Policy Analyses
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Policy Analyses
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Economic Effects and Policy Implications of Financial Opening in Korea
Since the 1980's, Korea has witnessed a continuous expansion of financial opening, consequently having a high degree of financial opening as in developed economies. Despite various potential benefits, financial opening also poses ..
Deok Ryong Yoon et al. Date 2008.12.30
Economic opening, Financial liberalizationDownloadContentSummarySince the 1980's, Korea has witnessed a continuous expansion of financial opening, consequently having a high degree of financial opening as in developed economies. Despite various potential benefits, financial opening also poses potential problems such as macroeconomic instability. Financial opening may promote investment and economic growth through providing financial resources at a lower cost, and it may also contribute to improvement of the efficiency in domestic financial market. However, financial opening may also result in excessive capital inflows or promote inflows of highly volatile short-term capital, increasing macroeconomic instability or causing financial crisis. In particular, in 2008, Korea faced a global financial crisis, and this made Korea reconsider the benefits and costs of financial opening and Korea's approach to become a regional financial hub. At this point, comprehensive studies are needed that can help to properly evaluate the effects of financial opening in Korea. For this purpose, this paper empirically analyzes the economic effects of financial opening on the Korean economy in various respects. This study also extensively discusses policy implications of its empirical results. (The rest is omitted.) -
Destined to Fail? The History of the Yen Bloc Before the Second World War
The formation of the yen bloc did not result in the economic and monetary integration of East Asian economies. Rather, it led to the increasing disintegration of East Asian economies. Compared to Japan, Asian regions and countries..
Woosik Moon Date 2008.12.30
Economic integration, Financial integrationDownloadContentExecutive Summary
I. Introduction
II. The Formation of Yen Bloc
1. First Step
2. Manchuria and China
3. Currency War between China and Japan
III. Yen Bloc under the Greater East Asia Co-Prosperity Sphere
1. Establishment of the Great East Asia Financial Sphere
2. Features of Great East Asia Financial Sphere
IV. Consequences of the Yen Bloc: Increasing Divergence
1. Inflation Gap
2. Growth Gap
V. Conclusion
ReferencesSummaryThe formation of the yen bloc did not result in the economic and monetary integration of East Asian economies. Rather, it led to the increasing disintegration of East Asian economies. Compared to Japan, Asian regions and countries had to suffer from higher inflation. In fact, the farther the countries were away from Japan, the more their central banks had to print money and the higher their inflation was. Moreover, the income gap between Japan and other Asian countries widened. This means that the regionalization centered on the Japanese yen was destined to fail, suggesting that the Co-prosperity Area was nothing but a strategy of regional dominance, not of regional cooperation. The impact was quite long lasting, and it still haunts East Asian countries, contributing to the nourishment of their distrust vis-à-vis Japan, and throws a shadow on recent monetary and financial cooperation movements in East Asia. This experience highlights the importance of responsible actions on the part of leading countries to boost regional solidarity and cohesion for the viability and sustainability of a regional monetary system. (The rest is omitted.) -
Financial Integration and Exchange Rate Coordination in East Asia
This paper examines the costs of a unilateral exchange market intervention in a developing East Asian country, focusing on Korea, and stresses the need for exchange rate and monetary coordination in East Asia. Indeed, the case of ..
Woosik Moon et al. Date 2008.12.30
Financial policy, Financial integrationDownloadContentExecutive Summary
I. Introduction
II. Increasing Financial Globalization and Regionalization
III. Intervention Cost: the case of Korea
1. Increasing Interest Arbitrage
2. Intervention and Sterilization Cost
IV. Proposal for Monetary Cooperation in East Asia
V. Conclusion
References
AnnexSummaryThis paper examines the costs of a unilateral exchange market intervention in a developing East Asian country, focusing on Korea, and stresses the need for exchange rate and monetary coordination in East Asia. Indeed, the case of Korea shows that individual countries in East Asia cannot manage their exchange rates, and that even if they try to do, the exchange market intervention operation results in heavy losses, achieving no expected results. Overcoming this dilemma requires a collective action through which all Asian countries simultaneously fluctuate their exchange rates vis-à-vis the US dollar to maintain intra-regional exchange rate stability. However, the precondition for such a collective action is not yet satisfactory. Active policy dialog to coordinate economic and monetary policies and to achieve greater economic convergence will be needed. (The rest is omitted.) -
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The Assessment of Korea's Capacity as Foreign Aid Donor
This study is aimed to assess Korea's executive abilities as an aid donor. This is motivated by two concerns. Though Korea has some 20 year long experience of providing foreign aid, it is one of emerging donors in terms of both hi..
Bokyeong Park et al. Date 2008.12.30
Economic development, Economic cooperationDownloadContentSummaryThis study is aimed to assess Korea's executive abilities as an aid donor. This is motivated by two concerns. Though Korea has some 20 year long experience of providing foreign aid, it is one of emerging donors in terms of both history and size in aid provision. Naturally Korea has many things to be improved in the area of the executive abilities. Therefore, one of the motivation is to identify the weak parts to be corrected and strengthened. In addition Korean government has a plan to gradually increase its size of foreign aid and become a member of the Development Cooperation Committee of the OECD in 2010. If the executive abilities in aid provision will not be enhanced in proportion to its aid size, the effectiveness of its aid may deteriorate in the future. This concern also is one of the motivations for this study. The rest is omitted. -
China's Consumer Market
China's consumer market has been regarded as the biggest potential market in the world. Since it's reform and open-up, China has been experiencing "consumer revolution". Consumer's expenditure has expanded dramatically with rapid ..
Mansoo Jee et al. Date 2008.12.30
Economic cooperation, Overseas direct investmentDownloadContentSummaryChina's consumer market has been regarded as the biggest potential market in the world. Since it's reform and open-up, China has been experiencing "consumer revolution". Consumer's expenditure has expanded dramatically with rapid growth of the income. During last 2 decades, most of major durables such as TV sets, refrigerator, washing machine have been introduced to Chinese households as well as all the new concepts like brand, advertising, shopping. (The rest is omitted.) -
Major Issues on APEC economic cooperation and Policy Implications
Since its inception in 1989, Asia-Pacific Economic Cooperation (APEC) has achieved remarkable progress towards the vision of building the Asia-Pacific community. However, with its 20th anniversary, APEC appears to be adrift in the..
Sangkyom Kim et al. Date 2008.12.30
Economic reform, Economic integrationDownloadContentSummarySince its inception in 1989, Asia-Pacific Economic Cooperation (APEC) has achieved remarkable progress towards the vision of building the Asia-Pacific community. However, with its 20th anniversary, APEC appears to be adrift in the middle of formidable challenge. First, as sub-regional trading arrangements proliferate within the APEC region, APEC has to take into consideration a high-quality and comprehensive regional economic integration strategy and strengthen APEC Ecotech Activities. Both intra- and inter-regional trade agreements must be utilized to function as stepping stones and building blocks conducive to strengthening multilateral trading system. Second, APEC needs to be more proactive and responsive to the global economic issues stemming from financial crisis and climate changes. (The rest is omitted.) -
Crisis and Internationalization of Korean Won
The internationalization of Korean won (henceforth KRW) refers to expanding the use of KRW further into foreign markets where KRW has never been traded or used. It entails the growth of the exchanges of KRW between non-residents, ..
Yonghyup Oh et al. Date 2008.12.30
Financial policy, Monetary policyDownloadContentSummaryThe internationalization of Korean won (henceforth KRW) refers to expanding the use of KRW further into foreign markets where KRW has never been traded or used. It entails the growth of the exchanges of KRW between non-residents, issuances of financial assets - either domestic or foreign- denominated in KRW, and settlements in KRW in invoicing the imports or exports of Korean goods and services. (The rest is omitted.) -
Cross-border M&As and Implications for Korean Direct Investment Abroad
Cross-border mergers and acquisitions (M&As), now constituting 80% of foreign direct investment (FDI) between developed countries, have been reshaping the global landscape of industries. Most of the growth in international pro..
Hea-Jung Hyun et al. Date 2008.12.30
Business management, Overseas direct investmentDownloadContentSummaryCross-border mergers and acquisitions (M&As), now constituting 80% of foreign direct investment (FDI) between developed countries, have been reshaping the global landscape of industries. Most of the growth in international production takes place through cross-border M&As rather than Greenfield investment. The value of cross-border M&As dramatically rose from less than USD 100 billion in 1987 to USD 2,234 billion in 2007, albeit some declines in early 2000s. (The rest is omitted.) -
Korea's FTA Rules of Origin: Review and Future Strategy
The determination of origin would be simple and straight forward if goods had been produced or manufactured within one country. However, in the world that is frequently referred to as 'global factory,' most of the final products i..
HanSung Kim et al. Date 2008.12.30
Economic opening, Trade policyDownloadContentSummaryThe determination of origin would be simple and straight forward if goods had been produced or manufactured within one country. However, in the world that is frequently referred to as 'global factory,' most of the final products involve more than one country in their production process. In such cases, there have to be specific rules that determine the country of origin of goods and it becomes an important issue when two or more countries negotiate regional trade greements. Determining the country of origin of importing goods is necessary for importing countries to apply the custom tariff, quantitative restrictions, or commercial policies such as anti-dumping duties and safeguard measures. Rules of origin are laws and administrative practices used to identify the country of origin of internationally traded goods. (The rest is omitted.)
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