Amid growing geoeconomic uncertainty and intensifying U.S.–China competition, the Bay of Bengal region has emerged as a new focal point for global production networks. Seeking alternative manufacturing bases beyond China, multinational firms are increasingly investing in coastal areas of India, Bangladesh, and Malaysia, regions that are rapidly integrating into Asia’s evolving “flying geese industrialization” pattern.

India’s coastal states exhibit distinct industrial profiles: Andhra Pradesh specializes in food processing, Tamil Nadu serves as a hub for automotive and electronics manufacturing, and Odisha and West Bengal host resource-based industries supported by abundant mineral and energy reserves. Bangladesh’s coastal zones are anchored in textiles and ship recycling while expanding into pharmaceuticals. Malaysia’s western region remains a critical node in the global semiconductor value chain.

Central and state governments across the region are implementing proactive industrial policies characterized by clear target sectors, investment incentives, institutional coordination, and detailed implementation roadmaps. Their two-track approach promotes both comparative advantage–conforming industries that build on existing strengths and comparative advantage–defying sectors that aim to move up the global value chain. Industrial park development is at the core of this strategy, offering concentrated, infrastructure-ready production bases designed to maximize agglomeration effects and attract investment.

The study identifies over 1,400 industrial clusters across the Bay of Bengal, with expansion occurring through two major patterns: (1) hub-and-spoke growth around established clusters and (2) corridor-based development integrating multimodal logistics infrastructure. While most parks are government-led, an increasing number involve private developers, often supported through public–private partnerships. Cluster ecosystems typically involve a network of industrial associations, resident firms, research institutions, and local organizations.

Although the region’s geopolitical landscape remains relatively calm, the Bay of Bengal nevertheless faces its own regional risks. Military and infrastructure competition among global and regional powers, illegal marine activities, and undersea cables are among the risk factors that could destabilize the Bay of Bengal’s value chain and production bases.

The report concludes with three key policy implications for the Korean government. First, provide Korea’s small and medium enterprises with detailed and practical information on the region’s industrial parks while offering financial and administrative support to those relocating production bases to the region in pursuit of greater economic security. Second, step up the monitoring of regional risks as the Bay of Bengal becomes an increasingly integral part of Korean companies’ global value chains. In addition to the geopolitical and infrastructural risks highlighted in the report, potential risks related to climate change could also have significant implications for regional supply chains, warranting the establishment of appropriate contingency plans in advance. Finally, mobilize Korea’s development financing to support the creation and management of industrial parks in the region. Korea’s development finance policy increasingly emphasizes scale, visibility, strategic value, and development impact, criteria that industrial park projects meet effectively. Supporting such projects directly or indirectly would not only strengthen local development outcomes but also provide enabling environments for Korean companies seeking to expand their presence in the Bay of Bengal.

This research project examines the current state of new knowledge creation from the perspective of global knowledge networks and analyzes the economic implications of participating in the so-called ‘innovation network.’ Policymakers have as a matter of course prioritized increasing their own country’s total R&D investment to advance technology and strengthen innovation. This research, however, asserts that in our current economic environment innovation cannot be achieved solely through the R&D of a single country, industry, or company. Policies must be formulated with the full understanding that innovation is shared and disseminated across borders—flowing from other countries and industries to new ones through various channels. For Korea, in particular, participating in these networks are critical.

Chapter 2 first lays out the background of our discussion. The theoretical model presented in the chapter highlights that in a closed economy, where all R&D is typically domestic, the impact of inefficient investment decisions is therefore relatively small. In an open economy, however, it warns that poor investment decisions have a much larger and more long-term negative implications on the entire economy. The model also points out a policy contradiction: despite arguing for the need to move toward the “global knowledge upstream,” supporting only “downstream” industries that yield immediate results is a short-sighted strategy. Against this backdrop, the theoretical discussion in Chapter 2 argues for two key policy directions: first, strengthening domestic R&D capabilities in the upstream of leading industries, and second, strengthening linkages with international, knowledge- leading countries and industries. This naturally leads to two critical questions: which future-oriented industries should we pursue, and with which countries must we strengthen our connectivity?

To answer the questions from Chapter 2, Chapter 3 first presents the “stylized facts” of the global innovation network. The presentation is categorized into five key areas: country-level centrality, the participation of major countries, shifts in citation relationships, the identification of leading technologies, and the patent activities of Korea and its firms, in particular.

Regarding the trends in technologies, it is noteworthy that the leading sectors within ICT are changing, while bio-healthcare and climate technologies are emerging as new leading sectors. Within ICT, the landscape has shifted over the past two decades: digital data processing (G06F) and digital information transmission (H04L) have become foundational. Conversely, the status of traditional manufacturing (Y10T) and older pictorial communication technologies (H04N) has relatively weakened. Also notable is the rapid advance of new leading sectors, including medical bio/healthcare (A61), climate technologies (Y02E), and specific ICT sub-fields like artificial intelligence (G06N, G06V) and data-based applications (G06Q).

Regarding the changing status of countries within the global innovation network, China’s rise since the mid-2010s is by far the most striking phenomenon. While the United States has maintained its leadership in the technology ecosystem, China is establishing itself as a major participant, transitioning from a “dependent chaser” to a “technologically self-reliant” economy. At the same time, a deepening of mutual interconnectedness between all countries also characterizes this shift. The innovation landscape, previously dominated by the United States and Japan, is now being reshaped by China’s emergence and the steady growth of Korea and European countries.

Chapter 3 also illustrates Korea’s evolving status within the innovation network. While a significant contribution gap remains compared to the United States or Japan, Korea has been advancing, surpassing Germany and the United Kingdom since the mid-to-late 2000s. Notably, in line with China’s own rise, Korea shows a trend of deepening technological ties with China, reflected in increased mutual citations.

Meanwhile, firm-level data reveal a unique shift in Korea’s patent network participation. The most conspicuous point is that Korean firms’ reliance on Japanese patents, which was overwhelmingly high in the 1990s, has been gradually decreasing. This decline was offset by an increase in citations of US firms in the early 2000s, and more recently, by a rapid increase in citations of Chinese firms since the early to mid-2010s. This evidence strongly suggests a structural change in the knowledge flow for Korean firms within the global innovation network. In terms of technology sectors, Korean patent applications are highly concentrated in semiconductors (H01L) and pictorial communication (H04N), a fact that closely aligns with the nation’s main export industries.

However, Korea’s patent trends appear to lag behind global innovation shifts. While applications in digital data processing (G06F) have risen rapidly since the 2010s, reflecting that global trend, Korea’s innovation status remains notably low in other booming sectors. Specifically, in the globally growing biomedical field, AI-based technology, and climate technology, Korea’s presence in the innovation network is not as high.

Regarding internal R&D activities, a positive correlation was confirmed between R&D expenditure and patent applications for active firms. Furthermore, a clear trend shows that innovation output, once dominated by large corporations, is increasingly shifting toward small and medium -sized enterprises.

The stylized facts from Chapter 3 naturally lead to two key questions. First, did participation in the innovation network and the expansion of citation linkages—a form of global knowledge sharing—actually contribute to new knowledge creation (i.e., new patent applications)? Second, did China’s rise within this network also benefit knowledge creation in other countries, such as Korea? These questions are addressed in Chapter 5.

Before the main analysis in Chapter 5, Chapter 4 investigates the impact of China’s rise on the global innovation network. It analyzes whether China’s emergence altered the network’s structure (specifically, inter-country citation proportions), when this impact occurred, and which policies were responsible. While China has a history of innovation -related policies, such as its 2008 “National IP Strategy,” the period around 2016—marked by “Made in China 2025” and the “13th Five -Year Plan”—is identified as a primary turning point. To verify this, the study analyzed the precise moment of a statistically significant shift by modeling patent citation shares with a Dirichlet distribution to detect a “change point.” The results show this structural change point aligns perfectly with the 2016 policy implementations. This alignment is strong evidence that China’s rise was not just a quantitative increase in patents, but rather a fundamental, policy- driven structural change described as a “realignment of influence.”

To answer the questions posed in Chapter 3, Chapter 5 analyzes the impact of global innovation network participation on the innovative performance (i.e., new patent applications) of firms worldwide. The analysis specifically segmented the impact of patents by the cited country—focusing on the US, China, and Japan—at the level of the citing firm. Building on the findings from Chapter 4, this chapter also focuses on the changes in China’s intellectual property systems after 2015. It provides a comparative analysis of how citing Chinese patents (or not) before and after 2016 affected the innovative performance of Korean firms. The results universally show that utilizing knowledge through the global innovation network contributes to increasing a firm’s total innovation output (the number of new patent applications). In an analysis that disaggregated the network by major countries to capture the specific effects on Korean firms, Japan was found to have the greatest positive impact on innovation performance, followed by the United States and China. However, as the stylized facts in Chapter 3 showed, the declining trend in citing Japanese patents must be carefully considered in policy discussions. Furthermore, regarding China’s rise in the global patent network and its growing contribution, Korean firms that cited Chinese patents showed a statistically significant increase in their total innovation output starting two years after the 2016 “change point,” compared to firms that did not. This suggests that China’s innovation-related “policy changes” are having a tangible impact within the network.

Chapter 5’s finding—that global innovation network linkages significantly impact national innovation and that China’s influence on Korean patents is rapidly growing—naturally leads to questions about a potential US-China fragmentation. Against the backdrop of expanding discourse on US-China decoupling since the 2010s, driven by geopolitical competition and the concept of economic security, Chapter 6 addresses this. It quantitatively analyzes what would happen if the US-China innovation network were exogenously and partially severed due to policy intentions. The analysis measures the effect on new knowledge creation not only in the US and China but also in closely linked countries (Korea, Japan, and the Rest of the World, primarily Europe). The results show that US-China fragmentation negatively impacts new knowledge creation for all participating countries. Crucially, this impact varies by time period, country, and technology. First, in all scenarios, the negative impact on US innovation performance is consistently the smallest. For other countries, however, the effects of fragmentation differ between 2010 and 2020. The negative impact on China, for instance, is smaller in the 2020 scenario than in 2010, suggesting that its strengthened domestic innovation capabilities have made it more resilient to external shocks. Conversely, the negative impact on Japan—a nation with a shifting status in the global network—appears to grow relatively larger over time.

In terms of technology, the field most affected by US-China fragmentation was telecommunications (H04), a sector with high influence across the entire network. Another interesting finding is that the specific fields impacted by this fragmentation have changed over time, reflecting evolving technology trends. For instance, the impact on medical fields (A61) has become much more pronounced in 2020 than in 2010; in particular, A61B (diagnosis, surgery, personal identification) was identified as the next most-affected field after telecommunications. Regarding Korea, the analysis suggests it has become relatively more resilient to the negative effects of US-China fragmentation over time, thanks to the strengthening of its own domestic innovation capabilities. However, a significant caveat remains: Korea’s innovation is highly concentrated in specific technologies. This means that if fragmentation were to target those particular fields, the impact on Korea’s new patent production would vary dramatically. It is crucial to note that if fragmentation occurs in areas where Korea has a strong leadership position—such as semiconductor-related technologies or image processing—the negative impact on the country would be disproportionately large.

Based on the analyses of this research project, Chapter 7 proposes a “Network-Linked Innovation Policies.” These directions can be viewed from three main perspectives:
1. Identifying Global Technology Trends and Strengthening Domestic Capabilities. The analyses clearly show that the global innovation network is driven by specific leading technologies, which change gradually over time. It also reveals that Korea tends to follow these global trends with a time lag. Policies must be data-driven to close this gap and set a forward-looking agenda.

2. Strategic Participation in and Utilization of the Global Innovation Network. A key factor in Korea’s rapid rise in innovation capacity was identified as its ability to effectively utilize accumulated foreign knowledge through the network, in addition to its own R&D. From a policy standpoint, Korea must identify which countries and which technologies offer the most beneficial cooperation for strengthening its innovation capabilities and then develop policies to support those linkages.

3. Contributing to Network Stabilization Through Global Cooperation. Although Korea’s innovation capabilities and its status within the global network are growing, the ultimate vision for a middle-power leading nation like Korea must be the stabilization of the overall rules-based international order. Especially in the current international trade environment, which is increasingly dominated by nation-centric policies, Korea must deeply consider what kind of international order it should pursue, with whom it should build it, and how.

Since the 2020s, the Japanese government has been actively implementing policies to strengthen its semiconductor supply chain, not only in response to geopolitical risks stemming from the U.S. Biden administration’s export restrictions on China but also from an industrial policy perspective. Among these, the supply chain strengthening measures under the ‘Economic Security Promotion Act’(enacted in May 2021), the ‘Semiconductor and Digital Industry Strategy’(announced in June 2021, and revised in June 2023), and the “Framework for Strengthening the AI and Semiconductor Industry Infrastructure” (announced in November 2024) are expected to bring about a major transformation in Japan’s semiconductor supply chain structure.

This study focuses on the Japanese government’s semiconductor industry revival strategy. First, it evaluates Japan’s semiconductor competitiveness based on global market share by product and manufacturing process, aiming to identify complementary areas from the perspective of the semiconductor ecosystems between Korea and Japan. Second, it focuses on the Japan’s Next-Generation Semiconductor Project(Rapidus) within Japan’s semiconductor revival strategy, aiming to identify areas that could broaden the horizon for industrial cooperation between Korea and Japan. Third, it analyzes Japan’s semiconductor supply chain structure from the perspective of external dependency to identify areas for cooperation between the Korean and Japanese governments in stabilizing the semiconductor supply chain. Finally, it examines the current state of semiconductor industry cooperation between Korea and Japan, focusing particularly on trade and investment relations, and conducts a quantitative analysis of the business activities and performance of Japanese semiconductor companies operating in Korea.

The analysis results can be summarized as follows. First, in analyzing Japan’s semiconductor industry competitiveness, it was confirmed that Japan maintains competitiveness in key semiconductor products—memory semiconductors, power semiconductors, CMOS image sensors, and MCUs—and semiconductor manufacturing equipment—thermal processing equipment, coaters/developers, cleaning equipment, mask inspection equipment, CD-SEM, and the semiconductor materials market, despite the absence of notable fabless companies and foundries in the semiconductor design and manufacturing sectors. Particularly in semiconductor materials, Japanese companies dominate not only the front-end process materials market, including silicon wafers, photoresists, high-purity cleaning solutions, CMP slurries, insulating film materials, target materials, and etching gases, but also the back-end process materials market, encompassing package substrate materials, dicing materials, bonding materials, and encapsulation materials. Second, it is no exaggeration to say that the success of Rapidus holds the key to Japan’s semiconductor industry revival strategy. Current challenges facing Rapidus include funding issues, mass production of 2-nanometer-class semiconductors, customer acquisition, and talent recruitment. Third, analyzing the changes in Japan’s semiconductor supply chain structure by examining the input structure of Japan’s semiconductor industry and the import structure of semiconductors during the period from 2018 to 2024, it revealed that Japan has a high degree of external dependence not only in the IC sector, but also in the semiconductor materials and raw materials sector. However, it was confirmed that in some material items, such as industrial plastic products and glass processing products, the degree of external dependence is low and the domestic production rate is very high. Moreover, Japan’s semiconductor import structure shows a very high dependence on Taiwan for finished semiconductor products, and for certain semiconductor raw materials, such as silicon carbide(China, 89%), phosphoric acid/polyphosphoric acid(China, 90%), fluorspar(China, 73%), hydrogen fluoride (China, 97%), and pyrophosphoric acid(Vietnam, 99%) exhibit extremely high import dependency on specific countries. Fourth, semiconductor industry cooperation between Korea and Japan was examined primarily through Korea’s imports from Japan and Japan’s direct investment in Korea. First, regarding Korea’s semiconductor imports from Japan, the impact of Japan’s export restrictions in 2019 was not significant, confirming that mutual dependence between semiconductor companies in both countries persists. Regarding Japanese companies’ direct investment in Korea, since the 2010s, investment in the chemical and electrical/electronics sectors has accounted for 60.0% of total manufacturing investment. This indicates that the Korean government’s foreign direct investment attraction strategy has been effective in attracting Japanese capital and technology. Furthermore, it was confirmed that Japanese chemical companies without major customers in Japan are expanding the establishment of parts and materials factories within Korea. However, quantitative analysis of 43 Japanese semiconductor materials, parts, and equipment companies operating in Korea also revealed the following characteristics and limitations of Japanese direct investment in Korea. First, investment is concentrated in semiconductor materials and manufacturing equipment. In technology cooperation, collaboration generally involves Korean conglomerates combining their production capacity with Japanese technology. Second, while sales of Japanese semiconductor companies in Korea increased by an average of about 20% annually from 2020 to 2023, and the number of employees also grew by about 15%, there was no statistically significant change in tangible and intangible assets. Third, it was confirmed that the economic activities of Japanese semiconductor companies in Korea positively influenced the business performance (sales) of Korean semiconductor companies. Based on these analytical findings, this study proposes two areas for Korea-Japan semiconductor cooperation: joint development of back-end packaging technology within Japan and collaboration in the AI semiconductor sector.

Amid accelerating global trend of green transformation to address climate change and digital transformation driven by technological progress, this report proposes Korea’s development cooperation strategies to promote an integrated green digital transformation in developing countries. Digital technologies are powerful enablers of green transformation—enhancing climate early warning systems, improving energy efficiency, and advancing smart grids—yet they also create new environmental pressures, such as rising energy demand and electronic waste. This duality calls for an integrated approach – the “green digital transformation” - that simultaneously advances “climate response by digital technologies” and the “decarbonization and greening of digital transformation” itself.

Although middle- and high-income developing countries increasingly demand both green and digital transformation, strategies and support for green digital transformation remain limited. This study aims to identify Korea’s policy directions as a member of the international community by analyzing international discussions, other donors’ approaches, and developing countries’ demands and needs. The analysis draws on cross-country indices, correlation analysis, donor policy and case reviews, and field-based studies. Chapter 2 identifies global disparities in transformation levels through cross-analysis of international indices. Advanced economies—especially in Northern Europe—perform well in both green and digital dimensions, while many emerging and developing countries remain unbalanced or lag behind. Correlation analysis reveals that higher levels of digital transformation are associated with increased per capita greenhouse gas emissions, but this effect diminishes when green transformation progresses concurrently. This finding underscores the importance of pursuing both transformations together to offset the environmental costs of digitalization. Countries with strong policy momentum and institutional coherence achieve better green transformation outcomes, confirming that political will and institutional strength are decisive factors. These results reaffirm that green digital transformation is not only a technological or industrial policy but also a core development agenda for sustainable and inclusive growth, emphasizing the essential role of development cooperation in bridging transformation gaps.

Chapter 3 examines post-pandemic development cooperation strategies of major donor countries. Australia and the United Kingdom position climate as a central development priority and digital transformation as an implementation tool, embedding climate safeguards into digital infrastructure projects. Germany treats both dimensions with equal priorities, supporting the application of innovative digital technologies for climate action while addressing digital divides. Donors increasingly link renewable energy expansion with digital monitoring, promote circular e-waste management, and engage startups through public–private partnerships. For Korea, digital transformation is a comparative strength within its ODA portfolio, yet integration with green initiatives remains limited. There is significant potential to expand cooperation in private-sector engagement, energy management, circular economy, and digital-climate governance.

Chapter 4 analyzes developing countries’ needs and constraints. While green and digital initiatives are often pursued in parallel, integration remains weak due to infrastructure, institutional, and financial barriers. Nonetheless, common demands are evident in areas such as smart grids and AI-based energy forecasting for renewable energy management, satellite and drone applications for climate monitoring, and greening ICT infrastructure through green data centers. Smart cities are emerging as integrated platforms combining both transformations. Korea’s experience in digital government, data governance, energy management, and environmental data systems provides a strong comparative advantage for cooperation in climate data platforms, renewable energy monitoring, e-waste management, and green data centers.

Based on these insights, Chapter 5 proposes a three-phase cooperation strategy for Korea. In Phase 1, efforts should focus on creating an enabling environment and mobilizing resources through policy and legal reforms, institutional capacity-building, and market awareness initiatives. Korea should offer policy advisory support on renewable energy, data governance, and e-waste management, linking these with pilot projects. Introducing a “green filter” into digital ODA programs can ensure systematic assessment of decarbonization potential, energy efficiency, and sustainability. Financially, Korea should strengthen ties with global climate funds and establish a Korea-led Green Digital Initiative as a cooperation platform.

In Phase 2, pilot projects financed by public funds can demonstrate feasibility and then be scaled up through matching funds, concessional loans, or PPP models. This phased approach allows public institutions to absorb initial risks while fostering private-sector participation. Priority countries should be selected among Korea’s key ODA partners with adequate digital and energy infrastructure, active KOICA or EDCF offices, and strong political commitment. Priority areas include energy, circular economy, and climate adaptation, including smart grids, AI-based forecasting, green data centers, and e-waste management.

In Phase 3, sustainability should be ensured through localization of operations and maintenance, performance-based grants, and public–private co-management models. Technology transfer and joint development of AI-, IoT-, and blockchain-based green solutions should be promoted, supported by intellectual property protection and long-term education and training systems linking universities, vocational institutions, and industries. Promoting startup and SME participation will help establish local innovation ecosystems. Finally, performance indicators for green digital transformation should be developed to support monitoring, reinvestment, and knowledge sharing through South–South cooperation and toolkits.

In conclusion, digital transformation has the potential to increase emissions, but when combined with green transformation, emissions decline significantly—demonstrating the value of integration. Political will and institutional coherence are essential for success, and development cooperation is pivotal in narrowing transformation gaps. By mainstreaming climate into digital development, mobilizing blended finance, and institutionalizing long-term integrated programs, Korea can diversity its coooperation approachees and contribute to balanced and sustainable green digital transformation worldwide.

Along with other major economies, India is actively promoting strategic industries as its broader efforts to secure supply chains and accelerate industrialization. Strategic sectors play a pivotal role in advancing the country’s long-term economic resilience and technology self-reliance.

This report focuses on six strategic industries: biotechnology, space, smart infrastructure, defence, electric vehicles, and semiconductors. It first examines data on trade, foreign investment, and research and development expenditure. With the exception of the biotechnology sector, India’s current trade competitiveness in these industries remains limited. However, recent foreign investment inflows and research development spending indicate strong potential for substantial growth across all six sectors.

An in-depth analysis of the Indian government’s industrial policies reveals a clear and proactive approach to fostering these sectors. The government has established comprehensive sectoral strategies and detailed implementation plans, while allocating significant resources through production- and consumption-linked subsidies, direct investment, and public procurement. Designated institutions have been tasked with managing and coordinating these efforts. A notable feature in India’s policy stance is its strong emphasis on mobilizing private investment, notably by easing restrictions on foreign direct investment inflows and vitalizing the startup ecosystem.

To date, cooperation between Korea and India in strategic industries has been limited. While several engagements took place before and after Summits in the 2010s, most projects lost momentum. Unlike other major countries, Korea currently lacks a bilateral framework or blueprint guiding cooperation with India in strategic sectors.

The report provides three policy suggestions.

First, establish a ‘Korea-India Strategic Industry Cooperation Initiative.’ This initiative should articulate the shared vision, principles, and objectives of the two countries, while identifying potential cooperation areas and responsible institutions. As a part of the initiative, Korea and India should also hold regular high-level policy dialogues to ensure sustained coordination and strategic alignment.

Second, support Korean companies’ participation in India’s strategic industries. Korean firms are showing growing interest in India’s strategic sector but continue to face regulatory and administrative hurdles. The Korean government should play an active role in addressing issues that individual companies cannot resolve on their own by engaging in close consultation with Indian counterparts. It should also assist Korean firms in accessing India’s industrial subsidies and foster stronger business networks by organizing regular events that connect Korean companies with key players in India’s strategic industries.

Finally, leverage development finance to promote industrial cooperation. Korea can use development finance to support projects that advance India’s strategic industries, particularly those related to smart infrastructure and industrial corridors. Such projects would not only contribute to India’s development goals but also create new opportunities for Korean companies seeking to expand their presence in India. Additionally, human resource development and startup support in strategic industries represent promising areas for Korea’s development finance engagement.

North Korea’s economic policy and its domestic and external strategies have undergone notable changes since the mid-2010s. The country faced a phase of “triple isolation,” precipitated by the intensification of UN sanctions in 2016–17, the breakdown of DPRK–US talks in 2019, and the closure of borders in response to COVID-19 in 2020. This period was marked by simultaneous economic, diplomatic, and physical crises, leading to compounded challenges for the regime. In response, North Korea has pursued greater centralization and resource concentration in select sectors to overcome these adversities, resulting in policy shifts emphasizing command management and targeted mobilization.​

This study aims to analyze the characteristics and impact of North Korea’s multifaceted crisis around 2019, identify the components of its new domestic and external strategies, and evaluate their outcomes using multi-source data—including satellite temperature and luminosity readings, media coverage, price indices, and trade statistics. Due to research limitations, the study mainly focuses on three domains of North Korea’s new economic strategy: production, consumption, and external relations.

A major contribution of this research is its assessment that the 8th Congress of the Workers’ Party of Korea in 2021 marked a clear break with prior strategies, introducing the “Comprehensive Socialist Develop- ment Line” or “Second-Phase Intensive Socialist Economic Development Strategy.” Another distinctive feature is the study’s quantitative evaluation of both policy effects and structural changes.

The structure of the research is as follows: Chapter 2 investigates the compounded crisis, its classification into economic, diplomatic, and physical isolation, and analyzes consequential changes in foreign currency acquisition—highlighting the increased role of illegal channels and centralization of foreign incomes. Chapter 3 explores the main features of North Korea’s new socio-economic strategy and institutional changes. Chapters 4 and 5 evaluate the economic implications of North Korea–Russia and North Korea–China cooperation using comparative trade analysis, RCA indices, and export price correlations, and examine industrial outcomes through sector-focused and media data approaches. Chapter 5 further analyzes commercial sector performance—including prices, retail margins, consumer imports, and satellite-based market activity indices—and uses ARDL panel models to investigate the pass- through effects of exchange rate policies.​

Quantitative findings indicate a recovery in DPRK–China trade to USD 2.2–2.3 billion by 2024, with DPRK–Russia trade witnessing rapid growth in agricultural and petroleum supply despite its overall smaller scale. Illicit trade and sanctioned labor dispatches reportedly continue. The “20×10 Local Development Policy” yielded partial positive effects, notably a 24% increase in regional nightlight during industrial construction, though long-term efficacy depends on resource stability. Structural changes in light industry sectors appear to be driving production downturns.

Within consumption and currency management, restrictive state initiatives—including the operation of state-run grain shops and the prohibition of food sales in general markets—have led to price surges and intensified shortages of staple goods. Although general consumer prices have not risen dramatically, expanded market margins indicate rising transaction costs, and the foreign exchange market remains volatile, with limited price transmission from market exchange rates to consumer imports.

In sum, North Korea’s new economic policy may survive in the short-term, but fundamental constraints and ongoing external shocks limit its sustainability. While the regime has leveraged opportunities such as the Russia–Ukraine crisis to cushion the economy, persistent institutional fragilities and external dependency point to significant long-term vulnerabilities. Russia-DPRK cooperation remains a conditional buffer stalled by broader strategic uncertainty, and continued regulatory excess and statistical opacity undermine effective policy outcomes.

In January 2026, North Korea is expected to announce a new five-year plan at the 9th Party Congress, determining whether current strategies will be prolonged or revised. Sustained performance may reinforce self-reliance and centralized control, while persistent stagnation might prompt expanded autonomy in enterprise and agriculture. In the face of adverse political or military developments, a full national mobilization could ensue. For South Korea, the findings underscore the need to revitalize humanitarian support and multilateral engagement, create indirect persuasion channels through global partners, and maintain active support for resumed dialogue among all key actors.​

The purpose of this study is to assess the supply chain risks of critical minerals that form the foundation of strategic industries such as electric vehicle batteries, semiconductors, and renewable energy equipment. Focusing on Korea’s “Top 10 Strategic Critical Minerals,” it identifies the import dependency structure and key partner countries, and proposes ways to strengthen supply chains through trade agreements. The analytical scope of this report follows the classification of Kowalski and Legendre (2023) and links raw materials, intermediates, and scrap by HS6 codes for each of Korea’s ten strategic critical minerals. The report consists of two main parts: a global supply chain and risk analysis, including Korea’s import structure (Chapters 2-3), and an agreement network, clause analysis, and strategic proposals (Chapters 4-6).

Chapter 2 analyzes the global supply chain structures and risks of Korea’s ten critical minerals. Lithium is supplied as raw ore from Australia and Chile, while China handles refining. Argentina and Zimbabwe have recently emerged as new suppliers, and the United States is pursuing localization efforts under the IRA. Nickel is mainly supplied by the Philippines and New Caledonia, while Indonesia has restricted ore exports and expanded intermediate production. The intermediates are exported to China for refining, and the final high-value-added products such as alloys are produced mainly in the United States and Europe. The Democratic Republic of Congo monopolizes cobalt ore production, with Canada and Finland handling most refining. In 2023, excess supply and weak demand contracted the market, while recycling activities centered in the United States and the United Kingdom expanded. Manganese production is concentrated in South Africa, Gabon, and Australia. China leads intermediate production but has reduced exports due to domestic prioritization. Japan and Spain supply high-purity refined products, while Indonesia and South Africa are expanding their smelting capacities. China dominates both natural and synthetic graphite production but began tightening export controls in 2023, prompting supply diversification. Tanzania and Madagascar have emerged as alternative sources, while Japan and Germany are expanding production of synthetic graphite based on technological advantages. For rare earths, China maintains dominance across all stages—from mining to permanent magnet manufacturing. In response, the United States and the EU have strengthened cooperation with Australia and Vietnam, while Malaysia has become a refining hub, and Myanmar and Laos have developed as chemical compound exporters.

Chapter 3 examines Korea’s import dependency for the ten critical minerals, classified by FTA status and supply chain stage. For lithium, imports are almost entirely from FTA partner countries, with dependence reaching about 99 percent for both lithium hydroxide and lithium carbonate as of 2023. While lithium hydroxide imports rely heavily on China, imports from Chile are increasing. Lithium carbonate remains concentrated in Chile and China. Nickel shows high dependence on non-FTA countries for ore imports but high FTA dependence for compounds. Nickel oxide and hydroxide are fully imported from FTA partners, while nickel sulfate and chloride record 93 and 85 percent dependence, respectively. Intermediates are largely imported from non-FTA countries such as Indonesia and Türkiye, and unalloyed nickel shows lower dependence (about 65 percent) on FTA partners. Overall, dependence on Chinese-refined nickel compounds stands out across product stages. Cobalt imports are mostly from FTA partners but are concentrated in a few countries. Concentrates, oxides/hydroxides, and scrap are wholly imported from FTA partners, while intermediates such as matte are 86 percent FTA-sourced. Imports of oxides/hydroxides are mainly from China and Belgium. Manganese ore and concentrate imports come 98 percent from non-FTA countries, predominantly South Africa; however, refined products such as manganese dioxide are nearly all imported from FTA partners, mainly China, Japan, and the United States. Graphite imports are highly concentrated by product in either China or the United States: natural graphite relies 97 percent on China, while “other forms” depend 80 percent on U.S. imports. Synthetic graphite imports show nearly full FTA dependence (over 98 percent), though electrode-grade imports are concentrated among a few countries, and other types remain China-dependent. Rare earth imports are almost entirely FTA-sourced, but actual supply remains concentrated in China and Japan, limiting effective diversification.

Chapter 4 analyzes the structure and evolution of global critical mineral agreement networks using IEA data. Before 2010, such agreements were few, but since 2021, networks have expanded rapidly through multilateral frameworks such as the Mineral Security Partnership (MSP) and the Indo-Pacific Economic Framework (IPEF), alongside numerous bilateral MOUs. Network analysis shows that the EU exhibits the highest centrality, acting as a core hub connecting resource producers and consumers. This indicates the EU’s elevation as a central actor in mineral supply chain governance, grounded in its extensive network of FTAs. The EU has introduced “Energy and Raw Materials (ERM)” chapters within FTAs that include export tax bans, non-discrimination in pricing, and binding ESG compliance obligations. Japan incorporates mineral-related provisions within Economic Partnership Agreements (EPAs), exemplified by the Australia-Japan EPA, which bans export restrictions to secure supply stability. Japan is also expanding mega-FTA negotiations with Latin American countries to enhance resource access. The United States has shifted from traditional FTA reliance toward leading multilateral initiatives such as the MSP or IPEF. The most notable development is the U.S.-Japan Critical Minerals Agreement (CMA), established in March 2023 under the Inflation Reduction Act (IRA). The CMA grants Japan FTA-equivalent status under U.S. law for EV subsidy eligibility and institutionalizes bilateral cooperation on critical minerals. Post-agreement data indicate a shift in Japan’s sourcing of five key minerals (cobalt, graphite, lithium, manganese, nickel) toward the United States and Canada, particularly in nickel and manganese imports. Following the IRA and CMA, Japanese investment in U.S. battery and material sectors increased markedly in late 2022 and 2023, while joint patent applications in mining, refining, and recycling also rose, reflecting deepening technological integration. These trends demonstrate that the CMA functions not only as a trade mechanism but as a combined platform for trade, investment, and technology cooperation aimed at realigning allied supply chains.

Chapter 5 proposes directions for agreement provisions supporting Korea’s critical mineral supply chain stabilization, investment protection, and skilled labor mobility.

First, institutional measures are required to mitigate sudden export restrictions by resource-holding countries. Cases such as Indonesia’s nickel ore export ban and China’s graphite export controls disrupt supply planning and investment decisions. Agreements should mandate advance notification (6-12 months) for new restrictions and provide a 2-3-year grace period for existing investors. Rapid consultation mechanisms—for instance, ministerial meetings convened within five days of a supply disruption—should be institutionalized to enable joint responses. Violations of export restriction obligations should be subject to dispute settlement under the WTO or the agreement itself.

Second, legal safeguards are needed to protect Korean investors against growing political and institutional uncertainty in emerging resource economies. Agreements should prohibit retroactive application of new regulations to pre-existing investments, define licensing procedures and responsible authorities across exploration, mining, and refining, and ensure transparency. Investor-state dispute settlement (ISDS) provisions must be included to address expropriation or unfair, inequitable treatment.

Third, mobility clauses are required to ensure deployment of technical personnel essential to projects. Due to labor and visa barriers, Korean skilled engineers often face delays in facility construction and commissioning abroad. Agreements should create special visa and work permit quotas for “core technical personnel” and establish mutual recognition agreements (MRAs) for Korea’s national technical licenses. While respecting local employment obligations, Korean specialists should be allowed to operate on-site for one to two years to provide training and technical transfer, linking labor mobility with capacity-building.

Chapter 6 synthesizes the results from previous analyses to classify potential counterpart countries into three categories and propose differentiated agreement strategies.

The first category, “strategic core partners,” includes Canada, the United States, and Australia—major resource holders and rule- makers in the global mineral governance system, as well as Korea’s key suppliers. Comprehensive, high-standard agreements anchored in international norms are recommended. Drawing from the U.S.- Japan CMA model, these should prohibit export restrictions, establish transparent investment screening and enforceable ISDS procedures, and include regulatory frameworks for MRA-based qualification recognition and fast-track visa issuance.

The second category, “supply chain and network partners,” includes Japan, India, the United Kingdom, Germany, and China. These countries possess advanced processing technologies and significant market influence. Agreements should pursue strategic reciprocity by requiring scientific justification and advance notification for export restrictions, modernizing existing Bilateral Investment Treaties (BITs) to clarify ambiguous clauses, and enhancing stabilization provisions. Labor mobility should focus on expanding joint R&D and technology exchange programs.

The third category, “resource-rich and specialized supply partners,” includes Indonesia, Chile, the Democratic Republic of Congo, South Africa, Brazil, and Vietnam. A development- cooperation-linked approach is most effective: combining Korean investment in refining facilities, technology transfer, and infrastructure assistance with commitments for stable resource supply. Agreements should incorporate MIGA’s political risk insurance (PRI) and link official development assistance (ODA) financing to reduce investment risks. Labor mobility measures should align with local training programs led by dispatched Korean technical experts.

Finally, the report presents overarching recommendations for future negotiation strategies.

First, ESG should be positioned not as a regulatory burden but as a tool for mutual cooperation, contributing to partner countries’ sustainable development while establishing resilient supply chains and responding collectively to G7/EU-led governance frameworks. Second, MIGA’s guarantee schemes should be institutionalized within agreements, embedding ESG compliance into project design phases to lower corporate investment risks.

Third, domestic policy instruments such as the National Resource Security Act should be aligned with external negotiation agendas on critical mineral designation, stockpiling, and recycling targets. Parallel efforts should include establishing HS codes and customs standards for recycled materials such as black mass.

Lastly, Korea should integrate and coordinate numerous MOUs and bilateral committees under a unified framework, ensuring coherence and performance monitoring. Drawing from the Korea-Australia example, accumulated public-private consultative mechanisms should be used to review implementation progress and connect new cooperation initiatives, ensuring that agreements deliver tangible results beyond declarations.

With the expansion of BRICS into BRICS+ in 2024, it has shown the potential for establishing a global order led by Global South countries. BRICs, officially launched in 2009 with four countries (China, Russia, India, Brazil), approved the accession of four new member countries (UAE, Egypt, Iran, Ethiopia) for the first time in 13 years since South Africa joined in 2011, and Indonesia formally joined as a member in 2025. Consequently, as of 2023, BRICS+ is a massive economic bloc, accounting for 28.1% of global GDP and 48.7% of the world’s population. Discussions are underway as to whether it will emerge as a new alternative to Western-centric economic cooperation, such as the G7, and the Bretton Woods financial order.

Particularly as economic and security cooperation with the Global South strengthens, centered around China and Russia, and the so-called Global South rises, BRICS+ is drawing attention as a focal point for Global South cooperation. China is expanding industrial, technological, financial, and supply chain cooperation with developing countries through initiatives like the Belt and Road Initiative (BRI), while Russia is expanding its influence centered on security cooperation. This has led the United States, among others, to closely monitor whether BRICS+ will bring structural changes to the international order. Especially in the 2020s, amid complex crises such as the COVID-19 pandemic, the Russia-Ukraine War, and the Israel-Hamas conflict, coupled with the escalating US-China competition, Global South countries are adopting diplomatic strategies that seek their own national interests by balancing between the US and China/Russia to diversify risks. Global South countries, including the new members, aim to achieve various goals — such as attracting domestic industries, acquiring technology, and securing stable supply chains — by strategically utilizing BRICS+. Recently, cases of South-South cooperation centered on BRICS+ member countries have also been increasing.

Against this backdrop, this study aims to derive policy implications for South Korea’s foreign economic policy by answering the following questions: (1) Why is BRICS+ expanding, and what are the motivations of the countries to join BRICS+? (2) Is strategic interdependence among BRICS+ countries increasing? (3) Will the economic power of BRICS+ in the global market be strengthened? (4) What are the future directions and challenges for BRICS+? Accordingly, this study focuses on 11 countries: the 10 BRICS+ nations and Saudi Arabia, which deferred its accession.

The expansion of BRICS+ was influenced by the rise of the Global South and the backlash against the Western-led international order. In particular, intensified Western containment of China and Russia provided the motivation for them to pursue the expansion of BRICS. The weakening of multilateralism and disappointment with Western leadership post-pandemic activated the discourse on the ‘rise of the Global South’, which led to high interest and positive responses from emerging countries regarding BRICS expansion. As Russia and China use BRICS+ as part of their strategy to counter the US, there is a view that sees BRICS+ as an anti-Western bloc. However, this dichotomous perspective has limitations, as it oversimplifies the complex participation motives of other BRICS+ members. It is true that BRICS+ member states are dissatisfied with the current order led by a few advanced nations. However, for original members like India, Brazil, and South Africa, as well as the new members, BRICS+ functions not as participation in an anti-Western coalition, but as a consultative body to reform the global governance system — which is unfair to developing countries — and to secure their own strategic and economic interests. Amid growing uncertainty in the international order due to the US-China strategic competition and the Russia- Ukraine War, many member states seek to use BRICS+ as a means for economic and diplomatic diversification. For example, BRICS+ provides Iran with a channel to bypass economic isolation, and offers Egypt and Ethiopia opportunities to receive financial support without relying on the IMF or World Bank. Furthermore, BRICS+ serves as a platform for countries like the UAE, which have felt marginalized in the Western-centric system, to enhance their global standing.

Above all, BRICS+ is becoming a key consultative body driving international cooperation that reflects the demands of the Global South. Member states are strengthening cooperation on common challenges for developing countries, such as climate change, health, and the eradication of hunger and poverty, in addition to calling for increased representation for developing countries at the IMF and reform of the UN Security Council. At the 2025 Rio Summit, they emphasized cooperation to protect the interests of the Global South, including a partnership to eradicate poverty, a declaration on climate finance, and the establishment of inclusive and fair global AI governance. This shows that BRICS+ is evolving from its existing financial cooperation into a multidimensional cooperative body representing the interests of the Global South across a wide range of fields, including health, climate, digital, and new technologies. Meanwhile, BRICS+ movements toward local currency settlement, the establishment of a grain exchange board, and cooperation in energy and advanced technology suggest the potential for economic solidarity among member states. Recently, the tariff policies of the Trump administration have also acted as an external factor promoting intra-bloc cooperation within BRICS+.

BRICS+ countries exert significant influence in the energy, critical minerals, and grain markets, as the membership includes major producers of crude oil, natural gas, and grains, as well as exporters of critical minerals. What is particularly noteworthy is the gradual increase in commodity trade among BRICS+ countries and the very low volume of trade with G7 nations. In other words, commodity trade between the G7 and BRICS+ is not active, which also suggests that the space for BRICS+ to align with the G7 during a complex crisis is diminishing. Meanwhile, commodity trade between non-BRICS+ Global South countries and BRICS+ is on an upward trend, which can be interpreted as the strengthening of BRICS+’s economic influence over the wider Global South. BRICS+ is strengthening cooperation on agriculture, energy, and critical minerals, and bilateral cooperation is also becoming more active.

In the manufacturing sector, China plays a core role in BRICS+ production, with over 83% of BRICS+ manufacturing exports originating from China. The countries with the next highest manufacturing export shares are India and the UAE, but their shares are very low compared to China’s. Consequently, manufacturing cooperation within BRICS+ is centered on China, and it should be seen that the Partnership on New Industrial Revolution (PartNIR), the Strategy for BRICS Economic Partnership, and the BRICS Industry Ministers’ Meeting are also, in effect, led by China. BRICS+ has expanded its export share to other BRICS+ members and third countries, centered on traditional manufacturing sectors like electrical/electronic equipment, machinery, and automobiles, with the export share of intermediate goods gradually increasing between 2013 and 2023. However, unlike the G7, the export share of capital goods has stagnated, suggesting that BRICS+ countries are engaged in cooperation closer to building a supply chain through intermediate goods trade, rather than acting as an export base.

Investment inflow into BRICS+ amounts to $330.6 billion (as of 2024), accounting for 21.9% of total global investment. Of this, China’s share alone accounts for 7.7% of the global total. In contrast, investment outflow from BRICS+ is only 15.1%, indicating a significant net investment inflow. The BRICS+ investment cooperation strategy is mainly composed of financial support through the multilateral financial institution, the New Development Bank (NDB), and investment cooperation via platforms (Business Council, Business Forum, PartNIR). In 2015 and 2021, they also agreed to promote investment among BRICS countries through the Strategy for BRICS Economic Partnership.

Meanwhile, contrary to concerns, bilateral investment among BRICS+ members is not large compared to their investments in the G7, and the investment sectors are also limited. An analysis of policy-driven investment trends, centered on sovereign wealth funds (SWFs), to gauge the investment policy direction of each BRICS+ government shows that major countries such as China, Russia, the UAE, and Saudi Arabia have recently been expanding their investments, focusing on advanced industries such as IT and bio industry. However, due to the nature of policy finance — seeking long-term returns — investments are heavily concentrated in politically stable and large markets like the G7 (especially the US and UK), suggesting limitations to bilateral investment cooperation within BRICS+. The reason for this phenomenon is that China and India are effectively the only countries within BRICS+ with high technological levels and large consumer markets, while the remaining countries have high demand for infrastructure and resource development. Financial cooperation among BRICS countries stems from the belief that their voting power in major multilateral financial institutions like the IMF and World Bank is low, and that the dollar-centric settlement structure can be disadvantageous due to factors like foreign exchange losses. In particular, after the financial crisis, restrictions on the voice of developing countries in the IMF and World Bank heightened the sense of crisis that the supply of international financial liquidity could operate primarily for the benefit of advanced nations. Consequently, China has long attempted to internationalize the RMB to reduce its financial dependence on the US, and RMB transactions have indeed increased slightly. In addition to traditional finance, BRICS+ countries have formalized the establishment of a BRICS digital payment network to expand digital financial cooperation, which is also linked to building a financial settlement safety net. Accordingly, the original five countries are leading the development and commercialization of CBDCs. BRICS financial cooperation is divided into emergency liquidity support (e.g., currency swaps, Contingent Reserve Arrangement), development finance through the NDB, and digital financial cooperation, and has produced various achievements.

However, as US countermeasures intensify in response to expanded financial cooperation, and the US formalizes the launch of stablecoins, challenges for BRICS+ financial cooperation are coming to the fore. Above all, the main challenges include: right-sizing the CRA fund to reflect the expanded membership and improving the efficiency of the risk management system; streamlining NDB voting rights; and building the digital infrastructure for the digital finance system centered on BRICS Pay and BRICS Bridge, as well as responding to stablecoins. Furthermore, the fact that countries like the UAE and Saudi Arabia use a dollar peg, and that their positions differ from those of Russia and Iran, which advocate for de-dollarization, is another factor to consider in the advancement of financial cooperation.

Based on previous analysis, this study suggests directions for cooperation between South Korea and BRICS+ countries, focusing on the future development path and challenges of BRICS+. First, BRICS+ is expected to develop in a direction that reduces economic dependence on the West. This can be seen as BRICS+ acting as an alternative cooperative body rather than an exclusive bloc. Accordingly, cooperation is expected to expand around: (1) strengthening economic cooperation in traditional industries, (2) leading global agendas that reflect the voices of developing countries (e.g., climate change, energy security, SDGs, poverty), and (3) expanding cooperation in advanced industries and technology. It is projected that the bloc-formation of BRICS+ will not threaten the existing international order system, contrary to some concerns. This is also linked to the following challenges. The main challenges facing BRICS+ are that member states have differing positions on the future direction of BRICS+, as well as on their stance toward the US, the accession of new members, and de-dollarization. The fact that they face US countermeasures, which also require a response, is another challenge. However, it is anticipated that as US containment of BRICS+ countries becomes more overt and its economic impact grows, it will create a space for BRICS+ countries to-solidify their solidarity.

Therefore, South Korea needs to strengthen: (1) expansion of minilateral cooperation, (2) joint responses to global agendas, (3) reinforcement of commodity supply chain cooperation, and (4) expansion of “software” cooperation to build cooperative networks with BRICS+ countries. However, rather than engaging with BRICS+ as a single bloc, it is necessary to maintain a direction that pursues South Korea’s economic interests through minilateral and bilateral cooperation with individual countries, while simultaneously expanding Korea’s economic footprint within the BRICS+ nations.

This study’s core objective is to identify the direction and policy tasks for a new Northern Strategy amid the shifting global order. This report focuses its analysis on three fundamental aspects, striving to ensure consistency within its content. First, it comprehensively examines the new external environment and conditions for cooperation between South Korea and Northern countries in the era of global order restructuring in 2025. Second, it comprehensively evaluates the 35 years of Northern Policy implemented since the establishment of diplomatic relations with the Soviet Union in 1990, identifying key achievements, challenges, and future cooperation needs. Third, based on these new demands for cooperation, it analyzes the economic impact of the Northern Strategy. By synthesizing the results of this analysis, it proposes a new direction for the Northern Strategy and a plan for managing neighboring countries.

Chapter 2 provides an in-depth examination of the structural changes in the global strategic environment and the new geopolitics of Eurasia. To deeply identify the key characteristics of the new foreign strategic environment and the conditions for pursuing the Northern Strategy, this study comprehensively analyzed the following: changes in the external environment and the direction of the new international order; alternatives to the post-Cold War system and the US's composite strategy; the rise of Eurasian regionalism and the changing external environment; and new dynamics and future challenges in Eurasian international relations.

Chapter 3 provides a comprehensive assessment of the Northern Policy over the past 35 years. It examines Korea's economic relations with key Northern cooperation partners—Russia, Mongolia, Central Asia, and the Caucasus—and identifies the growth goals and challenges these countries face amid a rapidly changing international order and uncertainty. This analysis aims to provide meaningful implications for formulating a new Northern Policy.

Chapter 4 examines the economic impact of the new Northern Strategy. To measure the economic spillover effects of cooperation with Northern countries, particularly Russia, we utilized a Computable General Equilibrium (CGE) model to analyze the GDP, total consumption, and total investment effects of each simulation of economic cooperation. Because partial equilibrium analysis may not adequately reflect the influence of markets, we examined the entire national economy through general equilibrium analysis. The countries analyzed included Russia, Central Asia (Kazakhstan, Uzbekistan, Tajikistan, Kyrgyzstan), China, and Mongolia. Specific targets and sectors were simulated based on existing research identifying areas with significant economic impact. Specifically, we analyzed the economic impacts of strategic industries such as logistics and power grids, energy and industrial cooperation, and ICT, as well as cultural exchange and tourism cooperation, where demand intersects. Based on this analysis, we aimed to identify areas of strategic cooperation that are expected to generate mutual benefits, including the potential economic spillover effects following the Russia-Ukraine War, such as the easing of sanctions against Russia.

Chapter 5 outlines policy implications of the research and proposes policy measures that take into account the new external environment. The most crucial element in formulating and implementing a new Northern Eurasian policy is the in-depth consideration of macroeconomic and structural factors. In other words, we must first understand the changing direction of the international order and its key characteristics to develop effective response measures. In this context, South Korea needs to consider the new challenges and cooperation needs of the countries of Northern Eurasia and formulate policies centered on strategic priority areas of cooperation.

This study examines the recent evolution of U.S. foreign economic policy, confirming through multiple sources that it is increasingly converging toward a stronger form of economic nationalism under the “America First” banner. It empirically evaluates whether major U.S. policies have achieved their intended economic outcomes and assesses their broader implications for Korea. Building on these findings, the study projects the likely trajectory of U.S. policy and derives implications for Korea’s trade, industrial cooperation, and collaboration with like-positioned partners.

Chapter 2 reviews the background and current direction of U.S. foreign economic policy. The Trump 2.0 administration’s approach represents a continuation of long-standing U.S. protectionism and isolationism, now reshaped into a 21st-century form of economic nationalism. Historical precedents include McKinley’s tariff policies and Reagan’s strategic protectionism, but current policies are more explicitly geopolitical—responding to China’s rise and global supply chain shifts. Under the four core themes of border security, energy independence, government reform, and value restoration, the administration is using Section 232, Section 301, and the IEEPA to enhance U.S. bargaining power while strengthening domestic manufacturing and tax bases through the One Big Beautiful Bill Act (OBBBA). The chapter also highlights the enduring anti-China orientation shaping U.S. policy since the Obama administration’s Pivot to Asia, sustained through both Trump and Biden presidencies. Recent U.S.–China tariff negotiations have only delayed, not resolved, structural trade frictions.

Chapter 3 presents empirical analyses of key policies. The Tax Cuts and Jobs Act of 2017 (TCJA) reduced U.S. outbound FDI but increased inbound FDI, indicating a re-concentration of global investment around the U.S. economy. This suggests that Korea must adapt its FDI strategies and risk management accordingly. The analysis of Section 301 tariffs shows heterogeneous impacts: while overall benefiting Korean exports, gains largely reflect indirect trade diversion amid heightened U.S.-China tensions. A qualitative comparison of industrial policies under successive administrations reveals that Trump 2.0 policy prioritizes shipbuilding, nuclear, and AI industries, while semiconductor and renewable sectors face greater policy uncertainty—underscoring the need for sector-specific strategies in U.S.–Korea cooperation.

Chapter 4 concludes that U.S. economic nationalism will intensify, with China containment at its core. The United States is expected to further promote domestic production in strategic sectors such as steel, autos, shipbuilding, semiconductors, and biopharma, while excluding China from key supply chains. Under Trump, unilateral measures such as tariffs, export controls, and investment restrictions will likely prevail, whereas a future Democratic administration may revive alliance- based approaches.