To address the complex challenges in international development, the role of social enterprises, particularly social ventures, is increasingly vital. These enterprises employ innovative and sustainable approaches to tackle multifaceted issues, by blending social objectives with economic gain and bridging corporate structures and nonprofit organizations. They offer effective solutions to development challenges through innovative approaches and technological integration, fostering a close collaboration with marginalized communities and local groups in developing countries. Nevertheless, activities and studies on the role of social enterprises in international development, especially in terms of individual corporate activities, remain limited due to institutional constraints and scarcity of information available. This study focuses on the features of social enterprises to illustrate their roles and contributions within the context of international development cooperation. By focusing on social ventures as the main form of social enterprise in international development, this study attempts to move beyond previous limitations and yield practical insights on facilitating the participation of social enterprises in international development, and to increase their impact.

Following an introduction of the study, Chapter 2 lays the groundwork for understanding some essential characteristics of social enterprises. Our research highlights the lack of a universal definition for social enterprises and the varying scope of these organizations across different countries. In Chapter 2, we examine discussions at the OECD and UN, along with the background and status of social enterprises in major countries.

Our review found that the countries have formed distinctive social enterprise institutions according to their macro policy background. We also discovered that they apply flexibility on the definition and scope over time. Notably, the UK, France, and Denmark, which saw the development of social enterprise institutions starting in the late 1990s, promoted social enterprise as a means to complement government welfare. Therefore, these nations emphasize the main feature of social enterprises as businesses that prioritize social value. In contrast, the development of social enterprises came into prominence in the Netherlands during the 2000s. In the Netherlands, social enterprises flourished as skilled personnel from civil society organizations entered the private sector. Unlike other countries, the Netherlands maintains a flexible perspective on determining social enterprises, foregoing any legal limitations on the forms of social enterprises. Well-known for its vibrant tradition in civil society engagement, the United States recognizes social enterprises through various legal frameworks. Flexibility is allowed in the social values pursued by each enterprise. Likewise, international organizations such as the OECD and the UN also provide flexible definitions of social enterprises. The organizations position social enterprises as key players in addressing evolving and intricate development issues.

In South Korea, institutions for social enterprises were developed during the 1990s with a strong focus on job creation. As a result, a narrower official stance toward “social enterprises” was formed, compared to the other countries discussed in this chapter. In a broader perspective, other forms of social enterprises also exist in Korea, such as self-supporting enterprises, cooperatives, village enterprises, and social ventures. This study focuses particularly on social ventures, which are defined most inclusively and have the institutional capacity to engage in international activities.

Chapter 3 compares and analyzes approaches and support programs in the UK, Netherlands, and the United States. These countries actively promote private sector participation in international development. For example, the UK has been supporting social enterprises since the 2000s, mainly through capacity-building. Since 2015, there is a shift towards indirect impact investment – through development finance institution, from direct capacity support.

The Netherlands has traditionally underscored the pursuit of national interests by encouraging private sector participation in international development. It is currently pursuing social value by requiring corporate social responsibility in all business-engaged international development activities. In addition to technical support (consulting, networking), the Netherlands also provides financial support, often employing indirect support for local companies in developing countries through development finance institutions.

The United States maintains robust private sector involvement in international development. The U.S. promotes the participation of socially innovative enterprises in line with USAID’s Private Sector Engagement (PSE) policy. Enterprises are supported through financial aid, advisory support, networking, and research collaboration. The U.S. distinguishes itself from other donors by providing direct funding to social ventures through development finance institutions (DFIs), therefore, leveraging additional private investment.

In contrast, Korea ‘s support programs for social ventures remain at a nascent stage. KOICA’s Creative Technology Solution (CTS) supports the initial business development of startups and ventures with innovative technology. Under the KOICA Innovative Business Solutions (IBS) project, there have been co-financing with domestic social impact investors to discover, nurture, and support local startups in developing countries.

The following chapter provides a review of Korean social ventures, including those participating in KOICA’s CTS program, as well as case studies of companies active in international development cooperation. Findings indicate that most KOICA CTS participants are registered as ventures, not as social ventures or (preliminary) social enterprises. They are predominantly classified as impact ventures or conventional ventures with some commitment to social value. On the other hand, companies interviewed for the case study identified themselves as social ventures, highlighting a gap between institutional classification and self-perception.

Examples of social ventures engaged in international development cooperation include Enuma Korea (education), Vuno (healthcare), Wiplet (water), Cornerstone T&M, Greengoods (rural development), Verywords, Envelops, and Pharos Marine (technology, environment, energy). These enterprises were initiated or adapted their business goals to prioritize social value creation in developing countries. Many leverage innovative technologies or mature business models to establish profitable structures, while utilizing public support to enhance their business model and to secure investments. In addition, many of them work closely with local stakeholders, ranging from the government to NGOs and community residents.

Lastly, Chapter 5 analyzes and presents the findings to identify key constraints in stimulating social venture participation in international development cooperation: (1) the gap between institutional frameworks and on-the-ground realities, (2) the lack of opportunities, and (3) the scarcity of entrepreneurs in development cooperation. To address these challenges we suggest a revision of policies related to social enterprises. In Korea, the Social Enterprise Promotion Act, enacted in 2007, has remained largely unchanged, failing to adequately reflect today’s social challenges and corporate realities. Drawing on the UN’s experience of amending social enterprise roles to address evolving demands, as well as OECD Guidelines on social enterprise institutions, adjustments to the social enterprise framework are essential. This should include revisions in the certification system and an expanded scope for social enterprises to reflect contemporary challenges, such as aging population, inequality, and environmental issues. Furthermore, it is imperative to enhance the efficacy of the institutional framework by providing tangible benefits to businesses. Many companies participating in the KOICA CTS are registered under the venture enterprise system, which offers substantial benefits such as tax exemption, low interest rate loans, R&D support, and so on. This stems from how registration as social or social venture enterprises provides no tangible benefits to these businesses, which in turn highlights the need for incentives within the social enterprise framework, as seen in the U.S., which provides practical incentives to enterprises with social missions.

Secondly, there is a need to expand programs that potential entrepreneurs can access. This will lead to fostering social enterprises involved in international development cooperation as well as revitalizing the private sector ecosystem in international development. Taking on from the lessons learned, current programs such as the KOICA CTS and IBS can play an even more pivotal role in attracting and fostering potential entrepreneurs in international development. In the long-term, it would be beneficial to explore impact investment for enterprises tackling development issues through development finance institutions, as in the cases of the UK, the Netherlands, and the United States.

Lastly, there is a need to cultivate entrepreneurs who possess a strong understanding of and interest in international development. The social ventures reviewed in this study can be broadly categorized into two types: those that focus on developing innovative solutions aimed primarily at developing countries ("social purpose-driven" ventures) and those that aim to apply innovative solutions to the local challenges in developing countries through entrepreneurial spirit (“innovation-driven" ventures). Strengthening the developmental impact of innovation-driven enterprises while enhancing the business models of social purpose-driven enterprises will improve the sustainability of their solutions and operations. The Dutch example could serve as a useful reference in reinforcing development objectives within existing programs. At the same time, it is also crucial to identify and nurture potential entrepreneurs who are willing to modify their business activities to fit developing countries.

This study aimed to gain comprehensive understanding of the form and characteristics of social enterprises in Korea to increase their participation in international development. The study seeks to assess the effectiveness of support programs and identify challenges from the perspective of the businesses. Furthermore, as a policy study, it compares Korea’s social enterprise systems and programs with those in other countries to identify areas for improvement. This research provides an overview of social enterprise development in international organizations, various countries, and Korea. It also documents the experiences of companies involved in these activities. Subsequent policy researches are expected to bridge the gap between policy and business activities. We also hope that the business cases analyzed in the report will serve as valuable references for increased participation of social entrepreneurs in international development cooperation.

In the 2020s, the Korean and Japanese governments faced a crisis involving supply chain disruptions of critical mineral resources alongside the reorganization of global supply chains due to efforts to promote digital transformation (DX) and green transformation (GX) within their domestic industrial bases. To address these issues, both the Korean and Japanese governments have concentrated their policy capabilities on stabilizing the supply chain for critical minerals through various strategies, policies, and legislation related to critical minerals. The Korean government began designating the five EV battery metals and rare earths as critical minerals through the Critical Minerals Securing Strategy in February 2023, and enacted the National Resources Security Special Act in February 2024. Japan also enacted the Economic Security Promotion Act in May 2022, somewhat earlier than Korea, and designated critical minerals as “particularly important materials” in December 2022. By March 2024, Japan further added gallium, germanium, and uranium to its list of particularly important materials as a response to China's rate metal export controls.

This study examined the Japanese government’s policies for securing metal resources, noting Japan’s extensive experience in establishing and implementing strategies for overseas metal resource acquisition. It then assessed the performance of major Japanese policies and evaluated supply chain risks for critical minerals in both Korea and Japan. The metal resources analyzed in this study were limited to non-ferrous metals, rare metals, rare earths, and precious metals, with each chapter’s scope varying according to the Japanese government’s evolving policy since 2000. The Japanese government's metal resource policies differ by period and by mineral type, with various policies employed in each period. Therefore, this study analyzes various policies according to specific periods and issues.

Based on these findings, this study suggests several areas for potential cooperation between the governments of Korea and Japan. First, the Korean government has been actively utilizing the Minerals Security Partnership (MSP) framework to secure overseas mineral resources, with Japan also actively participating in various MSP programs. Our suggestion made here was for the Korean and Japanese governments to jointly pursue projects (such as mine exploration and development) in third countries by leveraging partnerships with resource-rich nations participating in the MSP Forum, which offers a key advantage to MSP members. Second, regarding joint development efforts by Korean and Japanese companies for overseas mineral resources, this study proposes supporting overseas mine development by Korean private companies through the KOMIR and exploring cooperation measures with Japan's JOGMEC. Third, for collaboration in recycling critical minerals, this study recommends incorporating policy cooperation as a key agenda in policy dialogue between the Korean and Japanese governments. Specifically, it is suggested that Korea and Japan identify potential cooperation areas, such as performance evaluation, safety management, and institutional and infrastructure in the recycling process of critical minerals. Lastly, this study proposes the establishment of a joint government subsidy program to facilitate the collection of overseas recycled EV battery products as a joint response to the EU's recycling regulations.

The 2019–2020 Hong Kong protests over the Hong Kong extradition bill, Fugitive Offenders and Mutual Legal Assistance in Criminal Matters Legislation (Amendment) Bill 2019, and the hardline response of the Hong Kong and Chinese governments to the protests have had a significant impact on the international community. In the case of Korea, the diplomatic friction that occurred over the issue of THAAD deployment in 2017 greatly worsened Koreans’ perception of China, and the 2019–2020 Hong Kong protests deepened this perception. In other countries and regions, it has also had a significant impact on perceptions of China.

However, the negative perception of China and Hong Kong society that has increased due to the 2019–2020 Hong Kong protests is having an impact on the economic sphere. Based on the capitalist market economic system that was formed during the British colonial period and its geographical advantages in transit trade, Hong Kong has played the role of a global financial hub and center for transit trade, a window to the outside world and external financing for the Chinese economy, and a conduit for the internationalization of the yuan. However, after the large-scale protests in 2019, there have been concerns that Hong Kong’s society is fundamentally changing, leading to skepticism over the economic functions and roles that Hong Kong has played so far. This skepticism has grown stronger as economic entities leave Hong Kong due to changes in the business environment, and as Western countries seek to counter China and Hong Kong amid structural changes in the international order, such as the US-China strategic competition.

The problem is that these economic and social changes in Hong Kong can also affect the Korean economy through various channels. Hong Kong has been playing an important role in trade between Korea and mainland China, and many Korean companies and financial institutions have advanced into the region, and are engaging the region with active human exchanges such as tourism. Therefore, an in-depth and systematic analysis of the economic and social changes in Hong Kong is necessary for establishing and promoting Korea’s foreign economic policy.

Accordingly, this study aimed to empirically analyze the economic and social changes in Hong Kong based on various data accumulated over the past five years since the 2019 Hong Kong protests. In particular, it evaluated the changes over the past five years in economic fields such as the international financial hub and transit trade center, the external window and fund procurement function of the Chinese economy, the internationalization of the yuan, and the development strategy of the Greater Bay Area (粤港澳 大灣區, GBA). Based on this, the study aims to derive future prospects and implications for the Korean economy.

China, which has adopted a socialist system, and Hong Kong society under the one country, two systems (一國兩制) framework, are very organically linked to each other in the politics, economy, and society sectors. Although the primary aim of this study was to derive implications for the economic sector, it also comprehensively examined Hong Kong’s politics, economy, and society from a convergence perspective, analyzing the organic influence relationship between these sectors.

The following summarizes this analysis of the economic sectors on both sides.

First, Hong Kong continues to play a financing role for mainland China, which is expected to continue at least for the time being. There were concerns over prospective negative effects, such as a dampening of investment sentiment due to the enactment and implementation of the Hong Kong National Security Law, but Hong Kong’s FDI in China continued to increase, and Hong Kong’s share of China’s FDI from 2020 to 2022 remained higher than before COVID-19. In addition, Chinese companies are actively listing on the Hong Kong stock market and expanding their yuan-related businesses, attracting foreign investors who want to enter China through Hong Kong.

Second, the influence of mainland China in Hong Kong’s financial market is gradually strengthening, and this trend has become more evident since the 2019 extradition bill protests. The financial markets in mainland China, such as Shanghai and Shenzhen, have developed significantly as China’s economy has grown in scale, but they are following a different development path from the global financial market. This points to the crucial need for Hong Kong to play the role of connecting China to the rest of the world.

In the midst of this, the Chinese government is using Hong Kong to control the inflow and outflow of the yuan to promote the internationalization of the currency, leveraging Hong Kong’s status as both a part of its territory and an international financial hub. The Hong Kong government is also revealing its intent to strengthen Hong Kong’s position in the internationalization of the yuan and maintain its status as an international financial hub, and is expected to actively prepare measures to improve the convenience of financial transactions conducted in the yuan in the future.

Third, there have been some changes in how Hong Kong functions as a trade hub since the 2019 extradition bill protests. Hong Kong has been using mainland China as a manufacturing base supporting it, to which it has served as a trade hub that connects trade between mainland China and other countries. In this process, the proportion of mainland China among countries from which Hong Kong procures re-exported goods grew overwhelmingly high, but has been continuously decreasing, while the proportion of the United States has been rapidly increasing. However, this trend has become more pronounced since the 2019 extradition bill protests. While the proportion of procurement from mainland China has decreased rapidly over the past four years, the proportion of procurement from the United States has increased more than twice as fast over the previous period. In addition, the proportion of China as the target country (export destination) of Hong Kong’s re-exported goods has increased significantly since immediately after 2019.

Meanwhile, Hong Kong’s share of the world’s port container handling volume has been steadily declining since 2010, with no significant changes found since 2019. However, the share of mainland China’s port container handling volume has been rapidly increasing over the same period. In the world’s port rankings, Hong Kong was pushed out of the top 10 for the first time in 2023, while in contrast, six mainland Chinese ports, including Shanghai, Ningbo-Zhoushan, Qingdao, Shenzhen, and Guangzhou, were included in the world’s top 10 ports.

Fourth, it was analyzed that the integration between mainland China and Hong Kong is progressing step by step through the GBA, which refers to nine cities with high levels of economic development in Guangdong Province, Hong Kong and Macao. This regional integration policy was fully implemented in 2017 when the agreement was signed between mainland China, Hong Kong, and Macao. In this process, China is emphasizing the role of Hong Kong for development of the service industry in the construction of the GBA’s modern industrial system. It aims to build an international financial and logistics service hub centered on Hong Kong, and promote mutual development and cooperation in logistics, tourism services, culture and creativity, human resource brokerage services, convention industry, accounting and law, and other professional services centered on Guangzhou, Shenzhen, Hong Kong, and Macao. However, since this development strategy is still in the early stages of implementation, it is difficult to predict its effects, but we can expect for partial and limited market integration to be carried out centered on specific professional fields such as R&D and technological innovation, law, finance, architecture, and medicine.

This study predicted the future of Hong Kong by linking the results of this analysis on the economic field with the results of the analysis on the political and social fields, as follows. In particular, the content analyzed was reorganized around six factors: mainland China’s will, mainland China’s capacity, the characteristics of Hong Kong’s ruling class, public sentiment within Hong Kong, US-China strategic competition, and public opinion in the international community.

In summary, the major trend of Hong Kong’s “sinicization,” or integration of Hong Kong and mainland China, is likely to continue in the future, but there may be subtle adjustments in the speed of this process, depending on the direction of the US-China strategic competition, China’s economic situation, and changes in public opinion within Hong Kong. In addition, within this long-term major trend, Hong Kong’s economy is expected to continue to function as an international financial hub, play a leading role in the internationalization of the yuan, and function as a fundraising agent for the Chinese economy for a considerable period of time, but its presence is expected to gradually weaken as the Chinese economy develops. In addition, Hong Kong’s economic status is likely to be adjusted to that of a regional economic center in China, that is, the center of GBA, one of China’s regional development strategies, rather than its role in the overall Chinese economy.

In this way, since the 2019 extradition bill protests, Hong Kong’s politics and society have been showing signs of becoming more sinicized relatively quickly, while some changes have also been detected in the economic sphere, but Hong Kong still appears to be maintaining its various economic functions. Over time, Hong Kong is likely to transition into a role as a regional economic center within the Chinese economy, influenced by the long-term growth of China. Accordingly, we need to seek to strengthen cooperation with Hong Kong as a part of regional economic cooperation between Korea and China, and in the process, we need to strengthen cooperation with Hong Kong, focusing on industries in which Hong Kong is competitive or which it plans to strategically foster in the future. In addition, since Hong Kong’s economic function as an international financial hub is expected to continue for a considerable period of time, it seems reasonable to choose a policy direction that strengthens Korea’s financial competitiveness through financial cooperation with Hong Kong, rather than pursuing an impractical policy of seeking to replace Hong Kong.

India has pursued a unique, government-led model of digital transformation that stands in contrast to the market-driven approaches of many advanced economies. While other countries have relied on large tech firms to build their digital infrastructure, India has taken the lead in designing and operating its digital ecosystem through state-developed Digital Public Infrastructure (DPI). This model has become central to the country’s broader economic and social modernization.

At the heart of India’s digital strategy is the India Stack, a layered platform combining digital ID, financial inclusion via bank account access, and mobile connectivity. This architecture has significantly expanded access to public services and financial tools, including digital payments through the Unified Payments Interface (UPI). DPI has not only improved administrative efficiency but has also served as a public good, creating opportunities for innovation in the private sector. Furthermore, India is now promoting its DPI model as part of its international cooperation strategy.

This report provides a comprehensive review of India’s digital transformation policies and assesses their impact on both the economy and society. At the industry level, India lags behind in digital adoption compared to other major economies, especially in manufacturing. Key obstacles include limited digital infrastructure, financing constraints for small businesses, and a shortage of skilled workers. In response, the government has introduced various support measures to accelerate digital adoption in industry.

At the individual level, digital access has improved through the expansion of internet and mobile services. However, significant barriers remain—especially for women, rural populations, and those with low digital literacy—raising concerns about the persistence of a digital divide. Language diversity and educational gaps further complicate efforts to ensure inclusive participation in the digital economy.

Despite these challenges, the digital transformation has led to meaningful progress in financial inclusion. India has become a global leader in digital payment adoption, and digital ID systems have enhanced access to welfare services, particularly among marginalized communities.

In conclusion, India’s experience illustrates how government-led digital infrastructure can drive innovation, expand inclusion, and serve as a model for other developing economies. Continued efforts will be needed to overcome remaining gaps in industrial digitization and digital equity, but India’s strategy provides valuable lessons for shaping an inclusive digital future.

Coming into a period of major global transitions, China has been pushing for change in its economic growth paradigm. Due to changes in both internal and external economic environments—such as the deepening strategic competition between the US and China, fragmentation of supply chains, expansion of the concept of economic security, the rise of protectionism, slowing economic growth, an aging population, and the emerging risks in the financial sector—China’s economy is facing a variety of factors constraining its growth. In response to these limitations, China has announced promotion of the “new development pattern” through the “dual circulation” strategy, which emphasizes both domestic and international circulations. The Xi Jinping government sees the construction of the new development pattern as a next-generation economic growth strategy that can encompass the dialectical relationship between autonomy and openness, development and security, essential for realizing Chinese-style modernization and high-quality economic development.

Alongside this shift in China’s economic growth paradigm, reforms in the financial sector are also taking place. However, China’s financial development strategy under the new development pattern does not simply follow the financial development theories of Western countries, in which advanced financial markets are already established. The Chinese government aims to follow a strategy of “financial development with Chinese characteristics” and redefine financial practices that suit China’s national conditions. This report examines China’s emerging financial development strategies, analyzes the opportunities and risks posed by changes in China’s financial systems, and draws implications for future economic cooperation between South Korea and China.

Chapter 2 explores the relationship between China’s next-generation economic growth strategy, the new development pattern, and its financial development strategy, as well as the Chinese- characteristic financial development strategy proposed by the Chinese government. China’s financial reforms are centered on stronger regulatory systems, concentrated financial support for key sectors, and the creation of an all-encompassing financial procurement market. These characteristics are also evident in its distinctive financial development strategy. China aims to concentrate financial resources on real economy sectors that need investment to realize its ultimate goal of modernization, and the building of a powerful nation under the new development pattern. Simultaneously, under the leadership of the Communist Party, China seeks to enhance the level of financial supervision to manage and resolve economic risks and address the long-standing imbalances in the financial sector.

Chapter 3 reviews changes in China’s financial supervisory system and the background, current status, and policy direction of the three major financial risk management areas—real estate risk, local government debt risk, and small and medium-sized financial institution risk—one of the primary objectives of strengthening financial supervision. China’s financial supervision system has evolved from establishing a basic supervisory framework alongside the development of the financial market, proceeding through the stages of specialization, collaboration, and integration. In 2023, the “Party and State Institution Reform Plan” was announced, establishing a “one bank, one administration and one commission” supervisory system and institutionalizing the Party’s involvement in the financial industry, thus strengthening the central government’s role. The Chinese government aims to eliminate potential blind spots in supervision to address financial risks that constrain the growth of the real economy through stronger financial supervision. While this approach may effectively manage risks in the financial supervision sector, it could also lead to inefficiencies by causing imbalances in the allocation of financial resources. Furthermore, in the second half of 2024, China announced a variety of measures to stimulate the economy, including various financial measures to address the three major risks, including revitalizing the real estate market and reducing local government debt. These three risks are organically interconnected, and the expansion of one sector’s risks can spread to other areas. Therefore, comprehensive risk supervision and management are needed, rather than focusing on a single sector. Chapter 3 discusses and evaluates the main content of China’s financial risk management, considering these points.

Chapter 4 focuses on measures to reform China’s financial market and strengthen support for the real economy, analyzing the role of the central bank, improvements in monetary policy, supply-side financial reforms, and financial support for strategic industries. China is proposing improvements in the monetary policy transmission mechanism to address challenges such as difficulties in funding for small and medium-sized enterprises and credit tightness in the real economy. China prioritizes economic growth and contributions to the real economy as the main goals of its monetary policy. To reduce the gap between monetary policy goals and actual contributions to the real economy, the necessity of a shift in monetary policy tools is also suggested. However, the persistence of planned economy practices, such as providing interest rate benefits to state-owned sectors, is seen as limiting the effectiveness of China’s monetary policy reforms, which remains an issue in improving the monetary policy transmission mechanism.

In terms of financial support for strategic industries, China has sought to strengthen the capital procurement capabilities of strategic industries through government-led funds. Paradoxically, however, these government-led funds have become a means for the Chinese government to control the financial sector. Furthermore, the misallocation of funds due to a lack of adherence to market principles has led to indiscriminate investments, causing a decline in returns. There is also concern that the focus on strategic industries, such as semiconductors, has led to market distortions.

Chapter 5 begins with the question of whether China’s financial development is driving economic growth, and examines the impact of financial development on economic growth using the IMF’s financial development index. The study found that, from 1980 to 2020, the financial development index maintained a positive relationship with China’s economic growth over the long term, and the relationship was statistically significant. More specifically, the financial development indices such as financial institution depth (FID), financial institution accessibility (FIA), financial institution efficiency (FIE), financial market depth (FMD), and financial market efficiency (FME), but with the exception of financial market accessibility (FMA), maintained a positive relationship with economic growth. The conclusion is that, in the long run, China’s financial development has a positive impact on economic growth.

Based on stronger Party leadership, China’s financial development strategy in expanding support for the real economy, financial supply-side reforms, and financial risk management is interpreted as an attempt to expand the Party Central Committee’s authority for more effective and concentrated use of financial resources, and as a means to successfully implement the transition of China’s economic growth paradigm. However, stronger influence by the Party suggests that China’s financial industry may function more as an important tool for the national development strategy rather than an open and market-oriented reform. This could potentially expand the influence of state-owned securities companies in the capital market, which is currently relatively open, enhance the Party Central Committee’s influence in financial risk management, and concentrate financial resources on state-owned enterprises and strategic national industries. In other words, China’s financial market and system may become more characterized by planned economy traits rather than an open, market-based financial system. Therefore, South Korea must closely analyze the methods and intentions behind China’s strategy to become a financially strong country and formulate counter-strategies.

Chapter 6 presents the following implications for South Korea, based on the findings of Chapters 2 to 5:
First, South Korea must develop effective strategy from an economic security perspective in response to China’s expanding financial support for strategic industries. China’s current financial development strategy is characterized by the reform of state institutions rather than micro-level market institutional improvements. This shows that China places significant emphasis on development and safety in the financial sector, linking this with national economic security. If China continues to increase long-term financial investment in national strategic industries through these reforms, it could enhance its competitiveness in advanced industries. As the Party’s influence over financial resources becomes stronger, the distinction between state-owned and private enterprises in China’s market is becoming increasingly blurred, and Party organizations may influence internal corporate decisions. Thus, South Korea must formulate meticulous strategy to respond to stronger influence by the state on China’s industrial sectors.

Second, South Korean financial institutions need to reassess their response strategies in light of changes in China’s financial market structure and institutions. Going forward, China’s financial market will be influenced by a combination of open systems and regulated market environments. The emergence of super-regulatory agencies, such as the National Financial Regulatory Administration, could lead to exclusive support for specific industries. To avoid potential harm to South Korean businesses and financial institutions in China, the South Korean government must maintain close consultations with Chinese authorities.

Third, there is a need for in-depth diagnosis of the effects of financial reform and proactive risk management. Despite China’s strong commitment to managing financial risks, recent measures may not fundamentally address the risks themselves. Therefore, South Korea needs to conduct an in-depth diagnosis of China’s financial risk management measures and identify potential risks to the South Korean economy, preparing proactive response measures.

As North Korea continues to blockade its borders, it is difficult to study the North Korean economy. The purpose of this study is to analyze North Korea’s market activities by using satellite data in a new way and to identify the characteristics of market development over time. This study is different from previous studies in that it is the first to attempt a quantitative analysis of North Korea’s markets and logistics using satellite data. To complement the analysis of the market and logistics, this study also analyzes the changes in import, wholesale, and retail prices in North Korea, which is also different from previous studies in that it analyzes wholesale and retail margins for the first time to identify the role of wholesale and retail merchants.

The satellite data used in the study are SAR sensor data from the Sentinel 1 satellite and visible band data from the Sentinel 2 satellite, measured from 2017-23, and North Korean inflation data from November 2022 to July 2024. Other sources include North Korea-China trade statistics from China Customs and North Korean literature.

In Chapter 2, we interpret the North Korean authorities’ recent expansion of the socialist mercantile system and increased involvement in the market as an attempt to: absorb the market as a form of state mercantile system and socialist commerce; strengthen the state’s control and involvement in the market through the development of state-owned commerce; increase state revenues by attributing profits from private retailers to the state; and ensure the supply of goods to the North Korean people.

Chapter 3 develops logistics indicators (rail logistics indicators and road logistics indicators) using satellite data. This is the first study to develop logistics indicators for railroads and roads in North Korea. Trade statistics were utilized to verify the developed satellite indicators. The logistics indicators are expected to be useful in estimating the amount of consumer goods supplied to the market.The railroad logistics indicator declined from 2017 to 22 and then rose slightly in 23. Unlike the sharp drop in consumer goods imports due to the border closure immediately after the outbreak of the coronavirus, the train logistics indicator has gradually declined as North Korea’s consumer goods inventories have been gradually cleared. The road logistics indicator showed a contradictory change from the train logistics indicator, and it is unclear whether this is due to the substitution between rail and road or the unique characteristics of trucks. Using consumer goods imports and the market price index to analyze the relationship between logistics indicators and consumer goods supply, we conclude that the rail logistics indicator is a better proxy for consumer goods supply to the market than the road logistics indicator. Road logistics indicators need to be further studied and improved.

In Chapter 4, we develop an indicator of market activity using satellite data. This is the first study to quantitatively analyze market activity. The indicators show that North Koreans’ use of markets is seasonal throughout the year. Market activity decreases during the agricultural season in May and June, when North Koreans are sent out to work, and increases in the summer and fall. On an annual basis, North Korea’s markets appear to have been consistently active from 2017-2019, declining in 2020-2021, and then rebounding during 2022-23. To assess the reliability of the market activity indicator, we compared it to the Bank of Korea’s GDP estimates for North Korea’s service sector. The comparison shows that the market activity indicator and the service sector GDP in the transportation and telecommunications sectors in the ROK are very similar, suggesting that the market activity indicator is an appropriate indicator for monitoring market activity.

Chapter 5 analyzes import, wholesale, and retail prices to calculate wholesale and retail margins. While previous studies only analyzed retail prices, this study analyzed wholesale and retail margins separately to analyze the qualitative growth of the market. The results of the analysis showed that the market price was mainly influenced by import prices, i.e., the original price of goods. The wholesale margins were larger than the retail margins, so the influence of wholesalers on the market was greater than that of retailers. In addition, as the market environment deteriorated, wholesalers further expanded their margins, especially for agricultural products, further exacerbating price instability in the market. From this, we can infer that the better the supply of goods to the North Korean market, the more active the market, the lower the prices, and the lower the wholesale and retail margins. Conversely, as supply to the market decreased, the market slowed down, prices increased, and retail margins increased.

To summarize the above discussion, first, the North Korean market is active and growing in the medium to long term. The coronavirus quarantine and border closures have led to a temporary contraction and shrinkage of the market, but have not halted its growth and expansion. Second, the North Korean market has been characterized by an increase in the supply of goods, i.e., logistics supply, which leads to a decrease in market prices and an increase in market activity. Therefore, the North Korean authorities’ expansion of the state merchant system, i.e., strengthening management and involvement in the market, rather than shrinking/closing the market, seems to be an attempt to increase state revenues and ensure a stable supply of goods to the people by strengthening management and involvement in the active market and replacing some of the roles played by the private sector with the state-owned store network.

The contribution of this study is the novel use of satellite data. This study is unique in that it is the second study to explore the possibility of using satellite data other than nighttime illumination to provide a new view of the North Korean economy. However, the study of the North Korean economy using satellite data is still in its early stages and needs further validation and reliability through follow-up studies. We hope that many researchers will be interested in satellite data and conduct research.

India is a digital market with huge potential and influence. India is actively building a data governance system; Of all the digital policies currently in place or being established in India, about 25% (53 policies) are related to data governance. Against this backgroud, we study the data governance policies and regulations in India, as well as the cooperation between India and major countries, and cases of companies.

Chapter 2 analyses India’s top-level data policy framework that forms the foundation of the data economy and the data regulations that govern its implementation. India is considering a long-term, comprehensive data governance framework such as the ‘National Data Governance Policy (draft)’. It is also building a government-led data accumulation and utilisation system, India Stack. The establishment of a government-led data ecosystem is a key feature of India's digital transformation policy and has the potential to spread as an alternative to other latecomers to digital transformation.

India's data regulations are in line with global standards while seeking its own path. The Digital Personal Data Protection Act 2023 is business-friendly and avoids excessive restrictions. It is characterised by the introduction of a negative approach that allows cross-border data transfer in principle. However, sector-specific data localisation regulations are applied, and there are some parts that need to be specified in application. The Non-Personal Data Governance Framework (draft) announced in 2020 expresses the government's intention to create data platforms and data marketplaces, but further discussions are needed regarding the possibility of excessive restrictions. The Digital India Act (draft, 2023) is a comprehensive legal framework that responds to the rapid growth of new technologies and large technology companies represented by platforms. Through this, the regulatory environment for large technology companies in India will be newly established. It is likely that data regulations will be introduced for new technologies such as artificial intelligence, as well as transparency standards for data processing based on types of platforms.

In Chapter 3, we analysed the aspects of data governance in India expressed through digital trade policy. India has maintained a protectionist stance on data openness in WTO negotiations and bilateral trade negotiations with Australia and the EU. The US government has been raising the issue of data barriers with India, but given India's strategic importance, it is unlikely that the US government will exert bilateral trade pressure. However, it is likely that US companies will continue to raise issues and exert influence on India's data policy.

The EU and India are placing more emphasis on discussions about data governance in general rather than regulations, and it is expected that bilateral discussions will focus on areas where the interests of the two sides, such as artificial intelligence, coincide. It is noteworthy that the EU is responding to India's initiative to spread digital public infrastructure(DPI).

It is unlikely that Australia will be able to implement the liberalisation of cross-border data transfer and the restriction of data localisation measures in the CECA negotiations with India. However, Australia has been able to induce India to open up in the AI-ECTA service trade and financial services negotiations. Australia seeks to expand digital trade and data trasnfer with India and pursue institutional compatibility under the framework of strategic cooperation such as the QUAD.

Despite India's high economic dependence on China, it is likely to remain wary of China in the digital sector. In particular, Chinese companies’ investments in areas directly related to data security are expected to be treated with great sensitivity.

India is presenting Digital Public Infrastructure (DPI) as a key agenda at major international forums such as the G20 and the World Telecommunication Standardisation Assembly (WTSA-24), as well as multilateral forums such as QUAD, and is stepping up its efforts to make its DPI model an international standard. This is believed to be an attempt to expand India’s influence in the process of building digital infrastructure, especially in global south.

Chapter 4 synthesises the above research and presents policy implications. First, it is necessary to respond to the issues that may arise in the process of introducing data norms in India. The Digital Personal Data Protection Act (2023) provides separate regulatory grounds for large-scale data processing companies and does not clearly state the legal basis for data processing, which may cause uncertainty in corporate activities. The Korean government needs to pay attention to the list of countries that the Indian government plans to announce as data transfer restriction countries. The Digital India Act (draft) currently under discussion is expected to have a major impact on corporate activities by strengthening the transparency of data processing, with platform companies as the main target.

Second, we can consider indirect measures to make the activities of data-related companies freer through negotiations with India. Like AI-ECTA, efforts should be made to increase the level of openness of computer and related services, engineering and integrated engineering services, provision and transfer of financial information, and software provided by financial data processing. If the data related articles are included, it is possible to include a temporary clause as an intermediate step in the liberalisation of data transfer and data localisation, and to review it after the establishment of the India’s data system. Meanwhile, Korea needs to pay attention to strengthening cooperation between like-minded countries. Korea is already participating in the Korea-US- India iCET, and it is necessary to actively respond to the QUAD countries’ agenda for cybersecurity and DPI cooperation.

Third, digital cooperation with India requires the building of trust capital, and key area is DPI. India's DPI is a government-led model with no precedent, and is likely to attract the attention of developing countries. It is necessary for Korea to consider responding to the DPI cooperation agenda in the G20, ITU, UNDP, and QUAD. Korea should also pay attention to cooperation for the development, interoperability, and inclusiveness of DPI in developing countries. It would also be possible for Korea to cooperate with India in projects such as capacity building and expert exchanges for developing countries.

Fourth, Korea should seek cooperation in the digitalisation of the public sector in India using ODA. It is believed that cooperation can be found in tasks such as standardising data management, data security, building data platforms, and expanding public data accessibility, etc. In particular, the digitalisation of government services in the process of urban development in India is a field with high potential for cooperation.

Fifth, it is necessary to establish continuous bilateral contact platforms so that Korean and Indian policy makers can share the changing aspects of data governance. It is necessary to set current issues such as data and DPI as an ongoing agenda in channels such as the ministerial-level industrial cooperation committee between the two countries, which is scheduled to be established, and the established Korea-India Information and Communication Technology (ICT) Policy Council. Going further, the two countries could consider forming partnerships between relevant ministries and operating regular forums to exchange issues related to data governance. In addition, the difficulties faced by Korean companies entering India should be actively communicated through the Korea-India government-to-government dialogue channels, such as the Korea-India Fast Track Mechanism, Invest India, etc. Cooperation with a third country can also be promoted. Rather than the United States, which already has its own influence in India, cooperation with Japan may be more effective.

As major countries compete to deepen ties with ASEAN, the ASEAN Plus One (ASEAN+1) cooperation mechanism is poised to gain further momentum. In 2021, Australia and China established Comprehensive Strategic Partnerships (CSPs) with ASEAN, followed by the U.S. and India upgrading their relationships to CSPs in 2022, with Japan following suit in 2023. In 2024, South Korea also formalized a CSP with ASEAN, marking the 35th anniversary of the ASEAN-ROK dialogue partnership. Amid mounting challenges to ASEAN centrality arising from U.S.-China rivalry, ASEAN is likely to leverage the ASEAN+1 mechanism to attract greater engagement and cooperation from dialogue partners across the Southeast Asian region. Against this backdrop, this study aims to examine ASEAN’s dialogue partnership mechanisms and evaluate South Korea’s role within this framework. Through a comparative analysis of major dialogue partners’ cooperation initiatives and a perception survey of ASEAN experts regarding the ASEAN-ROK partnership, this study seeks to provide insights into enhancing South Korea’s engagement with ASEAN.

Chapter 2 explores how ASEAN manages its relationships with dialogue partners, highlighting the strategic objectives of its dialogue partnership mechanisms and their integration into ASEAN’s broader external relations strategy. The findings underscore ASEAN’s efforts to establish unified guidelines for managing dialogue partner relationships and apply them consistently across all partners. ASEAN develops cooperation agendas tailored to its specific needs and ensures that dialogue partners adhere to protocols established by ASEAN during negotiations. For ASEAN, the ASEAN+1 mechanism is prioritized not only for its efficiency but also as a means of safeguarding ASEAN’s central role in the region. It also serves as a tool to maintain a dynamic equilibrium, preventing any single dialogue partner from gaining excessive influence. These characteristics provide a clearer understanding of how ASEAN-led regional multilateralism functions and the recent increase in the number of CSPs established with ASEAN. In addition, ASEAN emphasizes openness-avoiding exclusion or discrimination against specific partners-as a core value in its dialogue partnership. It also requires dialogue partners to adhere to its self-defined procedural and substantive norms, collectively known as the “ASEAN Way.” These cooperation mechanisms reflect ASEAN’s dual objectives of preserving its centrality and maintaining autonomy in its external engagements.

Building on ASEAN’s emerging cooperation needs, Chapter 3 examines how ASEAN’s major partners advance their ASEAN+1 cooperation under the CSP framework. The analysis focuses on the U.S. and Australia’s tendency to prioritize ASEAN’s institutional capacity for community development. Both countries also focus on deepening collaboration in specific, targeted areas rather than pursuing broad, wide-ranging initiatives. In contrast, China channels substantial financial investments into fostering cooperation that directly serves its economic interests while carefully managing security issues with ASEAN. Japan adopts a blended approach, integrating elements of the U.S., Australian, and Chinese strategies. It supports institutional development for ASEAN’s community-building efforts and provides significant financial assistance, while distinguishing itself from China by promoting quality infrastructure. South Korea primarily directs its efforts toward economic cooperation but allocates fewer financial resources than China or Japan. Its initiatives are largely concentrated on bilateral projects that highlight its contributions, with less emphasis on strengthening ASEAN’s institutional capacity. Unlike the U.S. and Australia, which prioritize resource efficiency through targeted initiatives, South Korea takes a broader approach, engaging across multiple fields. While this approach showcases versatility, the lack of signature projects or standout initiatives that distinctly elevate South Korea’s visibility diminishes its overall impact. This underscores the need for a more strategic and systematic approach to ASEAN-ROK cooperation, from a long-term perspective.

Chapter 4 presents the results of a survey of ASEAN experts on dialogue partnerships and ASEAN-ROK relations, along with their key implications. The survey reveals that ASEAN places the highest value on economic cooperation and favors dialogue partners that implement programs aligned with its priorities. Japan (27.9%), Australia (17.8%), the U.S. (16.2%), China (10.3%), and South Korea (9.0%) were ranked as the most reliable partners for promoting regional peace and prosperity. While South Korea’s position behind Japan, the U.S., and China aligns with its relative economic scale and influence, its lower ranking compared to Australia—a fellow middle power with smaller financial contributions to ASEAN— highlights opportunities for improvement. South Korea could gain valuable insights from Australia’s cooperation model to maximize its impact and recognition across ASEAN. Meanwhile, South Korea’s strengths as a dialogue partner are most evident in economic cooperation, with 54.3% of survey respondents highlighting this area. However, respondents identified a “lack of strategic interest beyond the Korean Peninsula” and “overly cautious approaches to regional security issues” as key weaknesses, highlighting limitations in South Korea’s perceived reliability as a political-security partner. The top five most active areas of South Korea’s cooperation were recognized as trade and investment (19.6%), culture (15.4%), science, technology, and innovation (15.2%), education and capacity building (15.0%), and ICT and the digital economy (14.7%). These areas represent the fields where South Korea has actively focused its cooperation with ASEAN, garnering positive evaluations for its contributions to economic collaboration, cultural soft power, technological innovation, human resource development, and support for digital transformation.

Based on the findings from Chapters 2–4, Chapter 5 provides policy recommendations for South Korea to advance the CSP with ASEAN. First, South Korea should make greater efforts to work closely with the ASEAN Secretariat and support its capacity-building efforts in community-building. While the U.S., Australia, and Japan actively seek to incorporate input from ASEAN officials when identifying cooperative projects, South Korea has tended to propose its own initiatives aligned with ASEAN’s specific needs. Although these projects do address ASEAN’s priorities and are often practical and efficient in execution, this approach could lessen ASEAN’s sense of ownership over the initiatives. This perception may lead to South Korea being viewed more as a partner focused on delivering outcomes, rather than one genuinely dedicated to working collaboratively with ASEAN in planning cooperation projects. To address this, South Korea should actively collaborate with the ASEAN Secretariat to ensure its input is reflected in the selection and development of cooperative projects. Strengthening communication with the ASEAN Secretariat will also help South Korea better identify ASEAN’s most pressing needs. Additionally, prioritizing support for institutional foundations and capacity-building within the ASEAN Secretariat will strengthen ASEAN’s ability to drive its community-building efforts effectively. These measures will not only enhance ASEAN’s ownership of cooperation projects but also elevate South Korea’s standing as a key and trusted partner in the region.

Second, in formulating a new plan of action (POA 2026–2030) for the ASEAN-ROK CSP, South Korea should focus on developing a strategic framework that aligns with ASEAN’s needs while capitalizing on Korea’s competitive strengths, rather than simply expanding the number of projects across various fields. Limited resources should be concentrated on signature areas of cooperation where South Korea can make the most impactful contributions. Promising areas include digital transformation, science and technology, culture, and cybersecurity. Furthermore, South Korea should identify niche areas with high ASEAN demand and minimal involvement from other dialogue partners. An effective strategy could involve enhancing support for integrating and creating synergies across cross-cutting issues within ASEAN’s three communities. This approach would greatly enhance ASEAN’s ability to address complex, multifaceted challenges in a cohesive and effective manner.

Third, to deepen the CSP relationship, South Korea must establish itself as a comprehensive strategic partner by building trust and demonstrating its commitment to ASEAN’s broader priorities. Achieving this requires consistency and continuity in ASEAN policies, as well as strengthened institutional mechanisms through enhanced high-level and working-level consultations. Regular monitoring of the implementation of summit and ministerial outcomes is also critical. Additionally, South Korea should expand its engagement in the security sector, where its presence is perceived as weakest among ASEAN’s three communities. South Korea can contribute to strengthening the functions of ASEAN-led multilateral platforms, by taking the lead on specific agendas where it has expertise, including transnational crime, cybersecurity and defense industry.

This research studies the political economic determinants of protectionist trade policies by focusing on the role of domestic politics. The authors provide theoretical frameworks with empirical evidence, and expand discussions towards policy case studies of selected nations. This multi-dimensional approach broadens understanding on protectionist trade policy implementation of major trade partners of Korea. The authors provide implications for Korea’s policy reactions to its major trade partners.

Chapter 2 comprehensively reviews the theoretical discussions on the political economic determinants of trade policy. It includes literature on endogenous trade policy (tariff) formation theories and related empirical contributions which led researchers to construct stylized facts. Among the mechanisms reviewed in Chapter 2, Chapter 3 focuses on the median-voter approach and political support function approach in providing external validities with empirical evidence. Chapter 3 first estimates cross-country panel estimations with a sample from 141 nations from 1991 to 2019 by focusing on the tariff barriers. Estimations confirm that inequality mechanism is robustly supported by interacting with national factor endowment, while the mechanism through ideological orientation is not statistically confirmed. Chapter 3 extends discussions towards governments’ intervention on trade policies to incorporate the concept of non-tariff barriers. When the frequency of intervention is positioned as the dependent variable, the authors again confirm that the inequality channel is significantly identified.

Chapter 4 and Chapter 5 provide policy case studies by focusing on major trade partners of Korea: the United States, China, European Union, Vietnam, and Indonesia. For the United States, authors focus on the channel of lobbying, which has been the major source of interactions between policy makers and special interest. Chapter 4 analyzes firm-level and industry-level lobbying contributions of Korean special interests and draws comparisons with those from East Asian nations. For China, authors review historical developments of protectionist trade policies of the country, and how it is related to the strategic frameworks of the current Chinese administration. Chapter 4 provides case reviews on recent policies of China such as export controls on rare earths.

Moving on to the European Union, Chapter 5 estimates voter-level voting choice probabilities to identify whether individual attitudes toward climate change affect voting choice. By this estimation, the authors confirm that recent green trade barriers implemented by the European Union reflect domestic demands from voters. Individual views on climate change were a critical determinant of voting choice in recent elections. The qualitative analysis in Chapter 5 supports the findings by focusing on the European Union’s trade barriers on electric vehicles and the CBAM.

Chapter 5 expands the discussion to policy cases in Vietnam and Indonesia. An analysis is conducted on the political and economic background of anti-dumping duties on cold-rolled stainless-steel products to protect Vietnam’s steel industry, import regulations to protect the poultry industry, and export restrictions to promote the mining industry. For Vietnam’s anti-dumping duties on steel, it examines how the petitions from steel companies and the government’s intent to protect the steel industry interacted. Through interviews and literature review, Chapter 5 also investigates how Vietnam’s poultry industry protection plan and mining promotion plan were reflected in policy formulation. For Indonesia, the export restriction policy on raw minerals and resource nationalism can be understood in connection with populist agendas. Also, agricultural export and import restrictions have interdependently evolved with Indonesia’s food sovereignty discourse. Lastly, the chapter addresses the domestic background of Indonesia’s local content requirements, which posed significant challenges for South Korean companies, from the perspective of government-business interests.

Through the quantitative and qualitative analyses conducted in this study, the authors derive the following policy implications. To establish sustainable trade strategies for Korea, trade authorities must devote significant effort to understanding not only the economic constraints faced by counterpart countries but also their political constraints. This is because, in some cases, political constraints may serve as more binding restrictions than economic ones. By identifying the political and economic determinants of protectionist policies, it is possible to build a conceptual framework for forecasting and proactively addressing future protectionist measures, whether they strengthen or weaken.

To prevent Korean corporations’ lobbying activities in the United States from becoming politically biased or inadvertently delivering distorted messages to the U.S. political sphere, Korea’s trade authorities should consistently monitor these activities. This can be achieved through public channels, such as the Korea Chamber of Commerce and Industry, or private organizations, such as the Federation of Korean Industries, and efforts should be made to ensure political balance. Furthermore, the government and private sector must share the background and context of Korean corporations’ lobbying efforts to effectively align Korea’s trade policy responses with private lobbying activities. Based on the study’s analysis of China, the authors emphasize the critical importance of Korea’s ability to interpret the actions of the United States and China through a political lens. To this end, they advocate for the establishment or expansion of specialized economic security departments and organizations within relevant ministries and the Presidential Office of Korea. Particularly, as strategic competition between the United States and China intensifies, Korea must proactively leverage its increasing strategic latitude vis-à-vis China to formulate independent strategies.

Given that the European lobbying system differs structurally from its U.S. counterpart, it is necessary to reassess the current effectiveness of Korea’s communication channels with the EU. Specifically, evaluating which is the more effective channel—government-level communication or private-sector corporate communication—should guide the development of a collaborative government-private sector response manual for addressing potential escalations in EU trade barriers. In Southeast Asia, focusing on the political-economic context of protectionist measures in key countries such as Vietnam and Indonesia, Korea’s trade authorities should prepare a narrative emphasizing that expanding cooperation with Korea is free from the political constraints faced by Vietnamese and Indonesian authorities. For instance, as highlighted in Chapter 5, the Korean government should revisit Vietnam’s measures on the steel and mineral industries and Indonesia’s local content requirements to refine its trade negotiation strategies.

The sectors within Vietnam and Indonesia that the authors cover in Chapter 5 are sectors in which Vietnam and Indonesia have benefited significantly from Korean firms’ local investments in terms of supply chain and value chain development. Consequently, the argument that expanding cooperation with Korea aligns with Vietnam’s and Indonesia’s industrial protection and development objectives can be substantiated with quantitative evidence. To prepare for similar measures potentially emerging in Vietnam and Indonesia, Korean research institutions should preemptively conduct studies quantifying the industrial development effects induced by Korean firms’ local investments in these countries. Such studies would enable Korea to substantiate its claims with robust empirical evidence.

The global community is striving to establish a New Collective Quantified Goal on Climate Finance (NCQG) to support developing countries in addressing climate change. This research examines international efforts to mobilize climate finance and analyzes the scale of contributions from donor nations. It further suggests strategies for Korea to engage in future climate finance mobilization efforts.

Chapter 2 provides an overview of global climate finance discussions and mobilization efforts, while analyzing the key issues surrounding the NCQG. Although most parties agree that the primary purpose of climate finance is to support adaptation and mitigation activities, a universally accepted definition of climate finance remains elusive. Since the adoption of the United Nations Framework Convention on Climate Change (UNFCCC), the international community has been discussing climate finance as an effective vehicle to assist developing countries. Article 9 of the Paris Agreement also includes provisions on climate finance. Reports from the UNFCCC Standing Committee on Finance (SCF), the OECD, and the Climate Policy Initiative (CPI) indicate that global climate finance has primarily focused on mitigation efforts, even as the financial needs of developing countries for both mitigation and adaptation continue to grow. In 2010, developed countries committed to jointly mobilizing $100 billion per year by 2020 to support climate action in developing countries. However, given the significant financial demands outlined in developing countries’ Nationally Determined Contributions (NDCs), recent NCQG discussions have centered on key issues such as the providers of climate finance, the scale of funding, the scope and sources of support, its alignment with the Paris Agreement, and measures to transparency in finance tracking.

Chapter 3 reviews the literature and methodologies related to climate finance tracking and analyzes the scale of climate finance provided by donor countries, based on the OECD’s most recent five-year dataset. Bilateral flows include climate change support via the Rio Marker for climate change, while multilateral flows are estimated based on donor contributions to multilateral organizations and funds allocated for climate change. This analysis also includes private finance mobilized through public interventions by donor countries. Japan, Germany, and France have emerged as major bilateral donors. Since 2020, Korea has significantly increased its bilateral climate finance, providing an average of $1 billion annually, although only 28% and 32% of its support is reported as primarily targeting mitigation and adaptation, respectively. In terms of multilateral aid, the top four donors, including Japan and the United Kingdom, accounted for over half (52.4%) of total contributions. Countries that mobilized significant private climate finance employed various financial instruments to leverage private sector investments. Based on OECD data, Korea’s climate finance is estimated to range between $670 million and $1.16 billion.

Chapter 4 analyzes the climate finance-related strategies and policies of Japan, the United Kingdom, and Sweden, which are major donors of climate finance for developing countries. Japan has been the largest provider of climate finance among OECD DAC member countries in recent years. Japan is using transition finance instruments such as climate transition bonds to increase funding for green transformation (GX). In addition, it has been actively promoting emission reduction projects in developing countries and multilateral climate cooperation, especially with ASEAN. The UK manages climate finance in the form of ODA as International Climate Finance (ICF). Unlike other countries, it has developed a dedicated national strategy for ICF and evaluates its performance of support based on key performance indicators (KPIs). Additionally, the UK collects data on private climate finance and works to enhance developing countries’ access to climate finance. Sweden, while having a climate finance portfolio similar in size to Korea’s, demonstrates a higher level of private sector participation. It has successfully attracted private investment through guarantees and has established statistical systems and governance based on legal ordinances. These countries have commonly increased public climate finance, developed statistical systems, and strengthened efforts to mitigate private investment risks through development finance institutions (DFIs). However, they differ in their methods of aggregating climate finance data (e.g., the use of Rio Marker data and the application of various coefficient ratios by support purposes) and in their specific strategies for mobilizing private investment.

Chapter 5 analyzes the necessity and constraints of private climate finance, the current state and private sector strategies in the area of climate finance creation, and case studies on promoting the use of private resources. Globally, the importance of utilizing private resources has been emphasized due to the substantial gap between the scale of climate resources and investment demand, coupled with the challenges of expanding public resources. Given the nature of climate change projects, which primarily target developing countries, there are various constraints that hinder private sector participation, including general economic conditions, various policies and support measures, and the regulatory environment. Consequently, while the scale of private climate finance has gradually grown, it still lags behind the upward trend in public climate finance. Nevertheless, the private sector is actively working to reduce funding for fossil fuels and expand climate-related financial products by participating in diverse climate finance cooperation initiatives and implementing independent carbon neutrality strategies. Moreover, based on notable implementation cases in the international community, this study identified promising financial mechanisms, including pooled investment funds, green bonds, green securitization, and crowdfunding, to promote the use of private climate finance.

Chapter 6 reviews domestic climate finance policies and presents an approach for Korea to support global climate finance efforts aimed at assisting developing countries. It is essential to establish a foundation that enables Korea to contribute climate finance commensurate with its national capabilities, thereby contributing to global issues and simultaneously promoting domestic greenhouse gas reduction goals and the transition to a low-carbon economy. To achieve this, this study proposes the following policies and measures. First, policymaking must consider the entire lifecycle of climate finance, from mobilization to utilization and tracking. It is necessary to establish a system for Korea to strategically mobilize and utilize climate finance for international support, while closely monitoring and evaluating the support provided. Second, measures should be implemented to build a comprehensive climate finance statistics system to generate and manage statistical data. Third, it is crucial to identify the obstacles that hinder developing countries from effectively employing climate finance. Furthermore, public climate finance should be leveraged to mitigate the diverse risks that the private sector encounters in the early stages of investing. Fourth, it is also necessary to promote private sector financing through various financial mechanisms and to improve the financial support system. Finally, it is crucial to enhance domestic support for disadvantaged sectors and vulnerable groups impacted by the transition to carbon neutrality, and to allocate additional resources to facilitate the shift to a low-carbon economy.