This study investigates changes in the trend regarding the IP protection level in RTA and how the IP protection through RTAs has affected the composition of aggregate trade flows of member countries in order to provide basic findings necessary to formulate the FTA policies regarding the protection of intellectual property (IP) in Korea.
   This study first quantifies the depth of IP protection in RTAs based on more than 300 RTAs all over the world, showing that recent RTAs contain more comprehensive and strong IP protection provisions. We find that only 6 out of 71 RTAs had a high level of IP protection before 2000, while 45 out of 105 RTAs have a high level of IP protection after 2010. Second, we find that establishing such RTAs with high level of IP protection has positive effects on trade. In particular, exports in IP-intensive industries have increased in member countries of RTAs with high level of IP protection compared to other countries. However, the impact that strengthening IP protection through RTA has on imports is complex; it is negative in IP-intensive industries but positive in other industries. In order to rationalize these findings, we develop a two country and multi sector model featuring North firms deciding between exports and FDI, while South firms decide between imitation and R&D. In the model the increased IP protection affects South firm’s R&D incentives and relative wages, followed by changes in North firm’s FDI incentives. These strategic interactions between North and South firms vary depending on IP intensity of the industry, partly explaining the empirical findings.

   The main goal of this study is to identify policy implications for investment cooperation between Korea and Russia in the 4th presidential period of Putin and to seek ways to increase mutual investment. In particular, case studies were conducted of various investment cooperation projects by Russia with other countries during the 4th Industrial Revolution, aiming to suggest a more practical way to increase Korean investment in Russia.
   Chapter 2 focuses on the main characteristics of Russia’s investment environment and overseas investment patterns during Putin’s 3rd (2012‒18) and 4th (2018‒) presidential period. The foreign direct investment to Russia decreased starting from the Ukraine crisis in 2014 (50.5 billion dollars in 2012, 69.2 billion dollars in 2013 to 6.8 billion dollars in 2015). When analyzing the same period by region, European countries are still top-investing countries, although the size of their investments decreased year by year. Other countries except for Europe have similar patterns. Russia’s overseas direct investment also declined after the Ukraine crisis in 2014 and in 2018, when Putin’s 4th presidential period started. Eventually, the total amount of foreign direct investment (FDI) decreased due to economic sanctions against Russia, low international raw material prices, and changes in the ruble value. However, when analyzing the investment trend by country, except for some Europe countries, the investment volume was maintained at a similar level.
   Chapter 3 examines the recent trends and main characteristics of Korea’s foreign direct investment, and Korea’s direct investment to Russia. Over the past five years, Korea’s foreign direct investment has increased the proportion of M&A and SMEs, market entry via third countries, SMEs’ export promotion and low-wage investment, and the proportion of finance and insurance. Direct investment to major emerging countries also showed similar trends. In the case of Russia, it proved difficult to obtain meaningful results due to the absolute reduction in investment size, but the share of investments for entering the market expanded. However, considering that the proportion of SMEs has slightly decreased, and the proportion of SMEs remains low among the major emerging countries, it will be necessary to advance the industrial ecosystem of existing manufacturing industries and create new markets in the fields of innovation and domestic distribution, consumer goods and services, in order to overcome the stagnation of Korean investment to Russia. SMEs must play a stronger role in this process.
   In Chapter 4 we conduct an empirical analysis of the determinants of Korea’s FDI with Russia, determining why Korea’s FDI with Russia has been relatively poor and offering policy suggestions to improve the situation. According to the main results, in addition to economic variables, cultural and institutional variables acted as important determinants in Korea’s FDI to Russia during the analyzing period (2000-20). In addition, from an aggregate perspective, the negative impact of economic sanctions against Russia on Korea’s total FDI to Russia was less than expected. Also, the factors that determine FDI were very different depending on the investment motive, the type of business, and the size of the investment company. Based on these points, the following implications can be made. First, it is necessary to improve cultural and institutional conditions. Second, as the economic sanctions against Russia are likely to be prolonged, it is important to find ways to cooperate under these conditions. At the same time, it is necessary to identify more fundamental ways to expand FDI to Russia.
   Chapter 5 proposes policy implications for investment cooperation between Korea and Russia in the 4th presidential period of Putin, and suggests measures to revitalize investment focusing on high value-added industries. Korean investment in Russia is focused on automobiles, home appliances, and food (consumer goods). However, the biggest sector within Russia for investment by European and other foreign companies is natural resources such as energy and metals.
   To sum up, Korea and Russia have the potential to increase investment cooperation in the future. First, cooperation should be expanded in investment fields (energy, logistics, telecommunications, etc.) that Russian and foreign companies are traditionally interested in. Second, it will be necessary to cooperate in the emerging innovative industries. Third, active cooperation plans must be formulated in the strategic industries where Russia has global competitiveness. Fourth, it is necessary to allow management of the Export-Import Bank of Korea investment support program fund by investment rather than loans. Fifth, joint investment should be considered by Korea and Russia for entry into third-country markets. And sixth, it will be necessary to seek ways to bypass Western economic sanctions against Russia. The solution may be different for each individual investment and economic negotiation issue. Therefore, a permanent advisory body for support will be needed.

   The aim of the research is to study changes in the economic policies of GCC countries in the era of low oil prices, and to suggest policy implications for economic cooperation between Korea and Middle East countries. We conduct a review of economic policies, including case studies, divided into the areas of industrial, employment, trade and investment policies. Then, corporate risk factors and implications are drawn for Korean companies aiming to consolidate their market position in the Middle East.
   Chapter 2 analyzes the oil-dependent economic structure of GCC countries and the long-term economic plans being pursued to diversify this structure. As the economic structure of GCC countries heavily depends on oil and natural gas exports, volatility in international oil prices poses the greatest risk to economic stability in those countries. The drop in international oil prices reduces export performance in the oil and natural gas sectors, which in turn results in a decline in the stability of fiscal revenue. Accordingly, the six GCC countries have established new mid- to long-term economic plans with a focus on diversifying their economies, improving the quality of human capital and expanding local production and procurement. They are diversifying their industrial structure by fostering high-tech manufacturing industries such as aerospace and life sciences, and knowledge service industries such as finance, logistics and tourism, and strengthening policies in areas including technology development related to the fourth industrial revolution, digital transformation and startup support.
   Chapter 3 examines industrial policies focusing on strengthening technological innovation capabilities and digital transformation. Although the level of innovation in GCC countries is still considered to be below expectations, technology innovation policies are continuously being pursued to strengthen innovation capabilities in Saudi Arabia and the UAE. In addition, digital transformation is being actively promoted by digitizing government services and establishing various digital service platforms. Digital transformation is also becoming more important in the oil sector as it can increase operational efficiency and workplace safety and minimize environmental impact. State-run oil companies are employing cutting-edge technologies in the form of robots, drones, AI and big data to conduct real-time analysis and management of their industrial facilities. Smart cities, tourism, logistics, space and life sciences are areas where the introduction of digital technology is accelerating, and government-level fostering policies are being strengthened. Meanwhile, Saudi Arabia and the UAE recognize technology-based startups as key factors that will lead the nation’s innovation and are pushing for policies to vitalize the startup ecosystem by expanding support programs for startups.
   Chapter 4 touches upon recent changes in the employment policies of GCC countries, focusing on expanding employment for national workers and enhancing their job competencies. Through the introduction of the Nitaqat system, Saudi Arabia has strengthened the management and supervision of the quota system for national workers and subdivided its application criteria by industry and business size. Furthermore, in recent years, quota systems have been applied to jobs that require relatively high levels of technology, such as engineers, while foreign fees have also been introduced. The UAE is implementing systems that take into account the relatively small size of its national workers, with the Absher Initiative, in which the government covers the cost of vocational training for national employees, and the Tawteen Gate, in which companies that want to hire foreigners are mandated to review national job seekers first. In addition, GCC countries are taking measures to improve the employment environment of the private sector by introducing a minimum wage system, wage protection system and maternity leave. Regulations to expand the employment opportunities of national workers can lead to certain negative consequences, such as industrial development being hindered, outflow of excellent foreign workers, and reduced inflow of foreign investment. In preparation for such a situation, GCC countries are trying to increase vocational training support for national workers, eliminate restrictions on women labor and foster cooperation with companies and educational institutions in advanced countries.
   Chapter 5 surveys the GCC’s trade and investment policy changes. The GCC’s tariff rate remained low at around 5 percent as it launched a customs union in 2003, but has been rising slightly since 2015. Saudi Arabia, in particular, has raised its own tariff rate by up to 20 percent in June 2020 in order to secure the government’s non-oil revenue. The GCC also drew up a “Common Law on Anti-Dumping, Countervailing and Safeguard Measures” in 2004 and has been imposing safeguard and anti-dumping duties on imported goods such as steel products, car batteries, whose domestic production have increased. In addition, the GCC has tightened regulations on food imports for the purpose of health and safety for its citizens by increasing the number of sanitary and phytosanitary measures (SPS) notifications. The GCC Standardization Organization (GSO), a joint body of GCC countries, is increasing standards and technical regulations, while each GCC member country is introducing its own certification system and tightening labeling policy as well. Regarding investment policies, GCC countries are relaxing various regulations and offering incentives to support foreign investors. In particular, Saudi Arabia, the UAE and Qatar are removing regulations restricting foreign ownership, expanding various support measures, including granting permanent residency to foreigners, tax exemption and allowing the transfer of profits overseas. On the other hand, these GCC countries are also strengthening localization policy so that overseas bidders can further contribute to investment, production and job creation in the region by granting additional points to local employment and local production of the bidders.
   Chapter 6 examines online surveys and in-depth interviews to identify major troubles Korean companies are facing in the GCC countries, and their requests for the government. According to the surveys, lack of market information (26.7%), local regulations (23.3%), cultural gaps (20.0%), and lack of skilled workers (10.0%) are the main difficulties in conducting investment in GCC countries. In the area of government support policies, the respondents requested for better legal services, the latest investment information, and financial assistances. In light of the above findings, this research presents the following policy recommendations. First, a digital cooperation platform should be established for infrastructure build-up, technology development and industrial development based on a shared vision of digital transformation. Second, vocational education and training (VET) systems should be strengthened to enhance productivity of local workers employed by Korean companies. Korea and GCC countries need to cooperate in sharing programs between their VET institutions. Third, corporate support programs of diverse institutions such as Korean embassies and KOTRA should be unified under “one team one goal.” This would help Korean companies share market information, networks, and new local regulations.

   Over the past several decades, we have witnessed an accelerated pace of the tertiarization of the global economy. The tertiarization of the economy – the expansion of the service sector - has long been understood as a major characteristic of advanced economies, but the GDP and employment shares of the service sector in developing countries have been also increasing rapidly in recent years. For instance, the GDP share of the service sector in middle-income developing countries increased by 8.9% points from 45.2% in 1997 to 54.2% in 2017, exceeding the 4.8% points increase in high-income countries during the period.
   The tertiarization of the economy is driven by various socio-economic factors such as increased demand for income-elastic services, the spread of labor-saving technologies in manufacturing, the expansion of global value chains, ICT development, the aging population, and the participation of women in economic activities, etc. The advent of Fourth Industrial Revolution and the recent COVID-19 outbreak are expected to further accelerate such trend by breaking down the boundaries between manufacturing and services.
   Against this backdrop, the main purpose of this study is to examine the major characteristics and status of the ongoing tertiarization, investigate the competitiveness of Korean services in the global value chain, and discuss the direction of mid- to long-term trade policies for the Korean economy. In this study, a particular research focus is drawn on the servicification of manufacturing, which has not been adequately addressed in existing economic literature. The servicification of manufacturing refers to the situation that manufacturers expand the use of services as intermediate goods in the production process and/or provide services in the form of final goods. It encompasses not only outsourcing of service functions, but also increasing the proportion of in-house services generated by manufacturers themselves or simultaneously producing and selling goods and services.
   As the servicification of manufacturing spreads globally, there has been an upsurging policy and academic interest in intermediate types of services that are embodied in goods and thus indirectly traded in the form of goods exports. These services tend to promote high value-added manufacturing, not only by mediating the international division of manufacturing through transportation, telecommunications, finance, and logistics services, but more importantly by providing knowledge- intensive services such as engineering, R&D, marketing, design, and advertising.
   This study empirically investigates the value-added structure of services embodied in the export of final goods. Specifically, we divide intermediate-type services into three types: domestically-outsourced services, foreign services, and in-house provision of services within manufacturers, and then examines the value-added contribution of each type to commodity exports for the period of 2005-2015.
   The major analytic results of this study can be summarized as follows: first of all, compared to major exporters in the global market, Korea’s manufacturing exports tends to rely more on foreign services outsourcing and less on domestic services. This phenomenon is not attributed to certain industrial sectors, but rather to the overall manufacturing sector. The proportion of domestic outsourcing for distribution services and knowledge-based business services is found to be particularly lower than that of other major exporting countries.
   Second, the overall contribution of intermediate services to the total value-adds of manufacturing exports has been around 45~50%. It declined from 50.0% in 2005 to 44.8% in 2011, and then has been on the rise again afterward. Such trend stems mostly from year-to-year variation of in-house services within manufacturing firms, rather than from that of domestic or foreign outsourcing.
   Third, our analytic results indicate that the in-house provision of services within manufacturers is complementary to domestic outsourcing activities of services, but substitutable to foreign outsourcing. This suggests that the increase of the in-house provision of services by manufactures could be an effective way to reduce the extent of foreign outsourcing while helping to improve the outsourcing demand for domestic services.
   Fourth, Miroudot and Cadestin (2017) recently examine the contribution of services to commodity exports for the sample OECD countries. Basing on the Korean Labor and Income Panel data, they claim that the contribution of in-house services to the total value-adds of manufacturing exports is only at around 8% for the Korea case, which is one of the lowest levels among OECD countries in comparison. On this other hand, when re-estimating the service contribution by employing the Labor Survey by Employment Type, we finds that the contribution of in-house services in Korean manufacturing amounts to 18.6%, being well above the OECD average. Miroudot and Cadestin (2017) may have underestimated the actual contribution of serviceization in Korean manufacturers, taken into account that the Labor Survey by Employemnt Type is a more representative and comprehensive data source, compared to Labor and Income Panel data that they use.
   Finally, servicification within Korean manufacturers has been mainly centered on large-scale companies with a high export share, and their contribution continues to increase, especially after the global economic crisis. On the other hand, it is shown that servicification of small and medium enterprises remains stagnant at quite a low level. This implies that the government needs active policy support to help small and medium-sized companies increase service utilization and/or production, in order to improve the competitiveness of the overall economy.
   Given the aforementioned findings into consideration, this study provides the following implications regarding mid- to long-term trade policies; first, the importance of manufacturing has been highlighted again in the aftermath of the recent global economic recession. At the same time, as aforementioned, intermediate services embodied in manufacturing products is emerging as a driving force for manufacturing competitiveness. Furthermore, the development of new technologies related to the Fourth Industrial Revolution will gradually blur the boundaries between manufacturing and service industries, and accelerate the servicification of manufacturing industries. Therefore, the government should establish and implement trade policies that help to maximize synergies between manufacturing and services in the value chain. As our analysis suggests, the contribution of services to the manufacturing value-adds, through either the intensified in-house provision of services or increased domestic service outsourcing, is expected to increase. Hence, it is imperative for the government to establish support policies considering these areas.
   Second, one of the key results of this study is that there is a complementary relationship between in-house service provision and domestic outsourcing of services, and these domestic activities help to reduce the reliance on foreign outsourcing. The government's “Smart Factory Support Project” for SMEs is a very encouraging policy in this respect, which aims to encourage the use of IT technology and related services and combine them into the entire process of value chain, such as product planning, development, production, and sales. If the smart factory system is successfully settled, then the use of domestic services or servicification within SMEs can be further promoted, leading to enhance the overall productivity. The government should further develop and implement support schemes that allow SMEs to increase their utilization not only in these IT services but also in other knowledge-based services.
   Third, efforts should be made to strengthen the domestic value chain and revitalize the domestic outsourced service market by actively incorporating intermediate goods services into the "Export Supply Chain Support System" introduced as a countermeasure to Japan's recently triggered export regulations. This system refers to a policy measure that provides financial and technical support to small and medium-sized Korean companies that supply intermediate goods to export firms. Until now, the support system has mainly targeted small and medium-sized manufacturers that produce materials, parts, or equipment, but it should be expanded to service providers that supply intermediate-type services to manufacturing exporters. In the case of service providers, their core assets are in the form of intangible assets, and therefore have very limited access to finance due to the lack of fixed tangible assets with collateral value.
   Finally, if the Korean government pushes for new FTA negotiations or amends existing FTAs, it is necessary to prepare and implement negotiation strategies related to the servicification of manufacturing. The existing FTA negotiations have focused mostly on reducing tariff and non-tariff barriers in the commodity sector and expanding access to the market for Modes 1-4 service transactions defined by GATS. On the other hand, future FTA negotiations should also make great efforts to liberalize services in the form of intermediate goods.
   Within the GATT/WTO multilateral system, the liberalization of goods and services has been pursued separately within the GATT and GATS systems, respectively. As a result, the blind spots of these international norms are gradually expanding as the servicification of manufacturing and industrial convergence further proceed. In this regard, the EU has recently raised calls for defining intermediate-type service transactions that are embodied in commodity exports as Mode 5 and urged to initiate multilateral discussion on Mode 5 liberalization. Therefore, the government needs to preemptively identify how liberalization and potential revision of international norms related to Mode 5 will affect the price competitiveness of our product exports and establish policy alternatives.

   In this paper, we analyze the impact of IT sector innovation on the Russian economy in terms of structural transformation. Currently, Russia’s economy has a structural problem of excessive reliance on energy resources. Excessive economic dependence on the resource sector undermines sustainable growth, as the transition to medium and high value-added manufacturing is delayed, impeding qualitative growth through productivity enhancement, which is necessary for long-term growth. The Russian economy has been entrenched in the pattern of quantitative growth driven by physical capital and labor input since 2008.
   Chapter 2 of the study diagnoses delays in the structural transformation from a resource-dependent economy to a high value-added manufacturing one as a case of so-called “bad equilibrium” from the multiple equilibria perspective. In other words, the growth problem in the Russian economy is identified as a failure of coordination caused by the non-convexity of the production function.
   This research’s main contribution is to theoretically examine how technological innovation in the IT sector helps address the structural transformation delays that middle-income countries have suffered. This theoretical finding underlies the intuition that advances in IT technology positively improve productivity in the service industry, seen for instance in how online banking, e-commerce, and transportation services benefit from online matching. If such IT technology enhancements increase productivity in the service industry, the added value of IT industry production increases, which moves more economic resources (production factors) toward mid-and-high value-added manufacturing sectors, including the IT industry. Moreover, this structural transformation to the mid-and-high value-added manufacturing sector can be expedited by the substitution effect when the service sector’s productivity grows faster than the other sectors. Consequently, in the context of the so-called “big push theory,” IT technology innovation can function as a big push facilitating structural transformation in developing countries with abundant natural resources.
   Another contribution of this research is to investigate the possibility of IT cooperation between Korea and Russia in both policy and technological aspects. To this end, Chapter 4 performs a quantitative analysis with an ample dataset, including analysis of Russian IT patents, along with an extensive literature survey and reference. As a result, we found that both Korea and Russia share the same policy direction: they have exerted national policy efforts to discover new growth engines restoring growth potential through IT technology innovation. From a technological perspective, when we follow the common practice of categorizing the IT industry into the areas of IT hardware, software, and services, Korea has a clear-cut competitive edge in IT hardware while Russia is advanced in non-hardware sectors. This comparative advantage is prominent, particularly in the IT industry’s labor supply for both countries, namely competitive personnel in the areas of IT hardware and non-hardware for Korea and Russia, respectively.
   Taken together, the economic, policy, and technological conditions for IT technology cooperation between South Korea and Russia are all in place. Therefore, we can infer that voluntary and persistent IT technology cooperation between the private sectors of both countries can be guaranteed to some extent once the conditions for cooperation are established.

   The Covid-19 pandemic in 2020 caused disruptions in the global food supply chain, heightening food security concerns. The GCC countries rely on imports for a large portion of food due to environmental conditions that restrict agricultural development. Covid-19 is increasing concerns of food crisis in these countries, limiting the movement of logistics and personnel. GCC countries are pushing for policies such as expanding domestic production, increasing investment in overseas farmland and food sectors, and diversifying sources of income, which are expected to be pursued more actively in the future. Meanwhile, the introduction of technology-based smart agriculture in GCC is expected to accelerate as agricultural innovation incorporating high-tech technologies, or AgTech, has emerged as a global issue in the agricultural sector amid the ongoing fourth industrial revolution and technological innovation. This study aims to explore the current status and characteristics of food security in the GCC countries, analyze policies, and derive cooperative implications in response to the GCC’s reinforcement of food security to provide a way to diversify Korea’s energy and construction-focused cooperation with the GCC region.
   Chapter 2 analyzes the GCC’s food security situation through the World Food Security Index and statistics related to food production and supply. GCC countries ranked 13th to 50th out of 113 countries in the 2019 World Food Security Index. Among the sub-sectors, particularly high scores and rankings were given to “affordability,” which is relevant to the country’s wealth and food purchasing capacity. GCC countries remained at the bottom of the world in terms of natural resources and resilience, a sector which is not included in the index calculation but can gauge the likelihood of future food crises due to environmental changes. Meanwhile, food production in GCC countries accounted for only 25.2 percent of total consumption. Most of the food production shortfalls were supplied through imports, especially, the proportion of imports to total consumption of grains was 93.0%. The stock of grain is also low compared to consumption. In other words, it appears GCC countries are maintaining good food security levels overall, but they will face limitations that are difficult to cope with when food supply problems arise due to their high dependence on food imports and lack of water and farmland.
   Chapter 3 examines the GCC’s food security policies and the direction of change in the post-Covid-19 era. Since the 2008 global food crisis, the GCC has been pushing for policies to strengthen food security by increasing domestic food production and increasing overseas investment. These initiatives in GCC countries are accelerating further with the Covid-19 pandemic. In announcing their national development plans, the GCC countries selected food security as one of the key areas, going on to develop detailed strategies and establish dedicated organizations. Moreover, the government is promoting sustainable agriculture that considers the environment and introducing smart agriculture projects, and is expanding corporate support and research and development around the UAE. GCC countries are also expanding investment in overseas farmland and international food companies and strengthening food stockpiles and supply and demand management.
   Chapter 4 touched upon cases of cooperation between major countries such as China, Japan, the United States, and Europe and the GCC. In addition to government-level cooperation, China is actively engaged in private and academic cooperation. Agreements have been reached between the Chinese and UAE governments on strengthening cooperation in the agricultural sector and developing technologies, and various related projects are underway. While Japan is also establishing a cooperative system at the government level, the creation of funds through public-private funds is a notable feature. Japan, in cooperation with the GCC sovereign wealth fund, is investing in joint ventures established bilaterally with local companies. Technology-based startups in the U.S. and Europe are actively entering the GCC market. The UAE is attracting and investing agricultural start-ups in these countries.
   Chapter 5 explores the current status of cooperation between Korea and the GCC region and seeks future cooperation directions. First, it will be able to strengthen intergovernmental agricultural technology cooperation and corporate support policies. At the government level, expanding cooperation in agricultural technology and carrying out joint projects will be able to facilitate entry of companies. As demand for smart farms in the GCC region increases, it is expected that introduction of smart agriculture systems will expand. While leading agricultural countries such as the Netherlands, Europe, and the U.S. are actively pushing for entry into the GCC region, it will be necessary to come up with strategies to find sectors that are differentiated from these companies and in which Korea can show competitiveness. In addition, cooperation related to farm labor education can take place as the GCC local agricultural sector is assessed to lack manpower capabilities. In this regard, the government will be able to provide education through the operation of human resources exchange programs and promote knowledge sharing projects through the dispatch of agricultural experts. In addition, these efforts will allow the government and companies to diversify entry areas according to changes in food value chain. Since the outbreak of Covid-19, there have been changes in the GCC local food market, such as an increase in online orders and demand for healthy foods. As a result, the importance of cold chains is expected to increase, and consumption of organic products, halal foods, and stored foods will continue to increase. Finally, the creation of an industrial cluster exclusively for Korea could be promoted in the food sector. The food industry cluster will be able to promote shared growth by providing incentives to agricultural and food companies and increasing synergy through corporate integration.

 

   This study aims to provide implications for policies on the part of Korea’s competition authority to prevent ICT firms from abusing their market power and carrying out anti-competitive M&As under the changing competitive environment in the era of inter-industry convergence. It may be difficult to conclude whether these firm behaviors harm market competition or consumer welfare under existing competition policies. In this regard, we focus on recent policies of the U.S. and EU competition authorities in terms of how they deal with anti-competitive behaviors in ICT sectors.
   Chapter 2 presents an overview of U.S. and EU competition policies, including policy characteristics and causes of policy differences between authorities in the two economies. Recently, the Department of Justice (DOJ) and Federal Trade Commission (FTC), two U.S. competition authorities, investigated behaviors of large digital platforms such as Google, Apple, Facebook, and Amazon on whether they abuse their market power to an extent that negatively affects competition, innovation, and consumer welfare. As for the EU, the European Commission (EC) has implemented competition policies and recently announced EU-level online platform regulations to effectively implement competition policies for the rapidly developing digital platform industry.
   In chapter 3, we examine various forms of U.S. and EU regulation, focusing on abuse of market power and reviews of M&As. Largely two types of market power abuse were examined: exploitative and exclusionary abuse. The U.S. and EU take different perspectives on exploitative abuse. While the EU explicitly prohibits exploitative abuse in the Treaty on the Functioning of the European Union (TFEU), the U.S. does not have any legal provisions on exploitative abuse. Moreover, the U.S. does not consider this a target of regulation, on the grounds that there is no way to confirm whether the market price is the outcome of severe competition or market power abuse. In the area of exclusionary abuse, we examine predatory pricing, conditional rebates, tying, and refusal to deal. In regard to predatory pricing, U.S. legal authorities require rigorous analysis of the economic impacts of firm behaviors, whereas the EU competition authority has aggressively regulated these behaviors. In the case of conditional rebates, while there are no cases do date of the U.S. Supreme Court ruling such behavior as illegal, EU legal authorities such as the European Court of Justice (ECJ) have been more likely to consider those behaviors illegal as they harm competition in the European Common Market. In regards to tying, U.S. legal authorities concluded that a Microsoft (MS) case was not illegal as technological tying might increase market efficiency and provide benefits to consumers, whereas the EU authority concluded illegality in the MS case as it could set an entry barrier against its competitors due to network effects. When it comes to refusal to deal, while the U.S. considers that the theory of essential facilities is not necessary to determine monopolistic firm behavior, the EU holds the opposite view. Finally, the difference between the U.S. and EU in regulations for conducting reviews of M&As was relatively small compared to cases of market power abuse.
   Chapter 4 relates the characteristics of the digital platform industry to the U.S. and EU competition policies. Specifically, section 1 examines how the regulation differences between the U.S. and EU arise as inter-industry convergence and active market integration further progress across industries and regions due to the development of the digital economy. First, it may be difficult to assess exploitative abuse for certain firm behaviors as the price of digital platform services is often 0, or even minus (-). Second, technological tying as the outcome of a combination of products or technologies should be analyzed considering the impacts of limiting market competition and harming consumer welfare. Third, much more attention has been paid to conglomerate M&As under the environment of the digital economy. Concerning this issue, while the EU accepts the theory of portfolio selection, which states a certain firm can transfer its market power to another market through M&As or product bundling, the U.S. does not.
   In section 2 of the chapter, we investigate representative cases of anti-competitive ICT firm behaviors in the U.S. and EU and compare legal and policy responses by their respective legal and competition authorities. For example, the U.S. DOJ argued that MS abused its market power by the tying of its Windows operating system (OS) and Internet Explorer (IE) web browser. The EU, however, closed the case after MS accepted corrective actions to guarantee freedom in choosing web browsers for computer manufacturers and consumers. When it comes to the acquisition of WhatsApp by Facebook, the U.S. and the EU both allowed the deal as the merged entity would not harm market competition.
   Section 3 analyzes the impacts of digital platform M&As on market competition. Specifically, we examine the acquisition of WhatsApp by Facebook, utilizing data on the characteristics of 15 mobile social network service (SNS) applications (apps) and estimation using a structural model combining generalized method of moments (GMM) with instrumental variable (IV) estimation as empirical methodology. According to the empirical results, app file size negatively affects SNS app demand, whereas the number of apps provided by an individual digital platform has a positive impact on consumer demand. Furthermore, we calculate the change of own- and cross-demand elasticity in response to changes in app characteristics. The results show a 1% increase in the number of apps provided by Facebook leads to an increase in the market share of firms in the Facebook group but a decrease in the market share of competitor apps. This indicates a tipping effect in the market for mobile SNS apps due to Facebook’s acquisition of WhatsApp. In addition, we compare the markups of 15 SNS apps before and after acquisition by using a simulation method. As a result, we find that apps in the Facebook group experienced more increase in markups following acquisition, relative to competitor apps. This implies that Facebook’s acquisition of WhatsApp harms competition in the market for mobile SNS apps.
   In conclusion, it may be difficult to determine whether firms’ abuse of market power and M&As are unlawful using the existing competition policies. Drawing upon this perspective, and the case studies and empirical results of our study, we derive the following policy implications. First, Korea’s competition authority should transition out of the current regulation paradigm and introduce new legal systems in cases where the dynamics of competition and innovation should be ensured. Second, if the authority cannot determine whether the anti-competitive impacts of a certain platform’s behavior are greater than pro-competitive impacts, it needs to use ex-post regulation instead of ex-ante regulation to promote innovation and increase efficiency. Third, the authority needs to increase personnel to respond to the increase in M&As of small- and medium-sized startups by large digital platforms. Fourth, the authority needs to find a regulation level optimal to establish an environment where competition and innovation can coexist, as innovation will drive growth under the digital economy. Finally, the authority has to apply flexible regulation measures to diverse M&A cases instead of unconditional non-approval of M&As, as small- and medium-sized startups often use M&As as their exit strategy.

   The Hallyu in India began around Manipur and other northeastern regions in the early 2000s. Until the early 2010s, interest in Korean cultural content in mainland India was low, and it was not treated as a mainstream culture. Recently, however, the Hallyu in India has been spreading around K-pop and K-drama. This study analyzed the background, level of popularity, and characteristics of the Hallyu in India and suggested some policy implications.
   Chapter 2 analyzes the characteristics of India’s audiovisual content markets. India is traditionally a country with a high preference for its own culture, but interest in various cultural content is increasing around the Millennial generation with income growth. Recently, as the digital platform has spread due to the influence of Covid-19, access to overseas content has naturally increased, which is an opportunity to expand interest in Korean music, dramas, movies, etc. In 2020, for example, major Indian satellite broadcasters opened channels exclusively for Korea, providing an opportunity for the Hallyu to expand to those who have not yet contacted online content.
   Chapter 3 and 4 analyzed the trend of the Hallyu in India, and the main results are as follows. First, the level of interest in K-drama is highest in India, followed by K-pop and K-movie. The distribution of Korean content is expanding through Netflix, Amazon Prime, and India’s own OTT (Over-The-Top). Meanwhile, K-pop is gaining popularity throughout India, with BTS at the center. The Hallyu, which began with K-drama and K-pop, has recently led to preference to K-beauty, food and Korean language learning.
   Second, India is significantly less interested in Hallyu than Southeast Asian countries such as Indonesia, the Philippines and Malaysia. What is special about K-pop and K-drama is that trends in Southeast Asia and India have tended to synchronize. This is related to the environment in which real-time spread of content through online has become possible, along with strengthening the competitiveness of Hallyu content.
   Third, while Korea’s flagship products and brands such as IT and home appliances are receiving widespread attention in India, brand awareness of cultural content such as BTS, which can be directly related to the formation of Korea’s national image, is relatively low. However, according to the annual survey of the Hallyu abroad conducted by the Korea International Cultural Exchange Promotion Agency, K-drama and K-pop are emerging as an important element constructing Korea’s country image in India. This shows that the Hallyu is beginning to be associated with the image of Korea among Indian people.
   Fourth, K-drama and K-pop are attracting attention in limited regions of India. The Hallyu in India is concentrated in seven northeastern states, followed by the southern region. In the rest of the region, the popularity of Hallyu is relatively not noticeable. However, according the Indian presses, it is believed that the Hallyu is now expanding throughout India. Seven northeastern states have low income levels, but are ethnically and culturally close to Korea. Pondicherry, Kerala, Andhra Pradesh, Tamil Nadu and Karnataka in the southern region are religiously and culturally open, with relatively high levels of income and education.
   Fifth, the long-term Hallyu trend in India since 2004 shows that the level of interest in the Hallyu is most noticeable as the spread of Covid-19 began. In particular, the number of K-drama-related reports in 2020 doubled from the previous year in India. This phenomenon is also seen in Southeast Asia, but is most prominent in India. By region, interest in Hallyu content after Covid-19 in seven northeastern states and southern regions is rapidly increasing. In the case of K-pop, interest tends to rise in Kerala and Delhi, which had relatively low interest in K-pop. Covid-19 made favorable condition for the spread of the Hallyu in India.
   Chapter 5 presents implications based on the above research. First, There is a need to expand Hallyu-linked cultural exchange projects in the southern part of India where the Hallyu has recently emerged, as well as in large cities such as Delhi and Mumbai. Tamil Nadu and Kerala have cultural industry backgrounds and could be a new hub for the Hallyu. In addition to K-drama and K-pop, we also needs to pay attention to K-beauty, which has high potential to expand the market regardless of India’s regional characteristics.
   Second, we need to expand Korean language education in India with the popularity of the Hallyu. Indian consumers cite linguistic factors as an important obstacle to Korean cultural content consumption. Since the spread of the Hallyu leads to demand for the Korean language, and the knowledge on the Korean language leads to interest in the Korea itself, Korean language education will be an important medium for maximizing the positive external effects of the Hallyu and improving Korea’s national brand.
   Third, it is necessary to utilize the Agreement on Cooperation in Audio-Visual Co-production signed between Korea and India in 2015. India signed audio-visual co-production agreements with 15 countries including Korea, and has jointly produced a number of films with France, Canada, etc. India has already remade a number of Korean films and is showing interest in K-drama, but there have been no cases of co-production of movies or dramas yet. Korean producers should consider what Indian consumers and producers expect from the joint production.
   Fourth, it is necessary to expand cooperation among cultural agencies. While the Korean Cultural Center in Dehli is the only institution in India, it is time to actively expand institutional-level cooperation in India.
   Fifth, regarding India, Korean government or agencies’ supports to link Hallyu to national brands are crucial. It is required to strengthen Korean companies (especially SMEs)’ marketing in India combined with Hallyu content.