Introduction

Chapter 1. International Trade in Services
1. Introduction to International Trade in Services
2. Historical Trends in International Trade in Services
3. Intelligent Automation, Services Trade, and Outsourcing

Chapter 2. AI-Powered Intelligent Automation
1. Impact of Intelligent Automation on Jobs
2. Advances in Intelligent Automation and Service Occupations

Chapter 3. Overview of Data on International Trade in Services and Service Automation
1. Data on International Trade in Services
2. Data on Industry Automatability
3. Automation and Service Exports and Imports
4. Data Analysis Models

Chapter 4. International Trade in Services and Automation
1. Annual Growth Rates in International Trade in Services
2. Growth Rates in Highly Automatable Service Industries
3. Growth in Services Trade in Developed vs. Developing Economies
4. Growth in Services Trade by Different Levels of ICT Development
5. Growth in Services Trade in High GDP/Income vs. Low GDP/Income Economies
6. Growth in Services Trade by APEC Member Economies
7. Analyses of Select APEC Member Economies
8. Summary of Key Findings

Chapter 5. Policy Implications and Recommendations for APEC
1. Principles for Policies and Regulations for Intelligent Automation
2. Recommendations for Policy Directions
3. Policy Recommendations for APEC Member Economies
4. Roles of Korea in Promoting Shared Prosperity in APEC Economies

Conclusions

Appendix

Executive Summary 

   The advances in intelligent automation enabled by artificial intelligence (AI) could make a wide range of service jobs obsolete at an accelerated speed. These jobs that are threatened by automation include not only routine low-skilled service jobs but also high-skilled, knowledge-intensive service jobs. The service producers in developed economies have been resorting to high-skilled workers in developing economies via service offshoring to take advantage of lower wages. However, intelligent automation could offer the service firms with an even cheaper alternative than service offshoring, threatening employment in the service industries in developing economies.
   The objective of this study is to investigate the impact of intelligent automation on international trade in services. We posit that AI-powered intelligent automation reduces the demand for service offshoring, which, in turn, leads to a decline in international trade in services. To test this hypothesis, we use multiple data sets including the U.N. Comtrade trade data over the period from 2000 to 2016, the O*NET data, the World Bank Open Data, and ITU’s ICT Development Index (IDI). We run a series of regression analysis to take a deep dive into the temporal patterns of international trade in services.
   We find that the annual growth of international trade in services over the period from 2000 to 2016was 1.67%. However, we observe that the annual growth rate significantly declined from 2014 after healthy growth between 2008 and 2014. However, whereas highly automatable service industries such as financial services, information services, and professional services experienced a negative annual growth rate from 2014, other less automatable services industries did not experience a significant decrease in their annual growth over the same period. Therefore, we could infer that intelligent automation replaced service offshoring of highly automatable services and as a result, international trade in those services declined.
   Our further analysis shows that the exports in highly automatable services from developing economies to developed economies witnessed a significant decline since 2014. However, we did not find the same pattern in less automatable service industries. We also see that, over the period from 2000 to 2016, the annual growth in the service exports from countries with a low level of ICT development to countries with a high level of ICT development was significantly lower than that from countries with a high level of ICT development to other countries. This finding is consistent with prior findings that ICT facilitates international trade. However, since 2014, we are witnessing a decline in both the exports and the imports in services in countries with a high level of ICT development. This decline was more significant in highly automatable service industries. We could infer that countries with a high level of ICD development have more advanced intelligent automation technologies, which reduce the demand for service offshoring.
   When we limit the scope of our data analysis to 21 APEC member economies only, we still find the same results. While highly automatable service industries experienced a decline in international trade since 2014, less automatable service industries did not experience such a fall. Another interesting finding is that the exports from the developing economies within APEC to the developed countries within APEC decreased more significantly than the exports from the developed to the developing, from the developed to the developed, or from the developing to the developing economies. Finally, it is found that China, India, Korea, and Russia experienced growth in service exports until 2012 but since then witnessed a decline in service exports starting from 2012.
   We discuss the implications of these findings and offer policy recommendations. We present five guiding principles for regulations and policies for intelligent automation technologies, ten policy directions, and six specific policy recommendations for APEC member economies. Finally, we discuss how South Korea can serve as a model and contribute to promoting shared prosperity in APEC member economies. 

   Mongolia is one of the twenty four key partners with South Korea in accordance with the Second Medium-Term Development Plan of the ODA from 2016 to 2020. South Korea has been the second largest bilateral partner with Mongolia among countries participating in the international development cooperation projects for Mongolia. Although the health sector has been emphasized in the Second Mongolia Country Partnership Strategy (CPS) announced in 2016, South Korea's cooperation in health sector of the ODA projects has been limited to the hardware-based business of establishing healthcare infrastructures or to strengthening the capacity of healthcare personnel.
   Since the international cooperation strategies for Mongolia includes the health sector, it is necessary for the domestic development partners to understand the health level of Mongolia and the health care system in order to find a way to cooperate with Mongolia for development of health sector. The partners also need to be aware of the donor countries that are involved in the projects and the contents of their collaboration with Mongolia. In addition, it is essential to examine how Korea has proceeded those development projects in Mongolia so far and difficulties it has faced.
   Therefore, this study aimed to investigate how major donor countries and health related multilateral organizations such as WHO have supported the development of health sector in Mongol, based on the understanding of the current status of Mongolian health and health policy and systems. The purpose of this study is to describe the current status and the challenges regarding Korea 's cooperation in developing health sector in Mongolia and find implications for our future cooperation.
   This study found that Mongolia has problems related to a low population density compared to its vast land, a severe regional imbalance in health infrastructures, and a high burden on non-infectious diseases. Mongolia has been striving to strengthen its national healthcare capacity in line with the Millennium Development Goals and the Sustainable Development Goals. As a result, Mongolia has achieved success in the prevention and management of infectious diseases, which led the major donor countries to redirect their support from basic health area to general health area, focusing on strengthening health care systems and improving the quality of health care services.
   Mongolia is a middle and low income country. Mongolia has constantly enhanced the accessibility of health care service in order to improve the public health and the health care system through introduction and modification of the health insurance to benefit the entire population, an establishment health care system through 1st, 2nd and 3rd national plans, and employment of telemedicine. However, Mongolia faces a financial burden which makes it difficult to invest in continual development of the healthcare sector due to the recent declination of economic growth rate and economic recession accompanied by inflation and a rise of exchange rates.
   Mongolia has not only put its own efforts into coping with health issues, but also promoted development cooperation projects with various multilateral and bilateral parties for the improvement in health sector. This study examined the cooperation projects of major donors such as Japan, Luxemburg, WHO, and ADB. This study found that the major donors' projects for the development of the Mongolian health sector were being carried out in a variety of ways. While the cooperation projects are different according to the donor countries, they commonly aim at achieving universal health care coverage called 'leaving no one behind' which Mongolia has been pursuing. In addition, the major donors were utilizing a cooperative network among the various development partners to implement the health sector development cooperation projects. The major donors have established mid- and long-term plans with concrete contents and carried out their projects accordingly.
   Similarly to the major donor countries, Korea's Mongolian health sector development cooperation projects also presents its mid- to long-term priority areas and directions through national cooperation strategies. But there is a difference in the level of specificity of the contents between Korea and other donors. In addition, Korea 's Mongolian health sector development cooperation project is centered on the health system area which is also supported by major donors such as Japan, ADB and WHO. It implies that South Korea might need to discover new support areas where are not overlapped with the support areas of other major donors, we can apply our strengths to, and Mongolia expresses as its demand as well.
   Based on the recognition of these situations and problems, this study suggests to provide customized support to meet the health needs of Mongolia and support for strengthening the response capacity to cope with public health problems. We also pointed out that customized support and support for strengthening Mongolia's response capacity should be based on establishing a Mongolian health sector development cooperation plan that reinforces network with domestic and international development cooperation partners and entails specific steps.
   Upon consideration of the needs of Mongolia and the possible application of our strengths, this study recommends projects related to strengthening the health care coverage and the capacity to prevent and manage non-communicable diseases, such as strengthening the Mongolian healthcare workforce capacity through advanced training and providing technical support to improve health information system, as parts of the customized support and support to strengthen the response capacity. 

   The purpose of this study is to investigate the effects of the Japanese government support system on business restructuring. This study also aims to draw policy implications for the Korean government to keep in mind as it administers the Special Act on the Corporate Revitalization, notwithstanding the different business environments in Japan and Korea, and the differences in policy direction and legal institutional basis set by the two governments. The results of the study can be summarized as follows.

   First, the types of business reorganization measures regulated by the Japanese Industrial Competitiveness Enhancing Act are summarized by year, showing the highest utilization rate over the period of 2000 to 2005. Since 1999, Japanese companies have begun to increase the number of domestic M&A every year, indicating that the government has satisfied the 'demand' for M&A by domestic businesses.

   Second, in accordance with the Industrial Competitiveness Enhancing Act, Japanese corporations have actively utilized the special measures of the Commercial Act, tax support measures, low-interest financing by government financial institutions.

   Third, the number of business reorganizations using the Japanese Industrial Competitiveness Enhancing Act dropped to 15 or less annually from 2013, but this decline in utilization does not mean that the law itself is useless. Rather, the results suggest that the Japanese government responded timely to the demand for business restructuring by various measures.

   Fourth, in terms of legal and institutional aspects, the Japanese Industrial Competitiveness Enhancing Act can be highly evaluated in that the exceptional measures prescribed by the Act have been 'generalized' into revisions of the Commercial Act and the Corporate Law. 

   The policy implications for the Korean government, as it administers the Special Act on the Corporate Revitalization, are as follows. 

   First, the scope of the law is too narrow, as can be seen in its limited application to 'domestic companies that restructure their business to overcome oversupply.' In order to contribute to business restructuring efforts in Korea, the explicit condition of 'oversupply' should be eliminated and the scope of the law expanded to support all new business activities for the fourth industrial revolution.

   Second, it is necessary to keep in mind that the special measures within the Commercial Act and the Fair Trade Act stipulated under Korea’s Special Act on the Corporate Revitalization need to be incorporated into general provisions within the Commercial Law and Fair Trade Act if they show favorable results in terms of actual utilization by corporations.

   Third, Korea will have no choice but to operate its business restructuring support system in a way different from that of Japan due to various issues, including the succession of management rights by Chaebol owners. These special considerations reflect the unique characteristics of the governance structure of the Korean Chaebol and must be distinguished from support measures for business reorganization. 

   The main objectives of this research are twofold. The first objective is to analyze the trade structure between Korea, China and Japan between the years of 2001 and 2017 and propose measures to expand trade with China. In particular, this research argues that the existing trade structure with China has run into limitations due to a decrease in China’s import of intermediary goods and a consequent increase in competition within the industry, and thus it will be important to utilize China’s various policies such as the New Industries Policy and High-Quality Consumption Policy, etc., in order to expand trade. It will also be necessary to devise new China FDI policies that take into account the recent changes in China, especially in the fields of the Fourth Industrial Revolution, domestic consumption goods industries, and high value-added service industries. This is covered in Chapter 2 of the study. The second objective of the study is to derive policy implications for Korea and Korea-China-Japan (KCJ) cooperation in the following three areas: the 4th Industrial Revolution, e-commerce, and cultural contents. This is covered in Chapter 3 to 5 of the study.
   Chapter 2, “Changes in Korea, China, and Japan’s Trade and Investment Structure,” reviews the changes in the trade structure in the three countries, and examines new measures of cooperation to respond to changes in trade (including investment) structures between Korea, China and Japan. The results indicate that advances in China’s production and export have increased the similarity between the trade items in Korea and China, and this in turn has changed the trade structure between the two countries, from a focus on division of labor toward more intra-industry competition. Meanwhile, in the case of Japan, no mutual similarity is visible between the two countries in their trade items.
   In Chapter 3, “Korea, China, and Japan’s Cooperation in the Fourth Industrial Revolution,” this research first analyzes the three countries’ government policy in the field of the Fourth Industrial Revolution, then reviews the cases of cooperation between Korea, China and Japan, going on to propose promising directions or agendas for cooperation. According to the analysis, cases of Korea-China-Japan cooperation in the fields of the Fourth Industrial Revolution are rare, and Korea does not seem to have a clear direction for industrial cooperation with either Japan or China. In this context, this study presents tasks and directions for Korea-China cooperation, as well as for Korea-Japan cooperation, rather than drawing a common direction or agenda for trilateral forms of cooperation.
   In Chapter 4, “Korea, China, and Japan’s Cooperation in E-Commerce,” this study looks into cross-border e-commerce trade, which is growing rapidly in the recent years. This chapter aims to identify trends and characteristics of e-commerce policies in Korea, China, and Japan and draw implications for cooperation in the e-commerce sector. In the search for areas of cooperation in KCJ’s cross-border e-commerce trade, this chapter focuses on three areas: cross-border measures (including customs clearance and logistics), movement of data across borders, and consumer protection. According to the analysis, cooperation between KCJ is most feasible in the areas of customs clearance and logistics. In particular, joint partnership projects between cities, an area which has received much attention recently, could be effective when it comes to enhancing intra-regional cooperation in cross-border e-commerce. In the area of data transfer across borders, it would be difficult to reach a consensus among KCJ due to clear differences in the respective positions of the three countries. Finally, in the field of consumer protection, this study notes the discussions currently progressing through channels such as the Korea-China-Japan Consumer Policy Council, and stresses that developing and strengthening these communication efforts would yield more meaningful outcomes in the area.
   Chapter 5, “Expanding Korea’s Exports of Cultural Contents in China and KCJ Cooperation,” examines the three countries’ policies of promoting cultural contents industries and regulatory policies—implemented in order to protect indigenous industries—and suggests policy implications for Korea. Korea`s cultural content export is heavily dependent on China and Japan, and its export sector is also heavily concentrated in the game industry; thus, it is necessary to diversify its export destinations and foster new contents sectors. This chapter examines cultural contents policies in the three countries, as well as regulations and barriers to foreign entities in the cultural contents industry, comparing and evaluating the three countries’ policies to suggest changes to Korea’s cultural contents exports strategy. 

   In order to improve the quality of decision-making by Korean policy makers and members of the business community with respect to Korea's economic engagement with the Association of Southeast Asian Nations (ASEAN), better data and more systematic analysis are needed. One way to achieve this is to use a type of industry analysis where firm-level data are aggregated to an industry level over time and industry characteristics such as size, profitability and growth potential are identified and analyzed in a systematic way. The output can be used as a useful basis for strategic decisions as to how Korea should effectively engage the ASEAN economies.
   Common approaches to ASEAN industries tend to use macro data such as industrial production in the national accounts framework or trade and foreign direct investment statistics, while it has been rare to use micro data gathered at the firm level. Even when firm-level data are used, it is usually in the form of surveys with a narrow focus on business decisions and sentiments. Survey data on ASEAN industries tend to be limited in representation, data continuity, and detailed information on corporate finance.
   In this study, we adopt a dynamic industry analysis framework from Chang (2014), which aggregates firm-level data to an industry level to classify ASEAN industries according to their characteristics. Specifically, we analyze market capitalization, assets, sales, and profitability of listed firms in six major ASEAN countries. This is a pilot study and should be regarded as a first installment of a long series of investigations. We have to adopt a sequential approach due to the challenges of obtaining high-quality firm-level data in all ASEAN countries in a comparable format. Expanding beyond listed firms poses a considerable challenge and we add a discussion of how we plan to expand our future research in the conclusion of this report.
   Chapter 1 lays out the subject and contribution of this study. In Chapter 2, we briefly discuss the global standings of ASEAN firms and then the corporate ecosystems of each country. The indicators from Fortune Global 500 and the global competitiveness index of the World Economic Forum show that while the global competitiveness of ASEAN firms varies significantly across countries, global ASEAN firms are concentrated in the energy and commodity sectors and often state-owned. National statistics also indicate that small and medium-sized enterprises (SME) account for the majority of the total number of firms and employment while large corporations contribute disproportionally to the output and export in most countries. Although such findings are largely consistent with common perceptions, the results should be read with caution since most existing SME statistics, in addition to common data quality issues, are likely to suffer from definitional confusion, including the misclassification of self-employed persons or certain family businesses as enterprises.
   In Chapters 3 and 4, we perform a preliminary industry analysis using corporate data from ASEAN listed firms. In Chapter 3, we examine the aggregate picture of listed companies in the ASEAN region as whole. First, after presenting the descriptive statistics of the stock market in each country, we compare market capitalization, average asset sizes and revenues, average profitability by industry in ASEAN. The results indicate no strong correlation between the average revenues and maximum revenues of an industry, and no correlation between the size of a national economy or income levels and the average revenues and maximum revenues of an industry. The rank orders of industries by average profits and maximum profits are not correlated. Neither the size of a national economy or income levels are related to the average profits and maximum profits of an industry. Vietnam has the most profitable industries in all 17 industries, followed by Thailand, Indonesia, and Singapore. Vietnam's high profitability may be due to the country's low level of development. Singapore, Malaysia and Thailand have the most industries with lowest profitability by industry.
   In Chapter 4, we compare the number of companies, assets, revenues, and profitability by industry by country. In all countries, manufacturing is the largest industry in terms of the number of companies, assets, revenues and profits. This is consistent with the importance of manufacturing to ASEAN's overall growth models. The construction industry ranks at the top in terms of industrial size while finance, professional services, health and social services are at the lower ends. The rank orders of industries in terms of the number of firms, assets and revenues in each country appear similar. Profitability by industry tends to be high in manufacturing, construction, retail and education services. Manufacturing is the most profitable industry in Vietnam and Singapore and also ranks high in other countries. This is consistent with the findings in Chapter 3. Construction, wholesale and retail also rank high in most countries. In addition, the correlation coefficient between the rankings of industry-level profits by country turns out to be low, suggesting that the overall profitability rankings differ widely across countries. Taken together with the findings from Chapter 3, this suggests that the ranking of industry size is similar across the six major ASEAN countries, but the profitability of each industry differs significantly different from each other.
   Chapter 5 presents the directions of future research based on the preliminary analysis done in this study. Future research can be expanded to (1) building panel data by adding time dimension, (2) using lower levels of industrial classification, (3) using more target countries, and (4) covering un-listed firms.
   Dynamic industry analysis will enable Korean policy makers to make more effective strategic decisions for Korea-ASEAN economic engagement and to improve the quality of government support for the private sector in its expansion into the ASEAN market. The analytical results will help better identify potential sectors for economic cooperation and develop agenda for government-to-government interactions. They will also complement the current efforts by the government in producing and disseminating business information on the overseas markets, which usually covers macroeconomic conditions, political situations and trade structure and trends, and market regulations by adding industry-level analysis based on firm-level data. 

   This report reviews discussions about cross-border data flows in international organizations and recent free trade agreements and conducts comparative analysis of data protection regulations among the United States, European Union, China and Korea. It also examines the relationship between cross-border data flows and domestic data protection regulations and quantifies the welfare impact of the EU GDPR and data localization on the global economy.
   In chapter 2, we review from 1998 to present the discussions on electronic commerce in the World Trade Organization (WTO) and examine several obligatory provisions provided at the TPP electronic commerce chapter and the USMCA digital trade chapter. We extend our review to several US FTAs having electronic chapter, for example, the US-Morocco FTA, the US-Chile FTA, the US-Australia FTA, the US-Dominica-Central America FTA, and the US-Korea FTA (KORUS FTA) and also recent Economic Partnership Agreements (EPA) including the Japan-Australia EPA, the Japan-Mongolia EPA, the EU-Japan EPA, the EU-Canada FTA, and the EU-Vietnam FTA. After review, we summarize the core contents of provisions at the electronic commerce chapters in those FTAs and EPAs.
   In chapter 3, we focus on domestic data protection regulations in the United States, the European Union, China, and Korea and compare those data protection regulations in a horizontal manner. We divide the types of restrictions on cross-border data transfer into three subtypes: direct restrictions on cross-border data flows, localization of data storage facility, cross-border data transfer upon consumer consent. We also attempt to qualitatively measure the degree of enforcement when foreign firms violate their trading partner’s domestic data protection regulation. After qualitative analysis, we conclude that Korea has relatively stronger domestic data protection regulations than the United States and the European Union, but relatively weaker than China.
   In chapter 4, we use the gravity model in order to examine the relationship between data protection regulation and cross-border data flows. For the purpose, we reconstruct data trade restrictiveness index provided by ECIPE and use VoIP data as a proxy for cross-border data flows. Our estimation suggests that data regulation has a negative effect on cross-border data flows. As in the usual analysis for goods trade, we find that cross-border data flows are positively correlated with trading partner’s gross domestic product and negatively correlated with physical distance. We also confirmed that economic intimacy or trade openness between two countries has a positive impact on cross-border data flows.
   In chapter 5, we set a quantitative trade model with data protection regulation in order to examine the impact of the EU GDPR and data localization on the global economy. The constructed model comprises many countries and industries with heterogeneous firms in a monopolistically competitive market. Given trading partner’s domestic data protection regulation and product demand, a firm sets an optimal price strategy to maximize its profits. In the system of equations showing changes in trading equilibrium due to changes in data protection regulation, changes in data protection regulation affect trading partner’s optimal behaviors, market entry and exit, export prices, industry-level spending and revenues, and ultimately national prices and consumptions. Using the model merged with the WIOD, we shows quantitatively that the EU GDPR and data localization have negative welfare effects on Korea. We also show that Korea can improve its welfare when it enhances its institutional quality by amending its data protection regulation.
   In chapter 6, this report identifies several data-related pending issues in the wake of recent changes in data protection regulations including the EU GDPR and data localization by China, Russia, India, etc. We seek for possible remedies and provide several policy recommendations in response to changes in trading partners’ domestic data protection regulation and also suggest further considerations in amending Korea’s data protection regulation. 

   The Korean government is pursuing a New Southern Policy to diversify its trading partners and reduce US-China risk. This study aims to provide policy implications for promoting cooperation in services sector between Korea and ASEAN in line with such New Southern Policy which is at the stage of establishing implementation strategies.
   Since Korean firms have continued to advance into the ASEAN market, the firms in the services sector such as finance, logistics, construction, distribution, and rental, etc., are also entering the market with the demand of incumbent manufacturing firms. However, due to the lack of relevant data, research on the service sector of ASEAN is insufficient. In addition, an analysis of service trade regulations of ASEAN is difficult because there are cases where the regulations of ASEAN member countries are different or even there is no transparent regulation. Therefore, this report try to analyzes the current status of trade in services and restrictiveness of service trade regulations of ASEAN using various methodologies such as statistical and empirical analysis, related law and literature survey, and field studies considering of the limited data sources and the specificity of ASEAN. Throughout the paper, Cambodia, Laos, Myanmar and Brunei are excluded from the analysis, and only six ASEAN countries are analyzed.
   In Chapter 2, We overview the current status and trends of services trade in ASEAN, and then conduct GVC analysis to investigate the indirectly traded content of services being embodied in exported goods. Lastly, we focuses on the services trade on the basis of mode of supply (Mode 1~4) to capture trade volumes which are not accurately identified in the traditional statistics. According to the analysis, service trade in ASEAN-6 economy is increasing rapidly and it seems to increase faster than world trade trends.  This increase comes from the growth of travel, other business activities and transport sector. By country, Singapore, Thailand and the Philippines led the increase in services export, while Singapore, Malaysia and the Philippines led the increase in services imports. According to the results of Section 2, which analyzes the production networks in which ASEAN-6 are involved, ASEAN and Korea rarely depend on each other’s services sector in their production process. In Section 3, we find that Mode 1 (cross-border trade) and Mode 3 (commercial presence) are the major mode of supply of services from Korea to ASEAN.
   The relatively low services trade between Korea and ASEAN seems to come from the following factors: barriers to trade in ASEAN, restrictive service regulation of the Korea, comparative disadvantage of services sector in Korea. To identify the barriers to service trade between Korea and ASEAN rigorously, we first explore the services trade regulation of ASEAN in Chapter 3 using World Bank’s Service Trade Restrictions Index (STRI). According to World Bank’s STRI, the average STRI of ASEAN-5 in 2012 is 46, which is higher than that of high-income OECD countries (average 20) and still high considering the low income level of ASEAN. Indonesia, the Philippines, Thailand, Malaysia, Vietnam were recorded high STRI, and professionals were the highest sector among others. In transport, air transport were relatively open to foreign supplier, but roads and rail freight transport had relatively restrictive policy. However, even if STRI is lower, it is often found that the authorities restrict foreign entry through limited issuance of licenses. For example, even if full foreign ownership is allowed to foreign investors, new license are not being issued. There are no relevant regulation or policy, but in practice entry of foreign firm is not allowed.
   According to the results of Section 2 of Chapter 3, the services trade regulations permitted by the GATS and DDA is more restrictive than the actual trade regime in ASEAN. The preferential trade agreements signed by ASEAN were considered to have gained additional liberalization than GATS, but it is difficult to say that it gained additional opening of the service market in practice considering the “water.” Above this, ASEAN make an effort to achieve higher service trade liberalization through trade agreement among ASEAN member states, AFAS (ASEAN Framework Agreement on Services). According to the 9th package of AFAS (ASEAN Framework Agreement on Services), which is a service trade liberalization agreement among ASEAN member states, the higher level of liberalization has been achieved in educational, environmental, construction and related engineering services, whereas the lower level of opening have occurred in transport, health related and social services, recreational, cultural, and sporting services. Since the 7-8th package of AFAS is considered to provide the highest committment among ASEAN-signed FTAs, the 9th package of AFAS could be used as a target for negotiating or upgrading FTA with ASEAN. 
   In Chapter 4, we examine the effects of services trade regulations on services trade between Korea and ASEAN using empirical models and case studies. In Section 1, we conduct an empirical analysis on the cross-border service trade (Mode 1) and consumption abroad (Mode 2). Empirical results show that the restrictive regulations of importing and exporting countries discourage the trade in services, and the extent of the negative effects of service regulations on trade varies by sectors. Also, cross-border supply (Mode 1) and commercial presence (Mode 3) appears to be substitute in some sectors, but complement in others. Notable thing is that the coefficients on the STRI of Mode 3 has significantly larger magnitude than those on the STRI of Mode 1. In Section 2~3 , we conduct case analysis to identify the actual service trade barriers of Mode 3~4 (commercial presence, movement of natural persons) in wholesale and retail sector of Vietnam and financial sector of Indonesia. According to the results, the level of commitments provided by ASEAN-Korea FTA and Korea-Vietnam FTA is not higher than the currently applied regulations, and it seems that there are various difficulties besides the notified regulations, such as the ambiguity concerning interpretation of regulations, the practice of demanding bribes, and the obligation to transfer expertise, etc. 
   Based on the analyses of trade in services between Korea and ASEAN, and service trade regulations of ASEAN, Chapter 5 explores ways to improve the international competitiveness of Korean services sector, and strengthen cooperation between Korea-ASEAN in services sector. As presented in the report, we suggests the following recommendations for the growth of trade in services: (ⅰ) making an effort to lower domestic and foreign service trade barriers (ⅱ) seeking to harmonization of regulations with major trading partners of Korea (ⅲ) fostering high value-added services industry (ⅳ) strengthening the linkage between services and manufacturing sectors for efficient functioning of GVC that Korea is involved (ⅴ) building services trade statistics for policy making. Also, we provide the following policy suggestions to strengthen the cooperation of Korea-ASEAN in services sector: (ⅰ) supporting the reform and opening of the ASEAN services industry through Aid-for-Trade (ⅱ) promoting negotiations on upgrading the ASEAN-Korea FTA (ⅲ) collecting the information on difficulties from the business continuously and making effort to reflect the opinions from the consultative groups of business. 

Preface

Contributors

Introduction and Overview
     Lee-Jay Cho

Statements by Country Representatives and Keynote Address

  Country Representative Statement: South Korea
     Kwan-Young Park

  Country Representative Statement: China
     Wang Shuzu

  Country Representative Statement: United States
     George Ariyoshi

  Country Representative Statement: Russia
     Pavel Minakir

  Country Representative Statement: Mongolia
     Ganbold Baasanjav

  Keynote Address
     Nikai Toshihiro

Part I. Building a Northeast Asia Economic Community and Its Extended Regions

  Promoting International Cooperation in Industrial Finance, Propelling High-quality Development of an Asian Economy
     Zhao Xianfeng

  Northeast Asia Economic Community Formation and the Role of the Russian Far East
     Sergei Sevastianov

Part II. Cross-border Infrastructure and Special Economic Zones in Northeast Asia

  Cross-border Infrastructure and Special Economic Zones in Northeast Asia: Politically Holding Hands and Economically Going Underground
     Anthony Michell

  Logistic Connectivity for Northeast Asia
     Inoue Satoshi

  Cross-border Infrastructure in Northeast Asia: Transport and Energy
     Sangmin Nam

Part III. Financial Cooperation in Northeast Asia

  Financial Cooperation in Northeast Asia: Current Trends and Opportunities
     Maeda Tadashi

  A Review of the Asian Infrastructure Investment Bank
     Stanley Katz

  Establishment of the NEADB to Support North Korea’s Economic Development
     Jai-Min Lee

Part IV. Energy and Environment in Northeast Asia

  Trends in Energy Transformation and Policy
     Iinuma Yoshiki

  Perspective from the United States: Update on US Energy Policy and Technology
     Terry Surles

  Perspective from Korea: New Paradigm for Korean Energy Transition and Policy
     Haksik Yoo

  Perspective from Japan: Energy Trends and Policy and Northeast Asia Cooperation
     Tanabe Yasuo

Part V. Tourism Cooperation in Northeast Asia

  Border Tourism in Northeast Asia
     Iwashita Akihiro

  Increasing Tourism through Integrated Resorts—Tourism and Gaming in Northeast Asia
     S. Ray Cho and Brendan Bussmann

  Current Status and Challenges of Japan’s Inbound Tourism Boom: Evidence from Japan’s City-level Data
     Konishi Yoko

  Latest Market Trends: Visitors to Japan
     Tsuboi Yasukiro

Part VI. Panel Discussion on Natural Disaster and Regional Cooperation

  Summary of Panel Discussion on Natural Disaster and Regional Cooperation

Part VII. The Honolulu Ad Hoc Group Meeting on Financial Cooperation in Northeast Asia: Proposal for the Northeast Asia Bank for Cooperation and Development (NEABCD) Revisited

  Review of Current Situation and Recent Developments in Northeast Asia Regional Cooperation Relevant to Financial Cooperation Opening Remarks
     Kwan Yong Park

  Recent Developments and NEABCD
     Stanley Katz

  Perspective from Japan
     Maeda Tadashi

  Perspective from Korea
     Jae Hyung Hong

  Perspective from China
     Liu Ming and Zhang Jianping

  Perspective from the United States
     Mead Treadwell

  Commentary
     Inessa Love

Role and Justification: Why Is the NEABCD Necessary to Meet NEA Financing and Technical Assistance Needs?

  Overview 
     Lee-Jay Cho and Stanley Katz

  A Review of the Ad Hoc Committee on the NEABCD and the Brief on the Establishment of the NEABCD
     Liu Ming

  Recommendations of the Study on the Establishment of the Northeast Asian Development Bank: The Tokyo Foundation Draft
     Chiba Yasuhiro

  Update on Northeast China and Efforts Toward an NEABCD
     Liu Lanbiao

  Strategies, Future Plans, and Activities Establishment of the NEADB to Support North Korea’s Economic Development
     Jai-Min Lee

  Promoting the Northeast Asia Development Bank
     Zou Lixing

  Promoting Financial Cooperation  in Northeast Asia
     Li Zheguang

  The NEADB: Securing the Attention of the United States
     Mead Treadwell

  The NEADB: Considerations and Recommendations for Energy
     Terry Surles

Appendices 

   The risks of political tensions and military confrontation and war in the Northeast Asian region, triggered by North Korea in particular, has been a critical gap in an otherwise productive network of dynamic regional economic growth. However, this year, the milestone summit between US President Donald Trump and North Korean Leader Kim Jong Eun has resulted in a dramatic change on the Korean Peninsular, prompting greater need for the region to strengthen ties and find mutually beneficial ways to handle tasks ahead.
   Toward this end, the KIEP–NEAEF collaborative project seeks to fulfill the need for timely and forward-looking research and meeting activities by focusing on critical issues, such as 1) discussion and emphasis on connectivity in cross border infrastructure developments involving North Korea as an integral part of a broader regional economic community in Northeast Asia, and 2) revisiting the design and establishment of a Northeast Asia Bank for Cooperation and Development (NEABCD) in the context of economic cooperation and integration in the Korean Peninsula.
   This volume in the series of proceedings volumes is titled “Momentum for Building a Northeast Asian Economic Community: Emerging Challenges and Opportunities” and comprises summaries of research presentations and discussions at the planning meeting in Honolulu, at the 27th Annual Conference of the Northeast Asia Economic Forum in Sendai, Japan, and at the Honolulu Ad Hoc Group Meeting on Financial Cooperation in Northeast Asia in 2018. The results of this project represent activities that have been contributing to economic dialogues, interactions, and research on common issues for cross-border future economic cooperation in the region, which involves North Korea.
   KIEP is grateful to Dr. Lee-Jay Cho, Chairman of NEAEF, for his leadership in implementing the project, and to the authors of the presentations, conference participants and discussants who contributed to this volume.
   Drs. Lee-Jay Cho and Hyung-Gon Jeong would like to extend their appreciation to the NEAEF staff for their assistance in the course of the successful implementation of this project, and to Drs. Karla Fallon and Kennon Breazeale for their editorial review and editing of this volume. 

Executive Summary

 
Chapter 1. Introduction

Chapter 2. German Unification: Macroeconomic Consequences for the Country
1. Introduction
2. In a Nutshell
3. A Demand Side Shock
4. Price Reactions
5. Trade and the Balance of Payments
6. The Supply Side: Production Structure,  Labor, Unemployment, and the Capital Stock
7. Distributional Effects: Labor and Capital, the State and the Private Economy
8. Conclusions

Chapter 3. Economic and Social Integration in Germany: Implications for Korea
1. Social Aspect
2. Economic Aspect (German Unification and Progress of Economic Integration)

Chapter 4. Regional Economic Growth of East German States after German Unification and its Policy Implications for Korea
1. Introduction
2. Status of Economic Development in East Germany after Unification
3. Policy for Improving Germany’s Regional Economic Structure
4. Evaluation of Joint Tasks for Improvement of Regional Economic Structure in the West Germany
5. Conclusion and Policy Implications

Chapter 5. Spatial Development Patterns in East Germany and the Policy to Maintain “Industrial Cores”
1. Introduction
2. Spatial Patterns of Manufacturing Activities in GDR – Stylized Facts
3. Spatial Patterns of Manufacturing Activities after German Unification ― An Exploration of Statistical Data
4. Policies to Maintain “Industrial Cores”
5. Five Case Studies on Industrial Cores in East Germany and their Development
6. Preliminary Conclusions

Chapter 6. Decision Making by the Treuhandanstalt on Privatization, Restructuring, or Liquidation of Former State-Owned Firms in East Germany
1. Introduction
2. The Economic Situation of State-Owned Firms Prior to the Monetary Union in July 1990
3. Rules of Privatization Policy
4. Assessment of Restructuring Feasibility
5. Involvement of the East German Federal State Governments and Trade Unions in the Course of Privatization
6. Quantitative Results and Budget of Privatization
7. Interim Conclusions

Chapter 7. Rebuilding SMEs in East German States: Policy Implications for Korea
1. Introduction
2. Policy Measures for SMEs in Eastern Germany
3. Implications for Korea

Chapter 8. A Quantitative Analysis on Development Assistance Policy for North Korea during a Transition Period
1. Introduction
2. Empirical Motivation
3. Model and Equilibrium
4. Policy Proposals 

Contributors 

   The situation on the Korean Peninsula entered a new phase following the 2018 Winter Olympics, further evolving through the April 27 inter-Korean summit and June 12 Singapore summit between the U.S. and North Korea. Expectations are high for new exchanges and cooperation that would potentially lead to peace and prosperity on the Korean Peninsula. This would be a great chance to depart from hostility that has lasted over decades. However, it is expected to take some time until economic cooperation between the two Koreas resumes, as the negotiations for denuclearization still remain unresolved.
   The Korea Institute for International Economic Policy (KIEP) has been working with the Halle Institute for Economic Research in Germany (IWH) on topics related to the economic integration of the two Germanys after unification. This is the second report published by the joint research team. The report consists of eight chapters under the three major themes of macroeconomic impacts and socio-economic changes following unification, policies implemented to improve East Germany’s economic structure, and East Germany’s industrial policies. Chapter 1 provides a summary of the entire report’s contents and describes how they are interconnected.
   Chapters 2 through 5 describe macroeconomic consequences immediately after reunification and the subsequent socioeconomic changes. Here, Dr. Axel Lindner of the Halle Institute for Economic Research (IWH) argues that although many macroeconomic indicators temporarily deteriorated after unification, such as the ratio of investment to GDP and the fiscal deficit, they recovered after a few years. While real GDP growth appears to have damaged the growth potential of the German economy for a certain period of time, he stressed that the time frame was not long and that the benefits of reunification were significant after the early 2000s. In Chapter 3, Dr. Kim Young-chan and Dr. Yoon Deok Ryong pointed out that macroeconomic instability can be a major issue in the early stage of economic integration in the case of a unified Korea, which can be much bigger than that of East and West Germany. The two researchers highlight that in order to minimize post-unification economic impacts, efforts to converge the gap of productivities and develop measures for macroeconomic stability are needed. They also stress the need for integration in terms of social integration, assistance for rapid economic development and job creation in North Korea, expansion of daily exchanges and opportunities to interact, and preparation of institutional devices to represent its interests.
   Chapters 4 and 5 are studies of policies to improve the structure of the East German economy. In Chapter 4, Dr. Jeong Hyung-gon drew policies for economic development in East Germany and implications for the Korean Peninsula after reunification. In this study, Dr. Jeong Hyung-gon constructed panel data on total regional production (GRDP) in Germany from 1991 to 2015, gross regional production per capita, nominal income, household income per capita, support for infrastructure and support to companies. During the analysis period, support for infrastructure projects totaled approximately 23.6 billion euros, while support for enterprises came to a total of 46.5 billion euros. As a result, the total support amount was approximately 70.1 billion euros, among which 62.1 billion euros were provided to the East German region, meaning 89 percent of the total support amount was concentrated in the East German region. The GRDP in all five regions of the world has more than doubled from 1991 to 2015. Since unification, the New Commonwealth of Nations (East Germany) has been accompanied by structural changes such as changes in economic structure, technological improvements, and capital accumulation, and industrial structures have developed similar to those in West Germany. Despite these achievements, however, there is still a wide gap in regional development within Germany. In this study, to analyze the effects of subsidies to improve the German economy, the IWH research team analyzed the growth rate for two periods: the first program period from 2000 to 2006, and the second program period from 2007 to 2013. The results showed a positive impact on the gross value-of-value (GVA) and productivity (GVA per employment) of subsidized companies during the first program period. But during the second period from 2007 to 2013, there was no visible benefit. In this study, Dr. Jeong stresses that the Korean government needs to create a subsidy support standard that divides the country into functional regions, in the manner of Germany’s regional policies (GRW), and calculates regional comprehensive economic indicators based on them. Dr. Jeong also states that infrastructure investment to improve the regional economy is important, but in the early stage of reunification, support for individual companies should be strengthened to help them increase productivity and value added. Another suggestion is that small-scale projects to privatize North Korean companies could facilitate production activities, and that corporate restructuring can promote regional economic growth through increased efficiency in society as a whole.
   In Chapter 5, Dr. Gerhard Heimpold of IWH analyzed the policies of forming industrial cores in East Germany. In this study, he underscored the importance of seasoned corporate restructuring experts to successfully privatize companies after unification, and to apply a proper combination of spin-offs and acquisitions. He also highlights the importance of fostering R&D sections to enhance corporate competitiveness and normalize management, and create jobs for mass unemployment (skilled laborers) generated by corporate restructuring.
   Chapters 6 through 8 focus on industrial policies. Chapter 6 starts with the decision-making mechanism of the trustees, which was put in charge of privatizing the assets of East Germany. We explore whether it is beneficial to restructure state-run companies first or immediately privatize them, or bankrupt them. According to the research, the key criteria for the trustees’ decision to privatize, restructure or liquidate businesses were to conduct a feasibility analysis. In the decision-making process on restructuring or liquidation of individual companies, a panel of consultants or accountants acted as an independent advisor to the board of trustees, which collectively assessed the nature and viability of each company. Highlighting the independence of the decision-making group, Dr. Heimpold claims that close cooperation between the East German state government and labor unions played a significant role in job creation and maintaining social stability.
   In Chapter 7, Dr. Kim Young-Chan and Dr. Yoon Deok Ryong present the policy implications for the reconstruction of SMEs in East Germany after German unification. They assess that Korea’s SME support system is not inferior to Germany in terms of its experience, support schemes of taxation, finance, marketing, technological innovation, entrepreneurship and human resources, however, there are problems in terms of efficiency and effectiveness of support due to the excessive number of agencies, lack of analysis on performance, and evaluation of results. The need to simplify and evaluate the whole system has risen as this will be reflected within the North Korean support scheme once two Koreas are reunified. In addition, they claim that considerations must be made for discrepancies in perception regarding the transition process, meaning that economic development should precede when introducing a support system for the SMEs in North Korea, while acknowledging the constraints of human and material resources available. They also stress the need to establish systemic cooperation between the governments at all levels, policies, commercial and financial institutions, as well as international organizations and chambers of commerce based on an understanding of the North Korean real economy and financial system. It will also be necessary to conduct a comprehensive review of ideas to provide financial support both home and abroad and establish a risk-sharing system.
   The last section of the industrial policy, written by Dr. Han Minsoo of KIEP, focuses on the potential impact that opening the capital market and providing development assistance could have on the North Korean economy where capital markets are immature. The study showed that while opening the capital market in North Korea increases overall productivity, it does not have a significant impact on economic growth. On the other hand, carrying out development assistance policies along with the opening of the capital market can play a significant role in economic growth. He stresses that the government should use microfinance-based development aid rather than free economic aid to boost economic growth. 

   With the acknowledgement of the need to approach Africa’s agricultural sector through the lens of a comprehensive value chain approach, this research analyzes the challenges for each stage of the agricultural value chain in Africa and outlines policy recommendations based on Korea’s policy advancements and agricultural sector development since the 1950s when its initial conditions were similar to that of Africa.
   There are arguments to sharing the Korean experience due to its singularity but Korea has encountered and has overcome the same challenges facing Africa today relatively successfully, which makes its experience of value to be shared with Africa. In fact, there is much demand for analyses on Korea’s agricultural development experience as various African countries and leaders, as well as institutions like the AfDB and policy makers have expressed interests in learning from Korea’s agricultural policies. However, their interests go beyond general history as they seek more detailed information; the manner in which policies were implemented, the institutions that supported the policies, measures of financial support, the manner in which (horizontal and vertical) relationships were formed between the various stakeholders in the value chain including the government, agricultural cooperatives, farmers, agricultural processing companies, retailers and others.
   This research identifies and ranks policy areas that can be shared with Africa through interviews with various experts, discussions through an international workshop for agriculturalists and economists, and the use of the AHP model. Policy experiences that are most relevant to the African context are the establishment of a multipurpose agricultural cooperative with financial functions, the supply of agricultural inputs, and policies enhancing processing and quality management. On the other hand, policies on establishing wholesale markets and macro-agricultural policies were found to be insignificant. Though developing wholesale markets were quite significant in the Korean case, it is not so for Africa because of the limited volume of goods traded. Notwithstanding the fast growth of agro-markets in cities as a result of increasing purchasing power and rapid urbanization, most are still subsistent farmers with low levels of trade. The infrastructure is also yet inadequate to support wholesale trade.
   Among policy areas that are of relevance to Africa, the establishment of a multipurpose agricultural cooperative system is of great importance. Considering the structural problems of agricultural cooperatives in Africa, partial solutions such as improving the governance structure or increasing transparency cannot solve Africa’s development challenges. Korea’s multipurpose agricultural cooperative, Nonghyup, was created by the government and it executed projects on behalf of the government under their supervision. Many African countries sympathize with the need for such active government intervention to foster growth of the agricultural sector. Nonghyup, as the leading organization for agricultural development, led the growth of the agricultural sector and rural communities. Nonghyup grew in terms of both size and quality because it not only had functions of marketing and input supply, but because it also had banking capacities. Nonghyup created a virtuous cycle by providing Agricultural Value Chain Finance (AVCF) to input suppliers, farmers, processing companies, retailers and others. This experience corresponds to the demands of African countries that are changing paradigms and are looking for new systems of operating cooperatives, as they understand the need to combine financial functions for the full operation of cooperatives. 
   Increasing agricultural productivity is also of grave importance in Africa where urban areas are expanding and the population is growing at a fast speed. Because the use of fertilizers is key to increasing productivity, this research suggests the establishment of regional fertilizer production facilities to solve the fundamental problems regarding access to fertilizers. Africa is well positioned to produce fertilizers as it is home to a vast amount of raw materials required for fertilizer production. There are pessimistic views to this approach but action is already being taken to establish regional production sites in Africa. The success of developing key fertilizer production facilities depends on the degree of effort invested by stakeholders. For example, the African Development Bank (AfDB) could lead the formation of regional bases for fertilizer production by co-financing their construction and operation with international development financing agencies. The use of improved varieties through seed development is also important in increasing productivity. However, the rate of using improved seeds remains at 10% in Africa, with South Africa as an exception. Unlike the manufacturing sector where R&D can be substituted with technologies developed overseas, the agricultural sector requires the government to take a comprehensive role in facilitating R&D and distribution according to the local climates and environments. Korea succeeded in developing the Tongil rice variety in 1971 after years of research by breeders that were dispatched to the International Rice Research Institute (IRRI) in 1964. Innovations in developing new seeds requires more than building research centers. It requires the formation of intangible infrastructures such as the political and social environment, and laws and regulations, which Korea was able to build through the Korea Seed and Variety Service.
   Regulations on agro-processing and quality control through the post-harvest batch processing system is also applicable to the African environment. The quality of agricultural products depends not only on the seed variety but also on how it is stored and processed. Such facilities and processes are lacking in Africa which hinders market access and utilization of the value chain. Taking such limitations into consideration, this research suggests building Rice Processing Complexes (RPCs) that provide integrated services of post-harvest storage to processing, led by the government or Nonghyup. In view of the challenges of post-harvest storage in Africa, Korea’s experience has many implications because Korea was able to provide high quality agricultural products through the construction of RPCs.
   The research also suggests the creation of small-scale rural by-job complexes that employ farmers and rural residents during the off-season in consideration of the low production levels in Africa, a policy that increased rural income in Korea. The Korean government suggested the use of idle labor during the off-season for side jobs at the complexes to increase rural income and resolve potential unemployment issues in 1968. It was part of a local community development project led by the Rural Development Administration (RDA) initially as a pilot project but was expanded to the national level due to its effects. The government provided financial support (loans) and tax exemptions in creating and operating the complexes and commissioned the RDA to purchase machinery, find markets, manage and provide technical guidance to the rural communities. The complexes, which were designated by the government, were managed and operated by at least 10 households who participated in the entire process from production to sales.
   Africa also needs to take a comprehensive approach in building institutions and strengthening the role of the government. Impediments to the development of Africa’s agricultural sector are extremely complex. It exists across-the-board, in the political, economic, social and cultural spheres, outside the boundaries of the agricultural sector. Various conditions impede agricultural development in Africa that leads to market failure. From a value chain perspective, the absence of a strong link between the supply of inputs, production, storage, packaging, logistics, and retail blocks access to markets for agricultural goods. Therefore, a comprehensive or integrated approach is needed to address these issues, which highlights the importance of the government’s role. Many African countries agree that the state needs to actively address the challenges of developing the agricultural sector because the sector poses greater risks and uncertainties compared to other industries that deters the private sector from taking the initiative. Hence, a government-led agricultural development policy is needed to set the foundations for agricultural development in Africa, although perhaps not to the same degree as that of the Korean government.
   The Saemaul Undong (also known as the New Village Movement) is likewise significant to the African environment. The methods and impacts of the Saemaul Undong are still highly debated in Korea, but considering Africa’s demand for development cooperation and Korea’s rural development situation in the 1960s, there is a need to reassess and utilize the Saemaul Undong in Africa. After discussions with high-level politicians, bureaucrats, policy makers, academia, research agencies, rural communities, the FAO and the AfDB at Senegal and Malawi, and through an international workshop on Africa’s agricultural challenges, the research found a common understanding that Africa’s problem lies not just in production but also in social change. They emphasized the need to create motivations for change as well the need for social capital such as diligence, collaboration and self-reliance. Africa’s agriculture needs more than financial and physical assistance. It needs to adopt the values of self-motivation and voluntary participation, the core principles of the Saemaul Undong. The Saemaul Undong is also in line with the methodologies of institutional capacity building, participatory development and empowerment that are emphasized by the World Bank, UN, OECD and other international agencies. Because it was born in the unique political, social and cultural conditions of Korea, it needs to be tailored to the conditions of each country. Moreover, considering the characteristics of Africa’s rural communities, the Saemaul Undong should be shared first on a tribal level and then be shared to adjacent communities once successfully operated. This is because the African community was built on tribalism, and thus, people trust community leaders through customary law more than legal or political authorities through the state system.
   Although the research suggests in detail, policies to facilitate the growth of Africa’s agricultural sector based on the Korean experience, further work is needed in the following areas. First, it was unable to systematically investigate the dynamic relationships within the value chain; value addition of agricultural goods is created through the close business network of various stakeholders within the value chain. Moreover, it was unable to empirically identify the cost structure of the value chain, although the ultimate purpose of a value chain analysis is to effectively link producers with the market. The research is rather limited to qualitative investigations on the prices and quality of goods, and customer preferences through field surveys to improve market access and find measures to better utilize the value chain.
   To pass on Korea’s policy experience effectively, establishing value chain utilization strategies that are fit to the respective conditions of the different countries through thorough investigation over a long period would be desirable rather than short term seminars or training sessions. Although there are certain programs that share Korea’s experience such as the Knowledge Sharing Program (KSP), studies on the agricultural value chain require understanding of the entire flow from production to retail on specific goods such as rice and corn to be able to suggest policies and alternatives. This entails the participation of agriculturalists, such as sending agricultural policy specialists to the Ministries of Agriculture in Africa for a long period of time to advise the utilization of value chains based on the Korean experience.