycle is achieved in a relationship of incorporation of ICT in telemedicine -> digital work -> number of digital service users -> informatization index -> medical response capacity -> number of deaths. In this process, ICT can greatly contribute to the incorporation of the method of telemedicine and medical information. Second, it is expected that the need of applying ICT in all fields of social life will greatly increase. As shown in the causal map analysis, the degree of use of ICT in each field may affect an increase in the number of digital works, and again pass through the internet supply rate to achieve the effect of accelerating the use of ICT in various fields, particularly welfare, agriculture, public administration, and education. Third, the need of an active distribution of suitable technologies that use ICT. Internet supply and the number of personal smart phone users will increase, but for African countries, the demand of suitable technologies based on ICT will increase due to a lack of ICT-based technologies, and thereby the possibility of the creation of employment may also increase. It is determined that the supply of various types of technologies that use ICT among suitable technologies will be needed in Korea. Fourth, an increase in the demand of digital agricultural technologies. As shown in YouTube analysis and interview analysis, as the opportunity of face-to-face contact decreases in the agricultural field, the demand of non-contact work will increase, which will lead to the need for text services in farming and farm produce, and the use of information on crops. This will then lead to an effect on farming income and GDP, thereby needing a consideration of an increase in the need of incorporating ICT in the agricultural field.
       Fifth, the need of an increase in the opportunity of education by ICT. An increase in the possibility of infection will lead to a reduction in the opportunity of face-to-face contact, which will affect ODA projects and lead to the opportunity of ICT-based facilities and ICT-based education. That is, this will produce an increase in the role of ICT in the education field. However, since ICT-based education infrastructures are not yet well-established in African countries this will be a task that requires time. Sixth, the need of ODA for the supply and expansion of the internet. When internet supply increases, it will ultimately be connected to the informatization index. This process accompanies an increase in the number of online education users and the number of digital service users. Seventh, the need for a capacity to respond to border quarantine stations between African countries. The need to reinforce the capacity of weak quarantine facilities and border workforce in taking action with quarantines at border quarantine stations is required according to the spreading of Covid-19. To achieve this, the use of ICT will be needed.
       The achievements of Korea’s ICT ODA projects performed in Africa so far were evaluated largely using two methods, and the results of such evaluation are as follows. First, the matters that are pointed out the most by evaluation reports on previously studies of African ICT ODA includes insufficient analysis on the feasibility of the local environment in the project formation stage, the problem of project delay in the initiation stage, the problem of sustainability due to the problem of maintenance and repairs of ICT, the problem of applicability based on a lack of local infrastructures, and the problem of a lack of connection with private sectors. Meanwhile, the combined score of evaluating the specialists involved in the projects so far is approximately 67 out of 100, which is relatively poor. The nurturing of ICT business has the lowest score out of the types of ICT projects, and the dispatch of ICT volunteer groups has the highest score.
    In addition, in view of the post-Covid situation, the fields with relatively high scores in terms of need, feasibility, and ripple effect are the project types, such as the construction of ICT infrastructure construction and ICT system distribution.
    The conclusions of this study are summarized as follows.
       With regard to ODA fields, the prioritized field of the support of ICT ODA in Africa in the post-Covid era would be welfare and medicine, followed by agriculture and public administration. Upon combination of the analysis results through AHP analysis and simulation by specialists, the budget could be distributed into approximately 28% in the welfare and medical field, approximately 20% in the agriculture field, approximately 18% in the public administration field, approximately 17% in the emergency aid field, approximately 12% in the education field, and approximately 5% in the technology and environment field. Of course, it is not necessary for such distribution of the budget to be followed strictly, but it would be necessary to establish priorities and take the distribution of the budget into consideration. An ODA must be established two years prior by the N-2 rule, and be based on the PCP and the demands of the recipient country, and thus, it may be difficult to apply these rules on the supplier. However, when the demands of the recipient country contest with one another, such distribution ratio may be applied, and considering the future optimization of effect, it will be necessary to review such direction when establishing or revising a new CPS for African countries.
    The distribution ratio would also be important for each type of project that could optimize achievements considering the score of achievements of each type of project so far, the ripple effects, feasibility, and the need in the post-Covid era in each business sector. This is because there is a need to consider the difficulty of visiting the sites of projects in the post-Covid era, the need for an effort to enhance the quality of life according to new demands of the residents at the project site, the applicability of ICT to the site, and the ripple effect in the post-corona era.
       The optimum function value was derived and the resource distribution ratio optimized by the Monte Carlo simulation was derived. This is the process of deriving the optimum objective function value that increases the achievements scores by considering the related variables (need, feasibility, ripple effect) in a condition (with the total amount being identical) that is restricted by the same resources. The result of the analysis proposes that the type of project that requires the most distribution of resources is the field of ICT system supply, requiring approximately 52%, followed by 25% in the construction of ICT infrastructure, 8% in ICT education and training, 8% in ICT consulting, 5% in the dispatch of ICT volunteer groups, 2% in invited training, and a very low distribution in the nurturing of ICT business. This result displays a difference from past distribution ratios of resources. That is, the difference between the current distribution ratio of resources and the past distribution ratio of resources is significant in that it proposes satisfactory achievements.
       This analysis result, to a degree, is consistent with the AHP analysis performed by specialists. In addition, considering that it is difficult to visit Africa and invite specialists to Korea due to restrictions created by the pandemic, this selection of projects would be feasible. It is estimated that adjusting the types of projects based on this distribution ratio of resources would result in an approximately 9-10% enhancement compared to previous achievements.
       The details for effectively initiating the basic direction are proposed below.
       First, prospective ICT projects in each field that could be applied in the core partnership countries were established. These projects are one example, and may be applied considering the properties of each countries. These projects include the construction of a government-hospital information sharing system for handling the Covid-19 pandemic, an African ICT venture education and incubating support project to lead the untact economic system, the development of e-learning contents for middle school students, a capacity reinforcement project for the construction of a safe mobile banking environment, a cyber security specialist nurturing and occupational training project, smart farm educational center construction and capacity reinforcement project in the African region, electric commerce application development contest, robot introduction project for handling coronavirus in African national hospitals, ICT infrastructure reinforcement project for constructing the mobile healthcare environment, and, among things, a smart quarantine system project at ICT-based borderline quarantine stations.
       Second, it will be necessary to initiate ICT-based suitable technology projects in Africa in addition to direct ICT projects. To effectively initiate such projects, the so-called 'ICT Suitable Technology Support Center' should be established in such organizations as universities in Korea to perform the role of a platform. This organization merely need to perform the function of matching patents (approximately 2,000,000 currently usable cases) that have expired and can be used by anyone according to the characteristics of the relevant country, and to support the commercialization of such patents in the countries. ICT-based suitable technologies have significance in that Korea ranks 4th in the world in intellectual property rights, and in incorporating technology to suit the level of the recipient countries.
       Third, the active use of multi-bi project methods. In preparation of the difficulty of local visits, selecting and initiating the multi-bi project method that use international organization may be an alternative means for projects. The ratio of multi-bi projects among the cooperation projects in Korea as of 2018 is 9.7%, compared to the OECD DAC average of approximately 14%. Based on this, it will be necessary to review the active use of the multi-bi method rather than the method of direct local initiation.
       Fourth, there is a need for the active use of consultant training and video conferences. Since it will be difficult to initiate projects through local visits by the Korean project managers due to pandemic restrictions, it will be necessary to actively consider the method of educating local consultants and using them. To achieve this, it will be necessary to prepare a means of cooperating with universities and relevant research institutes that educate and nurture related specialists and actively use such local specialists. This requires an approach in terms of the organizations that have knowledge related to the work of the local offices, the talent pool of those with work experience in the main universities, related research institutes, and other international organizations in the individual countries of Africa, the conclusion of an MOU for the use of manpower between related organizations, the reinforcement of the capacity of these talents, the wage system, and the human resource management, such as their incentive policy. In addition, there is a need for non-contact communication methods by activating video conferences such as Zoom, and monitoring the sites through such means.
       Fifth, the conversion into program-focused means and terms related to the modification of the core collaborating countries will need to be considered. The third core partner countries to be applied will partially change from the second countries as stated in the introduction section, and the national partnership strategies (CPS) will also be newly prepared. This study was conducted based on the second core partner countries. However, there would be no significant differences in terms of the applicability of the proposed content and the overall standards of African countries. It is also determined that application to the newly selected core partner countries would be possible by reflecting the properties of the relevant countries.
       In addition, so far, ODA projects have been focusing on individual projects. However, it is determined that the ICT ODA project would be better if converted into a focus on organically connected programs than individual one-time projects in terms of effect.
  • 포스트 코로나 시대 대중남미 협력 방안: 의료 및 방역 부문을 중심으로
    Towards Enhanced Medical Cooperation between Korea and Latin America in the Post-Corona Era: Focusing on K-Quarantine and Digital Healthcare

       While the world has struggled to cope with the Covid-19 pandemic, the Republic of Korea has not only survived the pandemic, but utilized this as an opportunity to enhance its international reputation through swift and..

    Keumjoa Choi et al. Date 2021.06.21

    Economic relations, Economic cooperation Latin America
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    Summary
       While the world has struggled to cope with the Covid-19 pandemic, the Republic of Korea has not only survived the pandemic, but utilized this as an opportunity to enhance its international reputation through swift and skillful control of the measures. This success story has widely spread across the globe making headlines in the major news media. The Korean quarantine system, characterized by the three Ts (Test-Trace-Treatment), represents the importance of quick response by the authorities concerned and the use of information and communications technology (ICT) to trace suspect cases.
       This study is basically composed of three parts: the first part examines the mechanisms of transmission of the virus in some Latin American countries (Brazil, Argentina, Mexico, Peru, and Ecuador); the second part deals with the development prospect of the medical industry, focusing on its digital transformation in the post-Covid era; and the last part presents the mode of cooperation with the Latin American medical sector.
       More than anything else, this study examines variables that are assumed to have affected the spread of the virus in Latin American countries: measures taken by the government to control the epidemic, the quality of political leadership dealing with the health crisis, government spending on the health sector, effectiveness of the healthcare system, the role played by unequal socioeconomic structures, the resources and capabilities of the medical sector, including human resources and medical equipment, and the capabilities of ICT infrastructure to be used to control the spread of the virus. In addition, we also analyze the government measures for testing and tracing the suspect cases to see how effective and timely those measures have been. By analyzing the transmission mechanisms of the epidemic and the effectiveness of the test and trace policy we can locate the exact point of support and cooperation needed for the Latin American countries.
       After examining many aspects of spread-control mechanisms in the five aforementioned countries, we conclude as follows: 1) the commitments on the part of the central government or the top political leadership to curb the spread of Covid-19 are important especially at the initial stage; 2) government spending on the health sector have been much lower than OECD countries, signifying that the medical preparedness of the health sector has been insufficient to deal with the sudden onset of the virus, and also that the economic contraction caused by Covid-19 means it will be difficult to expect any major increase in government spending or investment in healthcare; 3) the high percentage of informal sector employees, mostly living in the poor areas of the city and countryside with poor sanitary conditions and commuting by mass transportation, contributed to the spread of the virus despite the stringent lockdown measures; 4) the shortage of medical staff, ICU beds, medical equipment and supplies (including personal protective equipment for the medical staff and ventilators and oxygen for the patients), though commonly observed in many parts of the world, prevented hospitals from providing effective treatment and even threatened the breakdown of the hospital system in some locations; 5) the healthcare sector has been divided into two de facto separate systems, that is, ill-equipped and poorly staffed public healthcare institutions in the small cities and countryside on the one hand, and well-equipped and staffed private healthcare institutions for the affluent in the big cities, on the other; and 6) the test and trace policies of the governments were mostly scanty, ineffective and too slow to catch up with suspect cases. Initial responses to the virus have been slow and insufficient, in part due to the lack of test-kits and lab facilities, thus losing the golden time to effectively flatten the curve.
       In the first part of the study, an analysis of the whole area of interactions among the state, economy, and medical sector leads us to believe that the coronavirus has widely spread through the rifts created by socioeconomic inequalities, fragmentation of the healthcare system, lack of medical preparedness and the supportive role of ICT infrastructure. Korea can be a great partner for Latin American countries to modernize their hospital system, supply appropriate medical equipments and supplies, introduce the K-quarantine programs, and invest in the ICT infrastructure and technologies.
       The second part focuses on the ICT development potential in Latin American countries. Most Latin American countries rank between 50 and 100 in the digital competitiveness and network preparedness index. They are not advanced but have a great potential to develop further. For Korea this means a great variety of opportunities to contribute to the cooperative relations with the Latin American countries as well as business opportunities.
       The coronavirus seems to be here to stay, with many different variants appearing all over the world, meaning it is time to formulate a proper vision for the post-Corona era. In the post-Corona era our lifestyle will be significantly transformed due to digital technologies and supporting ICT infrastructure playing a key role in ensuring a sustainable economy and national competitiveness. Digital transformation is not an option anymore but an essential requirement to survive in the new era, and the same holds for measures to curb infectious diseases like Covid-19 and to improve the quality of medical services.
       This study provides four venues to catch up with the new trends in digital transformation in the health industry: 1) The hospital system in Latin American countries needs to incorporate digital solutions, making paper work disappear and ensuring a seamless flow of diagnosis and treatment process using EMR/EHR, PACS, and other information technologies and applied systems. Digital hospital solutions will provide better treatment and better clinical decisions, as well as better financial options for hospital management. Though most of the hospitals in the region still rely on paper work for medical processes, there are already movements toward establishing hospital information systems. Many countries have been pushing for e-government projects recognizing digital health as a key task to accomplish.
       2) Telemedicine is another way to provide better medical services for those who cannot come to hospitals and see doctors for various reasons. People living in remote areas and emergency patients in locations without sufficient medical equipments can take advantage of the expert diagnosis and treatment in the big city hospitals through telemedicine. Telemedicine is an absolute necessity for the people in high mountain areas and Amazon jungle in Latin America. Telemedicine has also provided a safe way of diagnosis and treatment during Covid-19 and will be a valuable service if any similar pandemic strikes again.
       3) Smart wearable devices, including smart watches, smart phones and other small devices that measure, record and transmit vital signs to digital hospitals, are growing fast and will continue to do so. Healthcare consumerism, which refers to the active role of patients as producer and owner of health data, will play a bigger role in the healthcare process as big data and AI algorithms become ever more important in providing data-driven decision making.
       4) AI has provided many valuable solutions for low-cost diagnosis in many diseases and also helped provide a cheap way of seeing doctors in a short time. Brazil, Mexico, and Argentina have seen many medical startups using AI technology emerge and develop fast providing valuable services for millions of people who otherwise could not use healthcare services.
       In the third and final part of this study, we analyze the characteristics of each country in terms of opportunities and risks involved when the Korean government and ICT-based healthcare providers seek to advance into Lain America. We recommend an active pursuit of opportunities toward Brazil and Mexico due to their huge potential for further development. We recommend rather cautious but still active cooperation toward Peru and Argentina despite their political and economic instabilities and rather limited development potential for the time being. We recommend a cautious and gradual approach toward Ecuador due to its limited digital preparedness and small market chances. We also recommend active support for people in disadvantaged areas within Latin American countries using ODA programs offering them chances to experience the benefits of ICT-based healthcare.
  • 동아프리카 스타트업 시장분석 및 한국기업의 진출방안
    The Analysis of East African Startups Ecosystem and Korean Corporation’s Participation Plan

       Startups are an adventurous business platform with a high likelihood of failure. Statistics show that in 2019 only one out of every 12 startups survived worldwide. Despite such risks, investment in startups is increas..

    Yongkyu Chang et al. Date 2021.06.21

    Economic cooperation, Overseas direct investment Africa Middle East
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       Startups are an adventurous business platform with a high likelihood of failure. Statistics show that in 2019 only one out of every 12 startups survived worldwide. Despite such risks, investment in startups is increasing tremendously globally. For instance, Cruch base, one of top global startup investment research institutes, has shown that the total amount of venture capital invested in startups over the past decade (2010-2019) amounted up to KRW 1,700 trillion (15$ trillion)internationally. Furthermore, KRW 400 trillion ($249.8billion) that was invested in a single year in 2019.
       Behind the rapid growth in startups is the global economic crisis. Since the 2008 global financial crisis, the global youth unemployment rate has rocketed. Many countries have taken serious measures to tackle this impending and escalating youth unemployment rate. Promoting startups was one of decisive measures that aim to tackle the global youth unemployment issues.
       Currently, Europe and North America are at the forefront of global startup ecosystems. These two regions account for about 80% of startups in the world. On the contrary, Africa shares only a tiny portion of the global startup market. However, a good sign is that the African startup ecosystem is growing fast and that has caught the attention of international venture investors. For example, Africa's Tech Hub grew to nearly 50% alone in 2019 and major global startup investors, mostly based in Europe and the United States, are actively investing in the continent. The potential of the African startup ecosystem has been demonstrated and should not be taken for granted. With this in mind, we would suggest that the Korean startup ecosystem should also take steps towards entering the African startups ecosystem. The purpose of this study is to provide relevant information and analyse the African startups ecosystem. Based on this information and analysis, we advise the Korean startup ecosystem to take measures to pursue the possibility of cooperation with the African startup ecosystem.
       East Africa, known as the entry point of the African continent, has developed a cordial relationship with Korea. For Korea, East Africa is geopolitically a vantage point for various reasons. Korea and East Africa have maintained an active exchange of human and material resources, and East Africa is also a region where the large part of Korea’s ODA is implemented. East Africa is also a politically and socially stable region compared to other parts of African continent. Therefore, this study takes East Africa as its research area. For this purpose, the study takes and analyses East Africa’s five major industrial sectors (logistics, transportation, energy, health care, agriculture and education) in four East African Community (EAC) members (Kenya, Tanzania, Uganda and Rwanda). These five major industries are business areas that meet the needs of East Africa's high demand for and Korea's expertise in excellent ICT technology. We understand that this cooperation would be a starting point for cooperation between Korean and East African startups. In addition, East Africa is one of the major target areas for Sustainable Development Goals (SDGs) and we expect that a cooperation with the East African startup ecosystem would contribute to successful implementation of SDGs.
       This study employs a qualitative and quantitative methodology to analyse the East African startup ecosystem in order to provide ways for Korean startups to efficiently approach the market. The qualitative methodology consists of literature analysis and in-depth interviews. Unfortunately, academic literature on startups is rare. Therefore, it was not easy to attempt academic analysis. Also, another qualitative methodology, field work, is almost impossible as Covid-19 has spread world wide and prevented us from travelling to East Africa. So, we have had to rely heavily on Web-meetings with our interviewees. Interviews were conducted with Korean and Kenyan startup-related informants. Throughout this qualitative study, we could identify some trends and characteristics of global, Korean and East African startup ecosystems. The major results of the qualitative investigation are as follows:
       A significant feature of the most successful countries that have well-maintained startup ecosystems is that there are a number of excellent startup hubs. In these countries, governments provide proper policies to support startups and various initiatives. In addition, those startups operating in high-level startup ecosystems receive a good amount of venture capital investment. For example, in2019, international venture capital investment received by German and French startups, in their respective countries, amounted to $6.65 billion and $4.39billion, respectively. The volume of the venture capital invested in Africa (asa total in 55 countries) in the same year was merely $3.9 billion. The total volume of venture investment in the African continent was smaller than that of within France. However, a positive signal is that a growing number of venture capital transactions in Africa between 2014 and 2019 suggest that the African startup ecosystem is likely to grow in the future.
       The leading startup sectors in East Africa specialise in software, data, and fintech, which follow global startup trends. East Africa is Africa's second largest venture capital destination after Southern Africa. In particular, East African countries are trying their best to develop startup ecosystems by introducing startup bills and other actions. For example, the Kenyan Parliament announced the Startup Bill (2020) in 2020, which aims not only to protect startups in Kenya, but also to motivate the local youth to innovate and create startups.
       Whereas, in general, the Korean startup ecosystem is passive in the sense that Koreans are reluctant togo off overseas and invest in foreign startup environments. There are various reasons, but the lack of information on foreign startup ecosystems is considered as the most critical one. Technically, most Korean startups are optimised for the Korean market and that makes it extremely difficult for Korean startups to expand to local markets beyond their boundaries. However, during this study, we were able to contact some Korean startup operators in East Africa (Jerry Baek, Tella, Zakyraders, etc.). The number is insignificant; however, the results were sufficient in obtaining an overview of the nature of Korean startups operating in East Africa. These startups collectively demonstrate a movement to solve the various levels of social problems faced by East African societies. Also, we had interviews with four Kenyan startup initiators (Uhai 365, Mali Agricultural Industry Solutions, Young Stripe, Zeit Africa) that share similar characteristics to Korean startup operators in East Africa. In other words, startups operating in East Africa are partially pursuing social values ​​in their early stages. Based on this qualitative study, we define these type of startups as “social startups”.
       In this study, we adopted data mining methodology to anlayse five major industrial sectors in East Africa. The process of the analysis involves three steps: correlation analysis of topics related to startups in East Africa. By doing this, we hope to suggest the possibility of Korean startups entering into East Africa and cooperating with the East African startup ecosystem. For data mining, we collected news articles related to five industrial sectors in major East African daily newspapers over the past five years (2015-2019). Then we put them into a data mining programme. The programme classfied, patterned and selected some significant key words, called pain points, to illustrate the needs of the local business consumers. The five industrial sectors analysed in this study show some significant features. For example, there are Pain Points that show the overall needs in terms of the development of agricultural sectors in the region, such as improving agricultural production technology, ensuring market access (Kenya) and supporting and investing in improving the agricultural sector (Uganda). In the energy sector, more detailed pain points were revealed: the need for further support for the solar industry, strengthening access to power supplies (Uganda) and supplying power using solar technology (Rwanda).One commonality that can be found in all these five sectors is that there exist some pain points related to startups that are successful in securing investment. However, we found that there are far too many startups not properly receiving adequate government or venture capital investments. Despite their needs (pain points), they still lack investment. The results show that there exists a market where Korean startups could invest in and, in doing so, cooperate with the East African startups. In addition, the cooperation would lead to a meaningful contribution to social development in East Africa as five of the industrial sectors are closely related to the indicators of SDGs.
       In this study, we have reached the conclusion that we propose a converging point between Korean and East African startup ecosystems. We need to approach East African startup ecosystems in achieving two discrete, but connected goals: achieving financial returns and taking social responsibility. Startups in Less Developed Countries, such as many East African countries, cannot be solely assessed from an economic point of view. Measuring startup social responsibility is another cardinal indicator. As we have shown in this study, a number of Korean startups are already operating their businesses and taking social responsibility in East Africa. Fortunately, we have a government-led startup programme that is closely linked to development cooperation programmes in Africa. The effective use of these programmes will be an effective solution for the moment. The problem is that the number of social startups and programmes has not reached a critical momentum as yet. In order to overcome this unfavourable situation, the study reasons as follows:
       This study encourages governments to design a standardised startup programme to promote Korean startups accessing East Africa. As the study has shown, social startups are an alternative option for entering the East African startup ecosystem. The government's startup programme should be diversified, while at the same time one clear direction must be taken to link development cooperation programmes to facilitate their cooperation. Inter-cooperation among different governmental organisations is mandatory in this sense.
       Recently, facing an international aid fatigue, in the cycle of international development cooperation, international organisations have introduced ESG and impact investments that give more responsible positions within business corporations. Within this initiative, every single business corporation or government wishing to invest capital should provide reliable social and environmental indicators for sustainable development and social startups may play a role as major agents for ESG investment. Government organisations may operate a joint ESG investment fund with local and international companies. In addition, the joint ESG investment can lead to support for Korean and East African startups, nurturing a greater worldwide startup network system.
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공공누리 OPEN / 공공저작물 자유이용허락 - 출처표시, 상업용금지, 변경금지 공공저작물 자유이용허락 표시기준 (공공누리, KOGL) 제4유형

대외경제정책연구원의 본 공공저작물은 "공공누리 제4유형 : 출처표시 + 상업적 금지 + 변경금지” 조건에 따라 이용할 수 있습니다. 저작권정책 참조