Recently, our trades have been declining for the second year in a row, due to the maturity of the global value chain and the delay in the recovery of the world economy. In particular, imports decline more than exports, but trade surplus is rather expanding. Policy makers and experts expressed concern about the decline in exports, but did not show interest in decreased imports. Behind these responses, there is dichotomy that the increase in exports is positive but the increase in imports is negative. More importantly, there is still a lack of clear understanding of Korea’s import structure.
  In this paper, we analyze determinants of Korea’s imports in the context of the interaction between exports and foreign investments, and investigate the effects of imports on firms’ exit and productivity in order to understand Korea’s import structure and distributional influences of imports.
  Since 1988, Korea’s overall imports have increased substantially, except for the currency crisis and the period of the global financial crisis, but it has recorded a continuous declining trend due to recent sharp drop in imports of raw materials.
  Major importing countries have changed from developed countries in the past to resource-abundant countries and developing countries. By type, intermediate goods account for about 50% of imports, raw materials and capital goods account for 20% respectively, and consumption goods account for around 10%.
  In order to analyze determinants of imports by type, we constructed theoretical model and found two propositions. First, regardless of types, imports will increase as the economic sizes of importing countries become larger, and will decrease as the transaction cost with the importing partner increases. Second, while imports of consumption goods increase as the income level and market size of importing countries increases, imports of intermediate goods and raw materials used as production inputs increases as the outputs and exports of industries increase.
  The results of the empirical analysis based on the theoretical model are summarized as follows. First, as the export becomes more active, imports of intermediate goods and raw materials used as production input factors will increase, while imports of consumer goods will decrease. Second, imports of intermediate goods and raw materials are positively related with inward foreign direct investment (FDI), but imports of consumption goods are negatively affected by inward FDI. Third, the more industries spend R&D investments, the more the industries import intermediate goods and raw materials. Fourth, the effects of import liberalization are different for each type of import. The influence of the tariff rate was limited for raw materials and capital goods imports.
  According to the analysis of Korea’s import structure, imports of consumption goods declined by 0.137%, and imports of intermediate materials and raw materials were analyzed to increase by 0.235% and 0.193%, respectively when exports increased by 1%. When inward FDI increased by 1%, imports of consumption goods and capital goods decreased by 0.02% and 0.017% respectively, but imports of raw materials were expected to increase by 0.071%.
  The main results of analyzing the effects of imports on probability of firms’ exit are as follows. First, the increase in total imports increase the probability of a firm’s exit but the firm size, capital stocks, productivity decrease the probability. Second, imports of raw materials and intermediate goods decrease the probability.
  Third, whether firms are exporting or not does not significantly affect the relationship between import penetration and firms’ exit. Fourth, the magnitude of the effects of imports on firms’ exit varied from industry to industry.
  The results of effects of imports on productivity structure are summarized as follows. First, the total import penetration rates have an inverse U-shaped relationship with total factor productivity. Second, these nonlinear relationships between import penetration rate and total factor productivity are very different for each type of imports by industry. In order to investigate the effects of imports on the distribution of productivity within the industry, we decompose changes in the productivity into within firm effects, between firm effects, and exit and entry effects. Second, when imports increase, within firms effects are significant in food, iron, transportation industries and between firms effects are significant in oil and iron industries. Only in the transportation industry, exit and entry effects turn out significant. Third, the total import penetration rates have a positive impact on the growth rate of productivity by economies of scale, whereas the penetration rates of intermediate goods imports increase productivity through technological progress.
  Based on this, three policy proposals were derived. The first is the introduction of a new statistical system for imports linked with export and investment. Also, the new system should contain statistics for e-commerce imports in order to analyze the current situation of import of consumption goods. The second is improvement of the trade adjustment assistant (TAA) program. An increase in imports will increase the competitiveness of the domestic market and induce the exit of companies with low productivity, but these impacts were analyzed to be somewhat different depending on type and industry. In addition, a nonlinear relationship between imports and productivity was also considered. Third one is customized policies taking into account effects of imports by type. As the FTA tariff elimination schedule goes forward, the effects of imports are expected to continue to expand. To introduce customized policy for imports by type, it is necessary to raise the understanding of Korea’s import structure. 

  The international community’s sanctions are getting tighter due to North Korea’s continued nuclear missile tests in January and September 2016. This report aims to examine the impact of sanctions against North Korea on its neighboring countries' trade. First, in the 2nd chapter we analyzed the history, main contents, and issues of multilateral and bilateral sanctions against North Korea. In the 3rd chapter we categorized North Korea’s trade into termination, substitution, detour, creation, and provided empirical analysis using trade dataIt is necessary to clarify the concept of detour trade among the concepts of termination, substitution, detour, and creation in trade as a result of sanctions. In general, detour trade(sanction target country-3rd country-sanction sender country) is a trade that makes a detour via a 3rd country in order to avoid sanctions by the sanction sender country, which is based on illegality. However, detour trade concept used in this research is similar to the usual usage of the term in that it maintains the trade route using a detour, but is different in that it does not necessarily need to be illegal. In this research detour trade encompasses both legal and illegal trade. Legal detour trade is trade that abides by the customary rules of origin. For example, if an item that is traded on a detour from North Korea to a 3rd country via China is 60% produced by China and 40% by North Korea, then its origin is legally China. Therefore in this case even if the item had been in part manufactured in North Korea, it will not be subject to sanctions.
. In the 4th chapter we surveyed the history of cross-border business in the North Korea-China border region and how the how the main actors and locations(Dandong and Yanbian) of the cross-border business changed after the sanctions, and how export items changed through trade statistics analysis. Finally in the 5th chapter we analyzed the future scenario, issues and implications of sanctions against North Korea.
  Specifically, in chapter 2, we examined the history, and the main contents of sanctions against North Korea. Sanctions against North Korea are divided into multilateral sanctions led by the United Nations and bilateral sanctions imposed by the US, EU, Japan, South Korea and others. Up until now, there have been a total of six sanctions, and all were adopted due to the test-launch of North Korea's nuclear and long-range missiles. The United Nations resolutions have been strengthened gradually and continually to include additional points while reaffirming the previous sanctioning resolutions. The United Nations multilateral sanctions focus on WMD, nuclear tests and constraints on relevant trade, finance and travel, and in line with the Geneva agreement in 1949, there is no direct effect on the lives of residents of North Korea. In other words, sanctions were enforced so that it does not restrict ??civilian life, and only restrict non-civilian activities.
  Meanwhile, bilateral sanctions were imposed at a level that discontinued economic and diplomatic relations with North Korea gradually notwithstanding consideration for civilian activities. Unlike sanctions against North Korea by South Korea and Japan, the United States has stated four reasons based on domestic law, such as security problems, communism, terrorism aid country, WMD diffusion, etc. The sanctions were imposed by the U.S. since the 1950s, which includes ban on aid and financial support, freezing of assets related to North Korea, embargo of weapons, and prohibition of entry by stake holders. Japan's sanctions against North Korea had been initiated on the grounds of North Korea‘s abduction of Japanese citizens, and features a ban on imports against North Korea, the banning of related aircraft and ships, entry prohibition of stake holders in 2006, and banning exports to North Korea in 2009. South Korea's sanctions against North Korea includes the discontinuation of Mt. Geumgang tourism triggered by the attack on a South Korean civilian in 2008, the complete discontinuation of trade relations except the Kaesong Industrial Complex triggered by the 2010 Cheonan ship attacks, and in 2016 discontinuation of the Kaesong Industrial Complex.
  In Chapter 3, we analyzed the changes in trade between North Korea and neighboring countries due to sanctions. Sanctions against North Korea triggered changes in North Korea’s trade, which can be divided into trade termination, trade substitution, detour trade, and trade creation. Trade termination was due to the sanctions against North Korea by Japan in 2006 and amounts to about $ 180 million(annual average trade value between 2004 and 2006), and from the South Korea’s sanctions against North Korea in 2010, which amounts up to $300 million in trade termination(annual average trade amount between 2007 and 2009). As for trade substitution, inter-Korean trade increased by 113.1% in 2006, North Korea and China trade increased by 95.2% to Japan’s sanctions against North Korea, and North Korea-China trade increased by 195% due to South Korea’s sanctions in 2010. Detour trade North Korea-China-Japan amounts to about 2.1% of total North Korea-China trade(annual average of 2007 to 2009). After the 2010 South Korean sanctions, North Korea-China-South Korea detour trade amounted to about 5.6%(annual average between 2010 and 2012), North Korea-China-Japan detour trade amounted to about 2.6% (annual average between 2010-2012) of North Korea-China trade. Trade substitution to China and increase in detour trade via China due to Japan and South Korean sanctions increased China-North Korea trade to a considerable extent.
  In chapter 4, we analyzed how sanctions against North Korea impacts the businessmen and location of North Korea-China border region, and changes in major trade items as well as dispatch of North Korean workers to China. In the 1990s cross-border business was usually managed by the Chaoxianzu, or the ethnic Koreans in Northeast China, and centered on the Yanbian region. In the 2000s, cross-border business with North Korea was led by the South Koreans in the form of South Korean management and Chaoxianzu local brokers, mainly staged in Dandong. After the 5ㆍ24 measures, the major trading entity has changed its form from South Korean management - Chaoxianzu local broker to Han Chinese management ? Chaoxianzu and ethnically Chinese North Korean broker. The center of cross-border transaction shifted from Yanbian, Jilin Province to Dandong, Liaoning Province. In terms of trade items, North Korea’s traditional trade items such as anthracite and iron ore decreased after the sanctions against North Korea, while the growth of trade in textiles and marine products trade is remarkable. Finally, the number of North Korean workers sent to China has increased. After the sanctions against North Korea, the subjects, regions and products of the cross-border business with North Korea project have changed, but while North Korea's trade has not been greatly affected by sanctions, human interaction has rather increased.
  In chapter 5, we forecasted scenarios, issues and ripple effects on changes in sanctions against North Korea. An important factor in strengthening sanctions against North Korea is whether North Korea will conduct additional nuclear tests and long-range missile tests. Contents of the U.S. strengthening its sanctions against North Korea based on active participation by China include secondary sanctions in the financial sector, restrictions of the main export goods of North Korea which are coal and iron ore, restrictions on trading processed goods such as clothes and marine products which are rapidly increasing sectors for North Korea, as well as restrictions of dispatch of overseas workers. If the problem of weapons of mass destruction is resolved, sanctions against North Korea can be relieved at the level of sanctions enforced in 2006. Relaxation of South Korea’s and Japan’s sanctions against North Korea can be done relatively smoothly. However, the US sanctions against North Korea can be extremely complicated as it is necessary to dispose of relevant laws, amendments, and exemptions for North Korea. More importantly, the important variables that determine whether sanctions against North Korea should be strengthened or mitigated can be three-fold, such as changes in North Korea's behavior, changes in South Korea, the US and Japan's policies, and changes in China's policies.
  The ripple effect of the change in sanctions against North Korea was analyzed by distinguishing between the effect of strengthening and the effect of relaxation. In the case of strengthening the sanctions, North Korea's trade will be totally suspended and only emergency supplies based on humanitarian purposes will be sustained. The effect of alleviation of sanctions will result in rapid increase in trade between North Korea and Japan, and inter-Korean trade, whereas trade and detour trade between China and North Korea will rapidly decrease. 

  Following the global financial crisis, Korea recorded an average export growth rate of -1.8% for 2012-2015, and has not yet recovered its growth rate of 19.1% in 2003-2007 before the crisis. Considering the important role played by export growth throughout Korea's economic growth, a significant part of the recent decline in economic growth can be attributed to this slowdown in export growth. This study focuses on the relationship between financial constraints and exports in order to elicit policy implications for boosting export growth.
  In an analysis using firm-level data, we found that the financial constraint on the supply side of funds contributed to the decrease of exports. The financial shock to the banking sector, which supplied more than 70% of the external funds in 2015, has been found to affect exports of Korean firms. This main result is robust to another index representing the health of banks and different empirical model specifications including firm fixed effect, alternative variable transformation, and an empirical model considering the endogeneity problem. Small and medium-sized enterprises (SMEs) are more sensitive to the health of banks than large firms, and, among the top four manufacturing industries with a high proportion of exports, metal processing products are particularly vulnerable to financial constraints.
  Another empirical analysis using industry-level data again showed that the financial constraints are closely related to decline in export. Debt dependency ratio and tangible asset ratio were used as variables that indicate industry-level financial constraints. Having a higher debt dependency ratio and tangible asset ratio signifies a lower level of restrictions from borrowing in the financial market. An industry with a high financial constraint is more likely to show a large decline in exports as the cost of funds increases. By firm size, SMEs are more sensitive to financial constraints than large firms, as they both face the same financial costs. A classification of exports by item characteristics (e.g. capital goods, raw materials, consumer goods) shows that the financial constraints have a greater impact on exports of capital goods and raw materials. In the case of consumer goods, the effect of financial constraints on exports was not significant. However, further analysis of detailed consumer goods showed that consumer discretionary goods turned out to be sensitive to such financial constraints.
  The policy implications suggested in this report include an improvement in the health of banks, recognizing the different effect of financial constraints on exports by firm and industry characteristics, and the need for micro-financial policies. In relation to improving the health of banks, we propose improving loan examinations. This would involve an enhancement of the expertise employed to identify companies (or industries) that are expected to bring high profitability in the future. We also emphasize that the perception of policy authorities on the different effects of financial constraints on exports by firm and industry characteristics is a very important factor for the effective implementation of policies. By enterprise size, SMEs are more vulnerable to financial constraints than large firms. Therefore, policies to mitigate financial constraints on SMEs would be more effective. Since the relationship between financial constraints and exports is very different from one industry to another, we also emphasize the need for micro-financial policies. In Korea, financial constraints are more relevant to mid- to long-term economic growth rather than short-term economic fluctuations, indicating that policies related to financial constraints need to focus on the mid- to long-term. As the meaning of debt ratio is interpreted differently in empirical results for firm- and industry-level data, the policy maker should take this into account when establishing policies for individual firms and industries.
  The implementation of micro-finance policies that reflect the different effects of financial constraints on exports by firm and industry characteristics will serve as an effective policy option for policy authorities, as an additional policy instrument complementing existing monetary and fiscal policies. If the firms (or industries) with a large decrease in exports due to financial constraints are selected and focused on as a policy target, this would maximize the effect of policies while minimizing unintended side effects.
  The most salient feature of this report setting it apart from previous literature is that it applies proven methodology from previous research to Korean data, showing the part of decrement in exports caused by financial constraints. In addition, we found that these effects are different by firm and industry characteristics. Based on this report, future work using upgraded data will improve the estimation of the coefficient implying an accurate relationship between the diverse effects of financial constraints on exports by firm and industry characteristics, micro-finance policies and financial constraints under the control of various variables. Through this we ultimately hope to raise the effect of policies to improve the export growth rate. 

Introduction

Ⅰ. The Global Digital Economy: Trends, Impact and Prospects

1. The Digital Economy and Features of Digital Trade
2. Measuring Digital Trade
3. The Role of ICT in Northeast Asia
4.  Digital Services
5. Online Consumers
6. New Challenges Posed by the Digital Economy
7. Conclusions

Ⅱ. Existing Digital Trade Rules at the Domestic Level in Northeast Asia

1. Broad E?Commerce Regulatory Frameworks
2. Customs and Trade Facilitation Laws
3. Data Protection
4. Data Localization and Cross?Border Data Flows
5. Domain Names
6. IP Rights
7. Consumer Protection
8. Over?the?Top (OTT) Internet Services
9. Concluding Remarks

Ⅲ. International and Regional Trade Rules

1. The World Trade Organization (WTO)
2. World Customs Organization (WCO)
3. World Intellectual Property Organization (WIPO)
4. Asia Pacific Economic Cooperation (APEC)
5. Free Trade Agreement E?Commerce Provisions

Ⅳ. Negotiating Digital Trade Rules for the Future in Asia

1. Gaps, Challenges and Opportunities:  The Global Level
Recommendations:
2. The Domestic Level
Recommendations:
3. Addressing the Gaps:  Using Regional Trade Agreements
4. Concluding Remarks

Executive Summary 

  Economic policymaking is often a delicate dance between government officials and regulators and the marketplace.  Governments want to ensure, for example, that consumers are safe, that public goods are properly provided, and that government services are adequately supplied.  Companies want to find new markets and new consumers and reap maximum profits.  In mature markets or slowly evolving industries, finding the right equilibrium that balances the needs of government, citizens and companies is easier. 
  In digital trade and e-commerce, however, new technological advances are being developed so rapidly that governments are struggling to keep up.  Officials have responded by either allowing industries to exist in entirely unregulated spaces or have tried to adapt off-line rules and legislation to match growing on-line trade.  The result has satisfied no one.  Governments are uneasy with patchwork regulations and legislation in place to monitor the digital economy at the domestic, regional and global levels.  Companies face growing risks and uncertainty in their business models, since poorly structured and fragmented responses by governments can upend once profitable ventures overnight.  Consumers are also not getting the best outcomes since many products and services that they might want are not available, have uncertain quality, cost more, and may compromise their own privacy.
  This paper tracks the rapidly evolving landscape for digital trade and e-commerce across five Northeast Asian economies?China, Japan, Hong Kong, South Korea, and Taiwan.  These five countries are at the cutting edge of the digital revolution with increasingly wired citizens and innovative companies offering a staggering range of products and services.  The paper examines several business and consumer important trends of note, including the rapid explosion of e-commerce generally, the shift to online and mobile purchases, the proliferation of data and challenges of managing data flows across borders, and new disruptive technologies like fintech, 3D printing and the Internet of Things (IoT).  Each of these trends highlights the growing challenges to regulators in continuing to apply existing rules and legislation created for off-line applications to a digital world.
  It is one thing to note exciting new changing on the horizon.  It is another to grapple with how governments can actually address these rapidly evolving challenges.  The paper therefore breaks down digital trade and e-commerce into eight discrete segments of relevance for the digital economy.  The eight areas under examination are not the only areas that matter for digital trade, but give a better sense of the scale and scope of issues facing regulators at the domestic level. 
  The paper then tracks actual legislative and regulatory policies that govern (or do not yet address) policy for the following issue areas: overall e-commerce regulatory frameworks; customs and trade facilitation rules that apply to e-commerce goods; data protection frameworks; data localization and cross-border data flow rules; domain names; intellectual property rights rules; consumer protection in an online world; and over-the-top internet services.  A review of how the five Northeast Asian countries are grappling with policy in these eight discrete issue areas reveals wide differences in rules between the countries at the domestic level and often significant variation from what might be considered “best practice” ideas for each topic.
  Overall, the review of policy at the domestic level shows that governments have not yet figured out the best approach for creating supportive and enabling frameworks for digital trade and e-commerce.  To date, much of the official response has been fragmented between ministries and agencies, with little coordination.  Digital trade is unlike many other sectors?it cuts across an increasingly wide swath of the economy and regulatory policies in one area often has knock-on or unintended consequences in other areas. 
  It is also rapidly evolving, which is making it difficult for government officials to address.  If governments are too far out in front, too prescriptive or too forward leaning, they risk cutting off new sources of innovation and growth.  They may unintentionally box in specific technologies or platforms.  Yet it can be very difficult to think about regulating for outcomes, since it requires bureaucrats to have a visionary sense of the future that few individuals are likely to have.
  Creating digital economy policies at the domestic level, in any case, is probably not the best or most effective way to create sensible regulations.  The digital economy does not recognize national boundaries.  It does not logically stop at a customs border.  Hence, the more efficient and effective way to manage digital policies is at the regional or international level.  The paper therefore considers ongoing efforts in Asia the regional level, through the Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP) trade negotiations.  Both trade talks have digital components that could create sensible broader frameworks.
  Both the TPP and RCEP could also usefully contribute to broader global trade rules, crafted in the World Trade Organization (WTO), in the World Intellectual Property Organization (WIPO) and the World Customs Organization (WCO).  The paper also makes recommendations in the final chapter for provisions that should be considered in each of these fora to advance supportive, enabling digital trade and e-commerce rules that would allow governments and companies to reduce risk and uncertainty while ensuring that consumers are properly supported. 
  In the end, digital trade and e-commerce are likely to be the dominant means of creating and delivering goods and services to consumers and companies around the globe in the future.  Northeast Asian economies are at the cutting edge of these trends. The struggles that government officials, legislators and regulators are facing in creating the right frameworks to support this growth shows how vitally important it will be to get the appropriate scaffolding into place at the domestic, regional and global levels. 

Preface

 
1. Introduction

2. World and Korean Economy after the Global Recession

3. Three Structural Changes
3.1. Model
3.2. Constructing Counterfactual Scenarios
3.2.1 Aging Population
3.2.2 Rising Income Inequality
3.2.3 China’s 13th Five-Year Plan
3.3. Results
3.3.1 Aging Population
3.3.2 Rising Income Inequality
3.3.3 China’s 13th Five-Year Plan

4. Brexit
4.1. Model
4.2. Constructing Counterfactual Scenarios
4.3. Results
4.4. Appendix: Additional Figures

5. Summary and Policy Implications
5.1. Summary
5.2. Policy Implications

References 

  The Korean economy still faces severe headwinds from the weak growth recovery. Since Korea’s growth path has tended to converge to that of the global economy since 2003, Korea’s recent growth moderation partly reflects a still-weak global economy. Along with a weak growth in domestic consumption, Korea’s substantial export disruption might lead to a further slowdown in the Korean economy in the future.
  In this monograph, we suspect that there are common and structural global factors behind the convergence of Korean economy to the slow growth path of the global economy. Motivated by the recent policy-oriented works, we have analyzed the four structural, external changes of aging population, rising income inequality, the implementation of China’s 13th Five-Year Plan, and Brexit. In particular, we have quantified their effects on the Korean economy and analyzed the mechanism through which the structural changes affect the Korean economy.
  Our first finding exhibits the important role played by private domestic demand. Both rising inequality and aging population affect Korea’s GDP primarily through the private domestic demand channel. In the beginning of the implementation of China’s 13th Five-Year Plan, the external sector is the main driver of affecting Korea’s GDP. Over time, however, the channel through which private domestic demand affects Korea’s GDP outweighs external channels such as net export. Therefore, our results in Chapter 3 show that implementing policies, of which target is the domestic variables, can be more effective.
  Second, the policy to address aging population through raising the fertility rate should take into account trade-off between current employment and investment and the number of future working aged population. Our results show that an increase in fertility rate has negative consequences in current employment and investment. The result is consistent with our intuition that if women have more children, they are less inclined to supply labor. Therefore employment would decline. At the same time, because production factors, labor and capital, are complementary, a decrease in employment would lead to investment slowdown. On the other hand, raising the fertility rate implies an increase in the future working aged population. Again due to complementarity between production factors, this can boost investment and pick up growth in the future. Therefore, implementation of the policy to address aging should be based on the optimal growth of population and take into account trade-off between its short run and long run effects.
  Third, we need to deeply look into the whole income distribution to address rising income inequality. Our results show  that looking at one single index of inequality might be insufficient to analyze the consequences of inequality. Population within the different income groups might play a different role and the aggregate consequences might depend on the whole income distribution. For example, one of our results illustrate that the population within the top one percent income group tends to have positive consequences on employment and investment. In the absence of detailed data, however, we cannot tell what kinds of people among them would benefit domestic demand. Instead of targeting a single index for inequality, therefore, policy tools to address rising inequality should be grounded by further information on the whole income distribution.
  Finally, we devote Chapter 4 to the quantitative analysis of Brexit. At first glance, our results do not seem to be consistent with the standard gain from trade liberalization. For example, Korea can sometimes lose from an FTA with the United Kingdom. Instead, raising trade barriers against the United Kingdom sometimes benefit Korea's growth. Our seemingly counterfactual results would arise from the interaction between capital accumulation and market access versus the substitution effect. In particular, ending an FTA with a certain country might benefit our other trading partners if we import goods from them instead of the original exporter. Such substitution effect might be large enough to give us back the benefit especially if the other new trading partners are fast growing economies.
  Equally importantly, however, we do not argue that our results are against the general gain from trade liberalization. Instead, we argue that our results confirm the overall gains from trade liberalization again. Depending on factors such as a country’s input-output linkages with other countries, moving up and down in global value chains, and whether a country and its trading partners are growing, a country could either gain or lose from an FTA with a specific country. Given that the gain from trade liberalization may not be bilateral in practice, a careful approach to quantify the effect of trade liberalization should be necessary before the implementation of an FTA with a certain country.  

  Since the Global Europe Initiative in 2006, the EU has conducted active trade policy measures to contribute to economic growth, job creation and social cohesion in the community. One of the conspicuous features of the new trade policy is that the EU does its best to support EU companies to benefit from better market access through new trade policy tools. Comprehensive and high-leveled bilateral FTA initiatives, among others, have rapidly emerged as a major tool of the new trade policy to achieve the goals.
  The aim of the research is to illuminate how the goals of the new trade policy have been achieved through EU's FTA strategies. To do this, this research focuses on the three topics of EU standards, evaluation process of market openness and the global value chain (GVC), that is, how much EU's FTA strategies have contributed to achieving globalization of EU standards, job creation through careful evaluation processes and economic growth of the community by utilizing GVCs.
  First, the EU has made tremendous efforts to export its standards to other countries through various FTAs. Within its Community, the EU has tried to introduce unified technical and sanitary standards, but after little progress was observed, revised its standardization strategy to adopt a narrower harmonization area, leaving more flexibility in the area of general conformity. Since 1989, the EU has conducted international standardization of its community standards, and the process has been accelerated through bilateral FTAs after the new trade policy was initiated in the mid-2000s. The Korea-EU FTA was one of the best examples of EU's efforts in standard internationalization, which was also adopted in the EU-Canada CETA and the EU-Vietnam FTA. In the mega-FTAs, EU's efforts to export its standards do not seem to be so successful, not only because the EU faced big confrontation against the U.S. throughout the TTIP negotiations, but because uncertainties have grown after Brexit and a variety of standards have sprung up in the world recently.
  Second, it is utmost important that the FTA evaluation process should be carefully designed and conducted properly, in order to assess any impact of FTAs on community labor markets. EU has set out four stages for this evaluation process: impact assessment (IA), sustainability impact assessment (SIA), economic assessment of the negotiated outcome, and ex post evaluation. These assessments not only encompass aspects of quantitative economic analysis, but also qualitative economic analysis and social impacts such as broad impacts on the labor market, SMEs, competitiveness, income distribution, environment, human rights, etc.
  The trade sustainability impact assessment (SIA), among others, is particularly interesting with regards to the impacts of FTAs on employment. In the EU-Korea FTA SIA report, it is revealed that the Korea-EU FTA would bring about positive impacts on agriculture and services employment, but minor negative impacts on the manufacturing labor market. The dairy industry, with the exception of pork, would win in the case of a EU-Canada CETA, and manufacturing including automobiles would gain in employment in the case of an EU-Vietnam FTA. The TTIP may lead positive impacts on employment through a mutual investment boom, the TTIP SIA argues.
  Third, the FTAs pursued by the EU make full use of expansion of GVCs. The EU has set out global standards, prevailed competition in the services market, moved to high value-added stages in GVCs, strengthened market access not only in final goods but in the intermediate goods market. In addition, EU has increased forward linkage participation, provided better protection for IPRs, facilitated e-commerce, financial services supply and mode 4.
  Based upon the EU's FTA strategies revealed in its new trade policy, the following policy implications would follow: First, as for standard internationalization, we need to scrutinize various regulations and standards into several categories, and deal with them to the purposes. In case the standards would be helpful to globalize Korean standards, then we need to introduce them, which would help Korea lead the standard competition in East Asia. In newly emerging areas including IT, environment, and new technologies related to the fourth industrial revolution, it would be strongly recommended to lead platform competition. In this regard, we need to examine Chinese standards as they have rapidly emerged as a new competitor in the area of international standards.
  Second, Korea has its own assessment system in FTAs, but we need to cover a wider range of assessment fields such as social impacts and qualitative and institutional areas. A four-stage assessment system would be much more recommendable to conduct careful assessment of market opening. A stricter assessment process would be much helpful in maintaining public support to further FTA initiatives.
  Third, in order to make full use of GVCs, it is much desirable to upgrade value chains, and strengthen market access in East Asia in all stages of process. We need to focus more on the issues how to lift NTBs, widen services market opening, and persuade our trade partners to conduct enactment and enforcement of IPR protection. A single market for e-commerce and services must be established in East Asia. In order to harmonize different rules of origin among FTAs in East Asia, special dialogue channels must be created in RCEP or Trilateral FTA. More importantly, cooperative bodies for the East Asia Regulatory Dialogue can be utilized. 

  The Brexit referendum, which took place on 23 June, 2016, revealed the British people’s willingness for their country to leave the EU. The year 2017 will witness the beginning of Brexit negotiations between the UK and the EU taking place in a time full of uncertainties arising from the possibility of the negotiations extending beyond the originally planned duration of two years, ambiguity in EU’s competency areas leading to a complicated decision-making process in the Council, whether or not British MEPs should be given voting rights in the European Parliament, and so forth.
  One of the key issues in the relation between the UK and the EU in the post-Brexit era is whether or not the UK maintains full access to the Single Market, which is directly related to the issue of if the principle of free movement of the four factors of people, capital, goods and services still holds after Brexit. It will be a key factor to evaluate accessibility to the Single Market if British sovereignty on commercial policy and immigration is restored, and the principle of homogeneity does hold. Thinking carefully over several cases of the models of Single Market, half Single Market, or non-Single Market would lead to a pessimistic reasoning that the UK would hardly be able to maintain Single Market accessibility, and be inclined to take the non-Single Market model.
  With regard to the macroeconomic impacts of Brexit on the world and Korea, Brexit is expected to have negative impacts on the world in the short-term while having positive impacts in the longer-term. The world economic growth rate may slow down by 0.1?0.4% in 2017 and 0.1?0.7% in 2018, and Korea’s growth rate may also shrink by 0.1?0.5% in 2017 and 0.1?0.8% in 2018. Negative impacts would be spread out not only in the stock market and employment, but also in the areas of consumption and investment, with a harder hit being dealt to investment than consumption.
  In the medium-to-longer term, Brexit brings about positive impacts on the third countries including Korea in terms of economic growth and consumer welfare. Korea’s economic growth would be accelerated by 0.088% and 0.043% in the cases of Hard Brexit and Soft Brexit, respectively. Without a Korea-UK FTA, the positive impacts of Brexit on Korea’s growth rate would diminish by 0.038% (Hard Brexit) and 0.037% (Soft Brexit) from the previous positive numbers. Hard Brexit will decrease the growth rates of the UK and the EU by -1.56% and -0.18%, while Soft Brexit will do so by -0.949% and -0.133%. Establishing a new Korea-UK FTA results in a positive impact on the UK economy by 0.018% (Hard Brexit) and 0.017% (Soft Brexit).
  This study analyzes the impacts of Brexit on the production and export of Korea’s industries, too. First, Brexit leads to shrinking exports of Korea to the UK, and negative impacts would be bigger in the case of industries with stronger GVCs, such as manufacturing. Second, an elasticity analysis shows us that the automobile industry is one of the most sensitive industries in Korea’s exports to the UK, while the textile and leather industries are the least. With regard to Korea’s export to the EU, primary metals and chemicals are susceptible to GDP changes in the EU led by Brexit, while the automobile industry is less so. Third, Brexit leads to positive impacts on Korea’s industrial production in the long-term if Korea-UK preferential trade relations are established. Such a positive influence would be larger in the case of Hard Brexit than that of Soft Brexit. Automobiles and textile are estimated to be the biggest beneficiary industries. Without a Korea-UK FTA, most of industrial production shrinks in the case of Soft Brexit, while no clear signs can be observed in the case of Hard Brexit. Fourth, Brexit may lead to rather moderate impacts on the Korean banking and financial sector. The negative impacts of losing passporting rights in the European continent will be minimized at least in the short-term, as most of Korean banking and financial institutions have maintained a separate market strategy between the UK and the rest of the EU, and/or have not actively used the rights in their business. In the longer-term, it is true that rising uncertainty and costs from Brexit will be harmful to outbound activities of Korean financial companies. As for the inbound area, the most important factor that influences foreign banking and financial companies’ business activities in Korea will be the attractiveness of Korean assets in general, related to fundamental economic conditions rather than institutional changes led by Brexit.
  In the post-Brexit era, Korea-EU and Korea-UK economic and commercial relations will be heavily dependent upon various factors including the direction of revision of the Korea-EU FTA, EU-UK relations after Brexit, the contents of the Brexit agreement, economic conditions in the UK and the EU after Brexit, and so on. As both Korea and the EU have considerably benefited from the Korea-EU FTA, it is now a proper time to think about how to upgrade this FTA after five years of entry into force. Therefore, it would be utmost important to retain preferential trade relations between Korea and the UK after Brexit, which requires the initiative to embark on a new Korea-UK FTA after the Brexit agreement between the EU and the UK is concluded.
  A way to minimize the negative impacts of an institutional vacuum in the economic relations between the UK and Korea after Brexit, would be to include an interim clause of “extension of the preferential factors of the existing Korea-EU FTA to the case of Korea-UK” in a revised Korea-EU FTA.
  Based upon the analysis, we draw the following policy implications: First, the process of a sustainability impact assessment on market opening initiatives such as FTAs needs to be carefully designed and strictly implemented. Brexit is an exemplary case that symbolizes the anti-liberalization and protectionism in major developed countries. This is, in a sense, like a revolt by the ordinary people against elitism and globalization led by elites in the advanced economies. In order for market opening policies to successfully exploit foreign markets and enhance efficiency in the domestic market through strengthened competition, the general public should be brought to realize the benefits of market opening policies, which requires a more comprehensive and well-designed sustainability impact assessment process.
  Second, better communication and closer cooperation between government, private companies and related industry associations are needed to cope with the growing possibilities of negative impacts of Brexit on some industries with higher GVCs, as those industries are more susceptible to negative impacts from stronger direct effects.
  Third, Korea-UK relations need to be newly developed apart from the Korea-EU relations. Brexit will accelerate the divergence of the UK economy from the EU, which will require an independent policy towards the UK. Trade policy toward the UK needs to consider the multi-layered characteristics in the economic relations of the UK not only with the EU but also with transatlantic nations, the Commonwealth, East Asia, etc. In this regard, Korea needs to make full use of strengthening its financial network with the UK, especially for the inbound business area, as the UK’s business activities in the banking and financing sector may become more active and worldwide after Brexit.
  Fourth, the contemporary Korea-EU FTA needs to be revised in due course. The first step to revise the pact is to include any change of circumstances after Brexit. Additional protocol on the occasion of Brexit is to be developed and attached to the original text. The second step to revise the pact is to embark on a new deal for full-revision of the pact, making considerations to rebalance mutual interests, as Brexit provides the off-balance fields of interests in the existing Korea-EU FTA. The five years of entry into force of the FTA, together with Brexit, raise the necessity for revision of the pact, too. A temporary extension of the preferential provision to the case of Korea-UK needs to be reflected in the revised pact.
  Fifth, it is not too early to think about a concrete type of Korea-UK FTA. There is no reason for the Korea-UK FTA to be a duplication of the Korea-EU FTA, as the economic structure of the UK is quite different from that of the EU. A new pact between Korea and the UK should reflect careful consideration on the areas that the UK had asked for but failed to include within the EU’s request lists in the Korea-EU FTA, detailed compilation of the industries with comparative edges of the two, and strategic judgement on the change in the cumulation method between the UK and the EU after Brexit. We need to consider the issues in market opening in services and in enforcement of IPR, especially in agricultural IPR, and those in sustainable development areas.
  Sixth, as mentioned above, Brexit is a symbol of protectionism and anti-globalization, and it is not good for a small, open economy like Korea to contribute to this trend. Therefore, we should make honest efforts to set out a virtuous mechanism to spread the fruits of market opening out to all people in the society and to firmly abide by trade liberalization in international organizations such as the OECD and WTO, and multilateral fora like G20, ASEM, APEC, and so on. 

  This study examines the necessity and possibility of an inter-Korean FTA to expand inter-Korean economic cooperation and prepare for economic integration between the two Koreas. First, in Chapter 1, we conceptualize an FTA between South and North Korea as a Closer Economic Partnership Arrangement (CEPA), an FTA between two independent tariff zones in one country, reflecting the special relationship between the two Koreas. This CEPA between South and North Korea would aim at gradually liberalizing trade in goods and services, and facilitating trade and investment. Considering the current system and economic realities of North Korea, it will be necessary to approach the FTA by starting with a low or provisional FTA and gradually increasing this level according to North Korea's regime change and economic development. Therefore, a CEPA between the two Koreas represents an initial stage of economic integration between the two.
  In Chapter 2 we analyze the cases of the China-Hong Kong CEPA and China-Taiwan ECFA in terms of their respective backgrounds, process, legal status, major contents, and economic effects realized by the FTA. The China-Hong Kong and China-Taiwan FTAs ??are similar in that both specified the direction of opening and cooperating in each sector during the first round of negotiations, and then further defined the necessary regulations through follow-up negotiations. However, while the China-Hong Kong CEPA systematically opened the market through supplementary agreements once a year, the China-Taiwan ECFA has not led to specific negotiations for goods and services trade besides the EHP (Early Harvest Program). As a result, the performance of the two FTAs ??shows a marked difference. These differences are mainly attributed to differences in China’s political relations  with Hong Kong and Taiwan.
  Chapter 3 reviews the main contents of the CEPA. Already, the two Koreas have much better economic cooperation agreements than any between China and Hong Kong or Taiwan before their FTAs. Therefore, the CEPA of South and North Korea should be promoted in a way to accommodate and develop the existing economic cooperation agreements rather than starting from nothing. In this regard, Chapter 3 discusses the existing inter-Korean economic cooperation agreements and discusses the principles to be considered in the conclusion of the CEPA, such as principles of commodity trading (tariff, non-tariff barriers, and rules of origin), service trade and investment, trade and investment facilitation and dispute settlement. As a result, it becomes evident that non-tariff barriers need to be utilized appropriately in order to cope with any potential damage caused to each industry and class in the two Koreas. In addition, in the area of ??rules of origin and trade and investment facilitation measures, it is clear that there is still much need for detailed agreements between the two Koreas.
  Chapter 4 examines the problems of current inter-Korean economic cooperation from the perspective of international trade law, and suggests the necessity for an FTA between the two Koreas as a countermeasure to this problem and other related issues. Currently, the trade between the two Koreas proceeds as a “domestic transaction” based on the principle of zero tariffs. However, non-tariff transactions between the two Koreas can cause various international trade legal issues. In particular, there is the risk of violating the MFN, which is one of the basic obligations of South Korea as a member of the WTO under the GATT/WTO Agreement. Also, any preferential treatment for North Korea provided in line with the South-North Economic Cooperation Policy could also be objected to as a violation of WTO treaties. As a result, it was shown that the conclusion of an FTA or regional trade agreement between the two Koreas would be the best way to be recognized as an exception to obligations under the GATT/WTO Agreement. In addition, we also examined international trade legal issues such as those relating to North Korea's non-WTO status, meeting the requirements of Article 24 of the GATT, and the status of North Korea's non-market economy (NME) when concluding an FTA (CEPA) between the two Koreas. In conclusion, we could find no serious international trade legal issues in proceeding with such an agreement within the present situation. However, considering the scale of exchanges between North and South Korea, and the level of economic development in North Korea, the most practical way to conclude an FTA would be ??in the form of “tentative agreements” allowed by the WTO prior to concluding a formal FTA.
  Chapter 5 analyzes the economic effects of the CEPA between the two Koreas in terms of GDP change and production inducement effect. First, the GDP of North and South Korea was analyzed through the Growth Accounting Model. If a CEPA is concluded, South Korea's GDP will increase from 1,822.8 trillion won in 2020 to 3,067.5 trillion won in 2039, and North Korea's GDP will increase from 38.0 trillion won in 2020 to 308.3 trillion won in 2039. As a result, the income gap between North and South Korea will decrease from 21.4 times in 2020 to 5.2 times in 2039. The trade between South and North Korea will also rise to 2.32 billion dollars in 2020 (0.15% of South Korea's GDP, 7.2% of North Korea's GDP) to 4.93 billion dollars in 2039 (0.18% of South Korea’s GDP, 11.0% of North Korea's GDP).
  Next, we analyzed the changes in the vertical integration structure of the two Koreas and the changes in the final demand ripple effect using the production inducement coefficient of the inter-industry table. The degree of vertical integration between the two Koreas after conclusion of a CEPA shows that the proportion of intermediate goods input to South Korea in the light and heavy industries increases in the case of North Korea whereas the proportion of intermediate goods input to North Korea increases in mining and light industries in the case of South Korea. In addition, the intra-regional and inter-regional effects both increased after the CEPA according to an input-output analysis between the two Koreas. The effect within the North Korean region was 14.8 at the stage of general exchange and cooperation, but after the signing of the CEPA this increased to 16.4. In South Korea, the level of increase was from 18.77 to 19.86. As for inter-regional effects, the effect of North Korean final demand (export) on the Southern region increased from 0.2289 to 0.6394, and the effect of South Korean final demand (import) on the Northern region increased from 0.0243 to 0.0585. Meanwhile, we estimated the production inducement effect by final demand item by applying an estimation result of GDP and trade size increase before and after the signing of the CEPA between South and North Korea. The results showed the effect of the increase in South Korea's final demand (imports) to North Korea rising from 2.44 to 2.90 after the signing of the CEPA, while North Korea's dependency on South Korean production inducement increased from 2.9% to 7.4%.
  Finally, Chapter 6 explains the results and limitations of this study and suggests policy implications. Given the dynamics of inter-Korean relations, it seems important for the two Koreas to secure the “irreversibility” of agreements reached by defining as much detail as possible during the initial negotiations. In addition, the CEPA needs to be designed to minimize negative effects and ensure positive effects for economically weak sectors for a certain period of time after the conclusion of the CEPA. Lastly, it will be necessary to focus on the long-term economic integration effect rather than the short-term economic effect when proceeding with the CEPA. 

  Urbanization refers to a demographic change where the population residing in urban areas increases. Africa's urbanization is happening at an unprecedented speed as its urban population is expected to increase from its current level of 40% to over 50% by 2030. Generally speaking, urbanization leads to economic development through the agglomeration of factors of production, economies of scale, reduction of transaction costs and productivity advancement, attraction of domestic and foreign investment, and technology absorption. In fact, urbanization can be seen as the cradle of industrialization and economic development. The compressed and rapid growth of Asian countries such as Korea and China is in great part due to the development of urban areas. However, the cities of Africa seem to create “a new form of poverty” rather than acting as a driving force for development. Gleaser (2011) and others determine the favorable functions of urbanization based on the development theory of Arthur Lewis and Simon Kuznets, but also mention the vicious cycle of development due to “urbanization of poverty” or “geographical concentration of poverty.” Africa is a case of the latter, where the lack of physical and institutional infrastructures is exacerbated by the population increase, thus leading to the deterioration of cities.
  Nevertheless, Africa's urbanization is gaining the spotlight as cities provide a geographical space that produces the most economic value and function as a powerhouse for economic growth. In fact, because cities create 80% of the global GDP it is difficult to find a country that has achieved attractive economic development without urbanization. Obviously urbanization itself does not necessarily mean industrialization or economic development but it certainly functions as an engine for economic growth and transformation. African states underline sustainable urban development in their national development strategies, which include urban development policies, physical and institutional infrastructure servicing, new town development, urban production base as the essentials. A Pan-African infrastructure project that connects important point cities to create a development corridor and encourage intra-economic integration is under progress. 
  As such, the cities of Africa are a space of development and growth as population expansion and national development policies are both focused on cities. This phenomenon of urbanization is an opportunity for both development and economic cooperation. Africa's urban infrastructure is severely lacking and damaged but the demand for its development has surged with the fast and continued speed of urbanization.
  In recognition of such problems, we attempted to analyze in depth the development of Africa's urbanization and discover avenues of cooperation between Africa and Korea in the area of infrastructure by examining the urbanization issue, one of the economic and social development paradigm shifts currently occurring in Africa. A brief outline of our discoveries on the characteristics of Africa's urbanization is described below.
  First is “urbanization without industrialization.” Generally, urbanization occurs through industrialization but in Africa's case the urban population is rapidly increasing in the midst of deindustrialization. Sub-Saharan Africa's manufacturing to GDP ratio has decreased from 20% in 1970 to 12% in 1980 and 11% in 2013 while the rate of urban population growth has outpaced other regions. Second is the disorderly urban expansion and ghettoism. Africa's urbanization is creating massive slum areas mainly in the city outskirts. As a result, more than 60% of the urban population live in slums. Access to basic social services such as electricity, drinking water, sewage systems and sanitary facilities is limited while the government's administrative influence remains absent.
  Third is the poor urban infrastructure. While Africa's urban population has expanded rapidly, cities are backward and have nearly lost their original function due to the lack of basic infrastructures such as roads, power, sewage systems and sanitary facilities. Lastly, although much of the population still live in absolute poverty, the consuming class or the middle class is concentrated around metropolitan areas and rising as the new consuming entities. Many western-styled malls and department stores are being built across Africa where consumers including the young generation visit regularly, a scene similar to that of a developed country.
  Meanwhile, through our calculations on the potential demand for Africa's infrastructure development we have discovered that demand for power was the highest, as expected, followed by road and health and sanitary facilities. Demand for electricity development was highest in the western and northern areas where oil-producing countries are mostly positioned, while being lowest in the southern area where the relatively well powered South Africa is located. The development demand for road and health and sanitary facilities was relatively high in western and eastern areas. We also estimated the demand for urban infrastructure development in Africa and found that 605.8 trillion dollars was in demand annually between 2016 and 2030 due to urbanization.
  Regarding the direction of Korea's infrastructure cooperation with Africa, we took a three dimensional approach: urban development policy (soft infrastructure), physical infrastructure (hard infrastructure) and an urban production base (hard/soft infrastructure). When considering the level of competence Korea possesses in entering the development cooperation market of Africa, it will be necessary for Korea to select areas to concentrate its capacities in. Priority areas and directions of cooperation were identified as follow.
  First, Korea can support urban development policies. Establishing the necessary institutional infrastructure and physical infrastructure for sustainable urban development is important. Currently only 16 countries out of 54 have a national urban development policy and even with a comprehensive policy in place the capacity of government officials implementing the policies is poor, which doubles the burden. Korea has extensive experience and comparative advantage in designing urban development policies that should be put to practical use. One of the most difficult hurdles to overcome in establishing an urban development policy is land ownership and therefore there is a need to support the reorganization of land such as through the construction of a land registration system. Land ownership is mainly divided into government, community and private ownership but conflicts over land have amplified because around 90% of the total land is unregistered and rapid urbanization is pressuring land ownership. AfDB has noted three core task areas for sustainable urbanization, which are: 1) expanding infrastructure (urban infra), 2) establishing small and medium-sized cities that organically connect farming areas, and 3) systemizing land ownership. The World Bank and other aid agencies also recognize this problem and are actively supporting the establishment of a land registration system and enhancing land management capabilities. Based on the experience and know-how gained through implementation of the Korea Land Information System (KLIS), the Korea Land and Geospatial Informatix Corporation can provide development aid on building a land administration system that includes a land database and a land registration system, as well as technological support for training land administration personnel. The corporation is currently actively engaged in building land registration systems in Latin America, Southeast Asia, Central Asia and other countries. Their activities can be expanded to Africa where an efficient land management system is in need.
  Moreover, African states underline the importance of building small and medium-sized cities that have the basis for industrial production for sustainable urban development as a consequence of rapid urban expansion. Therefore, Korea needs to take a systematic approach toward establishing a comprehensive new town master plan and then developing follow-up projects. Korea has successfully developed various new towns during its rapid urbanization and thus has accumulated various development know-hows and experience, such as in design vocabulary, space planning, land use, funding, analyzing cost effectiveness and creating an industrial base. African states have shown interest not only in the physical infrastructure but also in the contents of Korea's new town development such as industrial clusters, state-of-the-art urban industrial complexes, Free Economic Zones, special R&D zones and U-cities. Supporting the creation of comprehensive new town development plans could lead to the participation of Korean companies in development projects on a large-scale.
  Second, the extreme traffic congestion in African metropolitan areas is an issue of acute concern. There is a need to support the development of a transportation master plan through which Korea can enter the African market. A systematic and comprehensive urban traffic master plan is required to solve the fundamental problems because improvement measures at the local level alone are insufficient. A master plan that encompasses the development of a traffic demand model, traffic network plan, traffic control, state-of-the-art traffic systems and parking control systems is in high demand for Africa's development, which can be sufficiently supplied by Korea. Korea has supported the implementation of urban transportation master plans in various developing countries in Southeast Asia, Latin America and other regions. Korea should expand its expertise in Africa to lay the groundwork for entering the African infrastructure market. Korea could suggest building the Intelligent Transport System (ITS) as a short-term cooperation project within the master plan. Such a system would combine ICT and other frontier technology to the core areas of the traffic system to ease the flow of the traffic. Korea has extensive experience and competitiveness in this area with its own comprehensive traffic information management system that contributes to road safety. The demand for such systems is high in Africa. Officials in charge of transportation policies in Kenya, Tanzania, Nigeria and others have shown interest in Korea's high tech transportation management system and wish to benchmark the system.
  Third, the increase of population flow into cities without appropriate sewage systems and sanitary facilities in place has deteriorated the state of cities and calls for the establishment of basic social infrastructure through consultations on environmental policies and establishment of sanitary facilities. Korea has experienced rapid urbanization in the process of its rapid economic growth and thus has experience and knowledge in building policies to solve such issues. Urban areas suffered from various problems regarding wastewater and waste in the 1970s as industralization and urbanization occurred simultaneously. The government responded by creating an environmental management system that included setting up new government offices and enacting new laws.
  With the exception of South Africa, many states in Africa do not have appropriate administrative or legal systems related with the environment and therefore Korea should focus on supporting capacity building through the organization of administrative systems and policies and legal and institutional tools. Korea also has developed technology in the treatment and reuse of waste, treatment and management of wastewater and water quality improvement, areas which can be utilized in development cooperation projects for the strategic expansion of Korean companies to Africa.
  Fourth, building a market base for Korean companies through various financial cooperation projects such as co-financing with foreign development credit institutions is necessary. Although Korean companies recognize the rapid urbanization of Africa and subsequent rise in demand for infrastructure development as a new opportunity, they are unable to enter the market due to financial limitations. Even in cases where profits are promising, independent financing by domestic policy financing agencies is difficult because of the various risks posed by the African market. Therefore, co-financing between Korean policy financing institutions such as the Export-Import Bank of Korea and European bilateral development financing institutions and other multilateral development banks such as the African Development Bank is needed to aid Korean companies in entering the African market. With China sweeping the African infrastructure market with massive amounts of development financing, Korea needs to consider entering the market in partnership through financial cooperation. In addition to grants and loans, Korean companies should also enhance their financial competitiveness by connecting their export credits with grants from the EDCF in the case of international competitive bids for large scale development projects. For example, in the case of water supply projects, building purification plants could be aided through grants while exporting equipment that has high yields could be aided with export credits. There is also the indirect way of entering the market through grants first, followed by the supply of export credits. Once Korea's technology and capability is recognized through such grants and companies are able to bond with African states, they will naturally gain an advantage in obtaining contracts for follow-up projects. In this case, Korea can support its companies through export credits.
  Lastly, Korea can establish an urban production base by constructing industrial complexes. The need for Korean companies to enter the African market is growing while African states seek to advance manufacturing by constructing industrial complexes, thus providing good opportunities for Korean companies. Industrial complexes can be built either by securing an area within an already established industrial complex or by taking responsibility over the entire process of selecting the site, creating the complex and operating it. In the latter case, under the condition that Korea works in partnership with the relevant ministry of the partner country, the relevant ministry should also assume a certain amount of responsibility over the formation and operation of the complex. In the case of Korea, aid organizations such as KOICA and EDCF in cooperation with private and public companies should be the leading agents in creating the complex while SME entities such as the Korean Federation of SMEs should be the leading agents for the operation of the complex. The eastern states of Africa such as Ethiopia and Kenya are promising areas as they are relatively stable from a political standpoint and gaining attention as the new axes of economic growth. In May 2016, Korea and Kenya signed an MOU on the creation of a Korean industrial complex on an area of 800 thousand square meters, during a visit by the Korean president to Kenya. The city of Mekelle in the northern area of Tigray should be considered as a candidate for the creation of an industrial complex in Ethiopia because this area is geographically close to Djibouti, the logistic hub of the Red Sea and therefore has many merits as an exporting ground. Many influential politicians are also from this area in Ethiopia, which makes business licensing and operations easier. China and India have already built a substantial base in the existing industrial complex in Ethiopia, meaning that Korea must seek a new strategic site.
  The aim of this research was to analyze Africa's urbanization issues from a variety of viewpoints and seek methods of cooperation in the infrastructure sector. However, policy recommendations remain at the theoretical level and therefore require further research. 

  This study puts its purpose to considering present condition of uncertainty of politics, economics, and social culture in Turkey and the cause of the uncertainty. To analyse actual proof about the economic uncertainty, daily and monthly data of physical indicators and financial market indicators of Turkey offered by Thomson Reuters Datastream was used, also to study uncertainty of politics and social culture, 1,016 questionnaires which were taken in Turkey were gathered. In the case of survey which was conducted in Turkey, usable 503 questionnaires among 1,016 questionnaires were selected to analyse the uncertainty. To raise reliability of the survey, the questionnaires was based on face to face and self-administering method, but collecting of the questionnaires was from 2016.08 to 2016.11 for four months. Basic data, which is cross section data, is concluding 142 questions which are measured by 7 point Likert type scale. To verify robustness of the data, World Value Survey data which is investigated in world main country every 5 years and survey data that was taken by KONDA, which is an authoritative Turkish survey institute, were compared and considered. As an analysis tool, PLS(Partial Least Square) applied structural equation model was used.
  In detail, current situation of uncertainty of politics, economics, and social culture in Turkey was introduced in chapter 2. In the field of politics, pessimism in credit rating and political degree of risk development coexists with optimism in the progress of conflict between Islamism and secularism which is the spirit of the national foundation. In the field of social culture, high level of social heterogeneity and social conflict indicators are found because of ethnic and cultural diversity in Turkish society. In the field of economics, indicators that represent sovereign credit risk are increasing over depreciation of the currency and variability of market indices and macro economic indicators which are interest rate and stock index, et cetera. Among the causes, some market indicators make precise determination impossible, so careful consideration about the cause of uncertainty occurrence is needed.
  Chapter 3 describes Turkish political landscape as a base work which is assembling various aspects which identity, political life, national vision, and so on contain by considering Turkish political uncertainty determinant. Also, we analysed main determinants of politics uncertainty by exploiting World Value Survey data and obtained data by carrying out a survey in Turkey. A concern about the field of Turkish politics was developing from conflicts between Turks and non-Turks, between Turkish and immigrants, and diplomatic problems with surrounding nations. Especially, uneasiness of the nation in Turkey is increasing and various diplomatic problems are occurring because of a long-lasting conflict between Turks, who are absolute majority, and Kurdish, who are minority, also a rapid increment of refugees and terrorism due to the outbreak of regional conflict containing Syria, and Islamic State. In addition, the present Erdogan’s Government claiming to advocate democratic regime at the beginning of launching is showing aspects of somewhat agreed solidity nation in the becoming restless situation because of a occurrence of domestic coup. To resolve the politics uncertainty, intertribal unity to construct social, political order and stability is needed fundamentally, apart from social unity as Turkish. Statistically, civic identity has the same effect as political communication(confidence), also the civic identity enhances a stability of the system.
  However, conflict among pro-Western, pro-Islamic, and pro-Rusian ideologies is unavoidable potentially in the case of continuous national emergency as it is. Government should suggest national future and vision, and promote value congruence among members of society, but the result of statistic analysis shows that national value sharing in the present Turkish society has no effect in the function of decreasing political uncertainty. It means that political uncertainty cannot decrease without national vision which makes the public not a ideological confrontation group but a united community in the circumstance of the expanded civic political participation along with progressing of an optimum level of democratic society.
  Chapter 4 represents uncertainty of the field of social culture. Identity, multiple cultures, and the unity of society are the subjects to consider conflicts among the groups in the multi-cultural society and influencing factors to receptiveness of multiple cultures. Identity is divided into ethnic identity and civil identity, multiple cultures is contemplated with social sense of distance against the other group, particularly immigrants and refugees, receptiveness of multiple cultures, experience of multi-culture education, and understanding. The unity of society is divided into attitude and behavior. Based on the data of Turkish native research institute, domestic and foreign preceeding studies, the social sense of distance against immigrants, ethnic(tribal) identity, civil identity, the recognition of unity, the understanding of multi-cultural receptiveness are classified as a predictors, and the experience of multi-culture education is a moderating variable, so we can observe the relationship with receptiveness of multiple cultures.
  To sum up the result of the study, civil and ethnic identity(0), identity(+), Social distance(-), multi-cultural education(0), the recognition of the unity1, 2(+) are the determinant of Turkish receptiveness of multiple cultures. Especially, the essence of Turks ethnic identity is becoming vague, also Turks nationalism has no positive effects on receptiveness of multi-culture because of no accepting attitude to the multi-culture. We can conclude that social distance and exclusiveness against immigrants and refugees are due to economic loss and burden of welfare/taxes. Also, multi-cultural education is positioning at the insufficient phase, and the effect of the education is insignificant, so there are no effects on the receptiveness of multi-culture. Turkish people are understanding the need of the social unity, but they are lack of cognizance to actual activity or the other groups.
  Chapter 5 shows the main reasons of Turkey economical uncertainty. Principal component data extracted from factors constituting economical uncertainty is a dependent variable, and exchange rate, interest rate, stock market, economical atmosphere, counterparty risk, risk of developing nations(discount), strategical dependency on import, and so on are independent variables in this study of research model. Daily analysis data from 2004 to 2016 was used for the study, and markov situation turnover model which explores determinants depending on the variability phase by dividing variability phase into high variability and low variability as an analysis tool.
  To sum up the result of analysis, the factors which are exchange rate, economic climate, counterparty risk, strategic dependency on import, and so on have a crucial impact on the economic uncertainty in Turkey. Also, bond market, risk of emerging markets, stock market and so on represented low level of effects on economic uncertainty in Turkey. Meanwhile, in the case of high volatility phase and low volatility phase, the factors which are exchange rate, economic climate, counterparty risk, risk of emerging markets, strategic dependency on import and so on, determine high volatility phase of economic uncertainty in Turkey in the high volatility phase. On the other hand, the factors which are bond market, counterparty risk, risk of emerging markets, strategic dependence on import and so on are the determinants of the economic uncertainty in Turkey in the low volatility phase.
  Also, phase turnover of the economic uncertainty in Turkey happened frequently, and the factors which make turnover to low volatility phase are bond market, economic atmosphere, strategic dependence on import and so on have effects. When the past time delay value is applied, the factors which are volatility of exchange rate, economic climate, counterparty risk, strategic dependence on import and so on are the main determinants that makes the economic uncertainty in Turkey turnover to the low volatility phase.
  By considering above analysis, we estimated capacity of uncertainty management in Turkey, inspected possible scenarios, and examined the impact-reaction between the economic uncertainty in Turkey and South Korea in chapter 6. Also, we anticipated the economic uncertainty in Turkey, deduced strategic and political implication for the corporations and the government. As a ultimate purpose of this study, we concisely put forward policy and business strategy for Korean government and Korean corporations which have got through to Turkey or have a plan to expand in Turkey. Above all, we are suggesting counter-strategy of corporations. First, the corporations should evade the risks with real option strategy by learning the local market with spacing out between initial investment and sequential investment when they get through to uncertainty inherent Turkey. Second, the corporations need to pursue not only exploitation entry strategy which is based on market and resource seeking type but knowledge-seeking based exploration entry strategy, and they need to diversify risk by selecting entry mode as a joint venture which is forming existing trend with establishing a new branch. Third, the corporations have to prepare multiple-layered risks from real assets, finance, politics, management and so on with real option grounded thought.
  First in political aspect, government should keep their eye on the economic policy uncertainty, prepare for the situations to obtain the expected effect. Second, government has to decide policies carefully by considering situational, circular factors caused by uncertainty along with duplicity of political error, reproducing problems of political error, and the attribute/degree of uncertainty. Third, government should take defensive strategy to resolve the structural risk and coordinate microscopic policy in the long term perspective. However, solving the vulnerability and retrievability problems in Korean economy, and recognizing variability phase between Korea and Turkey are the urgent priority. Also, supplementing momentum and analysing trade-off relationship based on real option approach, gradual developing of economic cooperation relationship, and preventing policy making authority from degrading prediction power are crucial. Especially, financial authorities need to examine exposers against Turkey, and monitor the cash flow.