After years of agonizing negotiations, Iran and P5+1(US, Russia, China, France, UK) & Germany finally reached a Joint Comprehensive Plan of Action(JCPOA) in July 2015 to resolve the dispute over Teheran's alleged nuclear development program. Thanks to the agreement, in January 2016 years of a tough economic sanctions imposed on Iran started being lifted. Since then, tremendous attention from the global community has been pouring into this natural resource rich and strategically located country of 80 million population with enormous economic, political, and diplomatic potential. This report tries to provide a way to build sustainable relationships between South Korea and Iran based on firm understanding of the historical, geostrategic, and economic essentials of this important country.

 We first lay out theoretical foundation of this country by providing historical background of Iran focusing on her interaction with global and regional changes mainly caused by the great power balance of power. We argue that neorealist framework and middle power theory are extremely useful to comprehend the complex relationships between Iran and some of the chosen great powers and Iran's foreign policy behaviors.
 The relationships between Iran and the US has been relatively short and cozy until WWII. Yet after the US assumed the leadership position from the UK after WWII, and the Cold War competition with the Soviet Union intensified, the US interest in Iran became more intrusive and coercive. Washington did not hesitate to overthrow a democratically elected government of Iran in 1953 and replaced it with pro-US Pahlavi regime. Despite severe criticism due to the Shah's autocratic policy, the US supported it unconditionally as a bulwark Cold War ally in the Middle East. Yet the Iranian Revolution dashed the US hope of maintaining a foothold in the region against Moscow and the ensuing Hostage Crisis caused unending deep animosity and mistrust between the new regime in Teheran and Washington. Several attempts and opportunities to bring rapprochement between the two were missed. Finally, Obama and Rouhani were able to agree to improve relationships between the US and Iran, and it contributed to the signing of the JCPOA. Yet the surprising election victory of anti-Iran stance Trump in the US has brought new uncertainty regarding their relationships.
 Russia's strategic perception toward Iran is based on the concept of the sphere of influence. In comparison of it, Iran's political response to Russian influence is to strategically balance great powers. Iran has attracted competing powers in Russia to offset Russia’s influence.  

Geopolitically, the strategic interests of Iran and Russia can overlap in the Middle East, Caucasus, and Central Asia. Iran and Russia share five strategic interests in Central Asia and the Caucasus region: ①prevention of regional conflicts; ②opposition to military intervention by offshore countries; ③antiterrorism-regional cooperation; ④development and cooperation for energy resources; ⑤regional economic and security community.
 After the Cold War, Iran's trade and economic cooperation with Russia has been in a state of underdevelopment. The most notable area of economic cooperation between Iran and Russia is the energy sector. If Iran's natural gas production increases in the long term after the economic sanctions are lifted and the natural gas production gap between the two countries narrows sharply, their competition in the downstream markets in Europe is likely to increase.
 It can be said that bilateral relations of Iran and Russia are sensitively linked to changes in US-Russian relations. If the US-Russia relationship has improved and is cooperative(consensual), the Russian-Iranian relationship has temporarily cooled down, and on the contrary, the cooperation between the two countries has been restored.
 Domestic political changes in Iran and Russia have played an important role in bilateral relations. Since the Islamic Revolution, Iran has been more favorable to Russia than the United States. Domestic political changes in Russia due to the dissolution of the Soviet Union also played an critical role in the formation of cooperation and conflict patterns of the two countries. In the early post-Cold War era, pro-Westernist Atlanticism of Yeltsin administration was negative for its relationship with Iran. Putin administration’s Eurasianist policy(or ‘Pivot to the East’) provided favorable strategic environment for Iran.

 Regarding Iran's nuclear program, bilateral relations of Iran and Russia show a typical pattern of cooperation and conflict. Russia has been working with Iran on its civil nuclear program, but has strongly opposed the military nuclear program. Russia has proposed two critical alternatives to the Iranian nuclear program: the nuclear swap deal and the ‘step-by-step’ approach. This proposal became the basis of the 'Lausanne Agreement', the turning point for negotiating the Iranian nuclear issue, and became the main operating principle of the JCPOA.
 The relationship between the EU and Iran has shown their cooperation and conflicts repeatedly. It can be said that the EU’s external policy towards Iran during the Cold War was similar with the US policy of preventing the expansion of communism. In the early period of European integration, member states such as the UK, France and Italy instead of the Community had their own policies towards Iran. It was the Iranian Revolution of 1979 that was the turning point in the relationship between the EU and Iran.
 Since the Islamic Revolution, the EU has faced various situations in its relations with Iran, but the EU has recently shown its willingness of developing relationship with Iran by active involvement in the resolution of Iran’s nuclear programme. Various factors such as Iran’s importance in terms of geopolitics, trading partner, energy security, and Iran’s domestic situations have also influenced the EU’s relationship with Iran.
 In particular, the EU has kept its different policy and stance from the US in the resolution of Iran’s nuclear programme, which eventually made the EU play a leading role. Even if the EU has the structural limitation in its foreign policy, the EU since its pivotal role for Iran’s nuclear issue could expand its international role as a civilian power which focuses on reconciliation. Therefore, the EU could have more advantages to develop its relationship with Iran after lifting the ban on Iran.

 With the complete conclusion of the nuclear talks in 2015, the economic and financial sanctions on the Iran by the western countries have been lifted. There has been growing interest in the Iran whose population is up to 80 million. Recently, the macroeconomy of Iran has improved compared to the past economic sanctions period, but there are still downside risks such as falling oil prices and the global economic downturn. In other words, there are complex problems such as stagflation where high inflation rate and unemployment rate occur at the same time, weak financial structure of banking sector and corporate sector, and delays in national taxation. In addition to the in-depth understanding of the macroeconomic, industrial structure and financial situation of Iran's economy, we need a comprehensive diagnosis of Iran's development strategy and characteristics of the oil-producing economy.
 In recent years, Iran has been suffering from a number of negative externalities. Now, after the conclusion of the nuclear deal, economic sanctions have been loosened and economic development has been spurred. Unlike other oil producing countries in the Middle East, Iran's tax revenue accounts for half of the total revenue. Other than oil and gas industries, the proportion of other manufacturing industries is high, and the domestic sector is also large, and the tax revenue base is wide. However, Iran also shares common characteristics of oil-producing countries such as subsidies and the deficit in the non-oil sector. It is also exposed to external market shocks, such as a drop in international oil prices. Therefore, in the face of economic sanctions that are expected to act as a positive external environment factor for Iranian economy and instability of international oil prices, which is a negative factor, a fiscal sustainability in the mobilization of economic development is an important policy variable. In this study, we presented the fiscal reforms required for Iran.
 Having considered the economic cooperation between Korea and Iran, previous research and policies have been focused upon two issues, namely trade and energy. After the international community started to lift the ban on Iran, however, a new form of cooperation with the consideration of the change of Iran’s economic structure needs to be considered. Iran’s economic development plan is the reduction of dependence on oil industry and diversified industrialisation. Therefore, the new formula of Korea’s economic cooperation with Iran could be promoted by way of industrial cooperation such as joint venture and technology transfer in the area of manufacturing industries. This could allow Korean companies to access Iran’s market directly and more effectively which still keeps high tariffs and its own trade policies.

  This report examines the characteristics of Indian firms in various sectors such as primary, secondary, and tertiary industries; financial and non-financial companies; domestic and foreign companies; and regions, by using firm-level data.
  The characteristics of firms include firm size, cost, profit, and risk. For firm size, total income and total assets are used. For cost, total expenses and total compensation are utilized. Profit before tax, return on assets, and gross fixed investment are adopted as proxies for firm’s profit. To measure firm’s risk, total liabilities as well as liquidity ratio are drawn from income statements of Indian firms. In addition to the characteristics of Indian firms, total factor productivity is analyzed through the estimation of production function. In particular, this study analyzes the characteristics of Korean firms that operate in India. This study also examines industrial structure of the Indian economy with the use of macro- and industry-level data and explores industrial policies of the Indian government.
  The results of this report show that the fundamental reason why the Indian economy grew slowly and was stagnant for long time, despite multifaceted and continuous policy reforms by the Indian government, could be found in the failure of privately led economy. It is shown that large firms and public enterprises are dominant in most areas in the Indian economy. On the other hand, high performance of foreign firms in India indicates that the Indian government’s policies to attract foreign investment have been successful.
  The results from regional analysis demonstrate that there is a high degree of regional heterogeneities, suggesting that the government’s industrial policies have not covered evenly all regions, and differentiated policies by state government deepened regional differences over time. Lastly, it is remarkable that Korean firms’ high performance in the Indian market, implying that the Korean firms’ entry into the Indian market is effective. 

  Traditionally Korean construction firms have actively invested in Middle Eastern countries. However, the centralization of investment in the region is not sustainable for Korea since the economy of the region is vulnerable to oil price fluctuations and keen competition among Korean firms is being witnessed in the market. Korean construction enterprises are faced with the challenge to find a new investment destination to replace the Middle East. Latin America has emerged as an alternative. The purpose of this study is to suggest policy and business recommendations for Korean companies to identify investment opportunities in Latin America, especially in Public Private Partnership (PPP) projects. This study focuses on four countries ? Chile, Mexico, Peru and Columbia ? where PPP laws and institutions are relatively well developed.
  Chapter 2 depicts the features and the development potential that the Latin American infrastructure market possesses. In Latin America, the investment in infrastructure has been led by governments. However, the importance of PPP is growing, as fiscal revenues are decreasing in many countries due to the fall of commodity prices. Private investment in infrastructure in Latin America is outpacing other emerging economies. Latin America accounts for about 43% of the total private investment in infrastructure among developing economies. PPP is especially active in Brazil, Colombia, Chile and Peru. Among foreign firms, Spanish companies have the strongest presence in the PPP market of Latin America. Yet the competitive landscape is changing; while Spanish and European firms are losing their market share, Chinese and American enterprises are broadening their presence. Traditionally, investment in infrastructure has been concentrated in the ICT and electricity sectors but investment is being diversified into other sectors such as airports, railway, road, water and sanitation. In Latin America, the share of investment in total GDP is about 3%. However, this share should be raised to 5% for the region to maintain an economic growth rate of at least 3%. Thus the development potential of infrastructure is high in Latin America and many countries demonstrate a strong political will to implement their development plan. When considering each country’s need for economic development, there is a high demand for investment in such economic infrastructure sectors as water and sanitation, roads, urban transportation, and social infrastructure sectors such as trade, and health and medical treatment.
  Chapter 3 analyses the environment and institutions for PPP in Latin America. Latin America has a less favorable PPP environment compared to other regions such as Asia. However, Chile, Brazil, Peru, Mexico and Colombia show promising conditions for PPP and hold a high rank among all developing countries. This is because these five countries have clear laws and institutions regarding PPP, and abundant experience with PPP projects. This study focuses on Chile, Peru, Mexico and Colombia and finds some similarities among them: 1) they have exclusive organizations for PPP, 2) projects with private initiatives are encouraged, 3) risks are transferred more to private sectors and subsidies from government are decreasing, 4) and there are growing projects in social infrastructure.
  Chapter 4 examines whether PPP opportunities are open to foreign firms, which foreign firms invested successfully, and what lessons Korean firms can learn from them. We select some subsectors of infrastructure which have high demand for PPP projects. We also study several cases of foreign investment in each subsector: electricity in Mexico, transportation in Peru, health and medical treatment in Chile, and water and sanitation in Colombia. In the first case we examine Iberdrola, a Spanish electricity company operating in Mexico, and its success factors. Iberdrola built up a network with CFE (Federal Electricity Company) by conducting technical cooperation, anticipating demand in renewable energy and development-related projects, winning contracts by offering low prices and then recovering its loss through re-negotiation. The second case is a Spanish-Italian consortium in Peru which was awarded the Metro Line 2 Project in Lima. The consortium attained world-level competitiveness with ample experience in metro projects in other countries. It carried out a feasibility study for the Lima Metro Line 2 and this experience gained it a favorable position at the bidding competition. The third case is the San Jose Group in Chile, which won the project of establishing hospitals. The success factors for this company are localization and risk diversification. The company localized itself in Chile and continuously participated in bidding projects. The developer, investors and Chilean government worked closely together and successfully dispersed the investment risk among themselves. The fourth case is a Spanish firm in Colombia which engages in water and sanitation projects. Finding itself with insufficient funds to carry out a project to expand water treatment facilities, the Spanish firm successfully negotiated with the local government to attain a subsidy. The case shows the importance of government subsidies.
  Chapter 5 describes the role of multilateral development banks (MDB) in PPP projects and the implications they hold for Korean firms. Latin America has several regional MDBs, such as the Inter-American Development Bank (IDB) and Latin American Development Bank (CAF). They play a crucial role for PPP projects: they finance projects, support member countries to improve their PPP environment, and provide PPP-related information. IDB manages an infrastructure fund to finance projects and feasibility studies. CAF places more of an emphasis on infrastructure projects than other MDBs. The bank has high potential for collaboration with Korean firms since it allows access to firms from non-member countries, such as Korea, should they conduct projects in Latin America.
  Chapter 6 suggests recommendations for the Korean government and for Korean firms to participate in PPP projects in Latin America. We offer four suggestions for firms: 1) firms need to understand the change in the infrastructure market toward more projects being planned by PPP rather than solely financed by the government, 2) the development level of the PPP environment differs by country, and thus firms need to prepare a customized strategy by country, 3) strategic alliance with local or foreign companies is crucial since they understand the local market well, 4) collaboration with regional MDBs, such as the IDB, CAF and CABEI, is recommended. This study also suggests the following policy recommendations for the Korean government: 1) The government can establish a government-business council and support Korean firms to win PPP contracts; 2) Incentives need to be provided to promote joint overseas business between conglomerate and small and medium-sized firms (SMEs); 3) ODA projects can be planned to identify infrastructure development demand in Latin America, and then the projects can be developed into PPP projects later, or feasibility studies for privately initiated PPP projects can be financed by ODA funds; 4) A formal cooperation system can be built between the Korean government and MDBs to facilitate Korean firms’ access to MDBs; 5) Exchange of personnel from PPP-related institutions from Korea and Latin America can support Korean firms to acquire information and win projects. 

  In June 2016, China, Mongolia and Russia confirmed the “China- Mongolia-Russia Economic Corridor Construction Program,” which includes 32 projects. Through the implementation of the program, first, modernization of transportation infrastructure including Mongolia, TMGR, modernization of border logistics passing point, improvement of customs affairs and quarantine management will be done in order to develop transportation and logistics infrastructure. Second, from the viewpoint of industrial development, based on the signing of industrial cooperation agreements of three countries and China’s Border Economic Cooperation, it is expected that activation of regional economic cooperation, improvement of power infrastructure of Mongolia, expansion of export of livestock products in Mongolia, cooperation of environmental protection, and development of transboundary sightseeing items will be promoted.
  The most influential factor in the implementation of the economic corridor construction program in China, Mongolia, and Russia is the strong commitment of the three governments. In fact, China is implementing “One Belt, One Road” strategy for building its own Eurasian traffic and logistics network. And Russia is attempting to accelerate “Look East Policy” for Far East and Siberia development and to expand EAEU for Eurasian economic integration. And Mongolia is advocating the “Steppe Road” initiative, which takes advantage of its geographical location between China and Russia’s two major powers. In view of the ideal convergence of these three countries’ Eurasian strategies, the “China-Mongolia-Russia Economic Corridor” is likely to be realized.
  However, because the levels of the 32 projects are so diverse, there are some risks like the possible conflict between the participating countries in the process of the project, and the fact that the efficiency of investment and logistics infrastructure cooperation is still low due to the characteristics of the region with a large population for its territory, so it is not easy to combine it with industrial cooperation.
  Meanwhile, the Korean government’s “Eurasia Initiative” has not been actively promoted because of the increasing uncertainty in the global economic environment, increasing private investment risks, economic sanctions imposed on Russia by the West, worsening economy of Russia, and the deterioration of relations between South Korea and North Korea, and the suspension of the trilateral cooperation projects in South Korea, North Korea and Russia. In this situation, the linkage with the “China-Mongolia-Russia Economic Corridor” could be an alternative cooperation model to realize the basic idea of “Eurasia Initiative” and “Eurasia Cooperation Roadmap.” This is because the “China-Mongolia-Russia Economic Corridor” is being pursued by Russia, Mongolia, and China, which are the main cooperative partners of Korea’s Eurasia Cooperation and cooperating countries, adopting minilateral cooperation format and have a potential to expand its business in case of improvement of relationship between South Korea and North Korea.
  As a result of reviewing the major projects presented in “China- Mongolia-Russia Economic Corridor Construction Program,” the following linkages could be drawn. First, the development of transport and logistics routes that are favorable to Korea as a means of linking infrastructure with transportation and logistics; the development of transport infrastructure in China, Mongolia, and Russia in connection with the Tumen traffic corridor; the linkage of railway networks in the eastern region of Mongolia and Rajin Port; Joint development and support of information systems, and participation in the development of international logistics complexes across borders. Secondly, it is necessary to construct oil refinery facilities, to utilize economic cooperation zone beyond borders, to build and respond to electric power infrastructure, and to take countermeasures against supply of livestock products in Mongolia.
  In order to realize such a linkage plan, it is necessary to establish the following cooperation base. First, it is necessary to show the will to participate through close contact with the governments of China, Mongolia and Russia, and to propose contribution plans for each project. In other words, in the situation where the cooperation between the three countries has already been embodied, Korea should have a clear logic of participation, clear financing, and new ideas. In this process, it is essential to cooperate with Mongolia, which is the main stage of construction of “China-Mongolia-Russia Economic Corridor,” and is trying to cooperate with China and Russia and check against them at the same time. Second, action plans should be developed that take into account not only short- term economic feasibility but also longer-term strategic value. There will not be many opportunities for Korea to participate in projects that have great economic relevance right now. Therefore, it is desirable to use longer-term strategic values ？？such as the possibility of creating new growth engines and expanding the scope of inter-Korean relations. Third, it is necessary to include the “China- Mongolia-Russia Economic Corridor” cooperation in the EPA/FTA negotiations with Mongolia and EAEU, which Korea is currently pursuing, and make a positive use of it. 

  In September 2015, the United Nation’s member states agreed on the Sustainable Development Goals (SDGs) as part of the 2030 Agenda for Sustainable Development, a resolution adopted by the General Assembly on its 70th session. Building on the achievement of the Millenium Development Goals and seeking to address emerging challenges, the SDGs are a set of comprehensive and ambitious development goals for the next 15 years and a universal call to end poverty, protect the planet and ensure all people enjoy peace and prosperity. The 17 SDGs and 169 targets are integrated, inter-connected and balance the three dimensions (economic, social and environment) of sustainable development. The implementation of 17 integrated goals and 169 targets requires whole-of-government approaches, enhanced coordination among divergent actors. The SDG target 17.14 specifically calls on all countries to “enhance policy coherence for sustainable development (PCSD)” as an integral part of the means of implementation. In the context of SDGs, it is emphasized to capitalize on synergies between goals, targets and different sectoral polices. The PCSD is highlighted as a policy tool to manage inconsistencies among policy areas such as aid, trade and climate change and subsequently enhance development effectiveness and enable the environment for sustainable development.
  Under the circumstances, it is important for donor countries to understand the potential impact of “beyond-aid” schemes in trade and climate change, in particular. While it is widely agreed that trade is crucial for economic growth and sustainable development, a large number of low income countries, the Least Developed Countries in particular, remain marginalized in global trade. Tariff and non-tariff barriers to developing countries create negative spill-over effects on the livelihood of poor farmers in developing countries. Another policy area of particular importance is climate change. The Paris Agreement at COP21 marks a decisive turning point in the global response to climate change. In the new climate regime, it is imperative for donor countries to help developing countries strengthen their climate resilience and adaptive capacity while attempting to reduce greenhouse gas emissions. 
  South Korea, as an emerging donor, has made a continuous effort to enhance its aid effectiveness by improving the linkage between technical and financial cooperation and engaging the private sector in development in priority countries. Nevertheless, there has been a lack of policy coherence in terms of aid, trade and climate change polices, which can have a significant potential synergy and sometimes negative effects on the developing countries.
  In this context, the study attempts to explore possible ways to enhance development effectiveness and policy coherence in the area of aid, trade and climate change from the perspective of the Republic of Korea. The study begins by briefly introducing the SDGs and moves on to analyze the goals, targets and indicators that are specifically related to trade and market access as well as climate change. This is followed by an illustration of changes in the concept of policy coherence in the context of MDGs and then the SDGs. The Commitment to Development Index by the Center for Global Development is depicted as a tool to measure and compare the performance of 27 rich countries in policy coherence in the areas of aid, trade, finance, migration, environment, security and technology. The transition from PCD to PCSD (Policy Coherence for Sustainable Development) is discussed, followed by an overview of the PCSD analytical framework proposed by the OECD.
  The next chapter attempts to reveal the joint effect of aid and Generalized Scheme of Preferences (GSP) on the export from recipient countries. The results of a gravity model show that the joint effects of aid and GSP on exports vary according to the income level of the recipient country and the industry. Especially, it was found that aid and GSP have positive joint effects on the agricultural export of low income countries. The result is consistent with former literatures indicating that GSP does not work alone but has a positive effect on trade when provided together with aid. This paper conducted a scenario analysis for Korea’s introduction of the GSP. The results of a partial equilibrium analysis indicate that the introduction of Korea’s GSP will increase imports in agriculture, textiles and mineral products. However, damage to the domestic industry would be limited since the volume of increased import from developing countries is relatively small. There are also provision tools such as rule of origins and import restriction that are widely adopted by other donor countries to protect their domestic industries.  
  The following chapter analyzes the key issues in the Paris Agreement adopted in the same year as the SDGs and identifies five priority areas to pay particular attention in order to achieve the SDGs, as follows: first, increase the volume of climate-related aid; second, mobilize private resources with public resources and public sector intervention using various financial instruments; third, mainstream climate change into decision-making processes; fourth, promote climate-related technology transfer; fifth, prepare for international carbon pricing scheme and way of cooperate with developing countries. 
  Finally, the paper concludes by suggesting policy recommendations for the Korean government to enhance policy coherence for sustainable development, specifically in the areas of aid, trade  and climate change policy. Firstly, it is argued that the government needs to enhance policy coherence by aligning its national strategies with the SDGs and applying integrated policy approaches. Since the adoption of the SDGs, an increasing number of countries have made efforts to “nationalize” the 2030 agenda and acclimate it to their national context and priorities. In order to promote policy coherence for sustainable development, the government needs to set up an institutional setting and co-ordination mechanism for SDG implementation. However in South Korea, there is an absence of an oversight unit for SDG implementation, which is crucial to ensure a whole-of-government approach and coordinated planning. The recently adopted Mid-term ODA Policy for 2016-2020 briefly mentions the importance of policy coherence in the SDG context without providing a detailed implementation plan. There should be clearly stated high-level commitment to PCSD supported by time-bound action plans with shared objectives across the whole government. There must also be clear mandates for relevant ministries and agencies to balance and coordinate divergent and sometimes conflicting policy interests. Most of all, the policy coherence across policy areas such as aid, trade and climate change must be integrated into the national legal framework, namely the Sustainable Development Act and the Framework Act on International Development Cooperation, to ensure the compliance of the relevant actors. To implement the PCSD agenda, the inter-linkages and potential trade-offs between various policies, goals and targets should be analyzed and identified through whole-of government approaches. Based on the analysis, the common area for action must be determined and implemented by an inter-ministerial committee.
  In order to track progress on PCSD, a set of indicators aligned with Korea’s national context must be developed by modifying standard PCSD indicators by the OECD into a form that can incorporate the expertise of government think tanks and the civil society. Using the existing mechanism, the Sub-Committee for Evaluation under the Committee for International Development Cooperation could play a key role in developing and coordinating the PCSD monitoring and reporting system. Furthermore, in order to promote an integrated approach to mainstream SDGs in various policy areas, the government could consider setting up an inter- ministerial committee responsible for the implementation of SDGs.
  Secondly, the study argues that the introduction of GSP should be considered to enhance development effectiveness. As was revealed in the empirical analysis, aid and GSP have a positive joint effect on the exports from developing countries. In addition, GSP could be considered as another supporting mechanism along with aid to expand trade and investment with developing countries. As we reviewed in this study, other donors have been diversifying their support tools for developing countries. Along with aid, FDI and GSP strengthen the local production and export facilities in developing countries. Given the constraints of the aid budget in Korea, GSP could be effective for the expansion of trade and investment with developing countries by improving the local production facilities. Such measures would help to enhance the investment and employment in developing countries, and ultimately will contribute to enhancing the development effectiveness and mutual growth with developing countries. The expected damage resulting from the introduction of the GSP to the Korean domestic industry will be limited according to our scenario analysis. If any, provision tools such as rule of origins and import restriction could be established together with the GSP to protect domestic industries. Also, the recent increase of reciprocal trade agreements with developing countries, such as the Korea-ASEAN FTA, is expected to curb any damages from the GSP to domestic industries.
  Thirdly, the linkage between climate change policies and aid policies must be enhanced. In the context of a paradigm shift toward low-carbon societies, climate change must be mainstreamed throughout the decision-making process of development policy and at the implementation level. Finally, all development activities need to help developing countries to prepare a low-emission and climate-resilient development path while meeting the needs and priorities of domestic actors.
 

  Corruption in Latin America is not a transient issue but a chronic social problem, which has been the major obstacle to the development of the region as well as a keyword to understand Latin American society. Therefore, understanding the structure of Latin American corruption and exploring the possibility of developing countermeasures against it is an important task for the public as well the private sector of Korea which seek to strengthen economic relations between Latin America and Korea.
  However, the existing literature on Latin American corruption in Korea did not include comprehensive comparative analyses of corruption in Latin America by solely focusing on case studies of individual country. Furthermore, it lacks analysis on anti-corruption measures recently implemented in various Latin American countries.
  In order to overcome limitations of existing literature on corruption in Latin America, this study explores corruption in six Latin American counties: Mexico, Brazil, Argentina, Peru, Chile and Costa Rica. After looking into individual case in terms of its corruption and anti-corruption measures, we engaged in a comparative study of the six cases to achieve more thorough understanding of characteristics of Latin American corruption as well as possible implications for Korean society.
  In case of Mexico, this study reveals that corruption is deeply rooted in its political system, especially corporatist system which caused clientelistic relations between the state and the society. Such political system spreads into private sector where private companies opt to give political donation in exchange to right to participate in governmental projects. Ironically such political corruption worsened with the weakening of the state with neoliberalism in 1990s because of the emergence of new corruption network among government, drug cartel and private companies.
  The most important reason behind the corruption in Brazil is its election system where multiple parties compete and collaborate in order to obtain its political as well as economic goals. However, the Brazilian political system, which is heavily based on negotiations and cooperations, could foment an environment where political parties buy supports from others. In addition, relatively light punishment for politicians resulted in chronic corruption.
  Argentine case shows the weak political system which consists of overly strong presidentialism and weak judicial as well legislative system could cause the structure of corruption. Such concentration of power on presidential system brings about clientelism which politicians utilize public resources to pursue their private interest. Meanwhile, in Peru, inefficient as well as excessive governmental intervention and bureaucratic system create generally weak institutions in the public sector, which foments a favorable condition for corruption.
  FNIAlly, this study looks into Costa Rica and Chile, which represent relatively less corrupt cases in Latin America. By analyzing the two countries, this study makes known the fact that institutionalized democracy as well as well-implemented anti-corruption measures are key to achieve a transparent society.
  According to this study, various Latin American countries implemented anti-corruption measures, which were introduced as an effort to comply to international treaty or a countermeasure to political scandals. Despite of detailed measures against corruption, most cases show that the intensity of anti-corruption measures does nos necessarily reduces corruption.
  This study offers several policy implications for Korea-Latin America relations. First of all, it offers detailed information of corruption in Latin America and its impact on business environment. In addition, this study recommends three types of governmental policies to enhance Korea-Latin America relations in terms of corruption. First, Korean government can actively engage in anti-corruption measures in Latin America by participating in international institutions and their treaties against corruption. Also Korean government could offer technological support such as e-Government to Latin American countries which try to reduce its corruption. FNIAlly, Korean government could support Latin American civil society which work hard to introduce more transparency in Latin American society by providing international development cooperation.
  By analyzing the corruption in Latin America, this study shed lights on the fact that tough anti-corruption measures do not automatically reduce corruption. Rather the democratic political system should exist as the basis to make anti-corruption measures work.
 

  Adopted at the UNFCCC COP21, the Paris Agreement is recognized as the most significant international environmental agreement since the United Nations Framework Convention on Climate Change in 1992. Laying the foundation for the post-2020 climate regime, the Paris Agreement emphasizes GHG mitigation efforts by all parties, including developed and developing countries. Korea decided to cut the national greenhouse gas emission by 37% in 2030 compared to the business-as-usual emission estimate and included the statement in its Intended Nationally Determined Contribution. In achieving the target, Korea stated that 11.3%p of greenhouse gas reduction will be achieved through international carbon market mechanism while the remaining 25.7% will come from domestic source.
  Nevertheless, the international community is in the process of developing consensus around the details of trans-boundary carbon market mechanism that is environmentally sound and sustainable enough to be recognized under the Paris Agreement. In this regard, the study aims to present ways for Korea to properly respond to the issue by observing the progress in the climate discussions and analyzing major carbon programs. Particularly since the Korean government is considering the use of cross-border carbon offset programs, the study comprehensively reviews a number of international carbon offset programs and thus seeks to provide implication for Korea. The study considers key principles highlighted in the international community and develops a Mitigation Cooperation Index (MCI), applicable to identifying prospective regions and fields for carbon offset programs. The study also looked at constraints to private participation in implementing international carbon projects and suggests ideas to increase private participation.
  In order to identify potential carbon partner countries for Korea, the study devised a set of index, namely ‘Mitigation Cooperation Index.’ The study deemed the following elements as essential: GHG emission level and intent for international carbon transfer, economic ties with Korea, and national development potential. By sub-categorizing and indexing the above-mentioned elements (emission level index, economic exchange index, and national capacity index) and varying the weight among the elements, the study induced values between 0 and 1, with 0 being less prospective and 1 being more prospective.
  When placing most weight on emission environment, India, Iran, Kazakhstan, Mongolia, and Vietnam were analyzed as the most potential partners. Nine out of thirty most potential partners were Asian countries. In terms of economic exchange, Vietnam, Indonesia, the Philippines, Bangladesh, Cambodia, Myanmar and several other Asian countries were included in the more prospective group. In regards to national development capacity, countries with higher income levels while classified as developing countries in the UNFCCC (i.e. Singapore, Israel, Chile, Qatar, etc.), were in the top tier. However, through a MCI analysis, we were able to conclude that it is most effective when national capacity support is provided along with cooperation in carbon reduction in a number of Asian countries.
  On the Korean side, while private companies are willing to participate in overseas reduction projects, many of them lack local network and capacity. Therefore, it is necessary to enhance private sector competitiveness through adequate institutional and policy design. In terms of finance, Korea must seek a linkage between ODA resources and international carbon reduction programs. Given the financial constraints of low-carbon projects, ODA resources can be linked to lowering entry barriers and inducing private capital inflows. Also, active participation in international carbon finance initiatives by multilateral banks and organizations should be considered.
  In conclusion, the study suggests the followings to facilitate Korea’s participation in international GHG reduction. First, the government should set up and implement a mid- to long-term plan to assist the private sector participation in climate change mitigation. There is a need for a powerful inter-agency control tower beyond the current level to perform and coordinate relevant action plans established by each ministries.
  Secondly, active support from the government is needed to promote private participation in climate change projects overseas. For example, establishing a one-stop support organization for Korean companies to successfully launch business in overseas green industry sector, building a system for companies to transfer overseas carbon credits to domestic reduction, and supporting private sector competency and experience through domestic institution building.
  In addition, resource mobilization must be considered. In this respect, Korea may consider supporting GHG mitigation projects in connection with ODA, multilateral funds, and various other financial instruments. Particularly, enhanced efforts to access the Green Climate Fund is necessary. Access to the Fund can be highly potential through a well-devised project plan.
  Finally, efforts are needed for Korea to engage and collaborate in various international carbon partnership programs. Through participation in the discussions with major international organizations, donors and recipients, Korea will be able to access first-hand information and also cultivate climate capabilities while engaging in actual business. Engagement in such activities will also increase business opportunities and partnership with interested parties.
 

  Recently, there has been growing interest in the use of production networks in the ASEAN region, which has emerged as a new production base and consumer market for Korea. If Korean firms establish regional production networks with intra-regional enterprises, they can improve production efficiency by heightening the possibility of local survival and international market competitiveness. Meanwhile, given the fact that Korea has gained a trade surplus of about $ 30 billion in 2015 from the ASEAN region, Korean firms should seek further cooperation with local ASEAN firms. If the new protectionism that has been spreading across the world contaminates ASEAN member states (AMS), AMS may complain about the trade imbalance.
  ASEAN member states have recently demonstrated their willingness to support the participation of SMEs in global production networks. If firms in AMS successfully participate in a global production network and upgrade their competitiveness, they can become competitors to Korean firms working in the ASEAN region. The utilization of local firms can be considered a countermeasure against the growth of ASEAN firms. Based on the above needs, it will be necessary to establish regional production networks (RPN) in the ASEAN region, as a new strategy for increasing both the sustainability and efficiency of Korean firms in ASEAN. In addition, this will lead to the expansion of exports. Therefore, the purpose of this study is to establish strategies for regional production networks in the ASEAN region.
  The level at which Korean firms have established regional production networks with local ASEAN firms is still relatively low compared to Japanese firms. Therefore, we benchmark the Japan case and see how we can utilize local ASEAN firms. First, we explored how Japanese firms have formed production networks in ASEAN region. Next, through a survey, we analyzed the capability of Korean firms and local companies to participate in regional production networks and the needs of Korean firms. Finally, we presented strategies and plans for the RPN construction of Korean firms and governments in the ASEAN region.
  In Chapter 2, we analyze the business environment of local firms and the current business situation drawing from previous research and various data. According to the World Economic Forum (WEF) Global Competitiveness Index (GCI) and the World Bank's Ease of Doing Business Index, the competitiveness of ASEAN countries has clearly improved since 2010. However, we do not believe that the improvement of these indicators necessarily coincide with the sentiment of Korean firms. Although indicators relating to the labor market, foreign investment, investment incentives and fair competition have improved, Korean firms are still unsatisfied. Nonetheless, it is meaningful that the improvement of the ‘format,’ such as the improvement of the indicator, is the starting point of ‘substantial’ progress. Fortunately, business conditions in Vietnam and Indonesia, which are subjects of the study, have significantly improved compared to Cambodia, Lao, and Myanmar (CLM).
  FDI inflows into the ASEAN region have grown rapidly in line with improvements in the business environment. The volume has been larger than that flowing into China, since 2013. To meet the growing investment in the region, Korean firms have adjusted their investment strategies. Even up until the mid-2000s, SME-centered single investment was the mainstream channel. Since 2010, large corporations have been led by SMEs. Such joint movement of large, medium and small enterprises into the ASEAN region is attributed to the fact that ASEAN-affiliated firms cannot participate in the production activities of Korean firms.
  Meanwhile, in Chapter 2, we surveyed the difficulties of management for Korean SMEs operating in the ASEAN region. There was hardly any difference from the difficulties identified by Kwak et al. (2014, p. 156-160). However, one problem that did differ from Kwak et al. (2014) was raised by Korean SMEs and large corporations that entered the ASEAN market together. Such joint entry into a new market improved the stability of Korean SMEs, due to the reduction of risk. However, it also secured a structure dependent on large firms, which weakened the bargaining power of SMEs against large corporations. Less bargaining power leads to a decline in product prices, causing problems in profit structure. In addition, the management status of SMEs would also be determined by that of large enterprises, their main customers. To avoid these problems, SMEs must diversify their production networks. In other words, Korean SMEs can consider diversifying the sources and buyers of parts and materials procurement as a strategy for sharing entry risk. Such efforts are also expected to be effective in responding to ASEAN's strategy of involving its own SMEs in global production networks. For example, Indonesia’s domestic component requirement (TKDN: Tingkat Komponen Dalam Negeri) policy can be overcome.
  In Chapter 3, we analyze how Korea will build a local production network through the experiences and cases of Japan, which has the best production network in the ASEAN region. Japan first employed the strategy of establishing its base in ASEAN countries, centering on electricity, electronics, machinery and automobiles. By connecting these bases to the network, they shared information, knowledge, experience, know-how and managed risk. In addition, Japan standardized the production process to establish division of labor in the ASEAN region, in order to maximize production efficiency. Moreover, local ASEAN firms were involved in the production activities of Japanese firms that had entered the market, so that Japan understood the needs and preferences of the consumers in the host countries. By applying the identified needs and preferences to the design, function, and characteristics of the product, Japan effectively targeted domestic markets. In addition, Japan created a system which produced and procured parts and components locally, so as to deploy them in production processes in a timely manner. Meanwhile, Japan managed to increase price competitiveness by including products of ASEAN countries that utilize cheap labor into the production process.
  For this reason, Japanese firms have steadily strengthened its ASEAN regional production networks over the past decade (2006-2015). Japanese firms in the ASEAN region have increased the proportion of raw materials and parts procurement for production from both ASEAN local firms and Japanese firms located in the ASEAN region. In particular, Singapore, Malaysia and Indonesia are among the countries in which Japanese firms have swiftly raised the percentage of procurement from local firms. This is because these countries are strongly advocating the use of domestic products for the production of Japanese firms. In addition, the extent to which local firms are utilized differs by industry. The local procurement portion was high for industries such as transportation machinery and equipment, where parts and raw materials logistics costs are high. However, the local procurement shares of electronic components and parts are relatively low, due to the short product cycles and relatively low logistics costs. It seems that Japan clearly distinguishes local procurement items from domestically procured items. It will be necessary to benchmark Japan when Korean firms in ASEAN seek to expand local procurement. For light parts and components requiring high quality and high technology, Korean firms have to be supplied from Korea. On the other hand, parts and components that have low value added or high transportation costs should be supplied locally. To this end, the domestic parts and materials industry in Korea should be further fostered.
  Meanwhile, a survey was conducted on 90 firms in order to identify the regional production networks of Korean firms located in ASEAN. Korean firms operating in the ASEAN region mainly procured raw materials and components from Korea and China. In particular, the reason Korean firms in Vietnam have a high procurement ratio from their home country is that most of them are engaged in electricity and electronics. Also, since large corporations and Korean SMEs entered Vietnam together, the proportion of local procurement in Vietnam is high. Currently, production networks in which only Korean firms participate are subject to complaints from ASEAN local firms.
  Korean firms have not yet established regional production networks in the ASEAN region in comparison to Japanese firms. Japan's regional production networks are strategically linked to Japanese firms located in Japan, Japanese firms located in the region, and Japanese firms producing parts and materials which are also located in the region, Chinese firms and ASEAN local firms. However, Korean firms’ production networks have yet to complete such a picture. ASEAN regional production networks formed by Korean firms, compared with networks built by Japanese firms, are characterized by a low utilization rate when it comes to local ASEAN firms. The history of the entry of Korean firms into ASEAN is relatively shorter than that of Japanese firms. For this reason, in order to overtake Japan in the region and establish a production network in the short term, it is necessary for a strategy in which large corporations and SMEs enter the ASEAN region together.
  Chapter 4 explores the functions of SMEs in production activities and explores why local SMEs in ASEAN should be included in the Korean production network. In addition, we present the results of in-depth interviews and surveys with ASEAN local firms regarding participation in production networks. The outcomes, we believe, can be used as a basis for Korean firms to establish strategies when working with ASEAN SMEs.
 The most representative function of SMEs is to enable smooth connection between production stages. However, SMEs, which are the foundation of the parts and materials industry, are failing to perform this function because they are not growing properly in the ASEAN region. Despite this situation, AMS insist that foreign-invested firms exclude ASEAN local firms from production. This difference can be attributed to the reduction of the incentives provided by ASEAN member states to foreign-invested firms or to the strengthening of regulations. Given the fact that Indonesia is already required to certify its TKDN, other countries among AMS may soon implement similar regulations. Therefore, a preemptive response is required to include ASEAN local firms in the Korean production network and have them operate as advocates of Korean firms. Considering that the purpose of Korean firms’ entry into the ASEAN region has shifted from “manufacturing goods that utilize cheap labor and exporting them“to”entering local markets,” it is necessary to respond quickly to changes in the demands of local ASEAN consumers by utilizing local SMEs in ASEAN.
  We found from the surveys that ASEAN firms have already recognized that their governments are already working to improve business environments for them. Also, more than 50 percent of respondents said that their business performance, financial conditions, employment and business areas either improved or expanded. In addition, ASEAN firms themselves, to succeed in global value chains (GVCs), have recognized that it is necessary to develop internal competencies such as product and quality specialization, innovation and design, and entrepreneurial spirit.
  Moreover, ASEAN firms with experience in participating in GVCs were aware that their relationships with other firms were a very important factor in determining business performance. Although Korean firms are reluctant to admit it, ASEAN firms are growing fast enough to threaten the position of Korean firms in the world market. It is necessary to prepare countermeasures against the growth of ASEAN firms. For example, Korean companies should internalize SMEs with high potential for development, and seek ways for Korean companies to enjoy the fruits of ASEAN SMEs. Furthermore, ASEAN SMEs strongly want to cooperate with Korean firms for technology development.
  Based on the results of this study, this study presents strategy for establishing the direction and goal of regional production networks (RPN). Given the heterogeneity of ASEAN, composed of 10 countries, Korea has to select strategic bases for regional production networks. Then the next step is to gradually widen and connect them. Currently, Korea has established a production base by concentrating investment in Vietnam. In order to gradually expand the base and increase the number of bases, it is necessary to build a master plan which includes a large framework that manages the ASEAN regional production network; a possible title could be the “Vietnam plus One” strategy. Exit and support strategies for Korean firms that have entered Vietnam in anticipation of the TPP could also be established within this framework.
  The long-term goal of the strategy for establishing an ASEAN RPN is to improve the local sustainability of Korean firms in ASEAN. Considering that the primary goal of Korean firms operating in ASEAN is to enter local markets, we can increase the sustainability of Korean firms by working together with local ASEAN firms, because they have more information on their local markets. In particular, the incorporation of local ASEAN firms into Korean firms through mergers and acquisitions (M&A) will provide the advantage of existing business facilities and distribution networks.
  Two mid-term goals have been set. One is to improve the competitiveness and profitability of Korean firms entering ASEAN. Another is to expand the entry of young people into ASEAN by establishing start-ups. As we have seen, building a regional production network improves the management efficiency and profitability of local firms. In addition, we can encourage our technical standards to be applied to the production process in ASEAN, by dispatching our young personnel when we engage ASEAN firms in the Korean production network. Also, if young people establishing their own business in the ASEAN region support the activities of Korean firms in the region, this will contribute to strengthening the Korean production network. In order to achieve these mid- and long-term goals, this study presents measures that should be implemented by the government and corporations, as follows.
  The government should focus on laying the foundation for building regional production networks. First, as seen in the outcomes of the surveys from Chapters 3 and 4, we confirmed that there is a difference between local ASEAN firms and Korean firms in their purpose for participating in the production network. Therefore, it is necessary to activate a cooperation forum between local firms and Korean firms, so as to fill the gap between them. Second, we need to enhance technology exchanges, because we found from the surveys that local ASEAN firms have such needs. We may consider the expansion of the TASK (Technology Assistance and Solutions from Korea) project led by Korea's Ministry of Trade, Industry and Energy. Third, we should encourage AMS to adopt Korean standards, with an emphasis on the need for the unification of technical standards to form and strengthen production networks between the two economies.
  Finally, since the enterprises are the ones that establish local production networks, we propose three methods the entrepreneur can employ to form regional production networks in the ASEAN region. First, Korean firms in ASEAN should strive to reinforce their collaborative relationship with each other and secure various clients. As shown in the case of Japan in Chapter 3, the parts and components that electric and electronic firms utilize for production have a short life cycle, as well as high value added. Japanese firms producing in ASEAN import these parts and components from Japan, rather than ASEAN countries. This should be used as an opportunity for Korean SMEs operating in the ASEAN region. Second, Korean firms must strive to advance into the ASEAN region's local markets by utilizing the distribution network of local ASEAN firms. For example, Korean firms can use M&A to expand the involvement of ASEAN local firms in Korean production networks. Third, Korean firms should prepare plans to utilize the supporting industry promotion policies of ASEAN member states (AMS). As we saw in Chapter 2, AMS governments are implementing various policies to foster their own supporting industries. Thus, we should carefully monitor policy changes related to the fostering of supporting industries and utilize them as opportunities for Korean firms.
 

  More than 20 years have passed since Japan entered a recession in the mid-1990s, with the bubble burst and changes in the population structure-low birth rate and aging population-acting as catalysts. It is true that Abenomics did manage to stimulate some growth in the Japanese economy, which had continued on a downward trend especially after the 2008 global financial crisis and the 2011 Tohoku earthquake; however, Japan’s nominal GDP in 2015 is still a meager 500 trillion yen, significantly lower than its GDP of 521 trillion yen in 1997, demonstrating the necessity for large-scale structural reform. Japan’s potential growth rate also illustrates something along the same line. Japan’s potential growth rate reached 4.9% in the late 1980s, and then plummeted to around 2% in 1992 after the bubble burst. In 1994, the figure halved to around 1%, and in 1997, to around 0%. In 2015, it was a mere 0.3%, showing that indeed something more than the hitherto practiced expansive fiscal policy and quantitative easing (QE) is required.
  Thus, this research presumes that the Abenomics growth strategy will accompany structural reform, using legalization as the tool. We first present a general overview of the Abe administration’s growth strategy, then examine its results and challenges, focusing on the four policy issues of business restructuring, corporate governance reform, the 4th industrial revolution, and employment/labor market reform. This research’s final aim is to present policy implications for the Korean government, considering the policy agendas the Korean government is currently facing, such as expanding the private investment, labor market reform, structural reform, the 4th industrial revolution, etc.
  Chapter 2, titled “The Framework of Abenomics Growth Strategy,” covers the background and goal of the Abe administration’s growth strategy. Here we emphasize that Abe’s growth strategy ultimately aims at solving the so-called “three excessives” of the Japanese economy?excessively little investment, excessive regulations, and excessive competition?and fostering new industries. This research divides the Abenomics growth strategy into two stages: the first stage, which consists of the four growth strategies up to the year 2015, focused on promoting the metabolism of industries through regulatory reforms, strategic markets creation, business restructuring, and corporate governance reforms; on the other hand, the second stage, consisting of the 2016 growth strategy, focuses on the fourth industrial revolution and the reform of working patterns.
  Chapter 3, “Business Restructuring under Abenomics,” deals with Japan’s business restructuring under the framework of the Act on Strengthening Industrial Competitiveness (the Industrial Competitiveness Act) that was enacted in 2013. Although the Japanese government’s restructuring policy shifted to a more market-friendly direction in the 1990s, government still does play a role in business restructuring, as is apparent in its expanding and reorganizing of the 1999 Industrial Revitalization Act in 2009 and in 2013, into the Industrial Competitiveness Act. This research also notes that the active business restructuring in the 2000s, such as M&A, was a result of the government’s various efforts at improving the legal and the regulatory environment.
  Chapter 4, “Corporate Governance Reform under Abenomics,” examines the significance of corporate governance reform from Japan’s traditional main bank system, and observes how the Japanese government is approaching the reform. We analyze the government’s efforts to strengthen the internal governance mechanisms, through measures such as strengthening internal audit systems or requesting the appointment of outside directors, and to strengthen institutional investors’ governing function.
  In Chapter 5, “Nurturing the New Industries in Abenomics,” this research looks into the Japanese government’s policy actions to increase productivity and create markets with high growth potential. Internally, Japan faces structural constraints to growth due to its decreasing population, while externally, Western countries including the US and Germany are actively promoting the 4th industrial revolution as a new growth model. Facing such challenges, Japan has been promoting strategies to create new industries, but following the 2011 earthquake and inauguration of the Abe administration in 2012, the focus is being placed on robots, Internet of Things (IoT), AI, etc.?the technological pillars of the 4th industrial revolution.
  Chapter 6, “Abenomics labor market reform,” covers Japan’s policy measures to reform the labor market and examines whether or not they are effective. We focus on the fact that the Abe administration has come to the realization that Japan’s employment customs?which include long-term (or lifetime) employment, seniority wage system, etc.?can no longer properly respond to Japan’s decreasing labor productivity and labor supply. This chapter divides labor reforms under Abenomics into two categories: policies to improve labor market flexibility, such as relaxing the dismissal standards of regular workers, and policies to increase labor supply by utilizing the labor powers of hitherto neglected sectors of the population, such as women, foreigners, and the elderly.
  Finally, in Chapter 7, “Policy Implications,” the outcomes and challenges of the Abenomics growth strategy are compared with Korea’s policy situations. It must be noted that although Korea has not announced a holistic “growth strategy” under such a name, it is promoting a series of policies that are comparable to each section of the Abenomics growth strategy.
  First, key agendas that are being promoted under Abenomics, which include regulatory reform, labor market reform, strategic markets creation, business restructuring, corporate governance reform, and new industries creation, are all critical to a country like Japan with its decreasing population.
  Second, although there is no denying that some government support is necessary to assist companies’ preemptive restructuring, it may be preferable to place more of an emphasis on modifying related laws and regulations.
  Third, in promoting corporate governance reform, Korea could very well refer to Japan’s case, and especially how it secured momentum of its corporate governance reform by amending the Companies Act in June 2014 and introducing the Corporate Governance Code in June 2015.
  Fourth, Korea, like Japan, needs to establish a government-wide national strategy with public-private cooperation, and promote regulatory reforms to foster new industries under the 4th industrial revolution. Fifth, in relations to the labor market reform, both Korea and Japan are failing to show progress in improving labor market flexibility. In this situation, it will be beneficial to try some measures that essentially are preconditions for labor market flexibility, and which are showing some positive results in Japan. Policies to improve labor conditions for irregular workers and allowing various forms of working are examples of this.