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Policy Reference

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  • 디지털 정책과 규제 변화 분석:  Digital Policy Alert 통계를 중심으로
    Analysis on Digital Policy and Regulations: Based on the Digital Policy Alert Database

    Digital policies and regulations are changing rapidly in advanced and major emerging economies. Based on the newly built Digital Policy Alert data, we found 3,876 changes in digital policies and regulations in major countries such..

    Ji Hyeon Kim Date 2023.12.11

    E-trade, electronic commerce
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    Summary
    Digital policies and regulations are changing rapidly in advanced and major emerging economies. Based on the newly built Digital Policy Alert data, we found 3,876 changes in digital policies and regulations in major countries such as US, EU, China, and India. This is the result of governments’ efforts to embrace the digital age and create a fair and stable digital economy. However, we do not have an accurate understanding of digital policies and regulations’ content around the world. This report aims to provide policy implications for our government’s policy making by objectively analyzing the international trends and status of digital policies and regulations and reducing uncertainty about foreign countries. 

    Digital trade, which is the trade of goods and services through digital means, has increased worldwide due to the development of digital technology. It can be divided into Business-to-Customer(B2C) and Business-to-Business(B2B) trade. By 2023 B2C trade is expected to reach $6 trillion and B2B trade $24.4 trillion. Asia, in particular, accounts for a large share of digital trade, accounting for more than 50% of the world’s B2C trade and on average 78% of B2B trade in 2022. Korea’s digital trade in goods is also expanding, and the proportion of its exports to China and Japan is decreasing while that to Europe is increasing.

    According to existing data, such as that from the OECD and EUI, the level of restrictions on digital services trade around the world is generally increasing. If we look at the regulatory environment of digital trade more broadly, there are many restrictive measures, but the level of restriction is not very high. Specifically, the level of openness in e-commerce and intellectual property rights have increased. On the other hand, the level of restriction in infrastructure and connectivity, or data is the highest. The level of restriction in other areas, which includes online advertising ban, local presence requirements, is also increasing. By region, Europe and North America have the most open regulatory environment, while Central Asia and South Asia have the most restrictive regulatory environment. East Asia-Pacific’s regulatory environment is more restrictive than the global average.

    By country, open economies such as Canada, US, Australia, or small countries such as Dominican Republic and Costa Rica, have lower levels of restriction on digital services trade. In contrast, relatively closed emerging economies such as Kazakhstan, Russia, Saudi Arabia, and India have higher levels of restriction on digital services trade. China, Russia, India have more restrictive measures on data transfer, and local data storage and processing than other major countries, and they also take discriminatory measures on communications business licenses and e-commerce. US is the most open to data transfer, while Europe and Japan transfer data conditionally.

    According to the Digital Policy Alert, data governance and competition account for the largest share of digital policy and regulatory changes worldwide. The main policy instruments for data governance are data protection, cybersecurity, cross-border data flows, and for competition, unilateral conduct regulation, merger review. Recently, the proportion of other business conditions, and registration and licensing have increased. Their instruments, algorithm design and technical standards for other business conditions, product or service licensing for registration and licensing have became increasingly important. In the policy area of content, changes have increased in user speech rights. In international trade, we see changes in measures such as bilateral and regional agreements and export/import bans. Foreign direct investment and tax are also changing actively.

    The top 10 countries with the most digital policy changes are US, EU, UK, China, India, Australia, Korea, Japan, Russia, and Canada. Their digital policy changes  focus on personal information and information protection, and they also have policies for emerging industries such as AI and crypto assets. Notably, US has more regulations under discussion than adopted or implemented. China and India have relatively more data localization requirements than other countries. Russia has many content-related policy changes, while China and US are active in the registration and licensing area.

    Other business conditions, registration and licensing are policy areas which have recently gained attention in digital policy and regulation. Among them, algorithm design and technical standards (other business conditions), product or service authorization (licensing and registration) are mainly used as policy tools. The aforementioned top 10 countries are seeking cooperation for standardization work concerning new industries such as AI. When it comes to crypto assets, countries adopt rather opposite policies depending on their perspective.

    Korea’s level of regulatory restriction on digital services trade is lower than that of East Asia-Pacific, but it is higher than the global average. Korea’s digital services trade regulations are becoming more similar to Germany and less similar to China. In terms of digital policies and regulations, Korea is discussing various digital policies such as data protection, unilateral conduct regulation etc.

    In conclusion, first, Korea follows the international trend in terms of policy changes in areas such as data governance, other business conditions, competition, but more active discussion on content is needed. Second, international standardization discussions are actively taking place. Korea should be more strategic and base its discussion on the cooperation status of other countries. Third, considering Digital Policy Alert with other existing data will provide a comprehensive picture of digital policies and regulations. Finally, collecting digital policies and regulations by ourselves would be a first step to respond more accurately to changes in digital policy regulation.
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  • 국내 전략산업 투자유치 인센티브 개편 방향
    Reforming Incentive Policies to Increase FDI in Korea’s Strategic Industries

    Foreign direct investment(FDI) in Korea remains at a lower level compared to that of major countries, although the amount of FDI in Korea in 2022 on notification basis exceeded 30 billion USD for the first time in history. And maj..

    June Dong Kim et al. Date 2023.12.08

    subsidy, Foreign direct investment
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    Summary
    Foreign direct investment(FDI) in Korea remains at a lower level compared to that of major countries, although the amount of FDI in Korea in 2022 on notification basis exceeded 30 billion USD for the first time in history. And major advanced countries have recently expanded investment incentives to strategic industries such as semiconductors and secondary batteries. Therefore, we need to make a landmark transformation of our FDI incentive policies. In this regard, this study first took a look at the recent trends of FDI in Korea and reviewed the incentive systems for attracting strategic investment in major countries such as the U.S., the EU, Japan, and China. And then it attempted to present policy directions for reforming incentive systems to attract strategic investment to Korea. In particular, it aimed to present the improvement of the cash incentive system as well as the use of specialized complexes for advanced industries and specialized zones for equal opportunity development.

    First, by looking at the recent trends of FDI into Korea (2010~2022), there are more FDI from advanced countries and tax haven countries such as U.S.A., Japan, Singapore, Malta, Netherland than from others. Also, we found more FDI in services industry than in manufacturing industry. Finally, there were more greenfield FDI than M&As.

    Next, we investigated recent incentive systems to attract investment in strategic industries in some key countries. These include the CHIPS and Science Act along with the Inflation Reduction Act of the U.S., and the European New Investment Strategy, InvestEU Program, and European Chips Act in the EU. We also analyzed Japan’s Direct Investment Promotion Strategy toward Japan, Promotion Act of 5G, Semiconductor Fund, and Green Innovation Fund, as well as China’s FDI expansion policy in the manufacturing sector. From this investigation, we confirmed that major countries (ⅰ) operate investment incentive systems without any discrimination between foreign and domestic firms, (ⅱ) provide large amounts of investment subsidies, and (ⅲ) have formed a social consensus that large-scale assistance is necessary to attract investment in strategic industries. 

    Based on these characteristics in major countries, we presented the improvement of cash assistance system as well as the use of specialized complexes for cutting-edge industries and equal opportunity development special zones as policy directions for reforming incentives to attract investment in domestic strategic industries. More specifically, in the case of improving the cash subsidy system, we found that the following measures are necessary; (ⅰ) increasing the budget available for cash subsidies, (ⅱ) increasing the R&D subsidy expenditures in the aspect of software, (ⅲ) and calculating the amount for cash assistance taking into account the quality of employment, not to mention the effect of job creation. Finally, we presented a plan for linking specialized complexes for cutting-edge industries and special zones for equal opportunity development in order to provide unprecedented support for the large-scale investments in strategic industries.
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  • Impact of Temporary Trade Barriers within APEC: Evidence from Korea
    Impact of Temporary Trade Barriers within APEC: Evidence from Korea

    This study uses a detailed product-level data to examine the trade deflection of Korean exports as a result of antidumping (AD) duty impositions. Given that APEC economies account for a large share of Korean exports and AD duty im..

    Seungrae Lee Date 2023.11.30

    APEC, Anti-dumping system
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    Content
    Executive Summary

    I. Introduction

    II. U.S. and Chinese AD cases on Korea

    Ⅲ. Estimation strategy and Data

    Ⅳ. Estimation Results

    V. Conclusion

    References

    Appendix
    Summary
    This study uses a detailed product-level data to examine the trade deflection of Korean exports as a result of antidumping (AD) duty impositions. Given that APEC economies account for a large share of Korean exports and AD duty impositions on Korean exports, especially by the U.S. and China, this study focuses on the deflection of Korean export to APEC economies following the imposition of AD duties by the U.S. and China. This study finds robust evidence of Korean export deflection within APEC as a result of the imposition of AD duties by the U.S. and China. Moreover, intra-APEC trade deflection is associated with the type of products involved in the AD duty orders. U.S. AD duties have an impact on the export deflection of intermediate products, while Chinese AD duties have an impact on final products, towards APEC economies.
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  • WTO 서비스 국내규제 규범의분석과 시사점
    Analysis of WTO Discipline on Services Domestic Regulations and Its Policy Implications

    On December 2, 2021, seventy WTO members announced the successful conclusion of the negotiations within the Joint Initiative on Services Domestic Regulation. The participants acknowledged the conclusion of negotiations on the Refe..

    June Dong Kim et al. Date 2023.11.24

    Regulatory reform, Trade policy
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    Summary
    On December 2, 2021, seventy WTO members announced the successful conclusion of the negotiations within the Joint Initiative on Services Domestic Regulation. The participants acknowledged the conclusion of negotiations on the Reference Paper on Services Domestic Regulation. As of September 2023, the participants are currently in the process of WTO certification by integrating the disciplines outlined in the Reference Paper as additional commitments in their GATS schedules. After this process is completed, these plurilateral agreements will come into effect. 

    This study aimed to analyze the contents of each article of WTO Services Domestic Regulation, and to present standards for compatibility of domestic regulations with this discipline. Additionally, this study identified domestic best practices related to each article to present how to implement this discipline domestically. In other words, the study presented the general guidelines and detailed checking guides that each official in charge of those domestic regulations should be aware of.

    First, in analyzing each article of WTO Disciplines on Services Domestic Regulations, we reviewed their meanings and then identified major matters to be checked and addressed. Subsequently, we analyzed our cases for implementation of the relevant legislations.

    Next, we outlined the likely economic impacts based on prior research that estimated tariff equivalents of domestic regulations on services. By implementing the WTO Disciplines on Services Domestic Regulations, we can anticipate (i) an increase in consumer welfare (ii) a boost in foreign direct investment due to the improvement of domestic business environment from enhancement of transparency and predictability of domestic regulations (iii) enhanced competitiveness of domestic firms (iv) improved economy-wide productivity by employing efficient services as inputs, and (v) facilitated outbound activities of domestic firms through improved overseas business environment as a result of the implementation of these Disciplines by other WTO members.

    This study has policy implications as it offers comprehensive guidelines and checklists that  every government ministry responsible for domestic regulations. This will prepare them for the implementation of the WTO Disciplines on Services Domestic Regulations after its certification process is complete.

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  • Environmental Non-tariff Measures and Trade in APEC Member Economies
    Environmental Non-tariff Measures and Trade in APEC member economies

    This study examines how environmental nontariff measures (NTMs) affect trade in Asia-Pacific Economic Cooperation (APEC) member economies. Using product-level panel data spanning 2009–2020, we find that stringent environmental NTM..

    Hea-Jung Hyun Date 2023.11.20

    APEC, international trade
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    Content
    Executive Summary

    I. Introduction

    II. Environmental NTMs and Trade Patterns in APEC Region

    III. Theoretical Background and Empirical Model

    Ⅳ. Data and Measurement of Environmental NTMs

    V. Empirical Result

    Ⅵ. Conclusion and Policy Implication

    References

    Appendix

    Summary
    This study examines how environmental nontariff measures (NTMs) affect trade in Asia-Pacific Economic Cooperation (APEC) member economies. Using product-level panel data spanning 2009–2020, we find that stringent environmental NTMs reduce trade in APEC member economies, whereas no significant effect exists when exporting is destined to non-APEC economies. The trade-impeding effect of NTMs is prominent in exports of dirty goods from economies with high-intensity greenhouse gas emissions through additional adaptation costs to meet environmental standards set by high-income importing countries with the high-intensity imposition of the measure. Results imply that APEC economies need to enhance effective environmental regulations by taking the heterogeneous effects of NTMs on trade across industries and types of measures into account.

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  • 동남아·대양주 유권자들의 보호무역주의 성향 연구와 시사점: 필리핀, 태국, 호..
    Voters’ Attitudes toward Protectionism in Southeast Asia and Oceania: Evidence from the Philippines, Thailand, Australia, and New Zealand

    This research analyzes the determinants of voters’ attitudes towards protectionism in four Southeast Asian and Oceania countries (the Philippines, Thailand, Australia, and New Zealand) and discusses whether voters’ attitudes tow..

    Nam Seok Kim Date 2023.11.10

    international trade, Political Economy Southeast Asia Ocean
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    Summary
    This research analyzes the determinants of voters’ attitudes towards protectionism in four Southeast Asian and Oceania countries (the Philippines, Thailand, Australia, and New Zealand) and discusses whether voters’ attitudes toward protectionism are related to their voting behavior. This study utilizes the endogenous trade policy formation theory in international economics to understand how voters’ attitudes toward protectionism are formed. Furthermore, by examining whether voters’ political party support can be explained by their attitudes toward protectionism, this study confirms that changes in each country’s trade policy orientation can be understood in the context of their domestic political-economic background.

    The main findings of this study are as follows: Voters in relatively labor-abundant countries such as the Philippines and Thailand prefer protectionist trade policies as their human capital attainment increases. In contrast, voters in relatively capital-abundant countries such as Australia and New Zealand prefer free trade policies as their human capital attainment increases. These findings align with the theoretical predictions of the Heckscher-Ohlin model-based factor endowment approach. However, since the factor endowment approach is based on the long-run assumption of free labor mobility across industries, it may deviate significantly from reality. To address this limitation, the analysis introduces a specific-factor approach that considers rigidities in the labor movement between industries to test whether there are differences in attitudes towards protectionism between voters in comparative advantage industries and voters in comparative disadvantage industries. The results of the analysis show that the theoretical predictions of the specific-factor approach did not have empirical validity for the voters in the four countries.

    Determining whether individual attitudes toward protectionist trade policies are associated with voting behavior requires a separate analysis. Analyzing the survey data on the party choices of each voter in general elections, the results show that their attitudes toward protectionism do not explain voters’ voting behavior in the Philippines and Thailand. In contrast, voters’ voting behavior in Australia and New Zealand is significantly explained by their attitudes toward protectionism. Australian voters who prefer higher trade barriers are more likely to support the right-wing populist party, the One Nation Party, while New Zealand voters who prefer higher trade barriers are more likely to support the Labour Party.

    From the above analysis, it can be concluded that  trade policy orientations in Australia and New Zealand tend to reflect domestic political-economic backgrounds to a significant extent, while this is not the case in the Philippines and Thailand. As the estimation results of this study suggest, voting patterns in the Philippines and Thailand are strongly influenced by regionalist tendencies. This study concludes by emphasizing the need to refine trade negotiation strategies by taking into account the domestic political-economic situations of these four major trading partners of South Korea.
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  • 동지중해 천연가스 개발 현황과 한국의 협력 방안
    Natural Gas Development in the Eastern Mediterranean Region and Its Implications for Korea

    This study explores the current status of natural gas development in the Eastern Mediterranean region and derives its implications for Korea. Our approach encompassed a thorough review of pertinent literature and statistical data,..

    Kwang Ho Ryou et al. Date 2023.10.20

    Economic cooperation, Energy industry
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    Summary
    This study explores the current status of natural gas development in the Eastern Mediterranean region and derives its implications for Korea. Our approach encompassed a thorough review of pertinent literature and statistical data, and insightful interviews with local government officials and industry experts, conducted through field surveys and seminars.

    The key findings of this study are summarized as follows: First, natural gas development in the Eastern Mediterranean region has significantly increased its prominence within the global natural gas market. Egypt, holding largest natural gas reserve in the region, now surpasses major natural gas importers of Korea, including Malaysia, Oman, and Indonesia. The total natural gas reserves in the Eastern Mediterranean region are estimated at 119.1Tcf, 41.1% more than that of Australia, Korea’s largest natural gas importer. It is estimated that there are 286.2Tcf of undiscovered natural gas resources buried along the Eastern Mediterranean coast. This means that only 29.4% of the region’s total natural gas reserves have been found to date.

    Second, countries in the Eastern Mediterranean have made significant efforts to develop their domestic natural gas resources and to strengthen both domestic and international cooperation. In particular, Egypt, Israel, and Cyprus, major natural gas holders in the region, have been actively pursuing exploration and development and related infrastructure projects to expand their natural gas production and export capacity. Efforts are being made to promote natural gas-related industries such as petrochemicals and hydrogen. In 2019, a regional consultative body for natural gas development, the East Mediterranean Gas Forum, was launched. Since then, through a number of meetings, countries in the region have gathered to discuss specific plans and implement methods for natural gas development. There is also cooperation between Egypt and Israel in the natural gas supply chain, using Egypt’s natural gas liquefaction facilities.

    The weaponization of resources in major energy producers and the expansion of global energy security threats have served as an opportunity to draw more attention to natural gas development in the Eastern Mediterranean. In the aftermath of the Russia-Ukraine war in 2021, the instability of natural gas supply and demand increased significantly, especially around the EU, and natural gas prices also showed a sharp increase in volatility. As the risks of energy supply and demand disruptions have been greatly highlighted, the Eastern Mediterranean has emerged as a new alternative destination for major energy consumers. In particular, major energy companies in Europe such as Eni and BP are showing great interest and continuing their aggressive entry into the Eastern Mediterranean region.

    We can use the current situation in which the threat to energy security has escalated as an opportunity to promote natural gas cooperation with the Eastern Mediterranean region. First of all, we can contribute to strengthening Korea’s energy security by increasing natural gas imports from the region. Recently, the need to diversify import sources has emerged as concerns about the instability of natural gas supply and demand have increased significantly due to the recent production disruptions in major oil-producing countries caused by geopolitical risks. As infrastructure development in the region is progressing at a rapid pace, it can be said that various entry opportunities are also open for Korean construction companies with global competitiveness in the region. In addition, the Eastern Mediterranean region can be considered a project site for the development of overseas natural gas fields, and participation in local countries’ efforts to develop gas-related industries such as petrochemicals and hydrogen could also provide good opportunities for Korean companies to enter the market.
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  • 클라우드 서비스 해외투자 동향과 국내 규제 분석
    Cloud Services FDI and Regulatory Trends

    This report examines cloud services FDI and regulatory trends. We obtain 2,442 cloud services FDI projects (firm-level) from FDI Markets for the period 2016-22, and do statistical analysis using information on investment purpose, ..

    Kyu Yub Lee and Jun Hyun Eom Date 2023.10.20

    Privacy, electronic commerce
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    Summary
    This report examines cloud services FDI and regulatory trends. We obtain 2,442 cloud services FDI projects (firm-level) from FDI Markets for the period 2016-22, and do statistical analysis using information on investment purpose, year, destination country, investment size, and industry. First, the total amount of FDI in cloud services from 2016 to 2022 is about $214 billion. The main purpose is to invest in overseas facilities to build ICT and infrastructure, and the telecommunications industry, software and IT services industry account for 98.7% of the total investment. Outward FDI between high-income countries accounts for about 62% ($132.9 billion), which rises to 85.5% ($183.9 billion) if transactions between high-income countries and upper middle-income countries are included. Lower middle-income countries invest more in high-income countries ($1.5 billion) than in lower middle-income countries ($900 million). There is no outward investment among low-income countries. Countries in the Americas, Europe, Asia, and Africa regions (excluding Oceania) are the most active, with the largest share (29.3%) of outward investment between the Americas and Europe. The Americas are the leading region for outbound direct investment in cloud services (61.9% of investment), and when looking at transaction patterns between regions, investment is concentrated in Europe (35.5%), Asia (25.6%), and the Americas (24.4%).

    Second, the total amount invested in the European region (43 investor countries and 37 recipient countries) is about $76 billion. Countries in the Americas have invested about $52.9 billion in the region, accounting for 69.6% of the total. The leading investor in Europe is the United States ($51.9 billion), and the top investee country in Europe is the Netherlands. The total amount invested in Asia (35 investor countries and 39 recipient countries) is about $54.9 billion. Countries in the Americas account for 58.1% of the total, with about $31.9 billion invested in the region. The leading investor in the Asia region is the United States ($31.6 billion), and the leading recipient country in the region is India. The Americas (37 investor countries and 21 recipient countries) received about $52.3 billion in investment. Countries in the Americas account for 56.9% of the total, with about $29.8 billion invested in the region. The leading investor in the Americas is the United States (almost $25 billion), while the top recipient country in the region is Canada. The Africa region (19 investor countries and 26 recipient countries) accounted for about $17.2 billion. The countries in the Americas accounted for nearly $6.8 billion in investments in the region, or 39.4% of the total. The United States is the only country in the Americas to invest in the region, while South Africa is the top investor in Africa. The Oceania region (12 investor countries and two recipient countries: Australia and New Zealand) totaled about $14 billion. Countries in the Americas have invested about $11.5 billion in the region, accounting for 81.8% of the total, with the United States accounting for about $10.8 billion. Countries in Asia invested about $1.5 billion (10.7%) and Europe invested about $900 million (6.5%) in the Americas. Korea invested a total of $5.8 billion in the United States, China, India, Africa, and a few other countries during 2016-22, accounting for about 0.3% of global cloud services investment. The United States, China, the ten ASEAN member countries, India, Singapore, and Hong Kong are the only countries that have invested in Korea. Korea's FDI in cloud services totaled $2.16 billion (1.0%), of which about $1.27 billion coming from the United States, $5.3 billion from ASEAN 10 and India, $240 million from China, and $120 million from the rest of the world.

    Third, we further examine the domestic regulations of the cloud industry in key countries. Based mainly on the U.S. Trade Barriers Report (2017-23), we find that there are discernible disparities between countries in terms of data localization, restrictions on cross-border data transfers, security certifications, mandatory sourcing of domestic goods, and content control. Data localization requirements are compulsory in China, Saudi Arabia, South Africa, Panama, Nigeria, France and South Korea. Restrictions on cross-border data transfers are enforced in China, Saudi Arabia, and South Africa. Mandatory sourcing of domestic products is obligatory in China and the Philippines. Security certifications are required in the EU (EUCS), France (SecNumCloud), the United States (FedRAMP), and South Korea (CSAP). Countries with content controls include Vietnam and Saudi Arabia. China and Saudi Arabia are identified as the countries with the highest number of most regulatory issues.

    We hope the findings of that report will serve as a useful reference as the government reviews FDI policies and regulatory policies for cloud services, which are as important as overseas expansion of domestic cloud service providers, in the process of formulating the Fourth Basic Plan for Cloud Computing (2025-27).
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  • 외국인 직접투자가 베트남의 성별 임금 격차에 미치는 영향과 시사점
    Foreign Direct Investment and Gender Wage Gap: Vietnamese Evidenc

    On July 4, 2023, Foxconn, the Taiwanese electronics manufacturer best known for producing Apple’s products such as iPhone and MacBook, announced plans to invest more than $200 million in northern Vietnam to reduce its dependence ..

    Jegook Kim Date 2023.09.08

    Labor market, Foreign direct investment
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    Summary
    On July 4, 2023, Foxconn, the Taiwanese electronics manufacturer best known for producing Apple’s products such as iPhone and MacBook, announced plans to invest more than $200 million in northern Vietnam to reduce its dependence on Apple and participate in the electric vehicles market. Including this investment, Foxconn has invested more than 2 billion dollars in Vietnam. Other multinationals such as Intel, LG, Nike, and Samsung are also rushing to invest in Vietnam. As a result Vietnam is sometimes called the FDI darling.

    These Foreign direct investment (FDI) contributes to Vietnam’s economic growth, not only through the role of capital as a factor of production, but also through the introduction of management skills from advanced economies. The impact of FDI on the host country is not limited to the target enterprises, but includes the transfer of capital or technology to industries and regions. The impact also affects factor markets in the region, in particular labor conditions, including employment, labor productivity, and wages. These effects may vary by industry, occupation, skill, educational level, and gender. This can be a matter of discrimination, especially when other conditions are equal, but the difference is simply due to innate gender differences. 

    Against this backdrop, this paper aims to examine the statistical and institutional status of FDI inflows and the gender wage gap in Vietnam, and to derive implications for governments and firms in Korea and Vietnam.

    Chapter 2 compares the status of gender equality in Vietnam with key ASEAN countries, Indonesia, Malaysia, the Philippines, and Thailand, focusing on the labor market, and assesses Vietnam’s gender equality institutions. Given Vietnam’s stage of economic development, gender equality in economic activities is good, but there is a need to expand political empowerment, provide paid parental leave, and reduce the gender gap in retirement ages. Vietnam has a large gender wage gap among the larger ASEAN countries but this varies by occupation. The gap is the largest in Technicians and Associate Professionals while Clerical Support Workers, women’s wages are higher than men’s.

    Similar to other major ASEAN countries, the unemployment rate for women was higher than for men. The higher level of education, the higher the unemployment rate and the wider gender unemployment gap. Vietnam has a high share of employment in the industry, including manufacturing, and a low share of employment in the services compared to the main ASEAN countries. This gap with major ASEAN countries is more pronounced for women than for men.

    In line with international standards, Vietnam has established gender-related institutions such as the Law on Gender Equality, the Social Insurance Law, and the Labor code. In 2021, the National Gender Equality Strategy 2021-2030 was promulgated. However, despite these legislative and policy efforts, there seems to be a lack of implementation efforts by businesses, especially Vietnamese private businesses.

    Chapter 3 investigates FDI inflows, gender wage gap, and labor market status in Vietnam by region or by classifications such as type of company ownership, age group, and occupational group. FDI inflows have been concentrated in the areas around the capital city of Hanoi in the north and Ho Chi Minh City in the south The variation in FDI inflows by region has been decreasing. The regional gender wage gap improved until the mid-2010s and has recently worsened, although the regional gap has narrowed. Women’s participation in vocational training falls sharply in their 30s. In most age groups, men spend about half as much time as women on domestic work. These two facts are often cited as widening the gender wage gap. 

    In the empirical analysis of FDI and the gender wage gap, Vietnam’s six socio-economic regions and four minimum wage regions were used to account for homogeneity and heterogeneity within the metropolitan area. Taking the fixed-effects panel analysis as the basic model, the regional dummy, the FDI inflows, and the interaction term of both were used as independent variables. Although there were differences among the models, negative relationships between FDI inflows and gender wage gap were generally estimated. In particular, the estimation that includes both regional and industry characteristics suggests that FDI inflows reduce the gender wage gap in sectors with a high share of female employment. In the most developed and industrialized regions of Vietnam, the highest minimum wage region in the Red River Delta and the Southeast, an increase in the share of FDI inflows in both traditional and knowledge services is estimated to reduce the gender wage gap. Among the control variables, the share of trained labor is negatively correlated in most models, suggesting the importance of education and training in reducing the gender wage gap.

    Chapter 4 suggests implications for governments and enterprises in Korea and Vietnam, including planning FDI incentives to improve the quantity and quality of female employment, the importance of vocational education and training, efforts to implement gender equality systems, and strengthening women’s right to self-determination in career choice. However, due to the limitations of the data in this study, caution must be exercised in interpretation. One should be borne in mind that assessing gender equality issues in Vietnam, including the gender wage gap, requires an understanding of the historical, social and cultural context.

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  • 러시아-우크라이나 전쟁 이후 유럽 주요국의 에너지 위기 대응 정책 분석
    Europe’s Energy Crisis, National Policies and Industrial Production: Insights for South Korea

    This study analyzes Europe’s policy responses after the energy crisis after the Russian-Ukrainian war and examines the impact of policy measures on industrial production. Although the mild winter of 2022 resulted in lower-than-ex..

    Yoonjung Kim and You Jin Lim Date 2023.08.28

    Industrial policy, Energy industry
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    Summary
    This study analyzes Europe’s policy responses after the energy crisis after the Russian-Ukrainian war and examines the impact of policy measures on industrial production. Although the mild winter of 2022 resulted in lower-than-expected energy demand, and energy prices have stabilized since the end of 2022, there is uncertainty about the severity of the winter in 2023 and the war is showing signs of prolongation. While Europe is using the energy crisis as an opportunity for the green transition, Europe is also accepting that it will continue to use fossil fuels, including liquefied natural gas (LNG), for at least the next decade and possibly even longer. 

    The fact that Europe can no longer rely on fossil fuel supplies from Russia has significant implications for Korea, which is a net energy importer, as it may be affected by the increasing demand from Europe in the international energy market. Analyzing Europe’s policy measures on energy crisis provides important policy recommendations for potential energy price surge in South Korea due to the additional international energy demand. 

    Chapter 2 explores the background of the energy crisis in Europe after the Russian-Ukrainian war, and explores the link between rising energy prices and inflation.

    We analyze the various policies implemented by the national governments of three European countries to mitigate the impact of the energy crisis, namely Germany, France, and the United Kingdom. The study demonstrates a significant increase in energy prices, providing justification for the implementation of national policy measures. We show heterogeneity across countries, including dependence on Russian energy, available fuel types, and the different institutional contexts, and further investigated the policy packages in each country. In France, the impact of rising energy costs has been relatively small, and the main policies were tax reductions on energy Imposing price caps. In Germany, tax cuts and universal household assistance were the main policy measures, with additional subsidies for energy-intensive industries. The U.K. government utilized targeted support unlike other countries, leveraging its administrative capacity. This targeted support encompasses providing cash assistance for vulnerable households and granting automatic discounts on household energy bills. 

    In Chapter 3, we use information on the timing of the introduction of energy crisis policies in major European countries to analyze whether these policies were meaningfully related to industrial production. Using fixed effect models and policy timing to reduce electricity prices in Germany and France, we examine the correlation between the industrial production index and energy crisis policies through their impact on energy prices. Our findings indicate that the policy intervention was positively correlated with industry production. By employing two-stage least squares regression, we find that the policy implementation was negatively correlated by approximately 40-euro reduction of wholesale electricity price, and 100 euro increase in wholesale electricity price was correlated with reduction in industry production index by approximately four percent relative to the average industry production within the sample period. Additionally, we also conduct heterogeneity analyses to investigate the potentially different correlation between the energy crisis responses and energy-intensive industries, but our analysis does not yield conclusive evidence of significant heterogeneity across different industries.

    From our analysis, we recommend that the energy crisis policy should prioritize assisting the most vulnerable consumers. Imposing a cap on price growth or reducing energy prices or taxes can result in price distortion and regressive taxation. In the event of an energy crisis, we suggest implementing targeted policies that benefit low-income households to optimize the government's budget efficiency and protect vulnerable households. In order for this policy option to be administratively feasible, the government must possess the capacity to identify eligible households and have streamlined procedures to efficiently deliver assistance without imposing excessive institutional barriers for applicants. In South Korea, Energy Voucher Program is limited to certain types of low-income families such as single mothers, the elderly, and other public assistance recipients, and the categorical eligibility should be expanded to include other low-income households that do not fall within these categories. If there is any consideration for implementing price reductions on energy, we suggest implementing price brakes to incentivize the reduction of energy demand and encourage more efficient energy utilization.

    This study provides valuable insights to the existing body of research by examining the relationship between energy crisis response policies and industrial production in the context of recent events such as the Russian-Ukrainian war and the energy crisis. To optimize the utilization of government resources, it is recommended to investigate this issue by analyzing firm-level data and actual energy prices paid by companies. Such approach can provide more informed policy recommendations for industries facing significant challenges due to high energy costs.

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