In recent years, there has been two contesting paradigms, ‘wage-led or income-led growth’ and ‘profit-led growth’ proposed in academic circles in Korea. However, there has been also a search for alternative distribution-growth model because the Southern European countries such as Portugal, Italy, Greece and Spain and some Latin American countries such as Brazil and Venezuela have failed from income-led growth policies adopted during 1990s and early 2000s under their socialist democratic regimes. The so-called ‘income-led growth policy’ adopted by the new Korean government established in May 2017 became a coined word by ILO (2010) in the literature of distribution-growth. It tries to trace the origin of worldwide stagnation after the global financial crisis of 2007 and finds its cause in the inequality of income from wage differential. It argues that since the rate of growth in wages is lower than the growth rate of GDP and therefore, domestic demand is lagging behind recovery. It proposes for increasing wages so that a virtuous circle of household income increase, consumption increase and domestic demand increase could be established. But there has been a criticism on income-led growth policy since it does not fit to the reality of the Korean economy as an export-oriented small open economy. They argue that the stagnation in the Korean economy is not due to low wage level but is due to stagnant investment and therefore, investment-led growth policy rather than income-led growth policy is more desirable to be adopted. They also argue that it is desirable to increase growth rate through investment and innovation and therefore, the government policy needs to be reoriented from income-enhancing policy to economic revitalization through structural reforms and promotion of corporate investment. It seems that it is difficult to link income-led growth policy to a significant consumption increase because of the high level of household debt and their precautionary consumption restraint for uncertain future.
  Theoretical background of wage-led or income-led growth theories can be traced back to Bhaduri and Marglin (1990), UNCTAD (2010), Stockhammer (2011), Storm and Naatepad (2011), Stockhammer and Onaran (2012) andLavoie and Stockhammer (2012). The empirical results on wage-led or income-led growth policy are mixed and inconclusive. Onaran and Galanis (2012) reports that an increase in wage income share will increase aggregate demand in US, Euro area, Japan and Korea but will decrease aggregate demand in China, India, Australia, South Africa, Argentina and Mexico which is in contradiction to the post-Kaleckian theoretical proposition that resource-rich large countries will benefit more from a wage-led growth policy. Onaran and Stockhammer (2005) has built a post-Keynesian open economy model of distribution, accumulation and employment and estimated the effect of lowering the wage share in a structural vector autoregression (SVAR) framework. They found that decreasing the wage share does not stimulate accumulation, growth and employment in both Turkey and South Korea. They have noted that the relation between wage share, investment, growth, and employment is similar in both Turkey and South Korea; however the former experienced low and the latter high growth rates due to different export-oriented growth strategies with a conclusion that the explanation for this difference is found in the field of institutions, power structure, and state policies.
  There are a few empirical studies using Korea-specific dataset. Hong (2014a) has estimated a demand-led growth model modifying Bhaduri and Marglin (1990) model. He finds that the increase in labor income share had stimulated consumption and investment in the period (1981- 1997) before the financial crisis in 1998 in Korea but since the propensity to consume out of labor income was weak, the wage-led effect on domestic aggregate demand was not strong. However, he finds that after the financial crisis the propensity to consume became stronger than before and the subsequent reduction in labor income share due to the financial crisis had weakened consumption considerably. During the post-crisis period, while the increase in capital income share did not contribute to the increase in investment and net exports, the wage-led effect on aggregate demand has strengthened. In another related paper, Hong (2014b) estimates a demand-led growth model combining demand system with productivity system following Storm and Naastepad (2011). He finds that during the post-crisis period (1999-2012) the increase in real income by 1 percentage point will increase real growth rate of GDP by 0.68-1.09 percentage point and labor productivity by 0.45-0.50 percentage point. Based on these estimates, he argues that treating labor income as cost elements only is one-sided analysis and that an income-led policy by increasing labor income will stimulate aggregate demand and productivity and will contribute to establish a virtuous circle of distribution and growth.
  On the other hand, Kim (2013) has found that aggregate demand system in Korea is profit-led structure in the sense that the increase in capital income share stimulates aggregate demand. Pyo, Chun and Rhee (2017) have estimated the growth rate of economy-wide nominal wage rate (3.69%), real wage rate (1.66%) and per-capita labor productivity (1.58%) respectively during the post global financial crisis period of 2009-2016. During the same period, the corresponding growth rates in manufacturing were nominal wage rate (4.34%), real wage rate (2.29%) and per-capita labor productivity (1.58%). It implies that the Korean economy during last 8 years after the global financial crisis in 2008 has experienced both nominal and real wage inflation surpassing the growth rate of per-capita labor productivity. During the same period (2009-2016), the real GDP and private consumption expenditure increased at the rate of 3.1% and 2.2% respectively. From this perspective, we can argue that the Korean economy has already experienced an income-led growth during the period after the global financial crisis in 2008 but its policy impact on private consumption expenditure was very small and insignificant.
  The investment-led growth policy proposed as an alternative for income-led growth policy has the following theoretical implications. If an economy’s demand–led growth is supported by a debt-financed consumption-led system, it may confront difficulty by the reduction in the economy’s potential growth rate as we had experienced in the global financial crisis in 2008. Such a consumption-based demand-led growth can provoke inflation and invite worsening balance of payments. On the contrary, if the economy’s demand-led growth is either investment-led or export-led, then the economy has a sufficient momentum to raise natural rate of economic growth. In other words, since the investment was productive, it reduces the supply bottlenecks. And if export earnings can finance imports necessary for faster economic growth, imports can be used for a more productive use than domestic resources.
  We have also estimated ex-post rates of return by industries in the Korean economy. During the period of 1981- 1990, the economy- wide average ex-post rate of return was very high (41%) as Harberger (1988) and Pyo and Nam (1999) termed it as ‘outlier’. But the rate of return started to fall to the level of 14.8% during 1991-2000, 6.6% during 2001-2010 and 2.5% during 2011-2014. The average ex-post rate of return in manufacturing is estimated to be only 1.69% even lower than the average ex-post rate of return in economy-wide level, which has affected sluggish investment in manufacturing during the period. We have also estimated an accelerator investment model with double-Koyck type expectation hypothesis to find that when we used both real investment and real output as variables, the estimated coefficient of ex-post rate of return was negative (-) and statistically significant. In case of Korea, the continued downfall of ex-post rate of return must have been a cause of investment stagnation during the period after the financial crisis in 1997.
  The case study on the country-specific investment-led policies can be summarized as follows. Dolinskaya (2002) provides us with the case of Russia in transition period (1991-1997) in which a reverse investment-led growth rather than investment-led growth was made. During the transition period, even the minimum investment for maintenance and replacement without mentioning new investments were not adequately made. As consequence, he estimates the growth accounting result of the transition period: Real GDP growth rate (-8.0%), labor input growth (-2.0%), Capital input growth (-1.7%) and TFP growth rate (-4.3%). According to Bosworth and Collins (2008), the growth rates of per capita real GDP during 1978-2004 are estimated as China (7.3%), India (3.3%) and East Asia except China and India (3.7% during 1980-2003). The growth rates of physical capital were China (3.2%), India (1.3%) and East Asia except China and India (0.9%). This result indicates for example, in case of China, the investment-led policy centered on physical capital input has promoted total factor productivity and as a result, it contributed significantly to enhancing output-income. Robertson (2010) argues that the total factor productivity growth rate in India (1.6%) is less than half the rate in China (3.6%) and therefore, unless India’s investment-led growth is lined to productivity growth, it may experience the falling rate of return from its excessive over-investment. India’s Investment/GDP ratio reached 35% level during 2000-2010. In Latin America, ‘economic populism’ was the core of its Keynesian policies. According to Isakkson, Ng and Robyn (2005), Brazil had fulfilled reforms on regulation in the public sector and had induced private capital in social infrastructure sectors. However, the existence of large unofficial labor market had inhibited private investment and productivity growth. It provides us with a lesson that any investment-led policy cannot be successful in maintaining a sustainable growth through productivity improvement unless its labor market operates normally. Argentina’s aggressive privatization policy in the 1990s had improves profit rate and operational efficiency in the privatized corporate sectors. But it could not be followed by and backed-up by institutional reforms and therefore had failed ultimately in late 1990s. OECD (2016) has analyzed the labor reform in Spain (2013-2015), Estonia (2009) and Slovania (2013) and recommended that labor reforms are key factors for the investment-led growth to be successful. OECD (2016) recommends a flexible labor market policy with reduced lay-off costs and lowering the income differential between full-time workers and party-time workers and between large enterprises and small and medium enterprises. OECD (2016) also recommends a voluntary and flexible labor relations system based on individual corporate practices rather than industry-wide centralized labor relations system.
  We have noted in this report that the income inequality status of Korea at the present time is in the mid-level among OECD countries and there is no significant sign of declining labor income. As pointed out in Pyo (2016b), the growth rate of real income by the middle class has been relatively falling behind that by the lower income class. The wag-led policy advocated by post-Keynesians and ILO (2011)) has been replaced by income-led policy encompassing non-wage income. However, the income-led policy has the following shortcomings and limitations. First, the economy with higher weight of external sector may face profit squeeze, increase in production costs and investment reduction rather than positive effects of wage and income increase. Second, the income-led policy can have a temporary expansionary effect only when the economy is in a deep depression or long-term recession. Third, as pointed out by Bowles and Boyer (1988), an income-led policy can be applied to advanced economies as a temporary recovery policy when they are equipped with social institutional infrastructure to manage wage restraints accompanied by labor reforms. Fourth, if a certain demand-led system is a kind of debt-financed consumption-led system, it can reduce future potential growth rate of the economy as many nations experienced in the global financial crisis. Such a debt-financed consumption-led system can invite inflation and worsening balance of payments as pointed out by Dray and Thirwall (2011). On the other hand, if the demand-led system is investment-led or export-led type, the economy may have enough room for lifting up natural growth rate. In other words, their investment will be productive so that it can reduce supply bottlenecks. If export earnings can finance imports necessary for faster economic growth, then imports can be used more productively than domestic resources. It will be desirable for government to switch from populist consumption-led system to investment-led and export-led demand system.
  Based on both theoretical and empirical analysis with country- specific case studies, we recommend the following policy prescriptions.
  (1)It is desirable for government to switch its policy from income-led growth policy to investment –led policy. The critical feature of income-led policy lies in its populist nature of zero-sum game-type income redistribution policy rather than stimulating income creation. The minimum wage policy, the arbitrary and forced labor policy to switch jobs from part-time to full-time, artificial job creation and increasing labor regulations can create irrecoverable high-cost production system due to the downward wage rigidity.
  (2)The switch from employment-biased policy to productivity- based policy is needed. The sectors and companies with higher productivity should be encouraged to create more jobs and on the contrary, the sectors and companies with lower productivity need to reduce jobs through labor reform. In this regard, the government needs to focus on corporate restructuring in non-competitive declining industries.
  (3)The movement for ‘doubling-productivity campaign’ by both public and private enterprises can be promoted. The means of doubling productivity are intra-industry restructuring and inter-industry restructuring. The intra-industry restructuring can be supported by both financial support and tax incentives for promoting M&A between lower-productivity enterprises and higher- productivity enterprises. The inter-industry restructuring can also be supported by both financial support and tax incentives to promote mobility among land, capital and labor.
  (4)It is necessary to promote innovation and human capital enhancement by the mainstream enterprises and companies. In order to prepare for the fourth industrial revolution, it is necessary to avoid too much regulatory educational policies and regulatory labor policies.
  (5)As pointed out by Piketty (2014), ‘the only exit’ for an industrialized capitalist economy, which faces ageing population and low fertility rate to survive and maintain a sustainable growth path is to increase productivity. The world-wide market trend is moving to the direction of mainstream economic theories such as new growth theory and endogenous growth theory. It is moving in the direction of “too-big-to-fail” phenomenon in which super-large nations such as Uniteds States, China, India and Japan play dominant roles and exert externality effects from cumulated social capital and R&D. Since the Korean economy is weaker in terms of cumulated physical, human and social capital, it needs to complement these weak points by strengthening external sectors. Income-led growth policies can repeat the failed inward-looking policies adopted once by India and Pakistan. Korea needs to re-orient its growth strategy toward outward-looking investment-led growth policy. 

  This study analyzes the impact of the new US administration’s China trade policy to the Korean economy as change in policy direction between two biggest trading partners of Korea was expected since the inauguration of President Trump. He was expected to be a hardliner against China’s trade practices since his presidential campaign. Trump administration has not put the pledges of President Trump that he had made during his presidential campaign directly into effect, such as 45% tariff and currency manipulator designation. Yet, it is still notable to keep an eye on the US administration’s policies toward China as ongoing conflict between two countries, is expected to affect Korea.
  Chapter two reviews the past US-China economic relationship and overall trade policy direction of the US administration. Chapter three covers the China trade policy of the Trump administration and key economic and trade issues between two countries. No real action has been implemented under Trump administration against China except for the traditional trade remedies such as anti-dumping and countervailing duties. Yet, the US administration is currently under the process of investigating its trade status with major trading countries under the section 201, section 232, and section 301 of US trade laws that the possibility of implementation of additional trade remedies still exists. Such investigations are not all targeted directly at China, but it is quite evident that China is relevant to most of them since it is the biggest exporter to the US.
  Several scenarios of the influences from the hard-line US trade policy toward China to Korean economy are introduced in Chapter four. First, reflected benefit is expected in Korean exports of electronic devices and appliances to the US from more strict trade policies to China as competition level in such products between Korea and China is quite high in the US market. Secondly, Korean export to China would decrease along with contraction of China’s export to the US and industrial production. Such analysis comes from the fact that Korea exports significant amount of intermediary goods to China, which are further processed as final goods, then exported to the US. Last scenario is derived from the possibility of China’s retaliation against US vigorous stance. Deepening conflict between two biggest economies may lead to the recession of global trade, which would damage Korean economy.
  As the number of the trade remedies implemented is expected to increase under the current US administration, Chapter five analyzes the impact of the US anti-dumping duties against the Chinese goods on the other countries’ exports to the US, i.e. trade deflection effect. The result is shown under three cases, which is categorized in three groups including 1) all countries other than China 2) OECD countries 3) all emerging market countries minus China and OECD. The trade deflection effect is maximized after one year after the implementation of anti-dumping duties for the group one and two, and is maximized after one and half years for the group three. Moreover, increase amount of the US imports from the emerging market economies exceeds that of the US imports from the advanced economies. However, no empirical result was found that the US anti-dumping duties would affect the amount of US imports from Korea.
  Chapter six analyzes the expected effect of the Chinese yuan appreciation from the US designation of China as a currency manipulator using Vector autoregression(VAR) model. The result shows that the appreciation of Chinese yuan would help the US to reduce its trade deficits with China. Yet, such effect faded out when the period was set from 2001, the year of China’s accession to the WTO. In addition, Chinese yuan appreciation would have negative influence not only on the China’s GDP but also on the US industrial production, which would negatively affect Korea’s economy due to decrease in exports. 

  Previously discussions about Africa focused on its resources. However, recent interests are shifting towards Africa’s growth potential as a consumer market. The combination of a billion people, impressive economic growth, a growing middle class, urbanization and increase of purchasing power has transformed Africa into a rising consumer market. Many recent reports by various business consulting firms emphasize that the most strategic investment opportunity in the long run lies in pursuing Africa’s middle income class and not in resource development. Although the overall majority of Africans yet live in absolute poverty, the consumer market is growing as the urban population who have sufficient purchasing power continues to expand. A growing number of large-scale shopping malls and supermarkets are moving into Africa’s major cities and they are being stockpiled with processed agricultural products, household goods, computers, household electronics and many kinds of manufactured products. However, for Korea, the market remains difficult to access because Africa is not only geographically distant but also because poor physical and institutional trade infrastructure in Africa limits traditional export means.

  Keeping mind of such problems, this research explores potential means of accessing Africa’s consumer market through industrial zones. The major contents discussed in each chapter are as follows. 

  Chapter 2 reviews contributing factors to Africa’s consumer market growth from economic and demographic perspectives while also outlining current consumption patterns, trends and development of distribution channels. Although the middle income group who have sufficient purchasing capacities remains small in size, it is growing at a fast pace around urban areas. Consequently, around two thirds of African households are prospected to have certain discretionary income by 2025. 

  Chapter 3 looks at the key characteristics of the African consumer market from a supply and demand logic. Various media outlets and reports have highlighted the growing size of the African consumer market. However, looking at the size alone is a convenient and arbitrary way of viewing the African continent as a single market, which is far from the truth. In this chapter, we analyze the African market through an objective and empirical method. One main feature of the African consumer market is fragmentation where poor traffic networks limit the trade of goods, services and labor. Borders that surround landlocked countries also hinder trade with regional and international markets. The lack of infrastructure in general hampers labor movement beyond a 10km radius. Another feature of the African consumer market is the accelerating market penetration of Chinese goods. Cheap Chinese products can be found not only in urban areas but also rural areas. The range of products cover a wide spectrum, including clothing, shoes, socks, plastics, agricultural machinery, household electronics, mobile phone, construction materials, stationery and others. Moreover, due to the underdevelopment of manufacturing infrastructure, Africa depends heavily on imports of processed goods. Import dependency is over 30% for food and beverages while surpassing 60% for technology intensive goods such as cars and chemical products. 

  Furthermore, this research estimated the national and regional population for different consumer classes. Results indicate that the potential consumer class for main durable goods in sub-Saharan Africa will expand by around 40% until 2025. The consumer class that is able to purchase a certain amount of durable goods will increase by over 4% every year. This growth will be led by eastern Africa (approx. 7.1-7.6%) and western Africa (approx. 3.5-3.7%). 

  To be more specific, the national and regional potential consumer class size for 48 countries in Africa were estimated using the CANBACK C-GIDD and resources on the size of consumer classes that possess vehicles (IRF) and cellphones (ITU), two typical durable goods that Korea exports. 

  First, the research constructed a functional relation between per capita income and vehicle or mobile phone ownership rate globally. With this function, a demand curve was calculated for vehicles and mobile phones in relation to the income level. Using the Lorentz curve estimated using the CANBACK C-GIDD resource, calculated the potential consumer class size for vehicles and mobile phones for each country in Africa was calculated. 

  Around a billion people will have enough income to purchase vehicles in 2025, with this number rising to 6.8 billion for mobile phones. On a regional scale, western Africa, with the largest population, and eastern Africa, with the highest economic growth rate, will surpass southern Africa (including South Africa) soon in terms of market size. 

  This research takes a step further from established research on the African middle income class, which generated the initial boom of interest on the rising consumer class of Africa, and estimates the consumer class size of those able to purchase vehicles and mobile phones, the main export items of Korea. It sought to define the consumer class as those able to purchase specific items, rather than the general 'middle income' group, i.e. people who earn income between ad-hoc upper and lower income cutoffs. While previous studies review only a few countries with sufficient data or rely on qualitative analysis, the contribution of this research lies in the utilization of all available data amidst the lack of data on Africa in evaluating purchasing powers and constructing the potential consumer class size. However, one must take into consideration that this research method assumes African consumers to have the same preference for goods as global average consumers and that the final results estimate the population size of those with purchasing power above a certain income level, not the size of those who have actually purchased or are willing to purchase vehicles or mobile phones. 

  Chapter 4 explains the necessities and reasons for utilizing industrial zones as a means to engage with the African consumer market. Developing or utilizing industrial zones as a means to enter the African consumer market is important in that it enables the production and sales of products that fit the needs and tastes of local markets. The African consumer market differs greatly from other developing countries in terms of purchasing power, consuming culture and various other aspects. One of the expected positive outcomes of utilizing industrial zones is the access of regional markets through various economic unions. Direct investment in Africa through industrial zones can lower the high entry barrier as African economic blocs have formed FTAs and customs unions that demand high tariffs from overseas imports. Another expected outcome is the ability to access advanced countries by utilizing preferential trade agreements arranged between Africa and the US or EU. 

  The highlight of this research unfolds in chapter 5 where strategic measures for using industrial zones as an effective means of entering the African consumer market is described. The process used to determine specific countries of engagement was based on a quantitative analysis using numerous evaluation standards and indexes that reflected the evaluation. The opinions of an advisory group were also taken into consideration. The outputs of this qualitative method were graded and combined with the quantitative research outcomes in determining priority countries or suitable countries. One major feature of the outcome showed that eastern African countries such as Ethiopia and Kenya were located in the high ranking category. Reasons for this outcome include the relative political stability, relocation of the economic growth axis from western African to eastern Africa, favorable investment conditions, and status of economic cooperation with Korea. Another reason would be the level of trade within the region. Amongst all regional economic blocs in Africa, the East African Community (EAC) shows the highest level of intra-trade. The total volume of intra-trade grew by almost five times, from 500 million USD in 2000 to 2.3 billion USD in 2015. On an individual country basis, results indicated Ethiopia as the most suitable location for entry through industrial zones. Although Ethiopia remains as one of the least developed countries in Africa, its economic development has been most outstanding. Ethiopia has sustained its economic growth rate at over 10% for the past 10 years. It also has the second largest population in Africa and has completed a railroad connection between Addis Ababa (its capital city) and Djibouti (the logistics hub of the Mediterranean). According to some evaluations Addis Ababa, the capital of Ethiopia, resembles Shanghai in the year 1987. Ethiopia’s low wages are an advantage. The wage levels of unskilled labor in the manufacturing (light industry) sector is a fifth of China, a third of Vietnam, and 30% lower than that of Tanzania. Wage levels are of great significance when considering investment in Africa. 

  To determine promising sectors that could be produced in the industrial zones, the study applied Product Space Analysis, a quantitative analysis tool introduced by R. Hausmann and used by other development economists to diagnose the national economy or industrial structure. Product Space Analysis views each product as an aggregation of production knowledge. The method assigns a numerical value to each country as the level of scarcity of knowledge that the country has to produce or export goods, which is called 'economic complexity'. Likewise, it also quantifies the 'product complexity' for each industry and sector with the economic complexity of the country that produces and the product complexity of relevant industries. With the two indexes, one can formulate an effective strategy that maximizes the economic complexity most relevant to the economic growth of developing countries and thus determine strategic industries or sectors. While the Revealed Comparative Advantage (RCA) analysis, frequently used in literatures, and other trade indicator analyses approach trade patterns in a static manner, Product Space Analysis differs in that it seeks to complement the static limitations with each country’s sectoral potential by using statistical probabilities. 

  Short-term strategic items and long-term strategic items were selected for each country using the 2014 BACI trade data for 14 countries in sub-Saharan Africa including Ethiopia, South Africa, Tanzania, Kenya and Senegal. In particular, strategic items were selected according to the ranking outcomes of products based on the short-term strategic index and long-term strategic index. The indexes were calculated as weighted sums of the opportunity gains, the technical distance between a country and item, and the product complexity index for each item. To identify items where Korean companies have competitiveness amongst the strategic items, we selected items that Korea has revealed comparative advantages in.

  As the economic complexity indexes were low for most of the countries analyzed in the research, indicating similar opportunity gains from each product, the long-term strategic items were similar for the countries. Machinery, chemical products, metal products were amongst the top ranking items, and Korea has a competitive advantage in most items. 

  Low-level manufacturing products related to agricultural and mineral goods were commonly found in the top ranks for short-term items. On the other hand, textile and clothing items appeared in the high rank for eastern African countries such as Ethiopia, Kenya and Madagascar. However, Korean companies rarely exported the most short-term strategic items directly, and thus the export competitiveness for Korea at this point in time was low. 

  The selection of potential items that could utilize industrial zones through the Product Space Analysis is meaningful in that it considers local consumption demands, the national or regional economic development strategies and the competitiveness of Korean firms in a complex manner. However, as this research deals with a vast number of countries and areas, potential local consumption demands such as regional market conditions and overseas market expansion conditions must be reflected for specific items to be able to identify more detailed potential items for each country or region. 

  Although this research suggests utilizing industrial zones as a strategic means of approaching the African consumer market, it is regrettable that the policy recommendations are theoretical. However, this research is a pioneer work in examining engagement with the African consumer market through industrial zones and we look forward to further research on this topic. 

  The Central & Eastern European (CEE) countries, including Romania, have the highest growth potentials in the EU. Reflecting this situation, Korea has been expanding its efforts on economic cooperation issues, such as trade and investment, with these countries. After the Korea-EU FTA came into effect in July 2011, Korea’s exports to EU have been underperforming due to economic recession throughout the EU. However, Korea’s trade with the CEE countries has remained stable and Korea has continued to maintain a trade surplus with these countries. Most of the CEE countries, who joined the EU in 2004, served as a dynamic growth engine for the EU, showing rapid economic growth, increase in income, expansion in trade and FDI growth, until the global financial crisis in 2008. Romania, who joined the EU in 2007 and experienced the global financial crisis together, did not hitherto have a proper opportunity to realize its economic growth. Therefore, possibilities are high for Romania to serve as the growth engine of the EU in the near future. As the EU market has the world’s greatest purchasing power, Korean companies and the government are looking forward to expanding economic cooperation with the CEE countries to gain further access into the EU market. Yet, information on Romania remains relatively scarce compared to other countries.
  This study has selected two Romanian industries with high growth potentials to strengthen Korea-Romania industrial cooperation and to suggest effective entry into the Romanian market, with the aim of enhancing Korea-CEE economic cooperation to overcome contracted market access in the EU following the European sovereign debt crisis. This study has analyzed the potentials of the Romanian economy as a growth engine of the EU, and the possibilities of industrial cooperation with Korea. More specifically, we have selected the information communication & technology (ICT) sector and infrastructure sector as our main industries in focus to analyze the risk factors, potentials, cooperation possibilities of each sector, through which we will seek strategic means to invigorate market entry.
  This study has collected a variety of related statistical data and references both from Romanian and international sources. And in order to analyse the competitiveness of the industrial sector, we have looked into the statistical trade analysis of manufacturing industry. Along with qualitative and quantitative analyses, we have interviewed Romanian and Korean experts to ensure a high level of objectivity.
  Among the CEE countries, Romania has the second largest population after Poland. Coming into the 2000s, Romania showed strong economic growth based on the inflow of FDI and growth in exports the nation saw after its accession to the EU. Romania has one of the highest economic growth potentials among EU member states, and is generating the most favorable economic results in recent days. Romania has maintained a relatively low level of commodity price, stable level of wage increase, decrease in value-added tax, and rise of purchasing power for individuals, thus leading to private consumption-led growth. In 2017, Romania is expected to achieve a 5.8% GDP growth rate, which is the highest among EU members. This trend of economic boosting is linked with improvement in investment sentiments from the 2nd quarter of 2017, and extended to develop production capacity and infrastructure, improvement in production levels, and so on, to increase expectations for the Romanian economy to converge to the average level of the EU.
  ICT is an industry sector that both the Romanian government and EU are keen to develop. The Digital Agenda of Europe was suggested in line with EU’s growth strategy “Europe 2020” to establish a European digital single market by 2020. In order to reach this target, it will be necessary to narrow the gap of digital technology within the EU region. Therefore, it is necessary to develop the Romanian ICT sector, and indeed the Romanian government is intent to do so. Despite the fact that internet and mobile coverage are relatively high, Romanian ICT infrastructure has shown the lowest level of development compared to other EU member states. Romania is ranked the 58th in the world according to the ITU’s 2017 ICT development index, indicating that Romanian ICT infrastructure remains insufficient. However, in terms of ICT services, Romania is highly competitive compared to any other EU member state, especially thanks to the relatively low wage level of its skilled IT labor force. Therefore, numerous global IT companies are operating in Romania in the form of outsourcing, near-shoring, etc.
  Romania is the largest recipient of EU funds for regional development. Most of these funds allocated for Romania are planned for infrastructure development. In February 2015, the Romanian government announced a revised version of its transportation master plan to develop roads, railways, air transport, naval and intermodal transport by 2030. Based on this vision, CNAIR and other related institutions are carrying on numerous projects utilising EU funds. According to BMI, the value of road and bridge infrastructure in Romania is expected to grow beyond 15 billion Romanian lei.
  When assessing the external and internal aspects of entering into the Romanian market, the core competence of Korean companies was slightly lower than the average of their competitors in Romania but they showed an average level of coping with opportunity or threat factors. Regarding this assessment using SWOT analysis, here we will suggest strategies for Korean companies when entering into the Romanian market.
  As a Strength-Opportunity combined strategy (S-O strategy), we suggest considering the establishment of an EU production base in Romania, an EU member state with high growth potential. To achieve this, the companies can make use of their competitiveness in high technology, such as in the IT sector, and comparative advantage in steel, automobile, electrical electronics, machinery, etc. It would be a realistic approach to establish a production base in the ICT sector in Romania, which is a fast-growing sector that hosts a number of foreign companies. This strategy is to utilize the opportunity factors available, such as the favorable market access allowed by the relatively open and well-developed infrastructure of the EU. It is in line with Korean companies’ establishing electronic and automobile parts producing factories in the North-western region of Romania near the Hungarian border.
  EU’s government procurement market, which is the largest in the world, is focusing on the infrastructure development projects as part of regional development policy in the new member states including Romania. Therefore, recently Romanian public procurement has been continuously expanding. Among the €454 billion mid-term budget of the 2014-2020 EU fund, €30.84 billion will be allocated to eight different countries and regional programmes. The total budget of the EU fund for Romanian job creation and expand employment, environmental protection, support on social engagement, and so on, is €36.47 billion, among which Romania should independently fund €5.63 billion. As a second S-O strategy to exploit the opportunities of market growth potential and favorable market access in the EU’s emerging market Romania, it would be promising to promote participation in the Romanian government procurement market.
  The third S-O strategy is to consider establishing a base in Romania to enter the emerging Eastern European market while minimizing threat factors. Macroeconomic performance, such as GDP growth, commodity price, exchange rate, etc., in Romania is stable and the nation has rich growth potentials as such a dynamic emerging market. If Korean companies establish an entry access point at the emerging Eastern European market in Romania, with their competitiveness and willingness to develop a market, the companies may expect increase in export to the nearby Balkan countries, Russia and other promising CIS countries.
  We can suggest the following three strategies as Weakness- Opportunity strategies (W-O factor combination strategies). The first is to overcome the actual and psychological gap in the European market and focusing the European business base in Romania to establish an EU market entry base aiming for the world’s largest purchasing power. Considering the personnel expenses and geographical conditions, the gap can be overcome somewhat though establishing the general base in Romania, where excellent language skills and abundant IT manpower would allow the organic integration of each country.
  The second is to participate in the Romanian government procurement market by collaborating with local companies. This would enable the Korean companies to overcome their weakness factor of having insufficient information on Romania, discrepancies in company culture, and lack of understanding and exchange in European culture. While the necessary legislation regarding public- private partnerships is yet to be ratified by the Parliament, the Romanian government expects to pass this in 2018 to invigorate public projects struggling with financial supply problems. Here the Korean companies, including SMEs with proper technologies, can collaborate with the local companies to participate in EU-funded government procurement projects. It is a prerequisite to establish a cooperative relationship with major Romanian companies.
  The third is to enhance understanding of Romanian culture through cultural exchange. This would be a mid- to long-term strategy to overcome the typical weaknesses of the Korean companies when entering the Romanian market. Normally, since cultural exchange should be carried out continuously as a long-term project the Korean government should actively support the projects. To succeed in the previous three S-O strategies, this strategy should serve as an important support policy simultaneously implemented by the government.
  The first Strength-Threat factors combined strategy (S-T strategy) is to launch an entry base for the internal market in the CEE countries based on price competitiveness. By utilizing the absolute or comparatively advantaged competitiveness of the Korean companies, such as in high-technology, and the companies’ willingness to exploit the market, this strategy aims to overcome the rising competition in the EU market and the technical barriers as well as to mark the domestic market of the CEE countries.
  The second S-T strategy is to increase export by considering the market characteristics of the EU internal market by market and product differentiation. This is a strategy to make use of the price competitiveness of the Korean products, willingness to develop a new market, and marketing abilities. Each EU member states have different comparative advantages. Considering that Western European countries and the new member states, including Romania, have different market characteristics, it is necessary to break down the market to apply differentiated product strategies according to the characteristics of each market. This strategy would make it possible to minimize the threat factor of the EU market facing economic recession and limitation on market growth. Moreover, since economic performance and structure are different within the EU, market differentiation by area will be an effective strategy.
  The third S-T strategy is to increase competitiveness in the EU market by securing an R&D base in Romania. This strategy would aim to overcome intensified competition and technical barriers in the EU market and maximize Korean companies’ competitiveness. Particularly, R&D cooperation between Korean companies and the promising ICT sector in Romania is a highly promising win-win strategy for both countries.
  The first Weakness-Threat factor combined strategy (W-T strategy) is to nurture market experts of the CEE countries, including Romania. It is necessary to train Romanian market experts to solve problems such as the lack of information on Romania and discrepancies with Korean business culture. Specifically considering the competitiveness in the environmental sector, lack of awareness, and various technical barriers, it is difficult to get access to the market without expertise in the local market. Besides, any company entering the Romanian market merely wishing to utilize its abundant and low-cost labor force, without perceiving the high wage increase in certain sectors and rising trend in production cost, will likely end up as a case of failure to enter the market.
  Another W-T strategy would be to improve product image through the promotion of Korean popular culture. Efforts to promote Korean culture, such as K-pop, movies, and dramas, are expected to supplement the weakness factor revealed from lack of cultural exchange. This strategy would contribute by minimizing the negative effect of the weakness factors, such as intensified competition in the EU market and overall economic recession in the EU, by increasing the positive image of Korean products. The companies can make use of the increasing demand in CEE countries of the so-called “Korean wave” of K-pop culture products.
  The final W-T strategy is to strengthen high-level intergovernmental diplomacy and economic cooperation. Enhancing economic cooperation through high-level diplomacy may serve as an important momentum to overcome the weakness factors of business culture discrepancies and lack of cultural exchange between Korea and Romania. The Korea-Romania Industry Cooperation Committee, which held its 9th session in Bucharest in April 2016, could consider elevating its participation to ministerial level or higher. The most recent summit- level diplomatic meetings were held in 2006 and 2012. 

  Minerals are North Korea’s key exports. The international community assumes that a significant portion of North Korea’s mineral exports is devoted to the development of weapons of mass destruction (WMD), such as nuclear weapons and missiles, and therefore has been implementing strong export sanctions since 2016. As a result, North Korean exports of more than 10 kinds of minerals, including anthracite and iron ore, have been banned for trade by the international community. The purpose of this study is to investigate the effect of sanctions placed on anthracite and iron ore exports on the North Korean economy in depth, which account for the largest share of North Korea’s exports. More specifically, we examine the production and export of anthracite and iron ores, the process of acquiring foreign currency as a result of the trade and its distribution mechanism. To ensure this end, we conducted in-depth interviews with North Korean defectors who have worked in the business of acquiring foreign exchange as a result of trade in anthracite and iron ores in North Korea, and Korean and Chinese business operators who had engaged in mineral trades with North Korea.
  In Chapter 2, after briefly examining North Korea’s foreign trade management system before and after Kim Jong-un came into power, we analyze the characteristics of North Korea’s foreign trade system, with an emphasis on its linkage with marketization. The “National Unique Trade System” that North Korea had maintained for a long time stepped over the doorstep of decentralization that followed the collapse of the socialist bloc and was replaced by a new trade system. This decentralization of trade was extended with the declaration of the demarche of July 1 in 2002 and gained further momentum thanks to economic reforms carried out by the Kim Jong-un regime. North Korea’s foreign trade is primarily operated by a licensing system, with certain areas managed by market mechanisms which are gradually expanding throughout numerous processes of decentralization. In particular, the strong infusion of private equity and substantial amount of economic activities in the private sector trade strengthened the relationship between trade and the marketization. As a consequence, the North Korean trade system composes systemic operations between the trade and the marketization where there is a mutual benefit of promoting each other.
  In Chapter 3 we use official data to examine the production and export policies of anthracite and iron ores in North Korea and analyze the current state of production and exports. The central topic of this chapter is the tension between domestic and foreign demands in mineral resources. Originally, North Korea’s anthracite and iron ores were key items supporting the nation’s economic development platform of self-sufficiency, and production aimed to satisfy domestic demand rather than foreign ones. However, in the 2000s, export promotion policies were introduced to secure the facilities and funds needed for economic reconstruction, and domestic demand was constrained due to a surge in exports caused by the increased demand for minerals in China. Although the North Korean authorities have introduced policies to restrict exports of minerals accordingly, they seem to have failed due to contradictions with other economic policies, the logic of mineral production itself, and internal policy conflicts. Meanwhile, North Korea’s biggest mystery regarding the production and export of anthracite, iron ores is that production has increased at a very slow pace since the late 2000s, while exports have precipitously increased. In this regard, this study examines the possibility of increased consumption efficiency, underestimation of the production, and overestimation of exports in North Korea.
  In Chapter 4, we analyze the major processes of securing and operating anthracite and iron ore production bases, securing and transporting export goods, and collecting and processing export proceeds in detail from a perspective of trading company. Based upon the initial analysis, we estimated costs and benefits of exports in each process. We verified a number of facts along the way. First, in case of anthracite coal, domestic and export coal mines are operated separately. Domestic goods are produced and sold at prices set by the government, while exports are produced and traded in accordance with market mechanisms. Iron ore, on the other hand, is exported almost exclusively to purchase the coke used for steel production, not to gain foreign currency itself. Therefore, while powerful organizations such as the party and the military exert a great influence on the export of anthracite coal, iron ore exports are overseen almost exclusively by the cabinet.
  Second, there is a complex dual-payment structure in North Korea’s mineral trade with China. To begin with, 70% of the payment for mineral exports is made immediately after the Chinese receives the minerals within the DPRK, and the remaining 30% is paid differentially after quality inspections in China. This is called the pre- and post-payment structure. In addition, a separate system of advance and post-delivery payment is in operation as well. In case of anthracite coal 30-50% of the export payment is paid in advance before production, and the remainder is paid according to the pre- and post-payment settlement method described above. Finally, payments can be made either in cash or in products. In particular, a significantly high proportion of iron ore exports are bartered in exchange for steelmaking coke.
  Third, the reason the advance payment method came to an use was due to the increase in demand for North Korean minerals by China but also due to the excessive demand for payment by North Korean authorities. The North Korean authorities demand an upfront payment of 30% of the sales amount, i.e. the export price, not the sales profit. Therefore, trading companies that lack production and operation funds have no choice but to ask their Chinese counterpart for the payment in advance. This is also the fundamental cause of disputes on outstandings between North Korean and Chinese trading companies.
  Fourth, political expenses and bureaucratic expenses account for a large portion of the sales cost. Suppose the official export amount is 100, then the various economic costs such as production cost, transport cost and operating cost are 25, 15 and 7.5, respectively, while bureaucratic costs amount to 35. If we add the payment to the authorities which is 30, North Korean trading companies suffer from a constant deficit structure. As a consequence, North Korean and Chinese trading companies started a new practice to make up for these deficits, which are “kickback” and various rebates. In other words, kickbacks and rebates in North Korean trade are not merely bribes but an inherent factor to sustain the trade.
  Fifth, approximately 50% of the foreign currencies earned from mineral exports are assumed to be flown to the authorities in the form of procedural costs (assuming that about half of the procedural costs are absorbed by the authorities), and the remaining 50% flows into the market in the form of production (purchase), transportation, and procedural costs. Therefore, sanctions on mineral exports will seriously damage not only the North Korean authorities but the market as well.
  In Chapter 5 we analyze and predict the effects of sanctions (mineral sanctions) that will have on the North Korean economy, anticipate how North Korea will respond to UNSC sanctions and draw implications of policies on North Korea. First and foremost, North Korean authorities seem to have secured a certain level of foreign currency to persevere against the sanctions for the time being. However, the extent to which the North Korean authorities can endure will depend on the amount of foreign currency they are holding. On the other hand, the market is expected to respond more quickly to sanctions. As time goes by, the shortage of foreign currency is likely to push North Korean authorities to try to absorb foreign currency circulating in the market or owned by individuals. In this case, depending on how they collect foreign currencies, it is likely that a change in North Korean regime or socio-economic disruption will occur.
  In the meantime, if the money flowing from the Chinese side is cut off due to the mineral sanctions, it will be impossible for North Korea to produce anthracite itself for export, and most of the tunnels developed for these exports since the 2000s are likely to be abandoned. This runs counter to the claims that export anthracite can be used for domestic demand to offset the impact of sanctions. The situation is even worse for iron ore. Most of the iron ore exports are used to cover the cost of importing coke for domestic steel production. If exports are discontinued, North Korean authorities will have to inject foreign currency reserves. In the worst case, the steel industry itself, which is the major industry of the North Korean economy, may face massive shutdowns. Moreover, North Korea has been supplying miners’ food through minerals exports, so if food supplies become restrained due to a fall in minerals export, the productivity of domestic mining will fall and there will be overall food crisis in the mining sector.
  The conclusion of this study is that current sanctions are already strong enough. Therefore, the government should focus on the current sanctions and should be careful about introducing additional sanctions. It is necessary to provide clear compensation for the commitment of North Korea while maintaining the consistency of the sanctions. At the same time, continuous efforts should be made to extend humanitarian assistance and attempt non-economic cooperation. 

  “Make in India”, the well-known national manufacturing policy of India, has raised attention around the world as it presents its vision of developing India into a global manufacturing hub. First and foremost, it will be significant for Korea to establish additional strategies toward the Indian market in order to diversify its exports. Furthermore, India is growing in its importance for Korea when considering its increasing need to re-adjust from dependence on the G2 economies, amidst rapidly changing circumstances surrounding the Korean Peninsula. Therefore, this research explores the structure and characteristics of each sector of the Indian manufacturing industry. In particular, this study analyzes the manufacturing industry in India, categorized into 24 sections and 137 divisions, by using firm-level data. First, prior to the analysis, this research investigated the current status, system, and policy of the overall manufacturing industry in India. Particularly, we focused on pinpointing the status of India’s manufacturing industry within the global economy through comparison with other major emerging economies. Our study also examines related policies at the sectoral- and state-level. In addition, this research conducted a thorough review of the literature available on the Indian manufacturing industry.
  For the sectoral analysis, this research examined the areas of market power, performance, research & development (R&D), globalization, and productivity and estimated industrial concentration, HHI (Herfindahl- Hirschman Index), Lerner index, sales, total assets, operating margin, R&D expenses, exports, imports, and labor productivity. Next, our research performed a regression analysis using a probabilistic frontier model to estimate the total factor productivity (TFP) of Indian manufacturing industries, with the determinants analyzed through comparative analysis of industrial sectors and firm characteristics. Moreover, this research conducted a comparative analysis on the characteristics of Indian domestic companies, foreign companies (excluding Korean companies), and Korean companies in the Indian manufacturing sector.
  Based on the research results, our study first and foremost strove to provide qualified guidelines for Korean companies to select potential industries for entry into the Indian market. Finally, this paper aims to provide valuable insights in different manufacturing sectors to determine whether the Indian economy is better suited as a production center, or as an export market. 

  During the transition period following the collapse of the Soviet Union, Central Asian countries underwent economic crisis and the collapse of the Soviet welfare system. In the 2000s, thanks to the income gained by oil and gas exports, Kazakhstan and Turkmenistan successfully transformed into upper middle income countries (UMIC). However, the Kyrgyz Republic and Uzbekistan are still eager to lift themselves out from lower middle income country (LMIC) status, while Tajikistan remains a low income country (LIC). There are various views on why Central Asia is lagging behind in economic development. Basically, the area’s geographical limitations as an inland region, political and security instability, and its planned economy are some of the key factors that impede the active development of trade, investment, technology and human resources. Moreover, the recent global financial crisis, the Russian economic crisis, and fall in commodity prices are causing the Central Asian economy to struggle.
  In this context, this study aims to provide an in-depth analysis on the development challenges in Central Asia, and provide policy suggestions for Korea’s development cooperation with Central Asia. Chapter 2 analyzes the current economic and social status in Central Asia based on the Sustainable Development Goals (SDGs). With additional consideration made for the national development strategies of each country, this study singles out six priority areas for cooperation: agriculture development, human resources development, trade facilitation, water management, renewable energy, and governance. Chapter 3 reviews the current status of development cooperation in Central Asia, illustrated in numbers. Case studies on Germany and Japan, two of the major cooperation partners of Central Asia, are introduced for implications to Korea’s development cooperation. Chapter 4 evaluates Korea’s development cooperation policy toward Central Asia, and identifies major achievements and key issues to be improved for future cooperation.
  This study concludes by providing some policy implications. Firstly, Korea needs to design customized strategies that reflect the demands for new development cooperation in Central Asia. Korea should identify the actual needs of the Central Asian region in accordance with changes in its internal and external situations, and establish measures to improve development effectiveness by building an organic cooperation system among different government departments. Secondly, differentiated development cooperation plans for individual Central Asian countries should be established and implemented. Such factors as basic national competence, economic development status (population, resource, socioeconomic infrastructure, etc.), and the basic directions of national development policies should be considered comprehensively. Thirdly, qualitative improvement in Korea’s development cooperation policy is necessary. This can be achieved by expanding private and global partnership, including participation on the part of NGOs and private companies, diversifying development financing through strategic utilization of foreign direct investment and remittances, and establishing field-based policies based on actual development cooperation needs. 

  Mobile healthcare or m-health is defined as all kinds of healthcare services provided with wireless communication devices such as mobile phones or mobile diagnostic devices. Recently ICT-based healthcare industry is emerging as an effective means of improving healthcare infrastructure in developing countries. On the other hand, Korean m-healthcare industry that has outstanding technology such as hospital information systems, electronic medical record management platforms, and mobile-based diagnostic devices faces premature domestic market and lack of related laws and institutions. It is also hard to create markets in other advanced economies because most Korean m-health companies are small- to medium-sized start-ups and other advanced economies have the similar market environment.
  Public healthcare service in developing countries is promising to the firms because m-health technology is easily accepted due to fewer regulations and less social interest conflict. In addition, governments of developing countries and international development agencies have strong demand for m-health to develop public healthcare infrastructure.
  This study analyzes the status and prospects of m-health industries in Kenya and Rwanda, which are the major countries in East Africa and research the cooperation approach of the Korean government and m-health enterprises. The paper also includes detail information about local cooperative government’s m-health and healthcare policy, current m-health projects and strategies of major donor countries and multilateral developing agencies, and technology and market status of the mobile health industry in Korea. Based on the local and industrial information, we suggest policy implications to design a new development cooperation project from which both cooperative governments that need improvement of healthcare services and Korean m-health companies that seek new markets mutually benefit.
  Kenya, an emerging ICT giant in East Africa through huge fin-tech (mobile–base finance service) success and Rwanda, a leading country having great experiences in its development cooperation projects are accomplishing various m-health projects to improve public health system by fostering mobile healthcare technology from the government level.
  We also examine Korean m-health firms’ technology and examples of projects in developing countries. There are two groups depending on company size, entry items, market entry projects and strategies: start-ups developing mobile healthcare devices and large enterprises and hospitals that focus on mobile healthcare platform and database.
  Since most projects in Africa are led by partner governments, especially healthcare projects, a partnership with local cooperative governments is most important. It is also important to maintain a good partnership with other donors in Africa to carry out m-health base development cooperation projects.
  Strategic region or country should satisfy the following criteria: regional integration and similarity among governments and industries, government’s wills, and business potential of scale-up. We also suggest disease and patients’ information sharing system and portable diagnostic devices as strategic areas of product and technology among various areas of mobile healthcare industry. It is necessary to select and discuss areas that harmonize the policies and strategic plans of partner country governments.
  From the m-health industrial point of view, it is vital to focus on collecting data and obtaining references to advance technology in the long term, in addition to expanding the public health sector procurement market. Enhancing policymakers’ m-health technical understanding can support the link between development aid projects and the mobile healthcare industry.
  Korea’s m-health ODA cooperation with African countries will also provide Korea with strategic cooperation opportunities with partner countries that place their economic development priority on the ICT industry. For Korea, it will be worthwhile to pay close attention to the multiplicative potentials forming in the m-health sector for Africa. 

  The UK’s decision to leave the EU (European Union) has put the Union in an unprecedented crisis. The exit per se of such a large member state in both economic and population size is causing turmoil, and the accumulated discontent towards the current system of the EU during the euro-area sovereign debt crisis and refugee crisis has come to the fore due to Brexit. Backed by this discontent, political forces arguing for their own countries’ exit from the Union have also risen in other member states, and heads of governments of other major member states and EU institutions are rushing to propose reforms to the current system. The deepening and extending of the European integration since the creation of the European Coal and Steel Community for peace and prosperity in Europe right after the World War Ⅱ is put on break, and the uncertainty on the future shape of the EU has risen to an unprecedented level. This uncertainty is likely to cause troubles not only to the EU and its member states but also to third countries including South Korea in long-term decision makings at the levels of business, consumer and government, due to the Union’s importance in world economy and international trade.
  Against this backdrop, this report analyzes the problems of the current system of the EU, forecasts its future shape and derives policy implications for Korean government.
  Chapter 1 briefly follows the evolution of Brexit, sketches the importance of the UK within the Union and outlines the plan of this report.
  Chapter 2 analyzes the major problems of the current system in the following 6 areas: European identity; decision-making structure; economic divergence among member states; public finance; management of economic crisis; labor migration and refugees. Lack of identity, decision-making structure and migration-refugee issue are known to have had direct impacts on the spread of the public demand for exit from the Union, and economic divergence, public finance and crisis management have emerged as the major problems of the current system during the euro-area sovereign debt crisis.
  Finally, Chapter 3 categorizes possible shapes of future European integration and proposes 5 scenarios. Using the AHP method, it estimates the probability distribution among the 5 scenarios and derives policy implications for Korean government for each scenario. 

  Korea has been providing development aids to support vocational education and training (VET) in Uzbekistan. This report aims to derive Korea’s policy alternatives for effective development cooperation in Uzbekistan’s VET by carrying out the following analyses. The development needs of Uzbekistan’s VET are identified, and lessons are drawn from donor communities’ VET cooperation practices. Korea’s VET cooperation efforts in Uzbekistan are also examined and evaluated. Korea’s new cooperation strategy and projects for Uzbekistan’s VET are proposed for more effective development cooperation outcomes.
  In Uzbekistan, under the government-led development policy with most of investment made in the public sector, the private sector has not played an active role in economic growth. Employment opportunities have not been created enough to provide jobs for the increasing and young labor force. To cope with this problem, the Uzbek government introduced a series of policies aimed at expanding the private sector and diversifying the industrial structure. In 2017, the new Mirziyoyev government announced the five priority policy directions to be implemented over the next five years. Economic development and liberalization is one of the priority directions, where industrial diversification, financial and agricultural reforms etc, were proposed. The improvement of education system was included in the priority direction for improvement of social services. The prerequisite for successful implementation of the industrial development policy is to increase investment in potentially competitive industries, develop industrial technologies, and cultivate high-quality technical personnel required for industrialization. However, no specific plans or strategies have been laid out by the Uzbek government to foster strategic industries and cultivate technical manpower.
  Vocational high schools have played a major role in providing compulsory vocational education in Uzbekistan, which means that access to vocational education is very high. However, the quality of vocational education is inadequate, which results from problems in facilities and equipments, curriculum, training of trainers etc. On the other hand, as the industrial structure and labor demands change, vocational training will need to be provided for new occupations and technical fields, unemployed and transferring workers, returning migrant workers etc.
  The development needs for VET in Uzbekistan can be summarized as follows. First, the mid/long-term manpower development plan should be prepared for strategic industries. Second, the mid/long-term road map for improvement of the VET system needs to be introduced. Third, the linkage between the VET system and the labor market has to be strengthened to meet new labor demands. Fourth, institutions and regulations need to be established to expand VET opportunities for adults. Fifth, credibility and acceptability of VET qualifications and institutions have to be improved. Sixth, the VET quality evaluation system needs to be strengthened. Lastly, information gathering and diffusion has to be improved in education including VET.
  About 12.5% ​​of development aids for Uzbekistan was spent on education, approximately 20% of which was provided for VET. Several implications can be drawn from the practices of major donor institutions in VET. First, as the industrial structure of Uzbekistan changes, demands for vocational training for adults will be greatly expanded. Second, Korea can improve the sustainability of VET projects by putting more aid resources on VET programs rather than VET hardwares. Third, the introduction of strategic guidelines on VET will be helpful for the effective and systematic implementation of VET projects. Fourth, cooperation with other donor institutions should be pursued to enhance the effectiveness of Korea’s VET projects.
  Korea’s ODA for Uzbekistan has been steadily increasing, and 12 aid projects have been implemented in education since 1991. While the EDCF has provided concessional loans for vocational and general education, the KOICA has carried out grant projects on vocational training, secondary and higher education. It has been pointed out that Korea’s VET cooperation projects were limited to providing supports on VET hardwares such as facilities and equipments. It is noteworthy that the KOICA recently launched its first consulting project on the vocational training system of Uzbekistan, which will contribute to the effectiveness of Korea’s VET supports. In addition, Korea can increase its VET aid effectiveness of Uzbekistan by concentrating its supports on expanding vocational training and establishing the qualification system in cooperation with other development partners including the private sector. 
  Korea’s new strategy directions for VET development cooperation in Uzbekistan are proposed as follows. First, Uzbekistan will have increasing demands for adult VET which can not be met by the current VET infrastructure and capacity. Therefore, Korea’s supports need to fill the gap in Uzbekistan’s vocational training capacity. Second, in order to increase the accountability of Korea’s VET projects in Uzbekistan, the result-oriented monitoring and management system have to be strengthened. Third, Koreas needs to help Uzbekistan establish the more effective VET system by providing legal and institutional consultation. Fourth, a list of promising VET aid projects with concrete implementation mechanisms can contribute to the effectiveness of Korea’s new VET cooperation strategy for Uzbekistan.