Starting from 2012, the Chinese economy has slowed down to enter the era of “New Normal,” where medium-paced growth is the new norm. This means that the Chinese economy has reached the limits of its quantitative growth driven by investment and exports over the last 30 years, and now needs to transition toward a new growth model. In response, the Chinese government has proposed “Supply-side Structural Reform” (SSSR) as a new economic development strategy in the era of New Normal.
   SSSR signifies a shift away from demand-side quantitative growth toward supply-side qualitative development by upgrading the economy and industry. It means to transform into an innovative economic growth method by raising total factor productivity (TFP) through improvements in the technology level, forsaking the previous economic growth method dependent on large-scale input of labor and capital which the Chinese economy has engaged in for 30 years since its reform and opening. The Chinese government plans to overcome the so-called middle income trap through supply-side reforms and lay the foundations for China to rise as a superpower by 2050. SSSR was proposed by President Xi JinPing of China in November 2015 and the year of 2018 is the third year of its implementation. In this report, we analyze the background and characteristics of China’s SSSR, and examine in detail the issues of cutting industrial overcapacity, deleveraging corporate debts, lowering corporate costs, and promoting new growth engines. Based on the results of the analysis, we evaluate China’s SSSR and draw implications for Korea.
   Chapter 2 analyzes the background, main contents, development process, and characteristics of China's supply side structural reform. This paper examines the background of SSSR in terms of the economic system, macroeconomic policy, production factor, industrial factor and financial risk. We also discuss the characteristics of SSSR in comparison with the Reagan-Thatcher supply policy of the 1980s.
   Chapters 3 to 6 reviewed in detail the current status and policies of each of the key tasks of SSSR pursued by the Chinese government. Chapter 3 analyzed the measures taken by the Chinese government to resolve industrial overcapacity issues, which the Chinese government has put forward as a top priority. First, we compared the concept of overcapacity and analyzed the internal and external causes of overcapacity. The Chinese government has been implementing various overcapacity-related policies since 2009, but these failed to have a big effect. Then, various SSSR measures were proposed in 2016, leading to intense restructuring by the central government and rapid recovery of excess capacity in the steel and coal industries, also elevating the profitability of companies rapidly. During this process of relieving overcapacity, the Chinese government encouraged the reduction of facilities through the integration and consolidation of large state-owned enterprises. Through an analysis of the merger of Baoshan Steel and Wuhan Steel, China's representative steelmakers, we discussed the restructuring process of Chinese traditional industry and the future strategy in detail. Lastly we evaluated the performance and limitations of cutting industrial overcapacity and discussed opportunities and threats to Korea.
   Chapter 4 analyzed the deleveraging of corporate debt, which is considered to be a major risk for the Chinese economy. We discuss the background and status of China’s corporate debt, which has increased at a rapid pace since 2008, by using BIS data. In addition, we analyze Chinese corporate debt by company ownership, industry, and periods, showing that China’s corporate debt has a high proportion of state-owned enterprises, real estate and infrastructure, and long-term bonds. We also analyzed the deleveraging policies by period, the results of which indicate the reduction of corporate debt in 2016－17 had a negative effect on the financing of private companies rather than the reduction of debt at state-owned enterprises. We discussed the shift to “structural corporate deleveraging,” which emphasizes the reduction of state-owned enterprise debt from 2018. The possibility of China's corporate debt developing into a financial risk is discussed through data analysis of China’s credit gap, credit strength, and ICR. We expect that the rate of change will be controlled and corporate debt will remain within a level manageable by the Chinese government, and thus the possibility of a financial crisis occurring or spreading to the real economy is low.
   In Chapter 5, we analyzed measures taken by the Chinese government to lower corporate costs and enhance corporate vitality in the market economy. We analyzed the status of China’s corporate cost by classifying it into financing cost, labor cost, tax, energy and raw material cost, logistics cost, environmental cost, land cost, real estate admission cost and institutional transaction cost. China’s corporate costs are increasing in general terms, and labor costs, social insurance costs, and funding costs are a heavy burden on companies. We also discuss the possibility of environment protection agendas posing a new burden as the Chinese government pursues more eco-friendly policies. By analyzing the transition of business tax to value-added tax (VAT) to reduce the burden of company costs and promote vitality in business activities – thus streamlining administrative procedures, supporting the strategic industry and reducing the social insurance payment rate – we examine the development of the industry and creation of new growth engines through VAT tax reforms by the Chinese government. While the transition of VAT was successful in the development of the service industry, there were also evaluations that the simplification of administrative procedures and the reduction of the social insurance payment rate did not have a great effect. China has carried out large-scale tax cuts since the US-China trade dispute in 2018, and we expect these to be implemented in a direction that supports industrial competitiveness and creates new growth engines in preparation for the 4th industrial revolution era.
   Chapter 6 analyzes the creation of new growth engines, which is the ultimate goal and mid- to long-term goal of SSSR. Through an analysis of innovation-related data such as the global innovation index, global manufacturing competitiveness index, R&D investment amount, and patent applications, we confirmed that China’s industrial and innovation competitiveness is improving. Policies related to the creation of new growth engines have been refined and pursued since before SSSR measures were proposed. We also reviewed China’s Made in China 2025 and Internet Plus agenda, and its innovative start-up ecosystem policy. For each policy, we conducted a case study by selecting industries in which the Chinese government has actively supported and show rapid growth, and in which cooperation or competition are anticipated with Korean industries. Our case studies analyze BYD, an electric vehicle manufacturer, Baidu, which is developing its own autonomous vehicle platform “Apollo,” and DJI, a drone manufacturer, as the new engines of China’s economy.
   In Chapter 7, we perform an overall evaluation of SSSR, the results indicating that China's SSSR is a creative development strategy based on the uniqueness of the Chinese economy, one which is difficult to find in conventional economic theory or macroeconomic policy as a development strategy for sustained and stable growth. This form of government-led total supply management is based on China’s special economic conditions and aims to reconcile the contradictions within the Chinese socialist market economy. However, the key to the success or failure of SSSR measures will be to minimize resistance on the part of local governments and state-owned enterprises and gain their cooperation in the process.
   The policy implications of SSSR on the Korean economy are as follows. First, in order for the Korean economy to take another step beyond its current contradictions at this stage, it will need to balance aggregate demand and aggregate supply. Second, efforts should be made to balance the role played by the government and the market in a harmonious manner throughout the restructuring and strengthening of competitiveness in overcapacity industries.  Finally, in order to prepare for the 4th industrial revolution era, it will be necessary for the government to boldly push forward policies and present its vision through selection and concentration in creating new growth engines. 

   The rapid spread of digital technologies is bringing about a reshaping of the global business landscape, in which the roles of services have been diversified in the global value chain  (GVC). As a matter of fact, the share of global manufacturing goods trade, which stood at 80% of total trade in 2006, fell to 70% in 2013 and remained at 76.8% as of 2017. On the other hand, the share of service trade gradually increased from 19.8% in 2006 to 23.2% in 2017.
   Against this backdrop, we attempt to verify how innovating digital technologies can significantly affect trade costs in services by conducting rigorous empirical experiments. Our empirical investigation may contribute to better understanding about global trade patterns currently in action and allow the designing of more practical policy options to take in the digitalizing global economy.
   In this study, we attempt to examine the case with diverse approaches. First, we introduce digital economy strategies launched by major economies, then review ongoing cooperation agenda discussed in the global community, including the WTO, OECD and APEC, in response to digitalization. Next, we examine how manufacturing and service trade costs have changed in Korea from 2000 to 2014, and trade costs between Korea and its major trading partners. Following this, we analyze the determining factors of service trade costs using the gravity model. Next, we analyzed Korea's service trade patterns, characteristics and its global competitiveness in each service sector.
   One of the initial outcomes we found is that the international competitiveness of Korea’s service trade is very low compared to its manufacturing trade. The empirical evidence clearly suggests the weak international competitiveness in Korea’s service trade field is due to low productivity in its service industry. The share of the service sector in Korea is 70.4%, accounting for a larger portion than the manufacturing sector. However, the value added portion of the service industry is 59.2% (as of 2016), and the increase in labor productivity is only 2.4% of the manufacturing industry.
   Next, we analyze and measure the factors affecting the changes in the service trade cost in the digital economy. In the first phase of the analysis, the bilateral service trade costs for five service industries in 43 countries and in the world between 2000 and 2014 are compared with those of domestic transactions and international transactions introduced in Novy (2013). We used a top-down trade cost estimation method with relative difference. In the second stage, the effect of proliferation of digital technology on the measured bilateral trade cost using the gravity model was quantitatively analyzed.
   Our estimations of trade costs indicated the service trade cost value was about 265% in 2000 and estimated at 231% in 2014. On the other hand, the trade cost measure of the manufacturing industry was 151% in 2000, which is lower than the service industry, and estimated at 128% in 2014. These results quantitatively verify the qualitative evaluation of existing studies that point to high service trade costs as a cause of the relatively low share of trade, even though the service industry produces a relatively high added value as compared to the manufacturing industry. The service industry, which has the highest service trade cost by industry, is a distribution service and the trade cost of transportation service is the lowest. Similar to the service costs of the entire service industry, the service cost of each industry gradually decreases in the period of 2000-2014.
   In the analysis of the determinants of trade costs, we used the International Telecommunication Technology Development Index (ITI) provided by the International Telecommunication Union and the Digital Trade Restriction Index (DTRI) provided by the European Center for International Political Economy (ECIPE). The first variable represents the level of digital technology in each country and is most widely used in measuring the information society. The second variable is used to reflect the regulations that accompany digitization. The results show the service trade cost reduction effect of the ICT development index is significantly higher than the reduction effect of the manufacturing trade cost, is continuously increasing during the past 10 years and proved statistically significant.
   We also analyze that the reduction of service and manufacturing trade costs caused by the advancement of digital technologies will not be stronger than the negative effects of digital trade regulation. Therefore, in order to minimize the effect of the DTRI, which greatly exceeds the trade cost reduction effect of the ICT development index and has high statistical significance, it is necessary to establish international norms for relaxation of regulations and standardization of digital trade restriction factors. In particular, when considering the empirical analysis that it is the most effective to mitigate policies that limit the access to finance and market access in the case of service trade, policies to limit foreign direct investment, intellectual property rights, data policy, content access, standards and online sales and transactions and international efforts for standardization should be mitigated. However, the unconditional easing of regulations restricting digital trade would not be a desirable approach, and appropriate regulation and efficiency improvement through institutional maintenance should be considered together.
   More specifically, examining the policy implications of the results of the empirical analysis, the trade cost of the Korean service industry is considerably higher in the service industries and the productivity of digital technologies in the five service industries is at an advanced level. The factor analysis shows that the growth of service trade in Korea is led by growth in the service industry. However, unlike in the US, the effects of trade diversion to third countries were significant, reflecting the competitiveness of the Korean service industry, especially in developed markets, not yet comparable. In order to develop the service industry in Korea, the above-mentioned digital infrastructure should be developed quantitatively, and institutional improvement and regulation should be prioritized to enhance its competitiveness. In particular, it seems to be more effective to improve financial and market accessibility through support policies such as taxes and subsidies to promote the service industry and improvement in government procurement-related policies.
   As a strategy to enhance Korea’s international competiveness in the service industry, this paper suggests firstly improvement of the digital regulatory environment, second, expansion of international cooperation such as by enhancing FTA networks, and third, improvement of R&D operating mechanisms and human resource development. 

   The purpose of this research is to propose policy implications and recommendations for the government’s New Southern Policy from the perspective of trade issues, thus enabling a more integrated policy that can be linked with Korea's ODA strategy and also strengthen global value chains in ASEAN and India. In order to achieve these research objectives, this report reviewed the recent developments in and characteristics of foreign relations in strategic regions to the south of Korea and compared the ODA strategies for major countries in the new southern regions. In addition, after analyzing the global value chain in new southern regions and empirically studying the relationship between the global value chain and ODA, we present suggestions for ODA policy and concrete policy measures.
   Chapter 2 of this report looked at the overall economic trends of ASEAN and India, focusing on macroeconomic relations, foreign trade and investment, and foreign aid. ASEAN has a population of about 640 million – including Indonesia (250 million), the Philippines (105 million), and Vietnam (94 million people) – and is classified as a region with the third largest population in the world after China and India. In 2017, ASEAN’s GDP was US$2.8 trillion, similar to that of the United Kingdom and France, whereas the growth rate of all 10 ASEAN member economies has begun to slow down over the last 10 years. However, recent members of ASEAN (Cambodia, Laos, Myanmar and Vietnam) achieved a 6.1% growth rate in 2017 and a higher rate of economic growth than the founding members (4.6% in the same year). In terms of the economic size of the 10 ASEAN economies, Indonesia accounted for 36.7% of the total GDP of ASEAN in 2017, followed by Thailand (16.9%), Malaysia (11.9%), Singapore (11.7%) and the Philippines (11.3%), while the Vietnamese economy recorded a share of 8.7% and continues to show strong growth.
   On the other hand, ASEAN trade is affected by external factors such as the global financial crisis and protectionism, but the trade volume of ASEAN has been steadily increasing due to the aggressive opening policy of ASEAN and high growth of China. The increase in trade with ASEAN is analyzed as being influenced by the attractiveness of foreign investment. Foreign investment is also steadily increasing due to the economic potential of the region as well as aggressive policies to attract foreign investment. Official development assistance (ODA) has also positively influenced the steady economic growth in the ASEAN region. In particular, ODA plays an important role in improving the connectivity of ASEAN in order to bridge the economic gap between ASEAN members with different levels of economic development.
   India also has a large economy (equivalent to US$ 2.6 trillion in 2017) that is comparable to that of ASEAN. Unlike ASEAN, India is characterized not by manufacturing but by service industries. However, since the launch of the Modi government, India has established and implemented the “Make in India” policy to strengthen its manufacturing industry and hence cooperation with Korea will become more important in the future. In addition, foreign investment into India is increasing rapidly. We can identify the labor force, market potential, talented manpower, and English-friendly environment in the nation as main factors to increase foreign investment.
   As previously analyzed, ASEAN and India are emerging as an important region for the global value chain of Korean companies, as exports of intermediate goods account for a larger share of Korea-ASEAN and Korea-India trade in goods. As a result, the investment of Korean companies in both ASEAN and India has been rapidly increasing. In particular, investments are being made in various sectors such as the manufacturing, mining, and service industries. In India, the concentration of manufacturing activity has become more pronounced under the Modi administration.
   Chapter 3 of this report analyzes the current status and strategies of Japan and China on ASEAN and India, and then draws policy implications through comparison with Korea. Overall, Japan's strategy is similar to Korea's, while China's strategy shows many differences. First, Korea and Japan have concentrated their ODA in the Asian region, while China is focusing on the African continent. In addition, Japan is also pursuing ODA strategies in conjunction with the expansion of the global value chain. China, on the other hand, is focused on securing the necessary production resources for its sustained economic growth. Also, while Korea and Japan as a rule do not use ODA for political purposes, China is actively utilizing ODA as a political or diplomatic means. This is because Korea and Japan are members of the OECD Development Assistance Committee (DAC) and are obliged to comply with regulations set by the DAC. On the other hand, since China is not a member of the DAC, it is free to actively seek political compensation after providing loans to countries with high geopolitical and diplomatic importance. Therefore, regarding the ODA strategy for ASEAN and India, Korea is in a competitive relationship with Japan and at the same time shares similar interests, and hence the two nations can expect to cooperate in various areas.
   Chapter 4 of this report analyzes the current state of global value chains in both ASEAN and India and draws implications for Korea's ODA policy based on this analysis. Considering the size of Korea’s ODA support, we selected Laos, Vietnam, Cambodia, Indonesia, and the Philippines among ASEAN member countries and included in the analysis the market potential and future economic cooperation with these countries. After selecting the main export industries of each country, we analyzed the GVC structure by disassembling the exports of the relevant industries in the corresponding countries. The conclusion from this GVC analysis is that Laos and Cambodia have a stronger global value chain structure with China, Indonesia with Japan, and the Philippines and India with the United States; Vietnam alone has formed a strong GVC with Korea, in the textile, clothing, and electric and electronic industries.
   In Chapter 5, we analyzed the relationship between the global value chain and ODA statistically, and also studied how ODA causes changes in comparative advantage as a production base of the country. In particular, ODA can mitigate the shortcomings of developing countries through various channels. First, it can improve the level of infrequent infrastructure through ODA, thus securing a comparative advantage as a production base for multinational corporations. The results of the quantitative analysis also showed that aid for trade (AfT), and particularly AfT for improving the infrastructure, has the effect of increasing the comparative advantage of the production base of the country. On the other hand, aid for enhancing productive capacity and for technically supporting trade policies and regulations failed to produce meaningful results. Therefore, in order to expand the global value chain by expanding production bases through ODA, it is necessary to focus more on policy support for economic infrastructure.
   Based on this analysis, this report proposes aid for trade as the main direction of ODA policy in order to link ODA-centered international cooperation with the expansion and strengthening of the global value chain in new southern regions. As previously analyzed in Chapter 5, the total amount of aid for trade and the size of AfT for economic infrastructure showed that the production base comparative advantage index of the source country was statistically significantly increased. This can be interpreted as an indirect way of expanding and strengthening the global value chain in terms of strengthening the comparative advantage of production bases through the establishment of economic infrastructure of the recipient country, rather than as a direct way to engage local companies in the global value chain.
   this study, we selected the key partner countries by combining the results of the global value chain analysis performed in Chapter 4 with the results of our analysis of foreign relations and ODA status and strategy in Chapters 2 to 3. In particular, we comprehensively evaluated the results of the analysis of global value chains in target countries and industries, together with the possibility of economic development in partner countries, their ODA policies and strategies, non-economic international relations and long-term cooperation strategies. In line with these analyses, we selected Vietnam, Indonesia, India, Laos, Cambodia, and the Philippines as the most promising partners for cooperation in the region, i.e. to expand and strengthen the global value chain of the key export industries in the new southern regions, and recommended ODA cooperation projects be more focused in the areas of aid for building economic infrastructure, enhancing productive capacity, technically supporting trade policies and regulations, and cooperation in non-economic fields, such as culture, academic, and education projects. 

   The purpose of thisresearch is to derive policy implications for Korea by comparing and analyzingthe current status and competitiveness of Korea, China, and Japan in theSoutheast Asian market as part of efforts to achieve diversification and enhancementof Korea's export items. Accordingly, the report analyzed the import patternsof consumption goods in the three Southeast Asian countries (Indonesia,Thailand, Vietnam), the determinants of consumption goods trade between Korea,China and Japan (KCJ) and the three Southeast Asian countries, the policies forpromoting export of consumption goods in KCJ and import barriers in the threeSoutheast Asian countries.
   In Chapter 2, we lookedinto Korea's export trends of prospective consumption goods to Southeast Asiaby analyzing import patters of prospective consumption goods to Indonesia,Thailand, and Vietnam, as well as Korea’s e-commerce trade—the composition ofwhich is largely made up of consumption goods.
   In Chapter 3, this research empiricallycompared and analyzed determinants of products traded in KCJ, Vietnam,Thailand, and Indonesia. The analysis found that unlike the trade of capitalgoods or intermediary goods, consumption goods trade is influenced by culturalsimilarity: the higher the cultural similarity among countries, the more activethe exchange of consumption goods. This is partly because while demandsfor capital and intermediary goods depend on relatively objective rationale,demands for consumption goods are often based on consumers’ preferences orchoice, which are subjective in nature. In this context,the trade of recreational services, such as broadcasting and education, canplay a complementary role in the trade of consumption goods. The study alsofound that consumption goods are more in affected by the e-commerceinfrastructure level than other products.
   In Chapter 4, this research first reviewed andcompared policies for promoting consumption goods and e-commerce in Korea, China, and Japan. Then we examined import barriers in Indonesia, Thailand, andVietnam.
   Compared to Korea, Chinafocusesmore on supervising and its ever-growing e-commerce market andstrengthening its management system, rather than on specific policy supports. Atthe same time, the government is pursuing a trial-based policy in which certaincities and regions are selected as testbeds for cross-border e-commerce, thanthe number is increased eventually to include the entire country. For Japan, itwas found that they exercise only a few direct support policies and even lesssubsidies, while for e-commerce, Japan provides provisions as a guideline forcross-border e-commerce. In this regard, Korean government’s e-commerce supportpolicy is much more direct and specific compared to China and Japan’s. In thefuture, it is necessary to prepare a comprehensive policy response throughcooperation between government ministries and spread success cases byimplementing adequate policy evaluation, etc.
   Next, the import barriers of Indonesia,Thailand and Vietnam in Southeast Asia are found to be relatively high.According to the TradeNAVI Integrated Trade Information Service provided by theMinistry of Trade, Industry and Energy and the Korea International TradeAssociation, Vietnam (49 cases), Indonesia (33 cases), and Thailand (21) aretaking non-tariff measures on various items such as food and beverage, cosmetics,medicine and medical devices. The measures include certification, quarantine,quantity control, technical barriers, etc.
   In Chapter 5, the following policy suggestionswere drawn based on the report analysis, in order to revitalize the consumptiongoods trade in Southeast Asia contents: First, it is necessary to re-evaluatethe effectiveness of Korea's export-promoting policies and preparecountermeasures accordingly.
   Second, it is necessary tocome up with comprehensive measures to promote exports of consumer goods toSoutheast Asian countries in connection with Korea’s New South Asian policy. Tothis end, the government should consider measures to improve the utilization ofFTAs, eliminate non-tariff barriers, establishing a research organization thatprovides in-depth market information, etc.
   Third, efforts to eliminatenon-tariff barriers, simplify import customs, expand Country RecognitionAgreement (CRA), etc. are imperative, as measures to prepare for theKorea-Indonesia CEPA negotiation.  
   Fourth, continuous effortsare needed to expand and supervise the Mutual Recognition Arrangements (MRA)partner countries, in order to reduce the time and cost of import customs andlogistics bound for Southeast Asian countries. 
   Finally, this paperproposed linking Korea’s consumption goods export stimulus policy to its serviceexport promotion policy. 

   This study examines changes in trade-related laws and systems in North Korea and actual trade practices, and analyzes them in accordance with international standards (the WTO regulatory framework). Recently, as the situation on the Korean Peninsula changes rapidly, interest in economic cooperation has risen in hand with the improvements in inter-Korean relations. However, our understanding of the North Korean trade system remains low. In order to prepare for the reform and opening up of North Korea and the resumption of inter-Korean economic cooperation, it is necessary to consider the characteristics of the North Korean trade system and measures to support  advancement.
   The main contents of this study are as follows: an examination of changes in the North Korean foreign trade system from 1990 to 2010, a review of the North Korean trade system and actual trade practices by detailed sectors, and a proposal of improvement plans for the North Korean trade system in accordance with WTO standards.
   Chapter 2 examines the expansion of North Korean trade and changes in related laws and institutions. First, after examining the expansion of North Korea’s trade, explanations are provided in connection with changes in laws and institutions. In addition, we analyze the changes in North Korea-China economic cooperation and the changes in inter-Korean economic cooperation in connection with the changes in the North Korean trade system. In order to understand the problems associated with North Korean trade laws and systems from the viewpoint of South Korea, we discuss the problems caused by the Inter-Korean Exchange and Cooperation Act of South Korea and provide a review of discussions in the 2000s concerning the conclusion of a CEPA between South and North Korea.
   Chapter 3 analyzes regulations and trading practices within North Korean trade laws and trade system. First, we examined the characteristics of the North Korean trade system and changes by period. Next, we analyzed the characteristics and problems of the North Korean trade system proposed by North Korean businessmen in China. In particular, we conducted an analysis of specific areas within North Korean official and informal trade systems, reviewing the areas of commodity and service trade, investment protection, customs clearance and quarantine, trade relief and dispute resolution.
   Chapter 4 examines issues of concern between the North Korean trade system and international standards, especially WTO rules. In order to overcome the lack of related data, we focus on issues and solutions that arose during the process of transition economies joining the WTO.
   In Chapter 5, we examine the issues and areas requiring improvement within North Korean trade laws and systems. First, we looked at how the North Korean trade system should be improved for economic growth, especially for export-led and foreign-funded economic growth. Next, we examined the issues and areas for improvement that must be addressed to establish a CEPA between the two Koreas. Finally, we looked at how North Korean trade laws and systems should be oriented to conclude a Northeast Asian regional trade agreement. In particular, we suggest an improvement strategy for the North Korean trade system, and negotiation strategy of the Korean government, in preparation for the conclusion of a CEPA. In the long run, North Korea should consider normalizing foreign trade and joining the WTO system. Lastly, we propose a negotiation strategy that takes into consideration the necessary process of persuading WTO members.
   The results of the study indicate that North Korea’s efforts toward legalization were not sufficient to lead the expansion of its trade. Although there have been efforts to establish a proper institutional framework to attract foreign capital into North Korea in the form of foreign investment, inter-Korean trade, and economic cooperation, there are numerous cases demonstrating how institutional devices to protect investors remain insufficient in terms of their actual enforcement. The partial rule of law within North Korea limits the quantitative and qualitative growth of trade, restricts North Korean trade participants to only North Koreans, and restricts the actual binding effect of trade-related legislation even if they are enacted. Improvement will be needed in these areas.
   It appears that North Korea will have no choice but to adopt a strategy that centers on FDI and export-led growth policies, as many Asian countries have, and this will likely proceed in the three stages of signing a CEPA between South and North Korea, concluding regional trade agreements in Northeast Asia, and accession to the WTO. In this process, North Korea will need to: (1) improve its tariffs and non-tariff barriers, (2) solve the problem of partial rule of law, (3) gain the trust of the international community and resolve disputes, and (4) conclude international trade agreements and cultivate human resources. In addition, in order for North Korea to maintain good foreign trade relations and attract investment from the international community, it will be necessary to faithfully carry out trade and investment contracts, to ensure the recovery of profits stemming from investment, and to resolve outstanding debts.
   We hope the findings of this study can offer valuable proposals for the reform of North Korea’s trade system to be considered during the negotiation process of an inter-Korean CEPA. The study is also significant in that it provides general reference data on the trends and characteristics of trade-related laws and regulations within North Korea, which will play a key role in the transition process of the North Korean economy. 

   Law amendments with reference to the EU General Data Protection Regulation (GDPR, henceforth) are flooding in Korea. It signals that GDPR is one way or another treated as a landmark for regulatory policy on data space. However, a point to see before such benchmarking is whether GDPR itself is compatible with the WTO Agreement. If not, Korea is likely to suffer from the same trade conflicts as the EU would face. Motivated by the concern, this study seeks to figure out key trade issues of Korea’s recent law amendments inspired by GDPR.
   The GDPR applies to all companies processing the personal data of data subjects residing in the EU, aiming to protect its citizens from privacy and data breaches as well as to facilitate free flow of data in the region. One of the major features of GDPR is the extended jurisdiction, so that it applies to the processing of personal data of the EU data subjects by a company not established in the EU. Non-EU businesses processing the data of EU citizens must appoint a representative in the EU to meet the obligations imposed by GDPR. Such requirement to appoint a local representative may be understood as a compliance measure in the GATS context.
   There is another kind of compliance measure, so-called ‘adequacy test.’ A country outside the EU should be recognised by the European Commission as having adequate protections in place in order to freely transfer personal data to somewhere outside the EU. It is the Commission that makes the final decision on adequacy status. Alternative route for a company without regional establishment to secure adequacy status for offshore processing personal data of EU citizens is to get an approval from supervisory authorities of EU Member States. In such instances, it is necessary for the company to adduce adequate safeguards for the protection of privacy and personal data.
   Is extraterritorial jurisdiction or adequacy test of GDPR trade-friendly then? Despite the lack of any available legal basis in trade agreements, the GATT dispute settlement panel once rejected extraterritorial jurisdiction because it would undermine the legal security of the multilateral trade framework. Adequacy test has potentially severe problems in terms of the GATS consistency. It is basically a discriminatory measure by reasons of origin, so that services and service suppliers are presumed to be of like. Unless such differential treatment is effectively justified by some other characteristics inextricably linked to such origin, it could constitute discrimination under MFN or national treatment obligations on a case-by-case basis. It deserves special attention for the EU to have a safeguard against such potential violations, none other than the GATS Article XIV (General Exceptions). In fact, this option is feasible for the EU because adequacy test is a compliance measure. Recourse to GATS Article XIV is available on the condition that challenged measure is a compliance measure, as far as it may be concerned with protection of privacy and personal data.
   Korea has been maintaining strong opt-in regulation on cross-border data transfer including personal data and space information. Contrary to regulation on space information equipped with solid national security ground, regulation on personal data transfer overseas is relatively vulnerable to trade friction. Views are spreading that Korea should change its policy stance to cope with the 4th industrial revolution, a common saying since 2016. Public sentiment still seems to put more weight on data sovereignty than usage in light of the recent law amendments. Patterns are unusual in law-making. Legislation is lingering in the Personal Information Protection Act that is the general law on the protection of personal data. In contrast, legislative efforts are very active in sectoral laws such as the ‘Telecommunications Business Act (TBA, henceforth)’ and ‘Internet Multimedia Broadcast Services Act (IMBSA, henceforth).’ Seemingly having little connection to the protection of personal data, they frequently adopt extraterritorial jurisdiction, local representative appointment requirement and adequacy test of GDPR.
   There are more to mention. Benchmarking GDPR, amendment bills of TBA and IMBSA claim to stand for relieving reverse discrimination in regulation. In a word, bill drafters presumably intend to solve regulatory issues induced by cross-border supply of value-added telecommunications services through capitalizing extraterritorial jurisdiction and local representative appointment requirement of GDPR. However, it is not unlike we try to open the lock with a wrong key. Figuratively speaking, it is a crossbite between means and end. Regulatory approach of this kind often leads to trade conflicts.
   Much more serious attention is due to two elements of the amendment bill of ‘Act on Promotion of Information and Communications Network Utilization and Information Protection, etc.’ One is the reciprocity provision and the other is the local server requirement. Aiming to authorize overseas transfer of personal data on a reciprocal basis, the former is scheduled to go into effect very soon. This clause is obviously a measure by origin discriminating between foreign online service suppliers. Without MFN exemptions registered in any trade agreements, Korea has no authority to implement such a measure. Although the latter is pending at the National Assembly, it is highly likely to run counter to Korea’s market access and national treatment obligations in the context of GATS and KORUS FTA as well. Therefore, repealing the amendments is greatly advisable to stop Korea from being embroiled in unnecessary trade disputes. 

Preface

Executive Summary

Contributors

Chapter 1. Introduction The European Union under Stress:Why It Matters for South Korea
KIM Heungchong (KIEP) and Françoise B. NICOLAS (Ifri)
1. A bumpy road to economic integration
2. Why this time is different
3. Why all this matters for Korea
4. The structure of the book

Chapter 2. Brexit: the Knowns Amongst the Unknowns ― For the UK, the EU and Third Countries, notably South Korea
Elvire FABRY (Jacques Delors Institute)
1. Introduction
2. State of play of Brexit negotiations
3. Potential scenarios for EU FTAs’ transition
4. A case study: Prospect for South Korea trade relations with the EU and the UK
5. Conclusion

Chapter 3. The Rise of Populism in  the EU and Changes in Political Geography
Matthew J. GOODWIN (Kent University)
1. Introduction
2. The evolution of national populism
3. Explaining the rise: Challenging conventional wisdoms
4. Conclusions

Chapter 4. Whither the Franco-German Motor?Overcoming Disputes and Reaching Compromises
Claire DEMESMAY (DGAP) and Barbara KUNZ (Ifri)
1. Introduction: From wonder to strategy
2. Education and culture
3. Eurozone reform
4. Defence
5. The way ahead
6. Conclusions: Lessons learned

Chapter 5. The EU and the Rise of US Protectionism
Iana DREYER (Borderlex)
1. Introduction
2. The deterioration of EU-US trade relations since the end of the Obama administration
3. EU’s response to the Trump administration’s trade policies
4. Conclusions and implications for Korea

Chapter 6. China and the EU: Main Economic Issues in Trade and Investment
Bernadette ANDREOSSO-O’CALLAGHAN (University of Limerick and Ruhr University Bochum)
1. Introduction
2. Theoretical framework for the appraisal of a bilateral economic relationship with implications on a third country
3. An analysis of the China-EU economic  relationship
4. Statistical analysis of the relationship and implications for South Korea
5. Concluding remarks

Chapter 7. Changing Landscape of Korea’s Economic Relations with Europe
Françoise B. NICOLAS (Ifri)
1. Introduction
2. EU-Korea economic relationship: A quantitative analysis
3. Qualitative analysis: what drives the  relationship
4. Conclusions and prospects

Chapter 8. The Future of the EU and its Implications to Korea
KIM Heungchong (KIEP) and LEE Hyun Jean (KIEP)
1. Introduction
2. Latent problems and revealed challenges
3. Criticisms on the EU regime
4. Projection on the future of the EU
5. Implications for Korea 

   The studies collected in this volume aim to illuminate what kind of challenges the EU and member countries have been facing now, how the challenges are developing, and what kind of implications we can draw for Korea.
   Chapter One is an introductory chapter, first highlighting the importance of crises in the EU’s development and then identifying the major drivers underlying the current difficulties and assessing how serious they are. Then it suggests what may be the major implications for some of the EU’s economic partners, with Korea as a case in point.
   Chapter Two talks about the current status of the Brexit negotiations and its impacts on countries such as Korea. The chapter covers the progress of the Brexit negotiations, chaotic status of post-negotiation politics in the UK, possible scenarios of future developments, and the impacts of Brexit on Korea as a case study. The author argues there is a growing probability for the alternative options of “no deal Brexit” or “no Brexit,” rather than the existing withdrawal agreement, and points out the numerous areas left by Brexit that will need to be addressed in the EU-Korea FTA and new UK-Korea economic relations.
   Chapter Three explores the rise of national populism in contemporary European politics, and the resulting changes in the political geography in Europe. It is very interesting to see how the author argues the current phenomena of rising populism are deep-rooted, much more than a mere response to the 2008 financial crisis, and closely related to the values divide in contemporary Europe.
   The next chapter concerns itself with Franco-German relations, which have been regarded as the motor of European integration. The authors appreciate the unprecedented process of reconciliation between the two countries in the course of European integration, but highlight the fundamental difference between the two countries in fiscal, monetary and defense policies arising from different political cultures. Talking about how the changing geography has placed the two countries into a leading role over the process, they suggest the two countries need to focus on exploring new areas of cooperation ‒ agenda for future challenges in Europe such as digitalization or climate change. This chapter provides ample implications to Korea on how to make regional cooperation work under fierce rivalry and regional dynamics.
   In Chapter Five, the author analyses the crisis in transatlantic relations coming into the Trump administration, and its implications for Korea. According to this chapter, the EU has responded to the protectionist approaches by the US by promoting cooperation with the US against China, staying with the US in the WTO and multilateralism, and the proposal of new trade agreements with the US and other countries. As the protectionist measures proposed by the US grow out of a prior history extending before the Trump administration, the tension is likely to last longer. The author concludes with some implications for Korea’s trade policy.
   Chapter Six covers China and the EU from the perspective of trade and investment. Although the two giants have achieved excellent performances in economic relations over the past several decades, tensions from China’s aggressive investment strategy to Europe have been arising. The author argues that Brexit would lead to the UK’s approach to the US rather than China, and that Korea would benefit from the geo-economic upheaval resulting from Brexit.
   In Chapter Seven, the author explores the recent history of economic relations between the EU and Korea. The author examines the impact of the EU-ROK FTA on trade relations and elaborates on the reason why the trade structure suddenly changed after the FTA. The author argues that is not only the result of tariff and non-tariff barriers elimination, but also of sluggish demand from the EU following the economic crisis in Europe, expanding value chains with third countries by Korean giant companies, and so on. The author also argues that the EU-Japan EPA, recently signed and about to enter into force in early 2019, will have a substantial impact on the EU-Korea trade relations, as Japan and Korea are competing in many industries.
   Chapter Eight examines the prospects of the EU regime and its implications to Korea. The authors talk about recent challenges in the EU such as its ageing society and enlargement process, together with other issues discussed in previous sections, which may have great impacts on discussions of the future of the EU. Then, the authors introduce recent developments toward the future of the EU led by the EU institutions and other players in Europe. Finally, the authors present the implications the EU holds for Korea, and the third countries located in East Asia, making for rare observations to Europeans. 

   This study identifies potential threats to exporters to the U.S. caused by the recent changes in U.S. trade remedies. A close examination is conducted of U.S. trade remedy measures against Korean businesses. The second chapter reviews the political and economic background of the recent legislations for U.S. trade remedies. The third and fourth chapters analyze the institutional and implementational changes in antidumping and countervailing duties, and safeguard measures carried out under the Trump administration, respectively.
   Our results find that the series of amendments to U.S. trade remedy laws aim to grant the two investigation authorities, i.e. the U.S. International Trade Commission and Department of Commerce, greater discretion in making their decisions and in calculating the price advantage provided to foreign exporters. In antidumping and countervailing duty cases such amendments lead to more facile application of a higher dumping margin or subsidy rate to foreign producers through an increase in normal value, use of Particular Market Situation (PMS) or Adverse Facts Available (AFA) or both, and a failure to cooperate on the part of a respondent. In doing so they serve the purpose of strengthening the position of U.S. domestic industries with protectionist tendencies.
   The study shows that the U.S. laws on safeguards, general and security, have not changed much since the enactments, but there has been a significant change in their implementations. The Trump administration has consecutively triggered general safeguard measures against Korean residential washing machines and solar products for the first time in 16 years, and initiated investigations on a threat to national security posed by imported steel, aluminum, and automobile products. It has employed general safeguards to prevent foreign exporters from circumventing antidumping duties, which may not be in line with their original purpose, and has been applying security safeguards rarely used in the past to a breadth of imports, aggressively interpreting the definition of national security. 

Foreword

Executive Summary

Contributor

1. Introduction – framework
1.1 General information - needs
1.2 Scope and objectives
1.3 Literature, theories
1.4 Methodology, process
1.5 Expectations
1.6 Research structure

2. Concepts and definitions – describing the relevant knowledge methodology, the foundation  and
     the structures of the economic model
2.1 Knowledge Management (KM)
2.1.1. Concept, definition
2.1.2.Knowledge characteristics in the Knowledge Management approach
2.1.3. Intellectual Capital
2.1.4. Knowledge Organization and Knowledge Worker
2.1.5. Knowledge Productivity
2.1.6. Knowledge Management process
2.1.7. Knowledge Management tools 
2.1.8. Practical examples of Knowledge Management implementation
2.1.9. Knowledge Economy Pyramid framework
2.1.10.Assessment tools for the readiness to adopt Knowledge Management
2.1.11. The need for Knowledge Economy
2.2 Knowledge Economy (KE)
2.2.1. Concept, definition, and pillars
2.2.2. Functionality 
2.3 Knowledge Triangle (KT)
2.3.1. The stakeholders and their roles
2.3.2. Evolution of the concept – establishing the European Institute of Innovation and Technology
2.3.3. Knowledge Innovation Communities
2.3.4. Measuring performance in innovation
2.3.5. Necessity to improve the Knowledge Triangle
2.4 Triple Helix
2.4.1.Structural harmonization in the Knowledge Economy Pyramid
2.4.2. The outline, concept, and stakeholders
2.4.3. Outlooks
2.4.4. Cycle and functionality
2.5 Smart Specialization
2.5.1. Build up the concept
2.5.2. Stakeholders and partnerships
2.5.3. Smart Specialization Strategy (S3)
2.5.4. The process of implementation
2.5.5. The roles and functionality
2.5.6. Bottom-up approach
2.5.7. Research and Innovation Strategies for Smart Specialization

3. Correlations and synergy – analyzing the knowledge ecosystems
3.1 University – Science
3.1.1. Knowledge generator function
3.1.2. The virtuous knowledge cycle
3.1.3. “Third Mission” of the university, lifelong learning concept and the needed reforms
3.1.4. Education performance around the globe
3.2 Business – Innovation
3.2.1. The two-way approach: bottom-up and top-down
3.2.2. Central axis of the pyramid
3.2.3. Innovation analysis
3.2.4. Touching creativity
3.2.5. Economic value of innovation
3.3 Research – Technology
3.3.1. The role of Information and Communication Technology (ICT)
3.3.2. Best practice: Samsung Advanced Institute of Technology (SAIT)
3.3.3. Build supportive environment
3.4 Government – Administration
3.4.1. Critical correlation for capacity building
3.4.2. Validating the model on different economic environments
3.4.3.Key drivers for establishing the Productivity and Competitiveness Center
3.4.4. Practical correlation: Korean Government – Korea Productivity Center
3.4.5. Adopting the best regulation to foster innovation
3.4.6. Key roles in the public administration innovation initiatives
3.5 Clusters – Community
3.5.1. Enhancing the local potential
3.5.2. Clustering process
3.5.3. The case of Korea: chaebol
3.5.4. Regions of Knowledge
3.5.5. The role of clusters for competitiveness

4. Measurement and indicators – assessment methodologies and indices
4.1 Outputs
4.1.1. Knowledge as resource
4.1.2. Understanding the knowledge before measuring
4.1.3. Productivity and statistics
4.1.4. The art of touching the untouchable
4.1.5. Knowledge Assessment Methodology
4.1.6. Knowledge indices
4.1.7. Global Competitiveness Index (GCI)
4.1.8. Global Manufacturing Competitiveness
4.2 Outcomes
4.2.1. Standard of living and quality of life
4.2.2. Human Development Index
4.2.3. Green Growth
4.3 Action plan
4.3.1. Specific terminology and the abstracting model
4.3.2. The 7 stages of implementation
4.3.3. Build up around the 4 pillars
4.3.4. Policies alignment and reforms
4.4 Perspectives of cooperation
4.4.1. The Knowledge Sharing Program
4.4.2. Planned organizational framework for Romania
4.4.3. Upgrading the cooperation
4.4.4. The role of the Productivity and Competitiveness Center at national level
4.4.5. The proposed action plan for Romania
4.4.6. The benefits of the cooperation
4.5 Lesson learned
4.5.1. Korean development after The Second World War – the 4 milestone of the Knowledge Economy
4.5.2. The way ahead towards Knowledge Economy

5. Impact - validation and sustainability
5.1 Productivity
5.1.1. Productivity as development strategy
5.1.2. Concept’s analysis
5.1.3. Case study: Korean productivity
5.1.4. Korea Productivity Center
5.1.5. Productivity in the European Union
5.2 Macro-economy
5.2.1. Changing of the development paradigm
5.2.2. Economic theories
5.2.3. The status of Knowledge Economy
5.3 Public policy
5.3.1. The context and the role of policymakers
5.3.2. The policy/decision-making process
5.3.3. The stages of policymaking process
5.3.4. Strategical approach
5.3.5. The EU principles for transition to the Knowledge Economy
5.3.6. Where is the knowledge frontier?
5.3.7. Recommendations for building institutional capacity
5.4 Society
5.4.1. The value for money
5.4.2. Comparing development cultures
5.4.3. The supremacy of the model
5.5 International relations
5.5.1. Collaborative approach
5.5.2: Going international

6. Conclusions
6.1 One-stop shop body of knowledge
6.2 The value proposition
6.3 Threefold conclusions for the analyzed economies
6.4 Sum-up the findings
6.5 Research perspective
6.6 Final remarks

Appendix

References 

   The global economy’s landscape needs a new economic model where knowledge is used as a valuable resource to stimulate innovation, creativity, and entrepreneurship in order to increase productivity and competitiveness for sustainable growth as a premise for social welfare. The policymakers have to design the new public policy for productivity and competitiveness considering the Knowledge Economy frontier and to establish the institutional capacity to manage the knowledge perspective of development. The Knowledge Economy Pyramid model is a catalyst of knowledge ecosystems from education, research, technology, business, innovation, government and local communities, capable to create a collaborative environment with synergy effect: transforming knowledge value in increasing productivity and competitiveness.
   The Knowledge Economy Pyramid is a robust framework based on the four pillars of Knowledge Economy with three effective and powerful structures build upon: Knowledge Triangle, Triple Helix, and Smart Specialization. The main axis which unifies these structures is education-business and all the other stakeholders from research, science, technology, government, administration, clusters, and community are equal contributors to process the knowledge along the central shaft.
   Considering the Knowledge Economy Pyramid model, this research work is defining the coordinates of the public policy for productivity and competitiveness which will be implemented by the institutional capacity – Productivity and Competitiveness Center. This institution is a concrete and accurate representation of the Knowledge Economy Pyramid model with the scope to implement the principles of Knowledge Economy to increase productivity and competitiveness as outputs of the process. Moreover, the capacity building will provide the premises to conclude the new public policy into outcomes: standard of living, well-being, quality of life, and green growth.
   Knowledge Economy Pyramid provides a toolkit for policy/decision- makers to take action in order to improve the activity at any stage of development or maturity for an economy or institution related with productivity and competitiveness and it is able to measure the gap between actual development level and the knowledge edge.
   From an economic perspective, to analyze the concepts of productivity and competitiveness in Knowledge Economy, this study is a very complex work where the tangible is mixed with the intangible, human with technology, economic growth with people prosperity. This study is a “one-stop shop” for all the policy/decision-makers, leaders, representatives, officials, professors, researchers, specialists and practitioners, all engaged in the work to transform the traditional economic model into a new one, according to the Knowledge Economy Pyramid framework.

Keywords:Knowledge Economy; Knowledge Triangle; Triple Helix; Smart Specialization; innovation; productivity; competitiveness; sustainable growth 

   Private sector development is imperative to alleviate poverty and drive economic development. In developing countries, small and medium sized enterprises make up the majority of the private sector and provide most of the employment. As such, growth in the private sector generates income for many parties. The UN Sustainable Development Goals(SDGs) underscore the role of the private sector even further. Highlighting inclusiveness and sustainability, the SDGs mention the need to foster SMEs’ capacity and to enhance their participation in the global value chains(GVCs). A number of leading donors have developed Aid for Trade strategies, identifying trade capacity building or access to GVCs as key areas for support. According to the OECD DAC Statistics, Korea has provided substantial trade-related support to developing countries. However, Korea has primarily focused on hard infrastructure, such as roads and railways. It is necessary for Korea to diversify the scope of its trade-related support to foster growth in the private sector and its participation in GVCs.
   The objective of this study is to present a strategy and implementation plan for Korea’s Aid for Trade. In particular, we focused on strengthening developing countries’ access to GVCs. We reviewed literature to provide an overview of discussions in the international community regarding GVC participation and economic development. In the case study of Vietnamese participation in GVC, we conducted a field study as well as quantitative data analysis. Finally, we undertook an extensive literature review in order to analyze the AfT strategies and GVC support programs by major donors and multilateral organizations. Incorporating the findings from each section, we suggested an overarching policy direction on AfT for the Korean government to contribute to the GVC participation of developing countries’ SMEs. The following is a summary of the chapters of this report.
   This study begins by presenting discussions on the role that GVC participation plays from the perspective of developing countries when it comes to advancing sustainable development. From a developing country perspective, we review the discussions on how participation in global trade will foster sustainable development, the benefits and barriers to GVC participation, and policy measures to promote GVC participation. The SDGs emphasize SME productivity enhancement, export competitiveness, and high-quality job creation in connection to participation in GVCs. Nevertheless, developing countries face a number of complex constraints to participate in GVCs. Such challenges vary depending on the stages of GVC participation, that is, entry – integration – upgrading. Therefore, different policy measures are required depending on the stages of GVC participation.
   In Chapter 3, we identify the benefits and constraints of GVC participation for SMEs in developing countries. As a concrete example, we selected Vietnam, a major export partner and also an ODA recipient of Korea. Based on data analyses, we draw implications for developing a support strategy. First, we analyze the supply and purchase relationship of Vietnamese enterprises in the electronics and food processing industries. Conducting an empirical analysis of the productivity premium associated with GVC participation, we seek the correlation between GVC participation and technology competence as well as the level of technological competence required to upgrade within the GVCs.
   An examination of the supply and purchase relations of Vietnamese electronics and food processing enterprises revealed different characteristics between the two industrial sectors. In the electronics industry, enterprises – often large in size – supplied intermediate goods to the global market. In the food processing industry, local SMEs procured intermediate goods to domestic food processing enterprises, and these larger enterprises engaged in the GVCs by providing final goods to the global market. In other words, enterprises in the food processing industry engage with the GVCs through the export of finished products, whereas enterprises in the electronics industry often subcontract with foreign companies. Companies in the electronics industry are highly focused on a small number of overseas buyers. Therefore, they are exposed to a large chance of progressing into a structure that is dependent on overseas firms. On the other hand, the transfer of technology was more likely in the electronics sector compared to food processing.
   The correlation between participation in GVCs and corporate productivity premium revealed different impacts according to the level of GVC participation. Despite large employment, firms with high GVC participation rate displayed low productivity, signaling that the learning effect of GVC participation is low. Analysis of the correlation between participation of GVCs and technology competence from 2013 to 2017 was also low, meaning that there was little technology development.
   Summing up the analysis from Chapter 3, we conclude that in Vietnam – and other similar countries – Korea should focus on assisting the enterprises to advance within the GVCs by enhancing their technology capacity. Needless to mention, adequate institutions and policy are required. In particular, cooperation between enterprises could be enhanced rather than measures to facilitate trade and reduce trade costs. During the field study, we observed a large demand for increasing partnership between enterprises to foster technological capacity. In response, an innovative partnership program between and among the public and private sector can be beneficial.
   In Chapter 4, we review the strategies and programs regarding AfT and GVC participation of selected donors and multilateral organizations. Upon conducting a thorough investigation, we identified a number of characteristics shown by different donors and organization. The German Federal Ministry of Economic Cooperation and Development (BMZ) has been promoting Aid for Trade under an organized strategy since the early 2000s. The United States Agency for International Development (USAID) emphasizes strengthening trade capacity in order to expand participation in GVC. In addition, the Swiss State Secretariat for Economic Affairs (SECO) promotes SME trade capacity building under an SME development strategy. As a designated UN agency for industrial development, the UNIDO supports SME development and trade capacity building. In sum, all of the organizations reviewed maintained some level of strategy regarding AfT or GVC participation. They provided systematic support based on their respective strategies. While considering the various challenges and barriers to GVCs, they also took account of their own strength and advantages in designing the intervention. Some noteworthy characteristics of these organizations can be summarized as follows.
   To begin with, BMZ supports developing country enterprises to participate in GVCs by improving quality-related infrastructure and enhancing production capacity. Furthermore, BMZ actively encourages participation from the private sector – both German and developing countries. On the other hand, USAID supports a broader inclusion of developing country stakeholders to GVCs by increasing agricultural productivity, developing service industries, conforming to international standards, increasing private sector participation, and improving trade-related institutions. The Swiss SECO diversifies its partnership strategy and performance framework according to the country’s development stage. In the case of Vietnam, SECO works to promote entrepreneurship, sustainable trade and competitiveness, and resource efficiency for Vietnamese SMEs. UNIDO assists trade-related institutional building and trade cluster development, maximizing the use of its vast network of cooperating partners.
   Korea has accomplished remarkable economic growth over the past decades, largely due to active trade. Therefore, Korea possesses a wealth of experience in trade and development. However, these valuable experiences have not yet been applied to intenational development cooperation. Furthermore, official development assistance(ODA) is delivered in an uncoordinated manner without clear guidance or strategy on AfT. In addition to stressing the urgent need to develop guidance/strategy on AfT, the study suggests the following points for further consideration.
   First, it is necessary to expand AfT activities beyond economic infrastructure construction projects to those that can improve production capacity. Our analyses and interviews with local enterprises in Vietnam confirmed that production capacity building is most needed for developing countries to create high value-added products and climp up to the next stage of the GVCs. Since there is no AfT strategy at present, Korea can highlight the relevance of production capacity building in SDGs 2, 8, and 9, and promote the private sector in developing countries to participate in the GVCs.
   Second, GVC-related interventions require an industry-specific approach. In our analysis, different industry sectors showed significant differences in the challenges and capacity to access the GVCs. Therefore, support programs must be customized by industry to address the different challenges each industry is facing. For example, in the case of electronics, transfer of technology can occur during interactions with foreign companies through the close link between local firms and overseas firms. However, the food processing industry has little need for interaction with foreign companies during production, and therefore technology diffusion is unlikely. ODA to promote further cooperation between Korean and Vietnamese enterprises can be beneficial for the electronics sector, whereas knowledge sharing on trade regulation and support on regulation-related capacity building is more valuable for the food processing industry. International Development cooperation programs for different industries must vary in line with the characteristics of the industries.
   Third, there is a need to further enhance private-to-private partnership between enterprises in developing countries and Korea. The German BMZ promotes a program to enhance the technical capacity of developing countries so they can access to and advance within the GVCs. A noteworthy element is that the program targets its support to EU (and German) companies which will expand their businesses to developing countries while integrating the value of mutual benefit. We also experienced a strong desire from the private sector in Vietnam to collaborate more closely with the Korean private sector during the field research. Especially for a middle-income country like Vietnam, and for a technology-intensive sector like electronics, the public sector should take on a role that is innovative in encouraging active private partnership between two countries.
   Finally, it is important to provide consistent support to elevate the trade-related capacities of individuals and institutions at parmer countries. Considerations should also be made to harmonize development cooperation and trade policy throughout these support measures. While Korea is already providing support to trade facilitation programs, there is room to improve. Our field study has revealed a number of challenges in non-tariff barriers in trade, such as sanitary and phytosanitary(SPS) measures. For instance, in order to foster Vietnamese enterprises’ participation in the GVCs, technical assistance is needed to improve the capacities of Vietnamese food processing enterprises to meet SPS.