This study analyzes e-mobility policies of the European Union (EU) and its major member states. Through the analysis the study provides policy implications for the Korean government in promoting eco-friendly automobiles, and strategic insights for Korean companies aiming to access the EU market.    The automobile industry of the EU faces multiple challenges today. Aiming to achieve climate neutrality by 2050, the EU will have to reduce greenhouse gas emissions of cars by expanding the use of renewable energy, while maintaining the industry’s competitiveness. Currently, the EU remains comparatively weak in the market for eco-friendly automobiles. The share of European brands in the world’s eco-friendly car market is only 12%. Moreover, Europe is lagging behind Northeast Asian countries, including South Korea, in battery packs and hydrogen fuel cells technology and production. Upon this background, the EU is endeavoring to support the eco-friendly automobile industry to reduce overseas dependence on core components, and to expand the distribution of eco-friendly cars. On the EU level, the EU Commission is playing a pivotal role in laying the basis for the eco-friendly automobile industry. It has announced the European Green Deal and adopted the New Industrial Strategy for Europe. A roadmap has been presented for supporting the eco-friendly automotive industry through EU-level strategies in the areas of batteries, hydrogen, and e-mobility. Meanwhile, cooperative alliances are being formed in the battery sector, including the European Battery Alliance (EBA), BatteRIes Europe, a technology innovation platform, and the Battery 2030+ initiative. The European Clean Hydrogen Alliance has been formed to promote hydrogen fuel technology. In addition, the EU protects and supports the regional e-mobility industry using indirect methods of regulation, such as emission regulation, waste regulation, and the establishment of standards. Financial support for research innovation is being provided through the Horizon Europe and InnovFin initiatives, and through mobilization of the European Strategic Investment Fund (EFSI), while infrastructure investment is actively being carried out through the Connecting Europe Facility (CEF). On the EU member state level, Germany, France, Sweden, and the four Visegrad states (Poland, Hungary, Czech Republic and Slovakia) were selected for case studies, on the basis of their importance in the EU’s automobile industry. Germany, France, and Sweden are all actively using subsidies and tax regimes to expand the distribution of eco-friendly cars. Germany has introduced a new e-mobility law to facilitate the administrative process of using eco-friendly cars. Germany's eco-friendly automobile industry support policy incorporates suggestions from the industrial sector, while providing support for research and production of battery cells, as well as R&D projects in hydrogen technology. In the case of France, it is notable that the government, as a major shareholder, is actively participating in the management of major manufacturers with a view to protecting jobs and fostering the eco-friendly automobile industry. Sweden has the highest sales volume of eco-friendly cars in Europe thanks to government policies to encourage consumption. The V4 countries are gaining importance as emerging powers of the European automobile industry, with a large number of global companies entering their markets, both as primary and secondary suppliers.    Through the analyses, the study draws three main implications. First, it is important to actively participate in the process of establishing standards through technical cooperation with Europe. For Korean companies it is important to work closely with EU companies and institutions to reflect their opinions when setting battery technology standards. In addition, Korean companies, academia, and the government should actively participate in discussions on expanding the use of hydrogen technology in Europe, so that well-advanced Korean hydrogen technology can penetrate into the newly-formed EU market.    Second, expanding the supply of eco-friendly cars in Korea through improvement of the subsidy system can be considered. Policy makers could consider expanding the scope of subsidies to include leased or used eco-friendly vehicles, to the extent of available budget levels. Another option to consider would be modifying the eligibility criteria to incentivize transition to eco-friendly cars, rather than focusing on scrappage programs. In addition, it is necessary to consider ways to incorporate CO2 emission into the calculation of automobile taxes. Finally, further cooperation with the V4 countries is necessary to improve access to the EU market. To make more efficient use of the advantageous position already formed in the V4, Korea needs to implement a step-by-step cooperative framework with the V4 for the development of future mobility. Possible directions would include establishing joint R&D centers for developing electric vehicles and batteries, or forming a global consortium in the field of hydrogen cars and charging facilities.

 

   As friction between the U.S. and China intensifies, this poses a huge burden on the Korean economy, which is highly dependent on China. Under these circumstances, questions are being raised about whether Korea can continue its strategy of aligning with the United States on security issues and with China in the economic sector. This study seeks to clarify what the main issues of friction between the U.S. and China are, and what positions and principles Korea should adhere to concerning each issue.
   The U.S.-China friction can be seen as arising from the clash between the U.S.’ vision of “America First” and the “China dream.” Xi Jinping’s leadership, which was launched in 2012, presented China’s dream of transitioning from an economic and military power to a great power. The U.S. administration recognizes this dream as a threat and challenge to the U.S. and is pressuring China. China perceives this pressure applied by the U.S. as an attempt to undermine its key interests and responds accordingly. The Trump administration defined the situation as a long-term strategic competition between the two systems and declared a “competitive approach” to China in a report titled “U.S. Strategic Approach to the People’s Republic of China” released in May 2020. In another report, “The Elements of the Chinese Challenge,” released by the U.S. Department of State in November 2020, the U.S. and the world are described as facing a new era of “great power competition” caused by the Chinese Communist Party. A U.S. congressional report released in December 2020 also described this as a “strategic competition” between China and the United States. In response to U.S. pressure, China recognized the conflict between the U.S. and China as a challenge to its development rights and declared a long-term war, regardless of the outcome of the U.S. presidential election. It has adopted a “dual circulation” strategy that puts large-scale domestic circulation first as the basic direction of long-term response and mutually drives both domestic and international circulation.
   In this study, the issues between the U.S. and China were divided into regulation of unfair practices on the part of China, China’s strategy to become a “strong country” with world-class forces amid the U.S.-China technology decoupling, and the U.S.-China strategic competition over ideology and values. First is the conflict over subsidies, intellectual property rights, developing country status, cyber security, and environmental issues raised by the United States. The second issue is China's strategy to become a strong country and decouple from U.S. technology, leading to the China Manufacturing 2025 initiative, Military-Civil Fusion (MCF) strategy, China Standard 2035 project and U.S.-China competition over network security. The third issue involves U.S. efforts to check the Belt and Road Initiative (BRI), perceiving this as a strategy to expand Chinese influence in the Asia-Pacific region. The U.S. recognizes the Belt and Road Initiative as both an economic challenge for the U.S. and a security challenge, and keeps China’s influence in check by pursuing the Indo-Pacific strategy. The fourth is pressure on China based on universal values. The U.S. is expanding its pressure on China by politicizing the issues of its party-state system, democracy, human rights, religion, and the South China Sea dispute.
   The U.S.-China friction can be both an opportunity and a threat to Korea, which is highly dependent on the U.S. and China. In the short term, China will be able to provide Korea with new opportunities if it improves external openness and transparency and takes a domestic- oriented growth strategy. However, in the process of U.S. pressure on China, Korean companies tied to the value chain will face immediate difficulties in exporting to China. It is also impossible to rule out the possibility of another “THAAD situation” unfolding as the U.S. and China pressure Korea to choose a stance on particular issues. In the mid- to-long term, should China respond by increasing its independent self- reliance in technology, this could pose a threat if China develops domestic alternatives to Korean imports. However, if China responds by opening up and expanding cooperation with neighboring countries in new industries, this could be a new opportunity for Korea. If the friction between the U.S. and China is prolonged, the relationship between Korea and China is expected to enter a new period of transition, where individual events develop into a phase and structural transformation begins. It will be necessary to assess the threats and opportunities accompanying the friction between the U.S. and China, and to prepare effective response strategies.
   Faced with pressure from the U.S. and China to choose one side, Korea will have to establish a set of principles to apply in situations where it proves impossible to maintain a stance of strategic ambiguity. This study presents new directions and tasks for Korea-China cooperation in the era of friction between the U.S. and China, namely in the areas of: adjusting Korea’s dependence relations with China, stabilizing the value chain in preparation of the U.S.-China decoupling, East Asian regional cooperation, and response measures to changes in China's strategy. In particular, in this study, an online survey of Chinese experts in Korea explored the direction of Korea’s response to U.S. and Chinese pressure to take one side. It is necessary to redefine China’s strategy by comprehensively judging China’s influence on the Korean economy, the future potential of the Chinese market, and the possibility of cooperation. First, Korea should redefine its position on each issue based on: the principle of securing national interest and minimizing damage, the principle of a fair market economy, respect for universal values, and the principle of multilateralism. Second, a new strategy is needed amid rapidly changing U.S.-China relations. Despite the friction between the U.S. and China, there is no significant change in China’s importance as a market and the importance of the U.S. as a crucial security ally. In this regard, the current structure of aligning Korea’s position with China in economic issues and with the U.S. on security issues will continue, but depending on the pending issues of friction between the U.S. and China, principles and response strategies need to be determined on a case-by-case basis.

   In 1990, the socialist economic system of East Germany was incorporated into the “Social Market Economy (Soziale Marktwirtschaft)” of West Germany, completing political, economic and social unification. The economic state of East Germany was in a more serious state than expected. With unification, East Germany’s GDP fell by more than 30%, and the unemployment rate rose sharply to over 15%, and in the late 1990s, the unemployment rate in East Germany drew near 20%. 
   During the time of unification in 1990, the economic gap between East and West was the biggest problem in the process of social and economic integration. Since the reunification, the German government has made various efforts to bridge the regional gap between East and West Germany. The income of East Germans has now reached 80% of West Germans, and the productivity of labor has steadily improved to 80% of the average of the West German workers. 30 years after reunification, Germany is now the largest economy in Europe and it has the world’s fourth highest nominal GDP.
   Despite these positive aspects, the income and productivity gaps between East and West are still widening, and the rate of economic convergence is falling significantly. Moreover, the bigger problem remains in that skilled or professional workers are moving to West Germany due to the fact that there are not enough attractive jobs in the East.
   The study aims to find whether the gap in economic power between the East and the West is decreasing and if the economies of East and West are converging in the process of economic integration. If the economies of the two regions have in fact converged, then it strives to discover the factors causing the convergence. It also intends to determine the remaining problems and challenges that exist to this day. In particular, by examining the factors that promoted the growth of the East German region and comparing them with the West German region, the study aims to provide policy implications for the unification of the Korean Peninsula. 

 Executive Summary

 

 I. Introduction

 

 II. Progress of Financial Inclusion
 1. Achievements of Financial Inclusion
 2. Limitations of Financial Inclusion and Advent of Digital Inclusive Finance

 

 III. Fintech and Digital Financial Inclusion
 1. Definition of Fintech and Digital Economy
 2. The Impact of Fintech Development on Personal and Corporate Finance
 3. The Benefits and Costs of Fintech and Digital Financial Inclusion

 

 IV. Promotion of Digital Financial Inclusion in Asia
 1. Digital Financial Inclusion in Asian Countries
 2. Tentative Empirical Results on the Effects of Financial Inclusion
 3. Main Implications

 

 V. Conclusion

 

 References

 

 Appendix

   Since the 2008 global financial crisis, including the recent COVID 19 pandemic, low interest rates and low economic growth have continued around the world. In spite of this low interest rate trend, as the economic downturn prolongs, there is a situation of concern called the “new normal” of low interest rates and low economic growth, and low prices. In this new normal economic structure, the rapid progress of aging is increasing the necessity and desire for asset accumulation. In addition, digital finance such as Fin-tech with the evolution of the underlying technologies and the emergence of new technologies has replaced or improved many functions of existing finance in the advent of the 4th industrial revolution era.
   These changes are expected to bring benefits to the individual and corporate finance sectors, which have been subject to financial inclusion. On the other hand, digital finance, which is changing at such a rapid pace, may further isolate some individuals who were in the blind spot of finance, such as the elderly, and a support system for this is an issue that should be included in the policy of financial inclusion in each country.
   In this paper we find that Asian countries like other regions have achieved tangible results in financial inclusion while achieving financial deepening. When looking through various financial inclusion indicators such as holding accounts and loans, ATMs, and bank branches, the Asian region has achieved similar or superior performance to other regions. Compared to the income level, the growth of financial inclusion in Asia was found to be attributable to better performance in middle-income countries than in other similar regions. High-income countries in Asia are performing somewhat lower than similar peer groups in other regions, but this seems to be due to stagnation of growth. More seriously, financial inclusion in low-income countries in Asia is not appearing faster than in other income groups.
   In Asian countries there appears to be a wide variation in regional financial inclusion. However, Asian countries are expanding around the younger generation in the use of ICT technology that is helpful in spreading financial inclusion so if digital inclusive finance centered on Fintech is properly applied, Asian countries will become a new model for digital financial inclusion. However, since the gap in the use of Fintech in the region is large, how to fill this gap is being raised as an important policy task for each country as well as the whole region.
   We also tentatively examined the effects of financial inclusion and digital financial inclusion in the Asian region using the Asian country panel data collected from WDI and Global Findex data. Looking at the implications of the empirical analysis results even though it is very cautious to interpret the results of this analysis due to the lack of data of inclusive finance in Asia., first, the expansion of financial inclusion(such as ATM) in Asia seems to have some relationship with the reduction of poverty rates and income inequality which is measured with Gini coefficient. And the expansion of internet usage in Asia seems to have some relationship with the reduction of poverty rates and income inequality although we use it as the proxy variables instead of the digital financial inclusion variables. Lastly, the higher share of rural population which is used as a proxy for digital divide, which may occur due to the expansion of digital inclusive finance in Asia, has the potential to erode some of these achievements, but there is still a possibility that the expansion of inclusive finance will be effective.
   Despite the likelihood of success in digital inclusive finance in the future, digital divide spreads due to various gaps such as between urban and rural areas, between young and old, between low and high income, and between men and women, occurring in Asian countries and may worsen the performance of inclusive finance. Thus the governments in the region need to actively intervene to resolve these gaps. In addition, it is necessary to close the digital gaps that is occurring between countries through policy cooperation among APEC members.
   Considering the situation that the degree of development of Fintech in each member is expanding financial inclusion, it is necessary for Korean financial companies to set up an advancement strategy that focuses on the financially marginalized class based on the advanced system strategy of credit rating based on big data.
   Our analysis results will give some implications for the New Southern Policy. Personal and SME finance are very important business areas when financial companies currently enter the ASEAN region, and accurate analysis of each member' current status for Fintech or digital finance and financial inclusion should be given priority in terms of business expansion.

 

 Keywords: Fintech, Digital Finance, Financial Inclusion, Comparative Studies of Countries
 JEL Classification: O33, G19, G20, I31, O57