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  • 포스트코로나 시대의 중남미 디지털 전환과 한국에 대한 시사점
    Digital Transformation in Latin America in Post COVID-19 Era and its Implications for Korea

       The digital revolution is heralding the advent of an Intelligent Information Society. The emergence and adoption of new digital technologies such as Artificial Intelligence, the Internet of Things, Big Data, Cloud Com..

    Yeongseok Kim et al. Date 2021.12.30

    Economic development, Industrial structure Latin America
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       The digital revolution is heralding the advent of an Intelligent Information Society. The emergence and adoption of new digital technologies such as Artificial Intelligence, the Internet of Things, Big Data, Cloud Computing, and 5G is triggering significant changes in both the economy and society. The newly coined term to describe these changes is digital transformation. Meanwhile, during the prolonged COVID-19 pandemic, we have witnessed a considerable part of economic and social activities conducted in a non-face-to-face manner using the internet. As a result, people’s acceptance of digital technology has also increased significantly. In other words, the most noticeable change caused by the COVID-19 pandemic is the acceleration of digital transformation. In the post-COVID-19 era, digital transformation in Latin America is also expected to accelerate. Therefore, this study attempted to analyze the current status, trends, and policies for digital transformation in Latin America and derive policy implications for strengthening cooperation in the digital transformation between Korea and Latin America.
       Chapter 2 outlines the digital transformation of the post-COVID-19 era. First of all, we review various definitions of digital transformation. We also briefly examine the seven vectors and policy frameworks of digital transformation proposed by the OECD. Then, we defined the concept of digital transformation in this study as "the economic and societal effects of digitization and digitalization." Subsequently, we looked at the changes in business and society after the COVID-19 pandemic and the impact of the COVID-19 outbreak on digital transformation. The most noticeable change caused by the COVID-19 pandemic is the acceleration of digital transformation. 
       Chapter 3 analyzes the current status and digital transformation policies in Latin America. First, we examined the digital infrastructure in Latin America. It is insufficient, but there is a trend of improvement. The cross-border and national networks in Latin America are relatively in good condition, but the middle-mile and last-mile networks are insufficient to deliver higher capacity. The digital accessibility in Latin America is showing good progress, but the digital divide in the region remains just as stark. The Internet usage rate in Latin America is 66.7%, which is less than the level of advanced countries (86.7%) but is far above the world average (51.4%) or the average of developing countries (44.4%). Meanwhile, the wired and wireless broadband penetration rate in Latin America is 12 and 72 per 100 people, respectively, slightly below the world average (15.2 and 75). The wired and mobile internet speed is lower than the world average, and internet fees are expensive compared to their income levels.
       Second, digital transformation in Latin America has been accelerating since the COVID-19 outbreak. The digitalization of economies is faster in the consumption and distribution sectors than in the production sector. By industry, the digitalization of the financial and ICT sectors in Latin America is comparable to that of advanced countries, but the digitalization of agriculture and manufacturing industries is lagging. The digitalization of the consumption and distribution sectors has been progressing rapidly since the COVID-19 crisis, and e-commerce is one of the fastest-growing sectors. The startup activity in Latin America is booming. The number of technology-based startups in Latin America (also called Tecnolatinas) that raised more than $1 million of capital reached 1,005. The number of unicorn companies with a corporate value exceeding $1 billion increased to 28. The digitalization of society is also progressing rapidly. Since the COVID-19 outbreak, 26 Latin American countries have established ways to provide education services through various distance learning modalities. For example, 26 countries implemented internet-based forms of learning. While education processes have continued remotely, using digital or traditional means (such as TV or radio), the effects of the digital gap have been amplified in the case of rural and lower-income students, which have lower internet access. The COVID-19 pandemic has accelerated the use and importance of telehealth and telemedicine. Meanwhile, Latin Americans internet users spend more time on social media than any other region in the world, and this trend has been strengthened even more since the COVID-19 outbreak. The digital transformation of Latin American governments has made notable progress. Most Latin American governments are classified as higher-performers in the UN E-Government Development Index or the OECD Digital Government Index. However, on average, it takes 5.4 hours to complete a public transaction in Latin America. Moreover, Mexico and Chile are the only Latin American countries where more than half of government transactions can be started and completed online. More efforts to offer web and mobile access to public services should be made to make government services more efficient. However, Latin American countries are classified as good performers of open government data and e-participation policies. 
       Third, most Latin American countries have their digital agendas. Digital agendas prioritize or include ICT infrastructures such as 5G networks and 5G auctions already began in Latin America. The total investment required to build 5G networks in Latin America is estimated to be $120.1 billion over the next seven years. Most Latin American countries also have their own digital transformation strategy aligned with national development plans. The digital transformation is expected to bring new opportunities for the region to cope with the development traps. 
       Chapter 4 analyzes the current status and policies of digital transformation in Brazil. First, Brazil’s digital connectivity is evaluated as the best among Latin American countries. The cross-border and national networks are in good condition. Fiber optic coverage in Brazil has increased to 82 percent. Digital accessibility falls short of the level of advanced countries, but it is classified as the highest among Latin American countries. Brazil’s internet usage rate is 74%, far above the world average (51.4%). The penetration rate of wired and mobile broadband is 15.7 and 97.4 per 100 people, respectively, exceeding the world average (15.2 and 75).
       Second, the current status of digital transformation is also evaluated as the most advanced among Latin American countries. The digital transformation of the economy is also making considerable progress. Brazil’s digitalization of the production sector is considered outdistancing among Latin American countries. According to McKinsey’s assessment, Brazilian leader companies’ average digital maturity score is 66 points, similar to the average score of global leader companies (67 points). The digitalization of the consumption and distribution sectors is also rapidly developing. In particular, e-commerce is multiplying due to COVID-19, which has achieved ten years of progress in only ten weeks. The startup boom continues. Brazil is reviewed as a representative mecca of startups among developing countries and Latin America. Between 2012 and 2020, the number of startups in Brazil increased by more than five times, from 2,500 to 13,300. The digital transformation of society is also progressing quickly. The digitalization of the education sector is rapidly advancing. when schools were closed after the COVID-19 crisis, 87% of educational institutions provided remote education services. However, there are digital gap problems, as 89% of middle and upper class (AB) students participated in remote education, while only 71% of low-income (DE) students could participate. The digitalization of the health sector is also accelerating. After the COVID-19 incident, the Brazilian congress eased the telemedicine regulations. As a result, 1.3 million telemedicine services had been provided in 2020, and 2 million cases are estimated to be delivered in 2021. Meanwhile, Brazil has some of the heaviest social media consumption per capita on the planet. In Brazil, people use SNS for private communication, but the usage for business purposes is also increasing rapidly. The level of digital transformation of the government is also evaluated to be world-leading. Brazil is the first country to introduce an electronic voting system (1996), being the top country in the digitalization of the government. Brazil ranked 16th overall in the OECD digital government index of 33 countries (29 member countries and four non-member countries) in 2020, and 7 out of 10 Brazilian citizens are using e-government services.
       Third, Brazil is one of the most active countries to implement digital transformation policies. Brazil is expected to start building 5G in earnest from 2022, as it successfully closed bidding in the 5G spectrum auction in November 2021. Furthermore, the Brazilian government has approved rules for a spectrum auction for 5G networks without restricting Huawei’s involvement as an equipment supplier. However, Chinese equipment is not permitted for constructing a federal government communication network. Meanwhile, Brazil issued its Digital Transformation Strategy (E-Digital) in 2018. The E-Digital strategy comprises two features: constructing a digital transformation environment (enabler) and promoting digital transformation.
       Chapter 5 analyzes Mexico’s digital transformation status and policies. First, Mexico’s digital connectivity is generally in good condition. Unlike other Latin American countries, Mexico’s cross-border network is mainly built by terrestrial cables. Meanwhile, Mexico operates the world’s first and only wholesale mobile network to increase mobile telecommunications coverage. Also, the Mexican government launched the ‘CFE Telecommunications and Internet for All’ project to expand the national backbone network utilizing CFE’s fiber-optic network. As for internet access, Mexico’s internet usage rate far exceeds the global average, but among OECD member countries, it is the lowest, along with Colombia. Mexico’s internet usage rate is 70.1%, and the penetration rate of wired and mobile broadband is 17.3 and 79.9 per 100 people, respectively, slightly exceeding the global average (15.2 and 75).
       Second, Mexico’s digital transformation has also accelerated since the COVID-19 outbreak. The digital transformation of the economy is progressing faster in the consumption and distribution sectors than in the production sector, and in particular, e-commerce is showing the fastest growth. Meanwhile, Mexico strengthened startup support through the INADEM during President Pena Nieto’s presidential term. Even though the INADEM disappeared in 2019, the number of startups has been steadily increasing thanks to active investment by private venture capitals. Meanwhile, the digital transformation of society is also accelerating. However, the Mexican government decided to offer education by television to its more than 30 million public school students after the COVID-19 outbreak. Mexico’s decision to rely on television highlights the country’s low internet penetration and vast social inequality. However, the COVID-19 triggered the sharp growth of telemedicine, and the digitalization of the health sector progressed rapidly. The digital transformation of the government is also showing an improvement. Mexico has demonstrated improvements in digital government services, such as operating a single government portal (gob. mx) and issuing birth certificates online.
       Third, Mexico’s national digital strategy has changed significantly since the inauguration of the AMLO government. The top priority of the digital transformation policy proposed by the AMLO government’s national development plan is to provide internet services to the entire nation by expanding wireless internet networks. The national digital strategy, the implementation scheme of the national development plan, also emphasizes developing the state-led digital infrastructure and solving the digital gap problem. The AMLO government’s national digital strategy contains information on the digital government and digital society but does not present any information on the digital economy.
       Chapter 6 analyzes Colombia’s digital transformation status and policies. First, Colombia’s cross-border and national backbone networks are relatively in good condition, but the middle-mile and last-mile networks are still underdeveloped. The internet usage rate is 67%, the same as the Latin American average (66.7%), but it is the lowest among OECD member countries. Meanwhile, the wired broadband penetration rate is 15.7, similar to the world average (15.2 people), but the mobile broadband penetration rate is 63.6, lower than the world average (75 people), Latin American average (72 people), and developing countries average (651 people).
       Second, Colombia’s digital transformation has progressed rapidly since the COVID-19 outbreak. Regarding the digital transformation of the economy, the digitalization of the production sector is relatively underdeveloped. However, 80% of SMEs have accelerated the adoption of digital technologies and remote work due to the impact of the COVID-19. Colombia does not have a high level of digitalization in the production sector. However, digitalization in the consumption and distribution sectors is relatively ahead. In particular, e-commerce is showing the fastest growth since the COVID-19 outbreak. Meanwhile, startups in the e-commerce and fintech sectors are showing rapid growth as the Colombian government actively stimulates startup activity. The digital transformation of society is also accelerating. In particular, digital transformation in the health sector accelerated, with telemedicine soaring after the COVID-19 crisis. However, in the education sector, only 13% of all students could participate in a class remotely using the internet due to digital gaps. Meanwhile, the digital transformation of the government has surpassed the advanced countries. The OECD ranks Colombia in third place behind only South Korea and the UK in evaluating the digital government index among 33 countries (29 member countries and four non-member countries) in 2020. Colombia is also making significant progress in providing digital government services, opening public data, and establishing an online citizen participation portal.
       Third, the Colombian government is consistent in carrying out digital transformation policies. The government is aware of the importance of 5G networks. However, 5G is not currently available in Colombia. The commercial service of the 5G network will be possible in 2024 as telecommunication companies are focusing on expanding the coverage of 4G networks. Meanwhile, the National Development Plan 2018-2022 of Colombia prioritizes digital transformation as a prerequisite for the economic and social development of the country. In addition, the government is operating various digital transformation-related consultation and training programs for individuals and businesses. 
       In the last Chapter 7, we propose policy implications for the cooperation between South Korea and Latin America. To be specific, we suggest strategies to strengthen cooperation in the following two policy measures: a differentiated approach to individual countries in Latin America and the establishment of a cooperation framework. Then we propose the cooperation tasks and policy implications for three countries: Brazil, Mexico, and Colombia.
  • 아랍-이스라엘 데탕트 시대 역내 안보환경 변화와 한-중동 경제협력 확대 방안
    Regional Security in the Era of Arab-Israeli Détente and Economic Cooperation between Korea and the Middle East

       The purpose of this study is to predict changes in the regional order and economic cooperation in the Middle East after the normalization of relations between Arab countries and Israel in 2020 and to explore potential..

    Dahn Park et al. Date 2021.12.30

    Economic cooperation, International politics Africa Middle East
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       The purpose of this study is to predict changes in the regional order and economic cooperation in the Middle East after the normalization of relations between Arab countries and Israel in 2020 and to explore potential areas in economic cooperation between Korea, Israel, and the Arab World. In order words, it aims to infer changes in the political and security order in the Middle East and their implications from various viewpoints and to seek our response strategies.
       Chapter 2 explores the idea that the Iranian threat and the United States withdrawal from the Middle East have led to the recent Arab-Israeli détente and their subsequent cooperation. After the Islamic Revolution in Iran in 1979, the conflict in the Middle East intensified along the fault line between the Arab Sunni monarchies and the Islamic Revolutionary forces of Iran. This confrontation is currently in progress. The Chapter also points out that since the Obama administration, the United States has pivoted to Asia, leaving the Middle East and leading from behind in the region, which has resulted in the current Arab-Israel détente.
       Chapter 3 examines the transformations in the political and security order in the region after the Arab-Israeli détente and analyzes the confrontational process between the new détente alliance of Sunni Arab countries led by the UAE, Saudi Arabia, and Bahrain and Israel on the one hand, and the Shiite coalition of Iran, Houthi, and Hezbollah on the other. We examine the changes in the foreign policies of Qatar and Turkey, which are pro-Islamic, after the signing of the Abraham Accords. Qatar maintains friendly relations with Iran and Turkey and has recently been working to improve relations with the neighboring Gulf countries. The UAE, Bahrain and Qatar have expressed their support for Saudi Crown Prince Mohammed bin Salman after the United States released reports on the murder of Saudi journalist Jamal Khashoggi and the Crown Prince’s approval of the killing. Meanwhile, Turkey has recently begun to express a conciliatory attitude toward the United States and Europe. Turkey, with the second-largest military forces among NATO countries, occupies a key geopolitical position in safeguarding European security, even though it is far from a democratic country. Given that the strategic competition between the United States and China continues to grow, and that the Biden administration balances values and interests in reestablishing relations with Turkey, Turkey-US relations could not only be regenerated, but also have profound effects in the region.
       Chapter 4 discusses increasing economic cooperation between Arab countries and Israel after the Arab-Israeli détente, specifically cooperation between the UAE and Israel and between Bahrain and Israel. By March 2021, UAE and Israel had signed more than 86 bilateral agreements. Since the signing of the Abraham Accords in September 2020, trade between the two countries has increased rapidly in about a year. According to the Central Bureau of Statistics of Israel (CBS), bilateral trade between the UAE and Israel recorded approximately $500 million from September 2020 to July 2021. Israel's exports to the UAE in the first half of 2021 amounted to $120 million, expanded by 14.4 times compared to the previous year period. In both 2019 and 2020, no Israeli import from the UAE was reported, but in the first half of 2021 alone, it recorded about $240 million. The total trade in the first half of 2021 was about $360 million, which is a 42.9 times increase from the same period of the previous year.
       Bahrain and Israel signed eight bilateral agreements in October 2020, five of which were related to economic cooperation. The cooperation agenda covered fields of economy and trade, aviation, information and communication, agriculture, and finance. In December 2020, three additional memorandums of cooperation were signed on innovation and technology and small and medium-sized enterprises (SMEs) development. While there was no trade between Israel and Bahrain before the signing of the Abraham Accords, the trade volume between the two countries during the first half of 2021 has reached $300,000. 
       Finally, Chapter 5 presents policy suggestions for expanding economic cooperation between Korea and major Middle Eastern countries, such as the UAE, based on the analysis of previous chapters. In so doing, it proposes several ways to discover new opportunities and chances in Korea-Middle East economic cooperation after Arab-Israeli relational changes, namely close monitoring on regional economic and political changes, utilizing the Korea-Israel FTA to find potential markets in the middle east, and triangular economic cooperation between Korea, Israel, and UAE. It will take a long time to stabilize the Arab-Israeli relationship because many complicated geopolitical factors need to be settled down and resolved. As significant ups and downs are expected in the future, even with new changes, including expanded UAE-Israel economic cooperation, Korea should prepare for any volatile situations and be ready for a strategic response to them. However, it is too complicated for individual companies to anticipate and prepare for such cases. Therefore, at the government level, it is necessary to inform and coordinate the strategic directions and forecast political and economic environments in the Middle East. At least for now, Korean companies entering the Middle East and targeting the Arab markets should take a proactive strategy of seeking to create new business opportunities rather than a passive, wait-and-see strategy, considering the competition with Israel in the same market.
       If Israel's political disadvantage in the Middle East market is resolved as economic cooperation between Arab countries and Israel deepens, Korean firms can consider a new route of exporting to the Middle East market, promoting Israel as a reliable base. As the cooperation areas of the Korea-Israel FTA encompass investment, high technology, and venture start-up in addition to trade, the Korea-Israel FTA secures access to not only the Israeli domestic market but also to the wider Middle East market through joint ventures with and local investment in Israel as an effective and productive means. In the future, if Israel forms a free trade agreement with Arab countries, such as the UAE in particular, it seems feasible for Korea to explore ways to link such an agreement with the Korea-Israel FTA.
       Given the fierce political and diplomatic confrontations that the UAE and Israel have experienced in the past, it requires a substantial effort to plan viable Korea-UAE-Israel trilateral cooperation projects from the beginning under mutual consultation among all three parties. Rather, it would be more effective and productive for Korea to start with the already consolidated, trust-based bilateral relations of either Korea-UAE or Korea-Israel in order to find a field in which the three parties can generate synergy and share mutual interests. It is again more feasible because Korea as a third party can keep a distance from Arab-Israeli confrontational issues and solely stress economic incentives. In this regard, Korea should incentivize the UAE and Israel to focus on private sectors with sufficient capacity-driven economic cooperation since the principle of separation of politics and economy will ultimately lead to the success of cooperation as long as the government and public sectors only have initiatives for cooperation.  
  • 벨라루스 디지털 경제 발전과 한·벨라루스 협력 방안
    Digital Economic Development in Belarus and Implications for Korea-Belarus Cooperation

       Belarus is facing economic challenges due to low efficiency, caused by structural problems. One solution could likely be found in ICT and digital development. Based on this observation, this study analyzes Belarus’s ..

    Jiyoung Min and Tatyana Alekseevna Tkalich Date 2021.12.30

    Economic development, Economic cooperation Russia Eurasia
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       Belarus is facing economic challenges due to low efficiency, caused by structural problems. One solution could likely be found in ICT and digital development. Based on this observation, this study analyzes Belarus’s structural problems and challenges, recent trends and major features of the ICT industry, and the level of digital development. 
       The Belarusian economy has been experiencing a low growth rate since 2009. This is mainly because the share of the public sector and the dependence on the Russian economy are still high. The Belarusian government has made efforts to raise economic efficiency since the 1990s through non-market economy oriented measures. Naturally, there has been little progress.
       Meanwhile, the government’s drastic policies to develop the ICT industry have been the most outstanding successes. The ICT industry in Belarus is one of the most promising sectors in the economy, accounting for almost 8% of the GDP in 2019. According to the digitalization index and the authors’ own calculation of DESI, Belarus has potential for and is in the initial stage of digital economic development. 
       In order for Belarus to realize the digital economic development, it urgently needs to increase the use of ICT in other industries, retrain persons who are in charge of digital affairs in organizations, establish relevant institutions, and construct a 5G network.
       Considering what is mentioned above, the study suggests the following measures to strengthen Korea and Belarus cooperation. 
       In the short-term, Korea could 1) provide facilities for ICT education to the public and dispatch ICT trainer volunteers through ODA programs, 2) provide advice on digital policies and institutions, and 3) encourage Korean ICT companies to partake in Belarus’s 5G network construction.
       In the mid-term, Korea could systemize exchange programs and technological cooperation; 1) organize a Korea-Belarus joint committee on economy, science and technology and a Korea-Belarus forum on science and technology regularly, perhaps biannually, 2) invite businessmen and engineers in the Korea-Belarus forum on science and technology to form a triangular cooperation between the government, scholars and businessmen, 3) readjust the budget provided to joint research programs run by the Ministry of Science and ICT, and the Korea Research Foundation to produce actual joint research output.
       To expand technological cooperation with developing economies, R&D and entrepreneurship programs should be established under ODA, EDCF, and KSP programs, to eventually build up a firm network between scholars and start-ups in the ICT sector in Korea and Belarus. Opening business incubators both in Korea and Belarus could also promote bilateral cooperation.
       In the long-term, there should be institutional grounds for stronger and sustainable economic relations between Korea and Russia. The Bilateral Investment Treaty signed in 1997 could be reexamined and revised. Korea can consult and support Belarus’s accession process to the WTO. Both countries can discuss “Korea-Belarus Service and Investment FTA,” which can lead to a Korea-EAEU FTA or Korea-EAEU comprehensive FTA.

  • 한-인도 CEPA 10년, 우리 중소기업의 성과와 정책 과제
    Study on Economic Impact of Korea-India CEPA and Implication for SMEs

        Since the sign of Korea-India CEPA, Korean SMEs’ trade with India indicated an upward trend in the beginning. However, after the early stage the trend is stagnant, showing many structural limitations. In case of exp..

    Young Chul Song et al. Date 2021.12.30

    Economic cooperation, Trade policy India and South Asia
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        Since the sign of Korea-India CEPA, Korean SMEs’ trade with India indicated an upward trend in the beginning. However, after the early stage the trend is stagnant, showing many structural limitations. In case of export, 80 percent of SMEs which expanded to India have more than 10 years of career, while naturally global companies’ expansion in India market remains in doldrums. In the same manner, SMEs’ importance in import market is constantly decreasing. This result is poor compared to the importance of SMEs’ trade with FTA-signed countries such as the U.S., China, Vietnam and so on. Based on the number of companies, CEPA　export utilization rate of Korea to India is only 49 percent, less than half of the whole trade between India.　Difference in the number of companies and trade amount of CEPA export utilization rate indicates CEPA utilized export is biased to certain SMEs. According to actual and extensive research, Korean SME’s CEPA utilization and performance is lower than expectation. CEPA utilization effect showed meaningful difference considering the presence of tariff lowering level, quickness of tariff abolishment, export volume and R&D investment. Nevertheless, the influence showed a significant difference in the short term, implying the shortage of consistency and limitation in its scale. Weak performance of SMEs’ CEPA utilization is the result reflecting low level of concession and utilization rate of CEPA agreements and characteristic of utilizing company. Therefore, Korean government need to establish clear political guidance and strategy in order to achieve additional improvement negotiations of CEPA. In addition, to lead Korean SMEs’ CEPA utilization to better result, establishment of various linkage support plans is needed. On the other hand, SMEs need to raise awareness on the utilization of CEPA and strengthen their own competitiveness, thereby expand trade scale and diversify items and vendors. SMEs also need to actively devise a solution to associate CEPA with various SME globalization policy supported by the government.

  • 디지털 전환에 따른 노동시장의 변화와 정책 시사점
    Digital Transformation and Its Impact on Labor Market Outcomes: Analyses Based on Country-Level, Korean Workers, and Korean Firm-Level Data

       Digitalization in production and distribution has been progressing continuously for the past 30 years. In the past decade, led by advances in artificial intelligence and machine learning technologies, digital transfor..

    Do Won Kwak et al. Date 2021.12.30

    Labor market, Electronic commerce
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       Digitalization in production and distribution has been progressing continuously for the past 30 years. In the past decade, led by advances in artificial intelligence and machine learning technologies, digital transformation has accelerated further. As a result, the effect of digital transformation on labor market outcomes has become more evident recently. There are two opposing hypotheses about the impact of digital transformation on the labor market: a decrease in labor demand due to labor substitution and an increase in labor demand due to a rise in productivity. This study empirically quantifies the changes that digital transformation brings to the labor market based on data at various country, firm, and industry levels.
       In a country-level analysis in chapter 2, we find the expansion of e-commerce has been shown to lower the employment rate and increase the unemployment rate. Looking at the heterogeneous effects according to educational background, the negative impact of the expansion of e-commerce on employment and unemployment was more significant in the low-educated workers. In the heterogeneous effect analysis by age, the negative effect on labor and unemployment was substantial in the working population aged 25 and over. In sum, the expansion of e-commerce has had a significant negative impact on the working population aged 25 and over and the low-educated population.
       Chapter 3 analyzes the effect of the development and utilization of digital transformation technologies such as the Internet of Things (IoT), big data, and robotics on firms' employment and labor productivity in manufacturing and service industries using the 2016-2018 Business Activity Survey, collected from the Statistics Korea. We find that the development and use of digital transformation technology reduce firm‘s employment with relatively low average wages in the manufacturing industry. This implies that the impact of digital transformation technology on firm employment depends on labor characteristics (e.g., required skills) in the manufacturing industry, which can be inferred from the wage level. Finally, we find that the development and use of digital transformation technology had a relatively more positive effect on service firms' employment and labor productivity. This is because the service industry relies more on human capital than physical capital in the production process than the manufacturing industry.
       In chapter 4, using 38 industries data from Korea Productivity Center for the period 1995-2018, we study the effect of labor productivity improvement on employments and wages. We find an increase in labor productivity reduces labor demand through the substitution effect. However, considering the externalities between industries, we positively affect labor demand through between-industry externality. As a result of estimating the heterogeneous effect (i) the negative (-) effect on employment through the substitution effect was found to be driven by large companies, and (ii) service industry. It was also found that the service industry absorbs the positive (+) externalities most significantly. For the effect of an increase in labor productivity on labor income, we find that the share of labor income has gradually decreased since 1995 with an increase in labor productivity.
       In chapter 5, using PIAAC data, we identify skill items that showed a high positive correlation with employment and wage. We find that the most significant increase in employment occurred in industries with high utilization skills of physical labor and ICT proficiency. On the other hand, the most considerable wage increase occurred in sectors with high utilization skills of continuous education and systematic and planned work performance. Industries with these skills showed a high negative correlation with high employment. At the individual level estimations, we find no significant change in employment and wage found for professional workers. The significant effect in employment was concentrated on non-professional workers.
       The results of empirical analysis at the country, firm, and industrial level consistently show that the impact of digital transformation on the labor market differs depending on the level of skill and education. To mitigate the negative impact of digital transformation on the labor market, the government should provide professional vocational education to develop high problem-solving and ICT-related skills in addition to the knowledge provided by university education. Furthermore, the government can improve the efficiency of the labor market by promoting the smooth transition between jobs and re-employment of displaced workers through the establishment of a strong educational infrastructure. High-quality skill education, vocational job training education, personalized education, and online education should be accessible to the greater population. The government should guarantee no worker is getting behind to attain proper skills to work at the age of digital transformation.

  • 사하라이남 아프리카의 주요 경제공동체별 통상환경 및 산업 구조와 한국의 협력 방안
    Trade Environments and Industrial Structures of the RECs in Sub-Saharan Africa and South Korea’s Cooperation Plans

       The purpose of the paper is to analyze the current status of Regional Economic Communities (RECs) in Africa, focusing on industrial and trade environments, and to find out strategies and cooperation plans for South Ko..

    Wonbin Cho et al. Date 2021.12.30

    Economic integration, Economic cooperation Africa Middle East
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       The purpose of the paper is to analyze the current status of Regional Economic Communities (RECs) in Africa, focusing on industrial and trade environments, and to find out strategies and cooperation plans for South Korea to enter into the African emerging market.
       Do the African RECs work as a driving force for the economic growth of African countries and income convergence among member states in the region? Also, would RECs' efforts to pursue regional integration make African countries catch up with developed countries? In response to these questions, our result shows that intra-trade is practically active compared to offshore trade in the case of COMESA, EAC, ECOWAS, and SADC. Regarding this, the Dispersion Index analysis confirmed that all those 4 RECs member countries have a higher level of homogeneity with production and export structure in trade among member countries than with non-member countries. It is expected that such progress in production and trade structure homogenization among member states could help the economic growth of the African continent and resolve regional income disparity.
       In addition, the results of the gravity model suggest a direction for the trading strategy of the Republic of Korea to increase trade with African countries in the future. First, it is necessary to expand trade relations, focusing on countries with as large an economy as possible within the African RECs. Since trade among member states within each REC is actively taking place, South Korea should strengthen the cooperation with countries with large trade volumes and power to a spillover effect. Second, South Korea needs to expand trade relations with African counties that have high levels of democracy. The result of the gravity model empirically shows that African countries with relatively higher levels of democracy tend to be more active in international trade engagement. This finding seems because, with higher levels of democracy, the country tends to be more concerned with economic policy outcomes and relatively have a higher government quality. Although most African countries have small economies, some have rich natural resources such as water, forest, mineral, and oil. So, RECs is pursuing a development strategy to enhance intra-trade by fostering leading trade partner countries. Moreover, they have an effort to promote sustainable and inclusive economic growth by achieving strategic outcomes like expanding regional infrastructure, modernizing transportation systems head to landlocked countries, establishing an integrated resources management system.
       This paper suggests ideas for Korea-Africa cooperation and the Africa expansion strategy of Korea through RECs as the central axis of regional development and promoting trade in the African continent. We selected two major cooperation partner countries (one for a significant cooperation partner country and one for a country with high potential) each for the four RECs and analyzed the selected eight countries' national development strategies and industry and trade structure. Based on the analysis, we presented the industrial and investment sectors that would cooperate and specific items to increase trade with South Korea. We selected the following eight countries. The former is, in each RECs, a significant cooperation partner country, and the latter is a country with high potential. 1) Egypt and Ethiopia in COMESA; 2) Kenya and Tanzania in EAC; 3) Nigeria and Ghana in ECOWAS; 4) South Africa and Angola in SADC.
       Recently, the role of the RECs has been growing in terms of regional integration and economic development strategies in the African continent. In particular, the African Continental Free Trade Area (AfCFTA), which is evaluated as the largest free trade area of the world, officially opened on 1 January 202l, African countries' trade and investment with other African countries and with international economies is expected to significantly increase. In turn, South Korea needs to develop a new and effective trade strategy toward Africa. As the movement of regional economic integration with the AfCFTA opening is about to be more active, it is necessary for South Korea to develop a multilateral cooperation model based on the critical role of African RECs.
  • 코로나19가 무역에 미치는 영향
    Analysis of Economic Effects of the COVID-19 Pandemic on Global Trade

       Although many studies have documented that financial and political crises are associated with severe recessions, little attention has been paid to pandemic crises. Furthermore, they focus on estimating the effect of t..

    Soon Chan Park Date 2021.12.30

    Trade structure, Trade policy
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       Although many studies have documented that financial and political crises are associated with severe recessions, little attention has been paid to pandemic crises. Furthermore, they focus on estimating the effect of the crises on economic growth and unemployment, but not on trade. With deepening global value chains, the growth of trade exceeds that of GDP, and countries are increasingly exposed to foreign risks or shocks. International trade therefore is no more derived transactions but a crucial factor driving economic growth. This paper makes progress understanding the economic effects of the Covid-19 by investigating the impact of the previous 21-century pandemics and the Covid-19 on trade.  
       To study how long the negative effects of the pandemics persist, we also estimate the effect of these health crises on trade, both in the onset year of the crisis as well as the dynamic effects over time. An another important question on the economic effects of the pandemics is whether pandemics are demand shocks or supply shocks. This is a fundamental question for both economists and policymakers, because it helps design effective policy responses to future health crises. Yet there were few evidence-based arguments based on similar events in the past. 
       Our findings are as follows:
       First, we find a larger negative impact of the severity of the Covid-19 on bilateral exports, implying that effective prevention and control measures for pandemics do matter not only for human life, but also for economic performance. The severity of the Covid-19 is measured by the mortality rate, death cases per 1000 population and confirm cases per 1000 population. It reveals that each of them serves as a good proxy variable for the severity of the Covid-19. 
       Second, we find that ICT development contributes to mitigate negative effects of the Covid-19 on exports. The Covid-19 and resulting public health measures necessitated many workplaces to permit workers to work from home. We test the hypothesis that the productivity of remote working depends on the ICT development, and this leads to better export performance. 
       Third, we find that the previous 21-century pandemics including SARS, H1N1, MERS and Ebola are a supply shock resulting in the reduction in exports of final goods, but leaving exports of intermediates inputs largely unchanged. These results imply that consumers in importing countries substitutes the final goods from non-affected countries for those from affected countries, but the inputs souring decisions of firms are not affected by the pandemics. 
       Fourth, we find that it takes at least 4 years for the negative effects of the pandemics on trade to disappear, identifying the dynamic effects of the pandemics. 
       Based on our empirical findings, finally, we discuss some policy implications for mitigation of economic damage, protection of business from destruction and facilitating recovery. 
  • 탄소국경조정제도(CBAM)에 대한 중소기업 대응방안 연구
    A Study on Korean SMEs Policies for the Carbon Border Adjustment Mechanism (CBAM)

       In July 2021, the EU announced the Carbon Border Adjustment Mechanism (CBAM), which obligates importers to purchase certificates corresponding to the emissions embedded in imported products. Implementation of the CBAM..

    Hyeri Park and Ji Hyun Park Date 2021.12.30

    Economic development, Trade policy
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       In July 2021, the EU announced the Carbon Border Adjustment Mechanism (CBAM), which obligates importers to purchase certificates corresponding to the emissions embedded in imported products. Implementation of the CBAM will have a negative effect on the Korean economy, which is highly dependent on trade and carbon-intensive industries. Another point of particular concern lies in that domestic SMEs will also be affected by the CBAM directly or indirectly. Therefore, this study examines the impact of the CBAM on SMEs in Korea, and evaluates different industries for their vulnerability to the CBAM. Implications for government policies and strategies for SMEs to effectively respond to CBAM are drawn.
       This study differs from previous studies in that it analyzes the impact of the CBAM from the perspective of SMEs. Few domestic studies have analyzed the impact of the CBAM on SMEs. This study examines various aspects of the CBAM, including statistical analysis of vulnerabilities to the CBAM in the area of SMEs, and case studies of carbon neutrality support policies for SMEs in major countries. Various analysis methods are attempted, such as measuring the export status of SMEs’ CBAM target items and domestic SMEs' distribution of CBAM target industries, evaluating the SMEs’ vulnerability to the CBAM by sectors, and measuring carbon emissions embedded in SMEs’ exports. Moreover, overseas carbon neutrality support policies for SMEs are investigated to identify recent policy trends in major countries and learn from benchmarking cases.
       Chapter 2 discusses the major issues of the CBAM. As the CBAM is expected to expand in the future, response strategies for the CBAM are needed not only in the steel industry but also in other industries. Moreover, if composite materials and indirect emissions are included in the scope of the CBAM, SMEs are also directly subject to CBAM regulation. Therefore, SMEs should prepare an adaptation strategy for the CBAM through active communication with the government while paying attention to the implementation progress. The government should carefully establish its position on the CBAM, while monitoring responses in other countries to the CBAM and cooperating with major countries. The Korean government should also make preparations on issues for bilateral CBAM consultations with the EU.
       According to the analysis results in Chapter 3, while direct exports to the EU by Korean SMEs do not account for a large proportion of items falling under the scope of the CBAM, it is confirmed that the impact on domestic SMEs increases when indirect exports are taken into account. When considering indirect exports, the sectoral vulnerability to the CBAM appears in different patterns from when indirect exports are not considered, and it is also found that vulnerability to the CBAM differs by sector.
       Chapter 4 investigates carbon-neutral policy cases for SMEs in Korea and major countries. In Korea, it appears that SME support policies related to carbon neutrality are mainly composed of short-term projects, and there is no long-term support policy. In addition, it is found that domestic SMEs lack the ability to respond to the CBAM and carbon neutrality, and SMEs have more demand for policy financing than strengthening their capabilities for carbon neutrality.
       The results of this study yield the following important implications.
       First of all, a phased response strategy is needed according to the timing of CBAM implementation. The role of the government is important during the CBAM transition period (2023-25). In order for SMEs to adapt to the CBAM, the government should provide information about the CBAM, prepare education programs, and design support systems for SMEs. If the CBAM is implemented after 2026, substantial response actions by the government and companies should be prepared. An integrated carbon-neutral data management system and advisory agency for SMEs should be established, while forming cooperational networks between large companies and SMEs. In the long run, SMEs should prepare export strategies to cope with the era of carbon neutrality. At the same time, they should de-carbonize their production processes and develop low-carbon, high-value-added products, and the government should participate in international discussions and negotiate the conditions of CBAM implementation.
       The detailed response strategies by the government and SMEs to the CBAM are recommended as follows. First, the government should come up with a long-term carbon-neutral support policy that focuses on SMEs. Second, when it comes to response strategies to the CBAM, indirect export as well as direct export must be considered. If the CBAM is expanded in the future and all supply chains are included in the scope of CBAM regulations, SMEs will also be subject to CBAM regulations. Therefore, the CBAM affects domestic SMEs through direct or indirect channels, as exporters are expected to force suppliers to comply with environmental standards and demand the supply of eco-friendly intermediate goods. Third, it is necessary to develop various types of carbon reduction programs that can promote SMEs' participation in carbon neutrality. Export support systems for environmental products and technologies, carbon reduction support through ICT, local government carbon neutral support policies, and cooperation between SMEs and large companies can be benchmarked from overseas cases. Fourth, the policy direction for carbon neutrality support for SMEs should prioritize implementation of support for eco-friendly process transition, followed by the provision of incentives based on carbon neutrality performance. Fifth, support policies for SMEs should be designed considering conformity with WTO agreements. Finally, a control tower that supervises SME carbon neutrality policies should be established. We propose the launching of an "SMEs Carbon Neutral Response Team" or “CBAM TF” dedicated to SME policies.
       SMEs must accurately inform themselves on the scope of the CBAM and international discussion on the CBAM, because the impact of the CBAM on domestic SMEs depends on how far its scope extends. Second, SMEs should actively participate in the carbon neutral policy design from the initial stage so that the specificity and difficulties of SMEs can be reflected. Third, the ability to respond to the CBAM should be strengthened. SMEs should secure professional manpower with CBAM-related administrative capabilities, reporting capabilities, and verification systems by making the most of government support during the CBAM transitional period. Fourth, it would be more effective to formulate response strategies by industry. Carbon emissions, reduction efficiency, and reduction technologies all vary by industry. Therefore, an effective approach would be for each company to participate in the development of benchmarks for their respective industries, develop standards for reporting emissions by industry, and share best practices. In addition, since the vulnerability factors by the CBAM are very different from industry to industry, government support should be established along the path of vulnerability. Finally, carbon neutrality is a challenge for SMEs in the short term, but it can be an opportunity if successfully overcome. SMEs should establish response measures to the CBAM from a long-term perspective.
  • 중남미 국가의 FTA 활용 인프라 분석 및 협력 방안
    Analysis of FTA Utilization Infrastructure and Economic Cooperation Mechanism between Korea and Latin American Countries

       In 2007, when the Korea-US FTA negotiations were concluded, the government of Korea started a program to support the utilization of FTAs by SMEs. Since then, through the enactment of laws and the related regulations,..

    Inkyo Cheong et al. Date 2021.12.30

    Economic cooperation, Free trade Latin America
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       In 2007, when the Korea-US FTA negotiations were concluded, the government of Korea started a program to support the utilization of FTAs by SMEs. Since then, through the enactment of laws and the related regulations, it has established a systematic FTA utilization support system that cannot be found in other countries. Korea’s FTA utilization support system has been modified and supplemented for more than 10 years. FTA utilization support includes providing information on FTA utilization (opening a website or holding education and briefing sessions, etc.), consulting on FTA utilization (preferential tariff, country of origin, FTA business model, etc.), and establishment of FTA utilization infrastructure (origin management system, customs clearance and preferential tariff margins with FTAs), and fostering professional manpower (undergraduate, graduate course, etc.).
       No country in Latin America has a comprehensive system to support the use of FTAs. The text of FTAs, the tariff concession schedule, and the rules of origin for goods are presented on the website of the national government (public) institution or the Organization of American States (OAS) FTA Information Center (SICE). Many low-income countries, such as Nicaragua, El Salvador, and Honduras, have a lot of difficulties in promoting the use of FTAs due to poor physical infrastructure including the Internet.
       Recently several countries have shown interests in adopting Korea’s FTA utilization support system. Korea, along with Chile and Mexico, has built the world’s widest FTA network, but there are several factors adverse to its export performance such as WTO’s lethargy, COVID-19 quarantine measures, global protectionism, and decoupling of the US and China economy. In order to respond to changes in the global trade environment, it is necessary to enhance the utilization of the existing FTA and to strengthen the FTA policy by negotiating to upgrade the existing FTAs and promoting new FTAs.
       This study intends to explore economic cooperation measures to support the use of FTAs among Latin American countries that have concluded FTAs with Korea or have raised the need for a new FTA. A total of 10 countries were selected for analysis, including 4 member states of the Pacific Alliance (Chile, Peru, Colombia, Mexico) and 6 Central American countries (Guatemala, Nicaragua, El Salvador, Honduras, Costa Rica, and Panama).
       The conclusion of the FTA negotiations with the MERCOSUR, which is currently underway, is the top priority for Korea’s trade policy with Latin American countries. In the case of the MERCOSUR, since internal policies within the block become a critical factor in the process of negotiations, it is difficult to expect the desired results from economic cooperation without a change in the attitude of the MERCOSUR countries (Brazil, Argentina, Uruguay, and Paraguay) at the regional level toward the FTA with Korea. While many research reports on the necessity and strategy of economic cooperation with the MERCOSUR have already been published, research reports on economic cooperation with small and medium-sized countries in Latin America are rare.
       In addition, securing the status of an associate member of the Pacific Alliance (PA), which can have an effect comparable to that of an FTA with Mexico, is an important issue in Korea’s trade policy. This study focuses on research to find ways to strengthen economic cooperation with Mexico, which is not making progress. However, this does not mean to underestimate the importance of economic cooperation with the MERCOSUR countries.
       Through transferring Korea’s FTA utilization support system to the Latin American countries in the form of economic cooperation, it is possible to expand economic gains earned from the FTAs with Latin American countries and to raise local interests toward the FTA utilization. The purpose of this report is to select a set of countries of priority for economic cooperation in the transfer of Korea’s FTA utilization support system.
       Chapter 2 summarizes the development process and the main contents of Korea’s FTA utilization support system. The enactment of laws and regulations have been described in detail. Based on Korea’s experience, it is necessary to transfer a support system suitable for local conditions in Latin American countries and induce them to develop step by step.
       Chapters 3 and 4 try to find the target countries for economic cooperation supporting the use of FTAs and to estimate the effects of economic cooperation. Even if a large number of FTAs have been concluded, it will be difficult for this economic cooperation project to proceed smoothly in the case of countries that do not provide FTA utilization support services to their own companies. With this point in mind, the criteria for selection of priority countries were established. One of the criteria is the impact on the GVC of Latin American countries, based on the reports by the international economic organizations (World Bank 2017, 2018; UNCTAD 2020, etc.) arguing that FTAs not only deepen participation in GVC, but also help economic growth by activating trade in intermediate goods.
       In Chapter 5, based on the analyses in Chapters 3 and 4, the target countries for economic cooperation to support the use of FTAs have been selected, and accordingly, the policy issues that should be focused on supporting those countries have been derived. In this study, Mexico, Colombia, and Guatemala have been selected as the priority countries for Korea’s FTA utilization support economic cooperation through an analysis of various aspects such as the FTA utilization support infrastructure, industrial base and structure, and the impact of the project on GVC. Finally, the conclusion and policy implications are given at the Chapter 6.
  • 글로벌 ESG 동향 및 국가의 전략적 역할
    Global ESG Trends and the Strategic Role of the Korean Government

       Recently, ESG(Environment, Society, and Governance) concerns are rapidly growing both domestically and internationally in various fields such as investments, management, consumers, and government policies. Beyond the ..

    Sang Buhm Hahn et al. Date 2021.12.30

    Financial policy, Environmental policy
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       Recently, ESG(Environment, Society, and Governance) concerns are rapidly growing both domestically and internationally in various fields such as investments, management, consumers, and government policies. Beyond the concept of investment criteria or policy instruments, ESG can be defined as a value system for sustainable prosperity of the human community. ESG issues are rapidly becoming impending socioeconomic risk factors, but it is also being actively researched and implemented as an opportunity and solution in a variety of fields.
       The current popularity of ESG can be explained in terms of the role-sharing relationship between the government and the market. The characteristics of political demands have altered as existing socioeconomic problems have accumulated. And the technologies that could be used to solve problems advanced quickly. As a result, not only has the nature of the problem in each industry changed dramatically but so has the relative superiority of efficiency between the market and the state. In the role-sharing of the market and the state, there are wide spectra between mutually exclusive extremes of market failure and government failure.
       Shareholder capitalism has not been able to adequately respond to various side effects that damage the natural environment and social community in the process of pursuing economic growth. In the early 1980s, the international organizations began addressing sustainable development in which current economic development does not jeopardize future generations’ economic prosperity. Concerns about sustainability began with environmental issues and grew to include human rights and social ideals. It has been summed up as the ESG concept in recent years, which encompasses three aspects: environmental, social, and corporate governance.
       We present examples of companies that are following an ESG approach. Many businesses are spearheading ESG initiatives, and their patterns vary. Some companies, such as Patagonia, have been doing ESG activities consistently since the beginning. In some cases, such as with Unilever, ESG difficulties are represented in existing business practices, but corporations like Schneider Electric, CLP Group, and Oersted have entirely rebuilt their businesses, eliminating certain existing businesses and launching new ones that are compatible with ESG ideals. ESG is also attracting a lot of attention from Korean businesses, particularly in the area of environmental challenges. Given the current situation in Korea, where controlling owners frequently exercise management rights, corporate governance challenges are considered to represent both a threat and an opportunity for the Korean firms.
       National ESG strategies are also required, in addition to business ESG plans. The notion of “market failure” serves as a justification for national policy intervention in general. Many initiatives, however, have unintended consequences or are ineffective, as the term “government failure” implies. Market and government roles should be linked on the basis of efficiency. Not a binary distinction of “market or government,” but new frameworks of collaboration between the “market and the government” should be sought. Referring to the remarkable ICT developments such as AI and big data, cutting-edge financial instruments, and various organizational/ management techniques, it is necessary to readjust the existing government policy intervention area and redesign the method innovatively.
       Carbon taxes and minimum corporate tax rate regulations are two contemporary international ESG concerns that have been explored. Korea has evolved in terms of economic size and technological level, but still remains developing status with the environmental and energy challenges. As a result, we should create phased implementation schemes and support systems for the significantly and abruptly burdened industries and SMEs, while actively participating in international ESG talks and reforming associated institutional structures.
       We also present policy examples from a variety of countries on ESG challenges. The European Union (EU) has taken the lead in instituting ESG regulations such as green taxonomy, sustainable financial disclosure, corporate sustainability reporting, human rights and environmental due diligence responsibilities of business supply chains, and carbon taxes. The U.S. Biden administration drafted state goals closely related to ESG, such as restoring democracy and strengthening human rights, digital innovation, regional development, resolving educational inequality, diversity and equality, and expanding corporate transparency and corporate responsibility. In Japan, diversity guidelines and health management strategies are notable. Individuals and enterprises’ social credit in China are assessed at the national level. This summer, the Chinese government formally unveiled the slogan “Common Prosperity.” Chinese ESG initiatives, such as outlawing monopolies, cracking down on giant platform businesses, and expanding educational equity, are also noteworthy. India is the only country in the world where corporate social responsibility is required by law, and non-compliance with CSR expenditure obligations can result in criminal penalties for firms and their leaders. Meanwhile, the OECD announced on October 8, 2021, that 136 countries and jurisdictions have agreed that certain multinational enterprises (MNEs) will be subject to a minimum 15% tax rate, effective from 2023. Korea also has to develop policies to improve tax transparency and corporate social responsibility.
       Investment and business management ESG infrastructures are also critical. This necessitates an adequate division of the roles between the public and private sectors. We need consistent standards for ESG financing, which necessitates an ESG disclosure system and a green taxonomy to determine whether it belongs under the ESG category. Many private agencies have started offering ESG rating services in recent years, but their rating methods are vastly different, and the results are under-correlated with each other. There are also worries that foreign agencies’ ESG assessments do not fully represent Korean-specific circumstances. It might not be a good idea for the government to conduct ESG evaluations directly because it could weaken market discipline. The government, on the other hand, should appropriately oversee the ESG rating system’s entire structure.
       We discuss how to establish and implement ESG policies in Korea in a strategic fashion. K-SDGs and the Korean New Deal are two of the most common ESG policies now in use. In addition, 23 Presidential Committees have been established to advise and deliberate on the national policy agenda, including the National Balanced Development Committee and the Aging Society and Population Policy Committee. In addition to the Prime Minister and ministries, there are around 500 committees. This policy approach appears to be in line with ESG trends that are now gaining traction around the world. However, because overlapping policy implementation by separate committees or ministries can lead to inefficiency and conflicts of interest, it is vital to examine integrated policy design and action plans.
       We recommend that the National ESG Committee, ESG reports from each ministry, and national ESG strategy reports are established. To begin, we need a policy classification system, such as modularizing individual policies, to effectively control and manage policy duplication. This system should be based on the ESG national plan and be as consistent as feasible with the green categorization system (K-taxonomy). From an ESG viewpoint, it is vital to identify major problems and hazards affecting our society, as well as to map existing policy goals for each risk category. We propose that social “issues” or “risks” be organized into the K-Risk Matrix, with K-SDGs as a primary subset of solutions. The K-Risk Matrix is a diagram that depicts the “likelihood” and “impact” of threats to Korean society, and it may be created using information from the World Economic Forum’s Global Risk Report.
    As an action plan, we must first define and taxonomize ESG activities and then construct ESG information infrastructures such as accounting and disclosure systems. ESG rating agencies, in particular, should be prepared with suitable regulations and supervisory processes. These ESG policy objectives should attempt to promote fair and efficient market competition and give a solution to both market and government failure.

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