Policy Analyses
Publications
Policy Analyses
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Effects of Environmental Changes on Migration and Labor Market Outcomes
This report provides a comprehensive investigation of environmental migration, which is expected to accelerate in the future due to the direct and indirect effects of climate change and natural disasters. The report is the first K..
Youngook Jang et al. Date 2022.12.30
국제이주, Labor marketDownloadContentSummary<This report provides a comprehensive investigation of environmental migration, which is expected to accelerate in the future due to the direct and indirect effects of climate change and natural disasters. The report is the first Korean-language study to address the various aspects of environmental migration and employs various research methods, including field research, expert interviews, case studies, literature review, and empirical analysis.Chapter 2 classifies migration due to climate and environmental factors into three categories: i) displacement due to extreme weather events and disasters, ii) displacement due to gradual climate change, and iii) displacement due to a combination of factors. It reviews the current status, cases, and prospects of each category. This chapter also highlights the impact of various environmental factors such as typhoons, floods, extreme heat events, earthquakes, and volcanic eruptions, which can cause immediate displacement of large numbers of people.Chapters 3 through 5 conduct case studies in Central America, Africa, and Southeast Asia, respectively. Chapter 3 provides case studies of Mexico, Guatemala, El Salvador, and Honduras, examining how climate change and the frequent occurrence of intense natural disasters are linked to migration in these countries. In these countries, declining agricultural productivity, particularly among subsistence farmers and seasonal laborers, is likely to worsen the socioeconomic situation, leading them to choose migration as a last resort climate change adaptation mechanism.Chapter 4 examines climate and environmental factors and migration trends in Morocco, Senegal, Nigeria, and Somalia. This chapter illustrates how climate change and environmental change are driving migration in these countries through case studies and field research. The impact of drought on migration in Morocco, Senegal, and Nigeria is particularly significant, with increased internal, international, temporary, and permanent migration due to drought. The more agriculturally dependent and drought-affected communities are, the more likely they are to choose to migrate themselves or their family members as an adaptation to environmental change.Chapter 5 explores the cases of environmental migration in four Southeast Asian countries: the Philippines, Indonesia, Vietnam, and Thailand. The findings presented in the chapter reveal that the Philippines experienced the most severe environmental impacts, with the highest increase in temperature and precipitation, and the most frequent natural disasters such as storms and floods, leading to the highest number of out-migrants. Indonesia also faced frequent floods and earthquakes, resulting in significant human and economic losses and domestic migration due to natural disasters accounting for the majority of migration. While Thailand experienced less severe floods and storms than the other countries, the back-to-back floods in 2010 and 2011 displaced over 2.5 million people.Chapter 6 reviews the literature and conducts empirical analysis to examine the impact of climate and environmental change on migration and labor markets. The analysis shows how temperature changes, precipitation changes, and natural disaster in sending or receiving countries have a significant impact on bilateral migration. Additionally, environmental change is found to lead to migration outflows only in low- and middle-income countries, while income decline has a deterrent effect on migration in low-income countries. This chapter also highlights the scarcity of research on the impact of climate change on labor markets as a route to migration and suggests expanding research in this area.Finally, in Chapter 7, the report draws policy implications based on its findings. The chapter recommends expanding humanitarian assistance to migrants, strengthening international and development cooperation on climate change mitigation and adaptation, and improving administrative procedures to accommodate the increasing influx of foreign labor. The report emphasizes the need for proactive predictions on the demand and supply of foreign labor and elaborating strategies to accommodate them, given the anticipated demographic changes in South Korea. While the report does not propose specific policy alternatives, its findings are recommended as a basis for future policy responses. -
The Impact of Anti-Russian Sanctions and Implications for the Economy of Central and Eastern Europe
The Russia-Ukraine war and EU sanctions against Russia are having a negative impact not only on Russia but also on the overall EU economy, and these negative effects are expected to continue into 2023 as the war prolongs. Central ..
Cheolwon Lee and Cho Rong Kim Date 2022.12.30
Economic cooperation, Overseas Direct Investment Europe Russia EurasiaDownloadContentSummary<The Russia-Ukraine war and EU sanctions against Russia are having a negative impact not only on Russia but also on the overall EU economy, and these negative effects are expected to continue into 2023 as the war prolongs. Central and Eastern European countries, which enjoy relatively strong trade, business and energy-related links with Russia, have been hit particularly hard. Central and Eastern European countries bordering Russia and Ukraine are relatively dependent on Russia for energy, and are expected to suffer the greatest economic damage in terms of trade relations.Policies toward Russia in Central and Eastern Europe have maintained various stances depending on country, ranging from Poland, which consistently maintains an anti-Russian stance, to Hungary, a typical pro-Russian country, or have recently undergone a change in stance. Central and Eastern European countries located on the EU border or those close to Russia and have some legacy of past socialist alliances, regardless of their pro-Russian or anti-Russian ties, generally have close economic ties with Russia. Therefore, after the invasion of Ukraine, the EU’s sanctions on Russia will inevitably have a serious impact on the Central and Eastern European countries in various sectors such as trade, investment, and finance as well as the energy sector, which is expected to suffer a direct short-term impact.In 2004 and 2007, Korean companies entered Central and Eastern Europe in large numbers including the four Visegrad countries (Poland, Czech Republic, Slovakia, Hungary), set production bases in Europe, and then made further investments. The Visegrad V4 countries represent the largest export market for Korea in the EU, accounting for 28.3% of its exports to the EU in 2020. As such, Central and Eastern Europe, where Korea has the most active economic cooperation in Europe, is expected to suffer the most serious and diverse negative impacts from geopolitical crises, including the recent Russia-Ukraine war. We analyze that major countries in Central and Eastern Europe will experience slightly different economic impacts and show disparate policy tendencies toward Russia in the face of geopolitical crises, and accordingly, it will be necessary for Korean companies to prepare differentiated countermeasures. In particular, it is time to review Korean companies’ strategy toward Europe based on an in-depth analysis of the economic impact of the geopolitical crisis on countries in Central and Eastern Europe.The purpose of this study is to analyze the impact of EU sanctions against Russia on Central and Eastern European countries from various angles after the outbreak of war between Russia and Ukraine, and to draw implications for Korea’s economic relationship with Central and Eastern Europe. This study is largely composed of the following three issues. First, it shows how these Central and Eastern European countries have close economic relations with Russia, second, how the geopolitical crisis originating from Russia will affect the Central and Eastern European economy, and finally, third, how Korean companies and governments should respond to economic relations with Central and Eastern Europe. Therefore, following the introduction in Chapter 1, Chapter 2 sheds light on the relationship between Central and Eastern Europe and Russia, including trade, investment, and energy. And in Chapter 3, the EU’s sanctions against Russia and their future trajectory, the impact on the Central and Eastern European economy, and the changes in the local business environment of the companies entering the market were analyzed. Finally, in Chapter 4, based on the above-mentioned analysis and economic relations between Korea and Central and Eastern Europe, implications for Korean companies and governments were derived. -
EU’s Medium- to Long-term Trade Strategies and Korea-EU Cooperation Plans
This study examines recent changes in the European Union’s (EU) mid- to-long-term trade strategy. The trade environment has been greatly affected by the weakening of multilateralism, intensification of the US-China strategic comp..
Youngook Jang et al. Date 2022.12.30
Economic cooperationDownloadContentSummary<This study examines recent changes in the European Union’s (EU) mid- to-long-term trade strategy. The trade environment has been greatly affected by the weakening of multilateralism, intensification of the US-China strategic competition, COVID-19 pandemic, and the outbreak of the Russian-Ukrainian war. In response, the EU has announced new strategies. This study categorizes the motivations of these strategies into internal and external ones, and identifies ways for Korea and the EU to cooperate in these areas. Specifically, the EU is currently focusing on policy areas such as supply chain reorganization, digital transformation, and climate change response due to internal motivations, and it is passively responding to external pressures in policy areas like the energy crisis and pandemic response.Chapter 2 analyzes the EU’s supply chain reorganization, which includes policies to increase the competitiveness of intra-EU companies in strategic industries and reduce extra-EU dependence. This chapter examines a series of EU policies to strengthen semiconductor and battery supply chains, including the Single Market Emergency Instruments and the Critical Raw Materials Act. To ensure that Korea’s participation in the EU’s reorganization of offshore supply chains increases, it is necessary to actively promote the idea that Korea is a reliable partner. Supporting Korean companies to invest in the EU to strengthen cooperation in the semiconductor industry and actively reflecting the position of Korean companies in setting international standards for batteries are also worth considering. Technical exchanges with relevant organizations and companies in the EU should be actively promoted. Bilateral cooperation in critical minerals, which are necessary to combat climate change, is also promising. EU experts suggest linking respective early warning systems and monitoring of critical minerals to share information and promote joint purchases.Chapter 3 examines the priority areas for digital cooperation between Korea and the EU, based on the EU’s key digital policies and agreements. The chapter identifies several potential areas for cooperation, including the Korea-EU Digital Partnership, which is expected to encompass emerging technologies such as 5G/6G, high-performance computing, quantum technology, artificial intelligence, and blockchain, as well as regulatory areas such as privacy, cybersecurity, online platforms, and data movement. Additionally, the chapter suggests that modernizing e-commerce provisions in the Korea-EU FTA could help facilitate digital trade and strengthen digital economic cooperation. Another area for cooperation is in creating a regulatory environment that enables the digital market to grow appropriately, as digital-related regulations are strengthened in each country. Finally, the chapter recommends upgrading cooperation in digital and information and communication technology (ICT) infrastructure and technical cooperation, including future networks such as 6G, high-performance computing, artificial intelligence, cybersecurity, ICT supply chains, e-government, and R&D. By leveraging their advanced digital technologies and shared interests in promoting and developing these areas, Korea and the EU can deepen their digital cooperation.Chapter 4 examines the key issues of the EU’s climate change response and proposes possible areas of cooperation between Korea and the EU. The EU is implementing one of the world’s most advanced and forward- thinking environmental policies. With the recent announcement of the “Fit-for-55” legislation, the EU is accelerating its eco-friendly structural transformation by reducing carbon emissions by 55% compared to 1990 levels by 2030. Additionally, the EU will ban internal combustion engine vehicles from 2035, raise the target for renewable energy, expand the scope of the emissions trading system, phase out free allowances, and introduce a carbon border adjustment system for offshore countries. Chapter 4 suggests three areas of cooperation: first, cooperative programs to jointly develop eco-friendly technologies; second, joint participation in multilateral discussions on climate change response; and third, joint participation in supporting climate change response and adaptation in developing countries. Climate change is beyond the scope of individual national governments or bilateral issues, and effective responses can only be achieved through multilateral cooperation.Chapter 5 examines the energy situation in the EU and its major member states, and then examines the energy security policies implemented before and after the Russian-Ukrainian war. In response to the green transition discussed in Chapter 4, major European countries have generally sought to expand renewable energy sources such as solar and wind power. However, their stance on nuclear power and natural gas has varied across member states. It is expected that the reliance on nuclear power generation will remain high for the time being, as the deadline for operating or retiring nuclear power plants has been extended to resolve short-term energy supply and demand imbalances. In response, Korea should continue energy cooperation with major EU member states such as Germany, France, and Poland, but consider alternatives for cooperation that are consistent with each country’s policy.Chapter 6 proposes potential avenues for cooperation between the EU and South Korea in the area of public health, based on the EU’s COVID-19 response. The COVID-19 pandemic has significantly impacted the EU, resulting in high numbers of infections and deaths as well as a sharp decline in economic growth. To combat the pandemic, the EU has implemented various policies, including establishing joint response procedures among member states, jointly purchasing and distributing vaccines, providing financial support at the EU level, and actively participating in multilateral cooperation. Korea can continue to cooperate with the EU in three key areas: first, promoting bilateral cooperation to respond to future infectious disease crises; second, jointly participating in multilateral organizations as similarly situated countries; and third, providing technical cooperation in the pharmaceutical field. By improving relevant provisions within the EU-Korea FTA and strengthening cooperation through diplomatic channels, the EU and Korea can continue their cooperation in the health sector.Overall, this study highlights various ways in which Korea and the EU can strengthen their cooperation in areas such as supply chain reorganization, digital transformation, climate change response, and energy security. By working together, both sides can achieve their common goals and respond more effectively to global challenges. -
The Social and Economic Impact of the Spread of Populism in Latin America
Populist forces continue to emerge in Latin America, causing instability and uncertainty across the region. Populist forces in the region first rose to prominence during the beginning of the period of import substitution industria..
Seungho Lee et al. Date 2022.12.30
Economic cooperation, Political Economy Latin AmericaDownloadContentSummary<Populist forces continue to emerge in Latin America, causing instability and uncertainty across the region. Populist forces in the region first rose to prominence during the beginning of the period of import substitution industrialization in the 1930s. They emerged taking advantage of the growing demands of the rapidly expanding urban working class for mass politics and the expansion of social benefits. Populism was rampant in Latin America for more than 30 years following the 1930s, but fell into decline with the emergence of military regimes in the 1960s and 1970s. However, populist forces emerged yet again in the 1980s with the wave of democratization and the accumulation of public dissatisfaction due to a series of economic crises. The so-called neopopulist forces took power in Latin American countries in the 1980s and 1990s, combining neoliberal economic policies with the typical ‘us’ versus ‘them’ discourse that is typical of populists.While a rapid transition to neoliberal policies led to various social and economic problems, traditional parties and politicians were not able to respond effectively to those problems. In this context, a new populist wave, combined with what was called the 21st-century socialism, emerged in the 2000s. In the 2010s, new breeds of populism appeared one after another, and the spread of populism is not expected to disappear in Latin America in the near future. Social and economic inequality is worsening across the region in the aftermath of COVID-19, and public distrust of established party politics and existing democratic institutions is growing higher than ever. All in all, there is fertile ground for populist forces to spread even more, claiming that they are the only ones who can eliminate the ‘incompetent and corrupt’ establishment and truly represent the “virtuous” people.With the spread of populism expected to continue in Latin America, there is a growing need to investigate the social and economic impact of populism. Against this backdrop, this study examines the impact of populist forces in power on the inflow of foreign direct investment, the quality of democratic institutions, and the foreign policy directions of Latin American countries. Based on our empirical evidence and qualitative analysis, we provide several recommendations for the Korean government and corporations. The contents of our research are as follows.In Chapter 2, we examine how populism has been defined in the existing literature and provide an explanation about the definition of populism we adopt for this research. This study follows the ideational definition of populism, which conceptualizes populism as a ‘thin-centered’ ideology that considers society to be ultimately separated into two homogeneous and antagonistic groups, the ‘people’ and the ‘elite,’ and which argues that politics should be an expression of the general will of the people. At the core of diverse phenomena labeled ‘populist,’ ranging from classical populism from the 1930s to 1960s and neopopulism in the 1980s across Latin America to recent populism not only in the region but also around the world, there is this ‘thin-centered’ ideology. In addition, we provide in this chapter a literature review that can hint at how the core characteristics of populism may affect our variables of interest.Chapter 3 examines the impact of populist forces in power on the inflow of foreign direct investment, quality of democratic institutions, and foreign policy directions. We conduct empirical analysis using a panel dataset including 18 Latin American countries from 1999 to 2021, employing regression analysis and synthetic control methods. We then complement our empirical evidence with some case studies on populist rule. Our findings are as follows.First, our regression results show that the presence of a populist government or a stronger populist tendency of the ruling government do not necessarily lead to a decrease in foreign direct investment inflow. We find that the negative impact of the presence of a populist government or a stronger populist tendency of the ruling government is pronounced in left-wing regimes. A populist in power or a stronger populist tendency are associated with a larger inflow of foreign direct investment under centrist and right-wing governments. Our findings from synthetic control methods suggest that a populist in power on average leads to a decrease in foreign investment inflow regardless of its ideological orientation. In our case studies, we examine how a number of populist governments in Latin America have implemented their economic policies and how they have affected foreign direct investment inflow.Second, our findings from regression analysis and synthetic control methods suggest that a populist in power and a stronger populist tendency adversely affect the quality of democratic institutions regardless of the ruling government’s ideological orientation. Our case studies illustrate a typical populist strategy to attack democratic institutions, with examples of left-wing and right-wing populist governments from the early 2000s to recent times. They confirm how populism and democracy are inherently incompatible. Moreover, we suggest that the authoritarian tendency of populist governments has strengthened during the recent COVID-19 period, which provided a number of populist governments with an excuse to suppress civil liberties while strengthening executive power.Third, we suggest that a populist in power tends to politicize foreign policy. The role of the governing ideology becomes more important than pragmatism in foreign policy decision-making, which is personalized and has authority concentrated on the ruling populist’s inner circles. In order to secure support from their core constituencies, populist governments attempt to break away from traditional policy directions and follow their governing ideology in foreign policy decision-making. We complement our case studies with our findings from synthetic control methods. We employ a variable quantifying how close individual countries’ voting patterns in the UN General Assembly are to that of the United States as a proxy for their policy stance towards the United States. Our findings show that left-wing populist governments tend to design their foreign policy to decrease dependence on the United States.Chapter 4 presents the implications of our research for the Korean government and businesses. First, it is necessary to pay attention to the recent movement of resource nationalism led by left-wing populist governments across Latin America. One should note that resource nationalism, including nationalization measures, is an important variable to consider for investment and cooperation decisions by the government and companies interested in securing critical minerals and strengthening supply chains across the region. Most of the left-wing populist governments in Latin America seem to be expanding the role of the state in strategic industries such as oil, core minerals, and electricity through anti-neoliberal and nationalist rhetoric. The Korean government and businesses are required to respond actively to the changing political landscape.Second, the Korean government and businesses should keep in mind that once populist rule is consolidated through referendums and constitutional amendments, it can result in a rapid transition from a democratic regime to an authoritarian regime. Meanwhile, the authoritarian tendency of populist governments has strengthened with the spread of COVID-19, which makes the possibility of a regime change even greater in some countries across the region.Third, the foreign policy directions of Latin American countries in which populist forces are in power can be ideologicalized and personalized at any time, breaking away from their traditional policy directions. It is also being observed that like-minded populist governments in Latin America are strengthening their solidarity with other countries both within and outside the region based on ideological similarities. In this context, this study recommends the Korean government pursue its foreign policy based on values and norms while making additional efforts to cooperate with countries under populist rule employing instruments such as economic cooperation or high-level diplomacy. -
U.S. Medium- to Long-term Trade Strategies and Korea-U.S. Cooperation Plans
Recently, not only responses to various major economic and trade issues, but also discussions at the global level to prepare measures for cooperation in the international community for each issue are taking place, centering on the..
Gusang Kang et al. Date 2022.12.30
Economic cooperation, Trade policy United States of AmericaDownloadContentSummary<Recently, not only responses to various major economic and trade issues, but also discussions at the global level to prepare measures for cooperation in the international community for each issue are taking place, centering on the U.S. Due to external shocks at the global level, such as the hegemony competition between the U.S. and China and the COVID-19 pandemic, the U.S. and other major countries have begun to consider ways to change their existing supply chains based on cost-efficiency to resilient supply chains for major materials essential to their national security. In addition, the intensifying spread of the coronavirus has prompted the expansion of non-face-to-face economic activities such as telecommuting and online shopping. Accordingly, it has become more important to discuss standard digital trade norms to support a digital platform economy. Moreover, the Biden administration announced its 2050 carbon net-zero goal to respond to climate change while implementing related policies and leading discussions on climate change response in the global community. Lastly, as each country's policy measures are being used to recover from the economic damage caused by the COVID-19 pandemic, major countries including the U.S. and South Korea have paid more attention to development cooperation policies targeting developing countries. Therefore, this study tried to derive South Korea's future trade strategy and cooperation measures with the U.S. by identifying the U.S. position and response strategy for each of the major economic and trade issues previously mentioned.First, we present the U.S. policy responses related to the semiconductor and battery sectors and their implications in terms of the U.S.-centered supply chain reorganization policy. In particular, semiconductors and large-capacity batteries are important industries in which Korea holds an important position in the global supply chain. Based on the U.S.-centered supply chain policy, Korea needs to expand local investment and production within the U.S. in the semiconductor and battery sectors, and seek ways to maximize national interests through close cooperation between the government and companies. In addition, in the process of Korean companies entering the U.S., it is necessary to explore ways to cooperate in technology, such as promoting joint R&D with the U.S. Furthermore, it is essential to carefully review whether there are any trade legal problems in relation to the detailed regulations of the IRA implemented by the U.S., and consider the possibility of legal response as well as institutional arrangements to compensate for damages that may be suffered by companies within or connected with the domestic electric vehicle industry following the implementation of the IRA.Next, in the field of digital trade, as the trend of digital transformation continues to gain pace worldwide, we review major digital transformation and trade policies of the U.S. to strengthen cooperation in the digital field between Korea and the U.S. Moreover, we derive cooperation plans between the two countries based on each country’s policy measures. First of all, Korea needs to actively participate in international discussions led by the U.S. to establish advanced communication network standards such as 5G and 6G as essential infrastructure in the process of global digital transformation. In addition, to overcome the limitations of the digital trade rules stipulated in the KORUS FTA and to strengthen cooperation with the U.S., Korea should actively lead discussions on trade pillar working groups within the IPEF to prepare a roadmap for digital trade rules with participating countries.In the field of climate change response, we review the current status of major related policies being promoted in the U.S. and Korea and important technologies as targets for cooperation between the two countries. Furthermore, we present a plan for cooperation between Korea and the U.S. based on this. Carbon reduction and next-generation nuclear power technology were focused on as major technology fields for cooperation between Korea and the U.S. First, as carbon reduction technology is included in the 10 climate innovation technologies selected by the Biden administration, R&D on the technology to be used in various sectors such as buildings, energy storage systems, and vehicles is expected to be promoted. In addition, the Biden administration has allocated a large budget to the old nuclear power plant support program, citing nuclear power as a realistic alternative that can stabilize electricity rates while reducing fossil fuel use. Korea, like the U.S., plans to select carbon-neutral technologies such as secondary batteries and hydrogen as “national strategic technologies” and provide extensive R&D support. Thus, the Korean government will provide various programs and budget support for these sectors.Finally, in the field of development cooperation, we review policies promoted in Korea and the U.S., and provide measures for cooperation between the two countries. First, it is necessary to expand infrastructure investment in developing countries in the region and to share know-how and experiences of success in development through the IPEF, which is promoted by the U.S. to check China's influence in the Indo-Pacific region. In addition, Korea, along with the U.S., needs to strengthen the joint support system for Pacific Island countries exposed to climate change and with small economies and low levels of economic development. Lastly, we need to clearly define what can be done in cooperation with the U.S. by expanding support through international development finance organizations such as the World Bank and IDB for Guatemala, El Salvador, and Honduras, which are part of the Central American “Northern Triangle”, and by actively responding to the efforts of the U.S. -
Utilizing Paris Agreement Article 6 for Achieving Korea’s NDC towards 2030
At the Conference of the Parties to the UNFCCC (COP26) held in Glasgow, the Parties finally agreed on the Article 6 rulebook for the Paris Agreement (PA). This was a long overdue task since the signing of the PA in 2015. The PA al..
Jione Jung et al. Date 2022.12.30
ODA, 대외원조DownloadContentSummary<At the Conference of the Parties to the UNFCCC (COP26) held in Glasgow, the Parties finally agreed on the Article 6 rulebook for the Paris Agreement (PA). This was a long overdue task since the signing of the PA in 2015. The PA allowed the use of internationally transferred mitigation outcomes (ITMOs) towards achieving nationally determined contributions (NDCs). Nevertheless, it was a challenge for the Parties to implement greenhouse gas (GHG) mitigation projects under Article 6 without detailed guidelines. This development is especially significant for Korea as it plans to use voluntary cooperation under Article 6 as a complementary measure to its mitigation efforts. 11.5% of the 2030 GHG reduction target, amounting to 35 million tons, is expected to come from international mitigation activities. Thus, it has become an urgent task for Korea to develop an overarching plan as well as specific guidelines for the implementation of international mitigation activities.This research reviews Article 6 of the PA and its rulebook specifying ITMOs. The study also addresses the issue of improving Korea’s institutional arrangement for international mitigation activities in light of the rulebook. An example is to determine whether a company should use the emission reductions obtained from a project abroad for its compliance or the NDC target. Our study outlines the limitations associated with utilizing more flexible approaches under the Article 6.2, as the current legal and institutional arrangement is designed on small-scale Clean Development Mechanism (CDM)-typed projects.Developing countries indicates their interest in Article 6.2 activities involving low-carbon investment. To utilize the Article 6.2 cooperative approach, both transferring and transferred parties of mitigation outcomes need to comply with the reporting requirement of the enhanced transparency framework of the PA Article 13 and corresponding adjustment. Multilateral development banks and bilateral development agencies support various activities to enhance readiness, enabling environments and infrastructure within developing countries to participate in Article 6 activities. Those activities are reviewed in this study to provide insights for the Korean government as it intends to create synergies between international mitigation activities and its international development cooperation.This research proposes two approaches to utilize the PA Article 6 activities towards Korea’s NDC achievement: i) transferring the mitigation outcomes acquired from the activities conducted under Article 6.2 and Article 6.4 in a host country, ii) purchasing mitigation outcomes from the host country or private companies. For the former approach, this study presents an implementation process and explains several issues to be considered under the PA and its rulebook. In the latter, we highlight that the corresponding adjustment of ITMOs might be adapted differently, depending on whether the partner is a government or companies within the boundaries of the PA.Under the Paris Agreement, all Parties have obligations to reduce GHG emissions, regardless of their stage of national development, in contrast to the Kyoto Protocol. Accordingly, it is necessary to focus not only on cost-effective aspects but also pursuing sustainable development and global environmental integrity when mitigation outcomes are internationally transferred. Based on a clear understanding of the PA Article 6, Korea needs to implement its international mitigation activities. The Article 6.2 approach will require selecting partner countries and government funding. In particular, there is a need to explore ways to link with international mitigation activities as the volume of climate change related-ODA expands. Above all, there is an urgent need to resolve legal and institutional uncertainty related to the private sector’s utilization of mitigation outcomes obtained internationally. -
Impacts of Climate Change and Policy Implications on Food Security in Africa and the Middle East
As a result of the recent outbreak of the Russia-Ukraine war, the global agri-food supply chain has collapsed, thereby raising concerns about food security in Africa and the Middle East. The international community is paying great..
Munsu Kang et al. Date 2022.12.30
ODA, Agricultural policy Africa Middle EastDownloadContentSummary<As a result of the recent outbreak of the Russia-Ukraine war, the global agri-food supply chain has collapsed, thereby raising concerns about food security in Africa and the Middle East. The international community is paying greater attention to the issue of food security caused by climate change, which is actually affecting food supply and demand in Africa and the Middle East as a result of frequent weather conditions, such as droughts, flooding, and heat waves. As a result of an intensifying drought, North Africa increased its imports of external grain in January 2022, and East Africa has experienced droughts that have adversely affected its crops in recent years. It is therefore increasingly important for the international community to cooperate to respond to the food security crisis resulting from climate change, and Korea should expand its cooperation to address climate change, food security, and agriculture in Africa and the Middle East.Climate change has both a global and a national impact, and African and Middle Eastern developing countries, especially those with insufficient climate resilience, are particularly vulnerable to the impact of climate change on agriculture and food production. It is therefore necessary to develop policies that can help lead the discussion of climate change in the international community while also increasing support for the agri-food sector through official development assistance (ODA) funded by Korea.Accordingly, the purpose of this study was to analyze the food security crisis in Africa and the Middle East caused by climate change from the perspective of supply and demand, and to identify potential areas of cooperation. The Food and Agriculture Organization (FAO) defines food security as “a situation in which everyone is always physically, socially and economically accessible to a sufficient amount of safe and nutritious food, while meeting individual dietary needs and preferences for a healthy and active life.” Therefore, food security should be considered throughout the entire food production and consumption process, toward which this study also examined the current state of the African and Middle Eastern food security crisis, causes of food insecurity, and policies to address it.This study can be summarized as follows. A first observation is that the average temperature is increasing across Africa and the Middle East, and this represents a higher increase than in previous years, particularly in East and North Africa. Additionally, droughts and floods have become more frequent in recent years, which can pose a threat to agricultural production in the future. The impact of climate change on agricultural production is increasing, but the FAO and the World Food Program have already warned of the increase in hunger and undernutrition caused by climate change, which means that rising temperatures and frequent droughts could pose a greater external shock than normal.Second, when droughts occur frequently and intensify in Africa and the Middle East, agricultural prices generally rise, especially for corn and rice. The agricultural production of developing countries in Africa and the Middle East is largely dependent on natural water rather than irrigation and shows various structural characteristics susceptible to weather changes. Moreover, most countries except North Africa have high rates of self-sufficiency in corn, rice, sorghum, and millet, whereas Africa and the Middle East lack adequate stockpiling capacity to buffer drought. As soaring food prices in Africa and the Middle East between 2007 and 2011 caused instability, and the recent prolonged Russian-Ukraine war caused public discontent, climate change and long-term increases in food prices could also contribute to instability.Thirdly, as natural disasters such as droughts and floods become more frequent, problems related to consumption such as nutritional disorders and slow development are exacerbated. In Africa and the Middle East, malnutrition has generally declined, with the exception of conflict-affected countries such as Yemen and Iraq. Consequently, indicators also improved in terms of strengthening food security and sustainable agriculture, which are the second goal of the Sustainable Development Goals. There has been a rise in both absolute and proportional food crisis populations in recent years, especially in Africa. In West Africa, in particular, the proportion of the population experiencing serious levels of food insecurity has doubled to 20.7% in 2021, compared to 10.2% in 2014. There is a higher incidence of children’s poor development and nutritional disorders in countries with more droughts or floods, indicating that climate change impacts both agricultural production and consumption.Fourth, the international community and major African and Middle Eastern countries are taking a variety of measures to combat climate change. Several countries, including Jordan, Egypt, Morocco, Senegal, and Tanzania, have developed comprehensive policies aimed at addressing climate change and protecting water resources, as well as establishing support systems for the vulnerable. Despite this, few countries have developed production and reserve policies to ensure food security, and technological capabilities are lacking, necessitating international cooperation. Climate change response strategies and social protection strategies have been developed by international organizations. The African Climate Innovation Mission (AIM for Africa), the African Agricultural Climate Change Adaptation Plan (AAAI), the African Green Revolution Alliance (AGRA), the World Bank, the International Agricultural Development Fund (IFAD), and the International Agricultural GIAR Group are representative organizations addressing climate change and food security in Africa and the Middle East. Likewise, international cooperation on food security is on the rise, and is on the agenda of both the 2021 Foreign Ministers' Meeting and the 2022 United Nations Climate Change Convention (COP27).Using the results of the analysis, this report proposes policies in the areas of climate change and water resources, agricultural production and stockpiling, crop consumption, and assistance for the vulnerable. First, it is important to cooperate to introduce an early warning system during times of drought or flooding throughout Africa and the Middle East, as weather events such as these are becoming more frequent. Climate risk and early warning systems have been established by the World Bank and the World Meteorological Organization in 60 countries, including most of the countries in West and Central Africa. As Korea expands its disaster warning system domestically, it may be possible to extend its cooperation with vulnerable countries in Africa and the Middle East. Furthermore, cooperation for the application of low-carbon agricultural technology should be expanded. Low-carbon farming methods include mixed farming, forestry, and cultivation, and agriculture is considered one of the major greenhouse gas emission factors in Africa and the Middle East, so cooperation in introducing agricultural technologies to combat climate change should be conducted as well. In areas where Korea can cooperate with either Africa or Middle East in agricultural production, heat-resistant and resistant varieties can be developed, as well as pilot projects for smart farming in low- and medium-sized countries.Secondly, it is necessary to increase cooperation in order to ensure the security of water resources and prevent flooding. The expansion of irrigation water facilities is the first factor to ensure the security of water resources in Africa and the Middle East. The Korean government has provided support for the modernization of irrigation facilities in Ghana as well as the construction of irrigation facilities in Ethiopia coordinated by KOICA, as securing agricultural water during the sowing season becomes increasingly important. The scale of Korea’s development cooperation with Africa and the Middle East is expected to increase in the future, and Korea should also expand its support for irrigation channels to improve access to water resources. It is also becoming increasingly important to ensure fresh water through wastewater recycling and desalination.The third recommendation is to expand support for the vulnerable in Africa and the Middle East in terms of consumption. Approximately 50,000 tons of rice were provided to six countries by Korea’s Ministry of Agriculture, Food and Rural Affairs in 2021. Due to a lack of stockpile capacity, there are few alternatives available in Africa and the Middle East to support the residents in these regions in the event of severe changes in weather patterns. Accordingly, major donor countries and international organizations continue to provide food to areas affected by the food crisis. In order to prepare for the rapid increase in food insecurity and severe food shortages occurring in Africa and the Middle East as a result of climate change, Korea will also need to establish a support system in advance for vulnerable groups in Africa and the Middle East.As a final point, the cooperation system should include not only bilateral cooperation but also multilateral cooperation with international organizations. In the area of expanding technical research cooperation with international researchers, the Rural Development Administration should assume a more prominent role. The majority of African and Middle Eastern countries are classified as vulnerable countries due to climate change, and accordingly, Korea has limitations in cooperating in agriculture or food assistance alone. Therefore, it is necessary to cooperate with international organizations that have already entered many countries and are carrying out projects in those countries. Moreover, CGIAR research institutes have conducted a number of studies on the demand for agricultural technology in Africa and the Middle East, facilitating the development of agricultural technology research and development projects in Africa and the Middle East by conducting joint research with CGIARs and internationally recognized agricultural research institutes. -
Policies and Implications of Reorganizing Global Supply Chains by the Biden Administration: Focusing on Semiconductor and Battery Industry
This study discusses the current status and future prospects of the Biden administration’s U.S.-centered supply chain reorganization policy for the semiconductor and electric vehicle battery industries. In addition, based on the ..
Gusang Kang et al. Date 2022.12.30
경제안보, Industrial policy United States of AmericaDownloadContentSummary<This study discusses the current status and future prospects of the Biden administration’s U.S.-centered supply chain reorganization policy for the semiconductor and electric vehicle battery industries. In addition, based on the current status of the global semiconductor and battery industry supply chain, this study addresses the future direction of the industry supply chain reorganization. Finally, this study indirectly estimates the impact of implementation of the Biden government’s supply chain restructuring policy on the U.S. and Korean economies, and derives policy implications accordingly.In February 2021, President Biden signed an Executive Order on the implementation of the supply chain structure and development strategy for major industries in the U.S. Accordingly, a government- wide review of the supply chain structure, supply chain risks, and policy proposals for four key items (semiconductors, large-capacity batteries, core minerals, and pharmaceuticals) over a 100-day period was announced in June 2021. Subsequently, in February 2022, the results of a one-year analysis by seven relevant government departments were released to secure a stable supply chain in six major industries (defense, health, ICT, energy, transportation, and agriculture). Meanwhile, the U.S. Congress passed a series of bills to strengthen the nation’s supply chain. For example, the CHIPS and Science Act of 2022, which includes incentives for investment in semiconductor manufacturing facilities and equipment in the U.S., was passed by the Congress on July 28, 2022. In addition, the Inflation Reduction Act of 2022 for electric vehicle purchase subsidy policy was passed in Congress, and took effect on August 16, 2022 upon President Biden’s signing.This study examines the changes in the global supply chain in the semiconductor and battery industries of the U.S. and Korea using the export and import concentrations for each major item. First of all, while the supply chain for system semiconductor exports in the U.S. shows a trend toward diversification, the supply chain for imports is gradually becoming more centralized. From the perspective of stabilizing the supply chain, it is clear that U.S. system semiconductor exports are diversifying, but the fact that the U.S. is increasingly dependent on imports from Asia remains a challenge. On the other hand, the memory semiconductor sales supply chain in the U.S. also showed a trend of diversification due to the expansion of exports to North America, while the purchasing supply chain remains highly concentrated due to the high proportion of imports from Asia. Unlike the previous two items, U.S. semiconductor manufacturing equipment exports tend to be quite concentrated due to their high dependence on Asia, while the U.S. supply chain for purchasing these items is relatively diversified, centering on Japan and the Netherlands.Both the sales and purchase supply chains of system semiconductors in Korea show a strong tendency of centralization. First of all, Korea’s system semiconductor exports are highly dependent on Asia, and imports of these items are mostly dependent on North America, including the U.S., specialized in system semiconductor design. Korea’s memory semiconductor exports are mainly concentrated in the Asian region including China, which has a huge domestic market, based on the international competitiveness of Samsung Electronics and SK Hynix. On the other hand, Korea’s imports of these items tend to be quite concentrated, with the share of North America significantly decreasing and being replaced by imports from Asian sources. Finally, Korea’s semiconductor manufacturing equipment sales supply chain has recently become more centralized as its dependence on exports to Asia has increased.In regards to the battery industry, the U.S. lithium-ion battery export and import markets show different patterns in terms of concentration. First of all, the export supply chain is spread evenly in North America, Europe, Oceania, and Asia, showing a considerably diversified structure. On the other hand, U.S. imports of these items tend to be concentrated, although their dependence on imports from Asia has eased with a slight increase in the portion of imports from Europe recently. Meanwhile, Korea’s lithium-ion battery export market is gradually reducing its high dependence on Asia thanks to Korean battery producers (LG Energy Solutions, SK On, Samsung SDI) with global manufacturing competitiveness, while steadily expanding and diversifying export regions. On the other hand, Korea’s supply chain for imports of these items is highly concentrated, with a high dependence on Japan and China, which have strengths in material and mineral processing.For the first analysis to indirectly examine the economic impact of the global supply chain reorganization of the semiconductor and battery industries, we estimate the impact of changes in the export share of the semiconductor or battery industry by country on the change in GDP per capita. Our results show an increase in the export share of semiconductors or batteries has a statistically significant increase in GDP per capita. These results support the reason why the Biden administration is moving to expand its exports through the reorganization of the U.S.-centered supply chain in the industry. By reorganizing the supply chain centered on the U.S., President Biden intends to attract production facilities in weak sectors such as memory semiconductors, foundries, and lithium-ion battery manufacturing to the U.S. through cooperation with partner countries such as Taiwan and Korea in the short term. In conclusion, this policy promotion seems to be part of a strategy to discover sustainable economic growth engines for the U.S. while checking China’s technological rise in key industries, and restoring U.S. leadership.Secondly, we estimate the impact of changes in export concentration or import concentration by semiconductor or battery item in the U.S. and Korea on the change in net exports by the two countries. First of all, in the case of the U.S. semiconductor industry, changes in export concentration and import concentration did not have a statistically significant effect on changes in net exports of the corresponding item. However, in the case of the Korean semiconductor industry, an increase in export concentration had a negative impact on the net export of the item, whereas a change in import concentration did not have a statistically significant effect on the change in Korea’s net export of the same item. In the case of the U.S. battery industry, as the import concentration by item increases, the U.S. net export of the same item decreases. However, we find that both the increase in the concentration of exports and the concentration of imports in the Korean battery industry decrease net exports of the product. Taken together, it can be inferred that the concentration of supply chains in the semiconductor and battery industries in the U.S. or Korea has the potential to hinder economic growth by reducing net exports of the relevant items in both countries.Based on the above analysis results, this study concludes with the following policy implications. First, it is necessary to strengthen norms-based supply chain cooperation with the U.S. Second, it is necessary to expand efforts to maintain the technological gap in the memory semiconductor field, where Korea has strengths. Third, policy support is needed to enhance Korea’s competitiveness in the system semiconductor field, which is relatively weak. Fourth, it is necessary to prepare a prompt support system for semiconductor infrastructure based on the National High-tech Strategic Industries Act. Fifth, it is essential to expand tax support for investment in semiconductor facilities through revision of the Restriction of Special Taxation Act. Sixth, efforts are needed to diversify the lithium-ion battery supply chain. Seventh, it is necessary to strengthen cooperation between Korea and the U.S. in the field of next-generation battery technology. -
Challenges and Implications for China’s Economic System Reform in the Third Term of Xi Jinping: Focusing on Establishing a Socialist Market Economy System
The year 2022 marks the 30th anniversary of China's declaration of economic system reform to establish a “socialist market economy system(社会主义市场经济体制)” Over the past 30 years, China has strengthened the role of the market in ..
Pyoung Seob Yang and Hongwon Kim Date 2022.12.30
Economic reform, Economic developmentDownloadContent
Summary<The year 2022 marks the 30th anniversary of China's declaration of economic system reform to establish a “socialist market economy system(社会主义市场经济体制)” Over the past 30 years, China has strengthened the role of the market in resource allocation and economic operation, and has promoted ownership reform in which both the public – the core of China's socialist economy - and the non-public sectors of the economy develop together. China has continued to build a “basic economic system of socialism(社会主义基本经济制度) with Chinese characteristics”, in other words, an economic system which is based on fundamental socialist institutions but combines market economy mechanisms. At the same time, however, entering his third term Xi Jinping has stressed a Dual Circulation Strategy aimed at common prosperity and domestic consumption (“internal circulation”), leading to forecasts that China may be strengthening the socialist nature of its economic system. Therefore, from the perspective of completing the socialist market economy system that China is pursuing, this study aims to infer changes in China's economic system in the 3rd term of Xi Jinping, specifically by analyzing tasks related to economic system reform included within China's mid- to long-term development strategy and the direction of its promotion.The reformation process of China's economic system following the implementation of reform and opening policy can be understood as one of establishing a basic economic system of socialism with Chinese characteristics. This process can be comprehended as changes in the relationship between the three elements of the basic economic system of socialism: joint development of public and non-public sectors of the economy (ownership relationship); the coexistence of various wealth distribution methods, with labor income as the main body (distribution relationship); and the socialist market economy system (relationship between market and government). In addition to reforming its economic system, China's opening and trade policies to connect the domestic economy and the world economy have played an important role in promoting domestic reform. From this aspect, China has pursued a strategy of linking reform and opening, which means to promote reform through opening. During his official report to the 20th National Congress of the Communist Party of China, Xi Jinping announced the goal of reforming the economic system, while also reaffirming that accomplishing the socialist market economy system lies at the foundation of the “Basic Economic System of Socialism” In addition, reforming current wealth distribution systems for the realization of common prosperity, promoting Dual Circulation as a new development structure, and institutional opening-up with regard to rules, regulations and standards were presented as important tasks for the next five years.This study focuses on analyzing these issues. First of all, the key to completing the socialist market economy system is to complete market-based allocation of production factors. It includes the market supply of land, free labor mobility, and marketization of raising capital, together with marketizing transaction and standardization of new production factors like technology or data. In this study, we identified the areas of land system reform, “hukou(户口)”system reform, interest rate and capital market reform as the most representative tasks related to this goal. Second, as it advances toward a new development structure through dual circulation, China will accelerate reforms to eliminate obstacles blocking the virtuous circle of production, distribution, and consumption. To promote a virtuous circle within the domestic economy, reform tasks have been presented to allocate production factors at the stages of production, distribution, and consumption. Third, achieving common prosperity is a key goal of Chinese modernization pursued by China and thus will be further promoted as an important goal in the 3rd term of Xi Jinping. In order to realize common prosperity, reformation of the wealth distribution system is inevitable. Common prosperity will be pursued in two aspects: strategies to increase the size of the economic “pie,” and those to ensure a fair share for participants. The former is to form an olive-shaped income structure by maintaining a stable income for workers while fostering a middle class, while the latter is to reduce relative wealth inequality through redistribution and tertiary distribution. Fourth, more opening efforts will be made to connect the domestic economy and the international economy, in the form of institutional opening-up that connects rules, regulations, management, and standards related to investment and trade globally. However, there is a need for caution when considering how the strategy links safety and openness in response to risks arising in the opening-up.The Chinese economic reform and opening-up aimed at achieving China's socialist market economy will continue in the third term of Xi Jinping. This study performed an in-depth forecast, based on the criteria of marketization and privatization, on the direction of China's future economic system reform. Marketization reform is expected to be pushed ahead, focused on market-based allocation of production factors, while privatization centered on reformation of mixed ownership is also likely to be gradually advanced. However, while such reform is taking place in the Chinese economy, the possibility of competition between China's socialist market economy system and the Western capitalist economic system continues to escalate amid the strategic competition between the U.S. and China. Under this situation, it will be an important task for a middle power like the Republic of Korea to firmly establish its principles and directions for competition issues as they arise. -
A Roadmap for Korea’s Digital Trade Agreements
This report examined the short- to medium-term roadmap for Korea's digital trade agreements. It suggested that the roadmap include, among other things, an assessment of Korea's position in the network of digital trade agreements, ..
Kyu Yub Lee et al. Date 2022.12.30
국제무역, electronic commerceDownloadContentSummary<This report examined the short- to medium-term roadmap for Korea's digital trade agreements. It suggested that the roadmap include, among other things, an assessment of Korea's position in the network of digital trade agreements, the objectives and directions of digital trade agreement policies, the scope and content of digital trade agreements, the priorities and selection criteria for negotiating partners to reach digital trade agreements, the procedures and timeline for such agreements, and the expected quantitative and qualitative effects of digital trade agreements.Understanding Korea's current position in the process of developing a roadmap for digital trade agreements necessitates objectivity. This report claimed that Korea's influence on the network of digital trade agreements has been moderate. It is the outcome of assessing using network analysis, which takes into account centrality of digital trade network, similarity of agreement text, and the size of the economy.The report suggested Korea to target becoming a hub for digital trade as a short-term and mid-term strategic priority. It is costly and subject to numerous restrictions for Korea to be a global leader in the digital space in the short- to medium-term. That is, to be a leader in the global digital trade and to establish relevant digital trade rules, Korea requires a sufficiently sizable digital trade market, abundant human resources, and high-skilled labor. In particular, it needs specific strategies to support the leadership that sets rules for norms in digital trade. The report thus suggested that Korea's primary role in the short- to medium-term is to become a rule-promoter of the digital trade norms through an active promotion strategy based on the roadmap for digital trade agreements.When determining the scope and content of digital trade agreements, it is critical to develop criteria for selecting negotiation partners and rank countries in order of importance. Essentially, digital trade agreement text for Korea should be written in a way that reduces or eliminates barriers to digital trade and challenges faced by domestic businesses. Furthermore, Korea should make efforts to improve the thoroughness of the form and content aspects of trade law in relation to key elements identified as appropriate for the development of the digital trade roadmap. To achieve policy objectives of digital trade, the report recommended to develop a Korean-style digital trade agreement template with varying levels of protection. This is due to the fact that the process of developing a template comprised of digital trade norms appropriate for Korea has numerous advantages and can take the lead from selecting a partner to negotiate with to coordinating, through negotiating contents of the text, to signing the negotiation. The report also emphasized the importance of developing supplemental content to strengthen digital economic cooperation in order to increase trading partners' willingness to negotiate and activate digital trade among countries and regions.The report listed four criteria for selecting a partner to negotiate with, such as the possibility for export expansion, the potential for market growth, the compatibility of the regulatory framework, and practicality. For instance, the top 20 countries in Korea that export digital services are estimated to be the United States, United Kingdom, Japan, Hong Kong, China, Singapore, Australia, Germany, Switzerland, the Netherlands, Ireland, India, France, Canada, Italy, Brazil, Spain, Russia, Norway, and Sweden, in that order. Thus, the most important are the Korea-UK FTA, Korea-China FTA, Korea-EU FTA, Korea-Canada FTA, Korea-India FTA, and Korea-Mercosur TA. The report came to the conclusion that Korea should actively participate in IPEF negotiations and consider upgrading the most recent digital trade rules in the FTA. Furthermore, it advocated for the creation of a digital trade agreement in the style of Korea.According to the report, domestic regulations and institutional reform plans must be developed in accordance with the scope and content of the digital trade agreement. This is because maintaining the coherence of domestic regulations and system restructuring for digital trade are linked to the problem of determining the content and level of digital trade agreements and selecting a negotiating partner. Korea should consider how to collaborate or respond jointly with other nations in relation to current issues related to digital trade, such as internet service, data localization, and cloud. It was also recognized that a careful assessment is necessary to keep domestic rules in line with industry standards for digital trading.The report concluded by saying that it is critical for enhancing effectiveness of digital trade agreements to have the process of actively soliciting feedback from businesses involved in digital trade transactions, as well as public relations strategies that can elicit support from the general public. A roadmap for Korea's digital trade agreements is necessary to explain the anticipated economic implications of its conclusion quantitatively and qualitatively.