This study analyzes the impact of the 2015 Nepal earthquake on economic growth and evaluates the effectiveness of humanitarian aid in mitigating the damage caused by the disaster. In the aftermath of natural disasters, emergency relief funds are quickly allocated to support victims, particularly in developing countries that face challenges in responding to such crises. These funds help with immediate survival and recovery efforts while also contributing to societal stability and long-term reconstruction. As the frequency of environmental disasters increases due to climate change, the demand for humanitarian aid has grown significantly.

The economic impact of natural disasters varies depending on the affected country’s capacity and the scale of financial assistance it receives. Developing nations, with limited disaster response capabilities compared to developed countries, tend to experience more severe consequences. Emergency relief funds are designed to address this disparity, and their effect on economic growth can vary based on the scale of the funding provided. This study investigates the effects of the 2015 Nepal earthquake and assesses the role of emergency relief funds in mitigating the damage.

Chapter 2 of this study examines the concept and definition of emergency relief funds, provides examples of their application, and outlines their operational mechanisms. Emergency relief funds are established to provide rapid humanitarian assistance during emergencies such as natural disasters, wars, and accidents. These funds, sourced from contributions by international organizations, governments, and NGOs, are used for the provision of emergency supplies, recovery efforts, and medical assistance, ensuring the protection of lives and safety. One key example is the UN Office for the Coordination of Humanitarian Affairs (OCHA), which manages the Central Emergency Response Fund (CERF). This fund mobilizes resources during crises and issues Flash Appeals to the international community. Allocation plans are determined through discussions within the UN OCHA’s cluster system, where sector-specific agencies collaborate, exchange information, and make decisions.

Chapter 3 explores the economic impact of the 2015 Nepal earthquake, investigates potential resource allocation distortions, and analyzes the role of emergency relief funds. The study begins by identifying the earthquake’s impact on economic growth. According to the literature on natural disasters and economic growth, four hypotheses exist: the “trend recovery hypothesis,” where the economy temporarily declines but eventually returns to its original trajectory; the “irreversible loss hypothesis,” where the economy fails to recover; the “sustainable recovery beyond the trend hypothesis,” where the economy grows beyond its original trajectory due to disaster-induced reforms; and the “creative destruction hypothesis,” where the destruction of outdated capital leads to increased productivity. The findings of this study align with the “irreversible loss hypothesis,” as the affected regions in Nepal failed to return to their original economic trajectory, showing a relative decline compared to unaffected regions.

The economic impact of the earthquake was more severe in areas with a lower proportion of upper-caste populations compared to regions with higher proportions. Possible explanations for this discrepancy include imbalances in resource allocation or differences in disaster recovery capabilities. Upper-caste populations are more likely to have connections with groups responsible for resource distribution. However, this study finds no significant differences in the amount of emergency relief funds allocated between regions with higher and lower upper-caste populations. This suggests that the internal processes of UN OCHA, which assess sector-specific funding needs and priorities, minimize the potential for caste-based bias in resource distribution.

The disparity in disaster recovery capabilities could account for the differences in economic impact. In Nepal, caste-based differences in income levels, asset ownership, and access to information contribute to varying recovery capacities. The study further examines the effects of emergency relief funds, revealing that in regions with lower upper-caste populations, emergency relief funds positively affected economic growth, unlike in areas with higher upper-caste populations. This is attributed to diminishing returns on resources in regions with relatively lower human and physical capital. By focusing support on regions with lower upper-caste populations, more efficient and equitable outcomes can be achieved.

Executive Summary

Chapter 1. Introduction
1. Background
2. Objectives of the Study
3. Research Methodology
4. Chapter Composition
5. Research Limitation

Chapter 2. Overview of the 2024 Korea-Africa Summit
1. History of Korea-Africa High-Level Forums
2. Government-Level Strategies for Economic Cooperation with Africa
3. Comparative Analysis of Previous Korea-Africa High-Level Forums and the 2024 Korea-Africa Summit
4. Analysis of the 2024 Korea-Africa Summit Joint Declaration

Chapter 3. Korea’s ODA Strategies for Africa: Focus on the Key Agendas of 2024 Korea-Africa Summit
1. Rethinking the Underlying Causes of Africa’s Underdevelopment
2. Agricultural Development
3. Environmental Sector: Climate Change, Desertification and Deforestation
4. Urban Transportation: Intelligent Transportation Systems (ITS)
5. Supporting Industrialization through TVET Program
6. Healthcare
7. Digital Cooperation
8. Sharing Korea’s Development Experience with Africa

Chapter 4. Developing Government Support Strategy through SWOT Analysis for African Market Entry
1. SWOT Analysis for African Market Entry
2. Recommended Government Support Strategies Based on SWOT Analysis

Chapter 5. Securing Reliable Critical Minerals
1. Energy Transformation and Strategic Minerals
2. Supply Chain of Strategic Minerals
3. Strategic Minerals and Africa
4. Supporting Private Sector Mineral Development

Chapter 6. Leveraging International Development Financial Institutions
1. Constraints in Financial Support to Africa
2. Utilizing Development Financial Institutions (DFIs)
3. Examples of DFI Financial Support
4. Co-financing with Development Financial Institutions

Chapter 7. Conclusion

References

국문요약

Contributors

This report examines strategies for strengthening Korea’s economic and development cooperation with Africa, focusing on key agendas from the 2024 Korea-Africa Summit. The analysis covers critical areas, including agriculture, environmental issues, urban transportation, technical and vocational education and training (TVET), healthcare, digital cooperation, and the sharing of Korea’s development experience. Additionally, the report provides recommendations for securing reliable critical minerals and leveraging international development financial institutions to support cooperation efforts.
Africa faces significant agricultural challenges, including low productivity, limited use of modern inputs, poor infrastructure, and vulnerability to climate change. Customized smart farm solutions adapted to African contexts are necessary to support the establishment of agricultural processing facilities and cold chain systems. Korea can build partnerships to develop agricultural policies and regulatory frameworks, promote public-private partnerships in the agriculture sector, and support the development of agricultural research and extension services. This will improve irrigation and water management systems and promote the adoption of climate-resilient crop varieties and farming practices.
The Korea-Africa Partnership can address critical environmental challenges in Africa, including the impacts of climate change, desertification, deforestation, and loss of biodiversity. Various projects can be developed, such as reforestation, sustainable land management, and biodiversity conservation. Supporting early warning systems for climate-related disasters will benefit recipient countries. Training on environmental impact assessments and green growth strategies, promoting sustainable urban planning, and developing green infrastructure will also be beneficial. Korea can assist in implementing integrated water resource management approaches to promote circular economy initiatives and waste management solutions.
Rapid urbanization in Africa is creating significant challenges related to traffic congestion, road safety, and air pollution. Korea can develop pilot projects for intelligent transportation systems (ITS) in major African cities to support the development of bus rapid transit (BRT) systems, provide technical assistance for transportation master planning, and promote electric mobility solutions adapted to African contexts. Additionally, Korea can help develop non-motorized transport infrastructure (e.g., bicycle lanes, pedestrian walkways) and support capacity building for urban transport authorities to promote transit-oriented development approaches.
TVET is a top priority area for Africa’s skills development. TVET projects focused on key industries (e.g., manufacturing, ICT, agriculture) should support the development of national qualification frameworks and promote industry-academia partnerships for TVET. Korea’s ODA projects can include quality assurance systems for TVET to support the modernization of TVET infrastructure and equipment and promote entrepreneurship education within TVET programs, including e-learning and blended learning approaches.
Africa’s healthcare challenges include a high burden of infectious diseases, rising non-communicable diseases, and weak health systems. Projects should aim to strengthen primary healthcare systems, support the development of telemedicine and e-health solutions, and establish centers of excellence for specific diseases. Promoting pharmaceutical and medical device manufacturing capabilities through capacity building for health policy and management, along with community health worker programs and health education initiatives, is essential.
Digital transformation is urgently needed in African countries. Korea has developed a well-designed e-government system that is envied by many. African countries need to improve customs, procurement, statistics, and more. Partnership projects can develop innovation hubs and tech parks to provide technical assistance for ICT policymaking and regulation, promote digital financial inclusion initiatives, and support the development of digital content in local languages. Digital literacy programs targeting underserved populations will be necessary to promote the adoption of emerging technologies (e.g., AI, IoT, blockchain) in key sectors.
Korea’s development experience can serve as a benchmarking model for African countries. Korea’s Knowledge Sharing Program (KSP) includes economic planning, industrial policy, export promotion strategies, human resource development, public sector reform, governance improvements, science, technology, and innovation policies, among others. Korea-Africa partnership projects that adapt Korean development models will provide policy advisory services tailored to specific African countries. This will support the development of think tanks and policy research institutes and organize study visits and exchange programs for African policymakers and experts to explore the adaptation of Korean development approaches.
There is a growing concern regarding the security of critical minerals for the clean energy transition, highlighting Africa’s significant mineral resources. Korea can strengthen partnerships with African countries rich in critical minerals to support sustainable and responsible mining practices and assist in developing mineral processing and value-addition capabilities. This can include technology transfer in the mining and mineral sectors, developing transparent and effective mineral governance frameworks, investing in geological surveys and resource mapping, and promoting local content development in the mining supply chain.
Development finance institutions (DFIs) will be crucial for the Korea- Africa partnership to support economic cooperation. Improving co-financing arrangements with multilateral and bilateral DFIs can strengthen cooperation with the African Development Bank. This will utilize innovative financing mechanisms like blended finance and enhance Korea’s capacity to structure and implement complex development projects. Strategic partnerships with European DFIs with extensive African experience can strengthen Korea’s development finance institutions to better support African projects. Additionally, it can promote private sector participation through public-private partnerships and risk mitigation instruments.
The 2024 Korea-Africa Summit provides a strong foundation for deepening this cooperation. Moving forward, it will be crucial to translate the summit’s commitments into concrete actions and sustainable long-term partnerships. This will require continued high-level engagement, regular policy dialogues, and the establishment of effective implementation mechanisms.

India’s state enterprises, or central public sector enterprises (CPSEs), are playing a key role in numerous industries. Although the country began its economic liberalization in the early 1990s, large-scale privatization did not gain momentum due to strong political and societal opposition, allowing CPSEs to maintain their pivotal position within the Indian economy. Starting from the mid-2010s, the number and total size of CPSEs increased as the Narendra Modi government actively mobilized these enterprises to pursue economic development. As of 2022, there were 389 CPSEs with total revenues exceeding 30 trillion rupees (approximately 350 billion dollars).

This report focuses on the agriculture-related sector, electric power sector, transport infrastructure sector, energy, minerals and metals sector, and defense sector as promising areas for Korea-India cooperation. It examines the role and key projects of India’s major CPSEs within these industries. Major CPSEs were selected based on indicators such as assets, revenues, and employment, as well as their roles in government development strategies. The report finds that major CPSEs play a crucial role in all five selected sectors. CPSEs in the agriculture-related sector are prominent players in fertilizer production, food trading, and food storage. In the electric power sector, CPSEs are leaders in thermal and nuclear power generation. CPSEs are also in charge of significant public transport infrastructure projects in the road, rail, port, and airport segments. In the energy, minerals and metals sector, CPSEs hold substantial shares in upstream and downstream businesses. Defense CPSEs lead the domestic production of military vehicles, ships, and aircraft.

While the Indian government actively employs CPSEs for development, it also recognizes the importance of the private sector. To attract private investment, the government has been improving the business environment by easing regulations and strengthening infrastructure. Moreover, it has been encouraging cooperation between CPSEs and international companies and organizations.

This report analyzes a set of case studies involving CPSEs and international companies or organizations. These cases can be divided into two areas: industrial cooperation and development cooperation. In the area of industrial cooperation, the goals of CPSEs include gaining access to advanced technologies and capital while strengthening supply chains. In comparison, external partners seek to leverage CPSEs’ local knowledge, networks, and market access. In the area of development cooperation, major advanced countries’ development agencies and global development financial institutions have been expanding funding to India with CPSEs charged with the execution of numerous development projects.

India is a pivotal partner in the Indo-Pacific era. As Korea seeks to strengthen its partnership with India, the most populous country in the world and soon to be the third-largest economy, the Korean government and businesses can consider cooperating with India’s CPSEs. Based on in-depth analyses of CPSEs, this report suggests five strategies referred to as the 5Ms (Monitoring, Meeting, Marketing, Matching, and Metamorphosis) to enhance relations with these enterprises.

First, Korea’s government institutions and industry associations need to strengthen their monitoring of India’s CPSEs. To prepare for potential disruptions in key natural resource supply chains, a monitoring team can be tasked to collect information on CPSEs with increasing influence in the global commodities market. Additionally, the team can gather critical information on India’s major development strategies and projects by monitoring CPSEs. As state enterprises play an important role in several large emerging economies, these monitoring activities should be extended to these countries.

Second, while India’s CPSEs actively cooperate with international companies and organizations, their interaction with Korea remains limited. To address this, Korea could organize “State-Enterprises Meetings” with Indian counterparts as an initial step toward collaboration. In these meetings, high-ranking officials from both countries’ state enterprises can discuss India’s development challenges and industrial trends and explore potential areas of cooperation. Korean companies could also identify solutions for some of the obstacles they face in India.

Third, the Korean government could support the marketing activities of Korean businesses aimed at CPSEs, which serve as important contractors in large projects in India. The designated organization would collect and provide information on CPSEs’ contractual relationships, purchasing intentions, and tender regulations as well as arrange seminars and exhibitions aimed at promoting Korean products to CPSEs.

Next, the Korean government could establish a unit responsible for identifying and designing potential cooperation projects by matching the needs of both India and Korea. This team, composed of industry and development experts, would plan cooperation projects aligned with the development strategies of both countries. Given that government-initiated projects involving India’s CPSEs tend to proceed relatively quickly, the team would benefit from close consultation with these enterprises in its search for potential areas of cooperation.

Finally, the report emphasizes the need for a metamorphosis in the Korean government and businesses’ approach to India. Korean businesses should seriously consider expanding local manufacturing capacities, while the Korean government needs to diversify development cooperation tools. With the Indian government advancing its industrialization strategy, Korean businesses targeting India’s vast market are advised to establish local manufacturing facilities. As CPSEs strive to increase indigenization in line with government policy stance, local production will be particularly important. Turning to the role of the Korean government, it could learn from major development finance institutions and policy finance institutions that utilize diverse tools to cooperate with India’s CPSEs. It could also expand its portfolio of policy tools by incorporating guarantees, debt and equity financing, and triangular cooperation mechanisms in addition to grants and concessional loans.

The Latin American region, while still abundant in fossil fuels, is also regarded as having significant potential in the renewable energy sector. The global transition to renewable energy presents an opportunity for industrial development in Latin American countries, which hold comparative advantages in this field. Many Latin American countries possess strong cost competitiveness in solar and wind energy. These global needs, coupled with the region's strengths, underline the necessity of fostering green energy. However, it is evaluated that the conditions required to realize these goals are not fully in place, necessitating responses through international cooperation. This study aims to analyze the current status and institutional foundations of the green energy industry in Latin American countries and, based on this analysis, propose directions for the advancement and cooperation of Korean companies.

This report seeks to understand the structure of the green energy industry in Latin America, focusing on solar, wind, and hydrogen energy, and to explore pathways for Korea's cooperation with the region. It especially highlights Chile, with its significant advantages across all renewable energy sectors and high political stability; Brazil, with the largest market in Latin America and strengths across almost all energy sources; Mexico, which ranks next in market size and holds great potential in solar energy; and Colombia, where energy accessibility is a major issue and official development assistance (ODA) could serve as a key cooperation channel.

Chapter 2 provides a macro-level discussion on the energy transition in Latin American countries. By examining shared and persistent characteristics, it identifies factors to consider for the development of the green energy sector and collaboration with Korea. It points out that underlying the region’s longstanding issues of low growth and inequality are problems in the corporate growth ecosystem, particularly institutional issues such as favoritism toward state-owned enterprises. Many Latin American countries find it difficult to meet energy transition demands on their own, requiring external investment. However, outdated institutional factors in Latin America are likely to continue to act as barriers to attracting investments for energy transition and green energy development.

This chapter also delves into the green energy potential of Latin America. According to IRENA (2023), countries like Brazil, Chile, and Mexico have significant cost advantages in the solar and wind sectors. Northern Chile, Peru, and Mexico hold immense potential in solar energy, while the Patagonia region (southern Chile and Argentina), parts of Colombia, and eastern Brazil excel in wind energy. Additionally, Brazil and Argentina are well-suited for bioenergy production using agricultural resources. These diverse renewable energy resources contribute to the region being one of the largest renewable energy producers globally.

The study highlights the role of hydrogen as an energy source for achieving carbon neutrality, with particular attention to green hydrogen (produced using renewable energy), which is attracting the interest of many companies and nations. Latin America, with its abundant solar and wind resources, has the potential to supply electricity for hydrogen production at the lowest global cost and aspires to become a leading exporter of green hydrogen. Emerging international hydrogen industry platforms, including the Global Hydrogen Council, could facilitate Korea’s collaboration with Latin America in this field.

Lastly, the issue of a just and equitable transition is emphasized not merely as a social concern but as a practical challenge that significantly impacts the identification and execution of projects. International organizations like the Inter-American Development Bank (IDB) are focusing on technical cooperation to support a fair transition. While private companies may concentrate on business aspects, governments and public sectors need to take responsibility for related areas, such as community development, and actively consider relevant models.

Chapter 3 explores Korean companies’ perceptions of the renewable energy industry and Latin America’s potential, based on a survey of 100 professionals from diverse energy companies and institutions in Korea. While respondents generally recognize Latin America’s cost advantages, they do not view it as a critical strategic region. This is attributed to not only a lack of information but also challenges such as political instability, licensing issues, and land ownership disputes in the region, underscoring the need for policy responses.

The chapter also examines the technical advantages of Korean companies to identify comparative strengths. In solar energy, midstream and downstream capabilities stand out, while in wind energy, partnerships with European firms are suggested as a key strategy. In the hydrogen sector, Korean firms are recognized for their strengths in hydrogen-powered vehicles, tankers, and ammonia co-firing technologies.

Chapter 4 provides an in-depth analysis of Chile, Brazil, Mexico, and Colombia and proposes strategies for cooperation. Chile is identified as the most favorable country for entry due to its excellence in both solar and wind energy, clear hydrogen-focused policy direction, and proactive stance on foreign investment and collaboration. The report suggests positioning Chile as a hub country, offering an empirical model for other Latin American nations. It emphasizes establishing stable domestic and international demand plans, leveraging Chile’s interest in securing customers, and building long-term relationships through human exchanges and joint research.

For Brazil, while it is the largest economy in South America, significant challenges such as foreign exchange risks and a lack of information and relationships are noted. The report proposes a detour strategy through partnerships with European companies already established in Brazil and suggests targeting unique growth areas like biofuels and internal combustion engine components.

In Mexico, despite its technical potential, the report anticipates that regulatory practices favoring state-owned enterprises will remain entrenched. It recommends focusing on small-scale distributed energy markets and energy demand along the U.S. border. For Colombia, the report highlights the country’s market-friendly policies and status as a priority ODA partner. It advocates for continued ODA projects targeting regions excluded from the power grid and active involvement in Colombia’s hydrogen energy plans.

Chapter 5 synthesizes the findings to propose strategic cooperation directions for the four major countries and draws lessons from the collaboration approaches of other donor nations. A key feature of advanced donor nations’ energy policies is the integration of energy cooperation with other development projects. Many countries are implementing policy-oriented ODA projects to drive the entry of their domestic firms. Energy cooperation requires not only private investment but also government collaboration, necessitating comprehensive partnerships, including policy coordination. Korea’s experience with initiatives like the Knowledge Sharing Program (KSP) and the Energy Industry Promotion Program (EIPP) offers advantages. However, Korea’s relatively short history of collaboration with Latin America suggests the need to focus on partnerships with willing countries in the region or to actively pursue collaborations with European nations or international organizations that have longstanding relationships with Latin America.

Lastly, the report highlights policy recommendations, including the identification of cooperative projects through international organizations like CABEI and IDB, strengthening intergovernmental cooperation through knowledge sharing and joint research, and improving internal feasibility studies for business development in Latin America.

The green transition and shifts in industrial paradigms have intensified the global competition for critical minerals essential to renewable energy systems and electric vehicles. The rising demand for these minerals has created more complexities for global supply chains, presenting greater challenges compared to the era of fossil fuel. In response, both mineral producers and consumer countries are formulating strategies to enhance economic security and diversify mineral supply chains, promoting public-private partnerships as well as bilateral and multilateral cooperation.

With its abundant reserves of these minerals, Africa is emerging as a key partner for economic diversification. Major mineral-rich African countries are revising mining-related laws and regulations to attract foreign investment and secure the needed increase state participation in the mining sector. Meanwhile, major global economies are bolstering diplomatic ties with these countries while supporting private investment into Africa. However, the expansion of the mining activities for critical minerals has led to various environmental and social concerns including human rights abuses, environmental degradation, and corruption in Africa. Consequently, establishing responsible and ethical mineral supply chains is important for achieving a just transition.

This study explores the potential for Korea to strengthen its partnership with Africa in securing supply chains of critical minerals. As a country heavily reliant on imported minerals, securing stable supply chains is vital to Korea’s economic resilience. Fostering cooperation with Africa, particularly in the development of graphite and rare earth elements, is crucial for maintaining stability in the supply chains of batteries and electronic vehicles, which are central to Korea’s economy.

To enhance Korea-Africa cooperation in the critical minerals sector, this study outlines three key strategies for the Korean government. First, policymakers must develop approaches tailored to Africa’s unique regional characteristics, and pay close attention to the shifts in the priorities and policy directions of African partner countries. Second, efforts should be made to revitalize resource diplomacy, strengthening bilateral cooperation with African mineral- producing countries while engaging in multilateral cooperation with global partners to complement Korea’s capabilities. Third, expanding financial and non-financial support will be essential to incentivize the private sector to engage in mineral resources and infrastructure development in Africa. Diversifying funding sources and bolstering the operational capability of support institutions will be instrumental in achieving these goals.

South Korea, with its heavy economic reliance on international trade, has undergone significant changes in its labor market due to trade shocks. Since the early 2000s, for example, the rapid economic growth of China and Vietnam has dramatically increased trade volumes between these countries and Korea. This surge has notably altered Korea’s industrial employment landscape, affecting worker income levels and job security. Workers in industries facing heightened import competition from China and Vietnam have experienced diminishing earned income growth rates and an increased risk of involuntary job loss, while those in industries with rising exports to the countries have benefited from enhanced income growth and job stability (Koo and Kim 2020, Koo et al. 2022).

This study aims to investigate how South Korean workers have transitioned across industries and occupations in response to trade-induced shocks resulting from the economic rise of China and Vietnam. It assesses whether the Korean labor market has efficiently realigned labor from industries at a comparative disadvantage to those at a comparative advantage, given the evolving trade structure. ​The study further explores the mechanisms through which these labor shifts impact worker incomes and overall economic welfare, identifying inefficiencies in the labor reallocation process.​ These findings inform discussions on policy approaches that could enhance the effectiveness of labor reallocation.

The main distinctions of this study compared to previous research are as follows. ​First, it is the first study to empirically examine the impact of trade shocks with China and Vietnam in terms of labor reallocation across domestic industries and occupations.​ Second, by using a general equilibrium trade model that explicitly considers friction costs of inter-industry labor reallocation and industrial linkages, the study estimates the labor adjustment costs by industry and the resulting welfare effects. Third, by utilizing the Employment Insurance Database, an administrative record containing information on all employees enrolled in Korea’s employment insurance system, the study provides a more accurate and comprehensive analysis of long-term labor reallocation trends—from 2003 to 2019.

The primary research focus and findings of each chapter are outlined below. In Chapter 2, diverse micro data including the Employment Insurance Database are used to analyze the overall inter-industry labor mobility in Korea since the 2000s. The focus is on identifying the patterns and characteristics of average worker movements, particularly between the light industries, which face stiff competition from Chinese and Vietnamese imports, and the heavy industries, where export growth is concentrated. Chapter 3 estimates the impact of changes in South Korea's trade with China and Vietnam, driven by their rapid economic growth since the 2000s, on the movement of domestic workers between industries and occupations. Unlike Chapter 2’s descriptive analysis, Chapter 3 emphasizes revealing causal relationships through a 2SLS econometric model using instrumental variables, while enhancing accuracy with the employment insurance administrative database. In Chapter 4, a dynamic general equilibrium trade model reflecting the domestic labor market and input-output structure by industry is employed to assess how the trade shocks with China and Vietnam since the 2000s have impacted Korean welfare and how the adjustment costs required for labor reallocation between domestic industries have contributed to this. Finally, Chapter 5 examines recent key advancements in South Korea's vocational training, higher education, and employment support policies, focusing on effective strategies for facilitating labor reallocation in response to trade shocks. Additionally, it explores specific areas for policy enhancement and provides recommendations for improvement.

Recently, major countries have been strengthening support policies for companies in strategic industries, emphasizing digital and green transitions, competition to secure advanced technologies, and supply chain stabilization for economic security. Among these, the increase in so-called “strategic investment subsidies,” where governments directly or indirectly support corporate investments in strategic industries, is particularly notable.

As the strategic industries designated by major governments often align with high value-added sectors or those with significant potential as future growth drivers, South Korea, with its prominent multinational corporations in such industries, is likely to be directly impacted by these changes. For example, the strategic investment subsidies provided under the U.S. Inflation Reduction Act (IRA) and the CHIPS Act are significantly influencing multinational corporations’ investment decisions and reshaping global supply chains. In addition to the U.S., other major economies such as the EU, Japan, and China are also implementing strategic investment subsidy policies, with continued support expected for key multinational corporations. Therefore, the Korean government must prepare for these changing trade environments and seek ways to leverage these changes as opportunities to maintain global competitiveness.

Against this backdrop, this study aims to provide an economic analytical framework to assess the impact of strategic investment subsidies on foreign direct investment (FDI) and global supply chains of multinational corporations. Furthermore, it seeks to offer insights that the Korean government can use when designing its strategic investment subsidy policies.

Chapter 2 examines the recent trends and characteristics of strategic investment subsidy policies using the GTA database and the NIPO (New Industrial Policy Observatory) database. The analysis reveals a sharp increase in both government interventions and strategic investment subsidies since 2020, with strategic investment subsidies generally having longer durations than ordinary interventions. The surge in government interventions post-2020 is attributed to the aftermath of COVID-19 and intensified technological competition. The U.S. leads in general government interventions, while China dominates in strategic investment subsidies. Key types of interventions include export-import policies, financial subsidies, and government loans. Strategic investment subsidies mainly involve financial subsidies, along with government loans and tax reductions. Technologically, general government interventions are heavily focused on intermediate goods, whereas strategic investment subsidies increasingly target advanced IT products, power and batteries, and eco-friendly products. Korea, on the other hand, emphasizes financial support and trade finance to secure overseas markets rather than directly incentivizing domestic facility investments, highlighting the limitations in its policies to attract domestic investments. Examining global cases in the semiconductor and battery industries, the U.S., EU, and Japan provide substantial subsidies to production facilities, including cash refunds for tax credits even when companies incur losses. In contrast, Korea relies on regional investment grants and non-liquid tax credit schemes, which offer weaker incentives. Korea’s strategic investment subsidy policies require improvements in these areas.

Chapter 3 introduces representative strategic investment subsidy policies of major countries and evaluates them from the perspective of WTO subsidy agreements. The analysis indicates that these policies, such as cash grants and tax reductions, are generally likely to violate WTO rules. However, the U.S., China, the EU, and Japan have made efforts to justify their policies by utilizing WTO exceptions for environmental and national security reasons. The EU’s “Temporary Crisis Framework,” which provides temporary tax benefits and favorable loan terms citing environmental and energy supply chain crises, is a prime example. Korea’s heavy reliance on tax credits necessitates diversifying support mechanisms, such as consumer tax credits and equity investments, which are less likely to violate WTO rules. Moreover, Korea must strengthen policy rationales for claiming environmental and national security exceptions and establish clearer grounds for supporting advanced strategic industries like semiconductors and batteries. Concurrently, major countries are working to reinforce WTO subsidy rules to address China’s practices, emphasizing stricter regulations and accountability for subsidy impacts. Korea must consider this context and design long-term policies to avoid excessive subsidy competition.

Chapter 4 explores the theoretical basis for supply chain stabilization policies and analyzes how strategic investment subsidies influence investment decisions of multinational corporations considering supply chain stability. The key findings are as follows: (1) Major countries’ supply chain stabilization policies are rational as interventions to address supply chain uncertainties arising from external factors, and international policy coordination is essential to achieve optimal policy levels. (2) Assuming that multinational corporations prioritize supply chain stability, outcomes deviating from the traditional horizontal FDI model with a proximity- concentration tradeoff may occur. (3) Governments aiming to attract advanced industrial facilities must consider tradeoffs between productivity screening and increased attraction probabilities when designing investment subsidies, optimizing between fixed-cost and production-cost subsidies depending on specific conditions.

Chapter 5 evaluates the impact of the U.S. IRA-based strategic investment subsidies targeting electric vehicle and battery companies on supply chains using structural modeling. The analysis demonstrates that “path-dependent subsidies,” which identify participating countries in the supply chain to allocate subsidies, are more effective than traditional subsidies in countering Chinese automotive and battery firms, as shown through simulation results.

Chapter 6 presents policy implications based on the previous chapters’ analyses. First, Korea should relax investment subsidy eligibility requirements. Although strategic investment subsidies have shifted towards incentivizing domestic investments through tax credits for facility investments and R&D since 2023, their effectiveness remains limited for companies with low profits or losses. Measures such as cash refunds for tax credits, credit transfers, or conditional clawbacks for excess profits could mitigate uncertainties and encourage investments. Second, Korea must design its subsidies to align with WTO rules. Utilizing consumer tax credits and equity investments and strengthening justifications for environmental and national security exceptions are critical. Third, differentiating investment subsidies by strategic technology and providing tailored support for facility and workforce investments can enhance policy efficiency. Finally, Korea must adopt a strategic approach to changes in global supply chain policies. Strengthening communication channels with host countries and addressing risks in investment realization, while advocating for the retention of subsidies such as those under the U.S. IRA, are crucial. By leveraging these approaches, Korea can navigate the changing trade environment and ensure sustained global competitiveness.

Cybersecurity can be defined as a state where national and citizen safety is guaranteed by defending against cyber attacks or threats, thereby ensuring proper functioning of cyberspace. Cyberspace is composed of ‘information systems’ and the ‘information’ stored within them.

International discussions on cybersecurity norms have continued, showing a standoff between Western liberal democratic countries led by the United States versus Russia and China. The United States and other Western nations recognize cyberspace as a separate domain and argue that international law can be directly applied to it. Non-Western countries like Russia and China contend that cyberspace is not a separate domain, and that domestic laws of the location of systems or information should apply.

The United States adopted an active defense strategy and strengthened collaboration with the private sector, considering that a significant portion of infrastructure is owned or operated privately. The EU implemented various voluntary certification systems and mandated labeling. Japan’s active cyber defense strategy is similar to the United States’, and it established a voluntary conformity assessment system for IoT products. South Korea also adopted an offensive cyber defense strategy in 2024. However, unlike major countries, we do not have a unified cybersecurity law.

The potential application of international trade law to cybersecurity measures is as follows. Even when arguing that cybersecurity measures do not apply to like products, such actions will likely be found by the panel as violations of WTO agreements. All WTO precedents addressing national security exceptions relate to wartime or emergency situations in international relations. There is a view that for measures during peacetime to be recognized under national security exceptions, there must be subjective evidence of understanding the purpose at the time of the measure and evidence of indirect supply to military facilities. Panels can assess whether parties have made good faith judgments about measures necessary to protect their essential security interests. A similar conclusion was reached in the international investment arbitration case of Seda v. Colombia.

Implications for South Korea’s cybersecurity policy are as follows. First, self-defense cannot be exercised for cyber misuse or cyber attacks that do not reach the level of armed cyber attacks. Second, offensive defense strategies must be pursued cautiously. While there is a view that preemptive self-defense targeting imminent armed attacks is permitted under international customary law, there are controversies regarding specific criteria for determining imminence. Third, the legal principle of state responsibility for domain management or due diligence in cyberspace can be usefully applied in responding to cyber threats from North South Korea. Fourth, there is a need to establish a unified cybersecurity law.

Implications for South Korea’s trade policy are as follows. First, South Korea Government must continuously observe cybersecurity measures introduced by major countries to minimize negative impacts on our export companies. Second, the government should support our companies to gain a competitive advantage regarding cybersecurity labels and certifications when competing with third countries in markets like the United States or EU. Third, when implementing cybersecurity measures, precise institutional design and operation are necessary to avoid conflicting with trade norms. Fourth, even when a country claims national security exceptions in trade agreements, review will be conducted in accordance with the principle of good faith.

This study aimed to comprehensively analyze China’s advanced semiconductor innovation capabilities, focusing on policy support systems, High Bandwidth Memory (HBM), and third-generation semiconductors, and suggest response strategies for South Korea.

The analysis revealed the following characteristics of China’s advanced semiconductor innovation. First, China’s research in high-bandwidth memory has shown rapid growth since 2015, with strong research groups centered around Huazhong University of Science and Technology and Tsinghua University. Research topics have expanded from application technologies like GPU computing and system performance optimization to fundamental technologies such as hardware acceleration and architecture design.

Second, China’s HBM research has been developing through systematic research networks. Co-author network analysis revealed close collaboration systems between major universities, companies, and research institutes. Notably, Chinese researchers affiliated with overseas institutions, particularly in the United States, are actively conducting joint research with domestic researchers, transferring global-level research capabilities.

Third, in terms of future fundamental technology research, systematic support is being provided through the National Natural Science Foundation. Between 2019-2022, 474 semiconductor-related projects were supported, with general projects and young scientist fund projects accounting for about 45%, indicating a focus on nurturing next-generation research personnel. Additionally, according to the State-owned Assets Supervision and Administration Commission’s analysis of state-owned enterprise performance, among 49 advanced semiconductor-related products, core electronic components were the most numerous with 18 items, and 14 products were evaluated to have reached international leading levels.

Fourth, in the third-generation semiconductor field, systematic technology independence is being pursued through the National Semiconductor Technology Innovation Center and China Advanced Semiconductor Industry Innovation Strategic Alliance (CASA). Through the ‘1+N+X’ open joint construction and collaborative innovation operating model, they are promoting organic linkages between basic research, applied research, and industrialization, while focusing support on the localization of core materials such as SiC and GaN and linkages with demand industries like electric vehicles and renewable energy.

In response to these Chinese innovation trends, Korea needs the following strategies. First, to maintain its current competitive advantage in the HBM field, there needs to be a shift from manufacturing-centric to design-manufacturing integrated innovation. As shown in the research network analysis, while Korea is concentrated on hardware manufacturing technology, China shows a comprehensive approach at the system level, making it urgent to secure comprehensive technological capabilities through strengthening design capabilities. Second, diversification of global research networks is necessary. Co-author network analysis showed that while Korea actively researches with traditional partners like the US and Japan, collaboration with emerging research entities like India and Singapore is limited. New innovation opportunities need to be created through diversifying research collaboration partners.

Third, in the third-generation semiconductor field, a comprehensive strategy encompassing fundamental technology development, applied technology acquisition, and market expansion is needed. Particularly, as China provides many incentives for the spread of products based on domestic technology in addition to technical support, Korea also needs to introduce policies supporting market demand creation and technology diffusion along with technology advancement.

Finally, to enhance the effectiveness of these strategies, systematic government support including industry development stage-specific support policies, strategic R&D investment considering technological characteristics and timeliness, and talent development is necessary. In particular, policy focus should be placed on building an innovation ecosystem connecting basic research to commercialization and strengthening global cooperation networks.

This study is a research project that aims to more objectively and comprehensively understand Russia's new foreign policy direction, the Global South Strategy, after the outbreak of the Ukrainian War in February 2022. In particular, the main purpose of the study was to examine the structural changes and reorganization processes of the world order after the outbreak of the war, and to analyze the new foreign strategic direction of the Russian government in the midst of structural changes in the foreign strategic environment.

Chapter 2 examines the Russo-Ukrainian War and the rise of the Global South. The Russo-Ukrainian War has had a significant impact on the changes in the international order in terms of political diplomacy (deepening the process of fragmentation of international relations), security (creating a military confrontational structure between the West and Russia), and economic (damaging economic ties between Russia and the West). Meanwhile, the Global South is rising in the process of transforming international relations, symbolized by fragmentation. This is because, as the presence of the Global South (continuous economic growth and strengthening of political autonomy) has been highlighted since the war, its strategic value and importance in recent global international relations have increased even more. Ultimately, the Russo-Ukrainian War is creating a new phenomenon in international relations: the division of the world, changes in the international order, and the rise of the Global South.

Chapter 3 analyzes Russia’s Global South strategy concept, perception of the situation, goals, and tasks. Russia has recently preferred the term “World Majority” instead of the term “Global South.” According to Russia’s perception of the situation, the multipolarization of the world order, the growing interest in a new economic cooperation system, the emergence of comprehensive security threats and the risk of conflict between great powers, and the West’s all-out pressure on Russia are emphasized. The goals and tasks of Russia’s Global South strategy can be summarized in four points: promoting multipolarization of the world order through cooperation with Global South countries, intervention in the security of Global South countries, expanding economic cooperation with Global South countries, and spreading friendly perceptions of Russia in Global South countries.

Chapter 4 examines Russia’s Global South strategy in a multilateral context. In particular, it examines the launch and development process of BRICS, as well as Russia’s policy direction and economic relations toward BRICS. The recent expansion of BRICS has become a significant turning point and starting point in the history of BRICS, and a milestone in which BRICS has come to occupy the most important position in Russia’s “world majority” plan encompassing the global South.

Chapter 5 analyzes Russia’s Global South strategy in a regional context. In particular, it examines the nature and characteristics of the development of Russia’s relations with the Middle East, Africa, and Latin America, given that Russia has strengthened its diplomatic activities in the Middle East, Africa, and Latin America since the war in order to gather friendly forces to establish a multipolar order.

Chapter 6 presents policy implications for the research content and suggests policies that take into account the new external environment. First, policy implications are presented for each chapter: Chapter 2 (The Rise of the Global South and Pragmatic Balanced Diplomacy), Chapter 3 (Russia’s New Foreign Strategy and Seeking Changes in the World Order), Chapter 4 (The Means of BRICS Expansion and Potential Factors for Development), and Chapter 5 (Russia’s Means of Promoting Global Regional Strategy and Challenges). In addition, policy suggestions include strengthening and expanding middle-power diplomacy, establishing strategic cooperation plans for the Global South, establishing new perspectives and strategies for developing and fostering multilateral agendas at the global level, and establishing strategic management plans for Russia.