Executive Summary

1. Introduction

2. Background

3. Data
3-1. European Social Survey
3-2. Dutch Parliamentary Election Panel Study
3-3. French Electoral Study

4. Econometric Specifications
4-1. European Social Survey
4-2. DPES and French Electoral Study

5. Estimation Results
5-1. Estimation Results Using ESS Data
5-2. Estimation Results Using DPES
5-3. Estimation Results Using French Electoral Study
5-4. Variable Selection Using LASSO

6. Conclusion

References

This paper explores the connection between individuals’ barrier preference toward immigration and refugee policy and how they are linked to voting behavior. We use three different datasets to tackle these two questions. We utilize multi-country survey data with abundant information regarding voters’ subjective attitudes toward immigrants to study the determinants of far-right voting in Europe. Notably, even after controlling for education, income level, or current employment status, which represents the human capital endow-ment of natives, industry-level comparative advantage and disadvantage, and political scale from left to right, we still find that a preference for immigration barriers has strong explanatory power for far-right voting behavior. We find that educational attainment and income level are important in explaining vot-ers’ anti-immigration attitudes, as the Heckscher-Ohlin model predicts. On average, voters with higher education and higher income are relatively more open to immigration and aware of their role in the economy.

In addition to the cross-country election studies that allow us to study the anti-immigration attitude, we also use election surveys conducted in the Neth-erlands and France to add more details on the role of individual immigration and refugee policy preference in the voting behavior. The election survey on the parliamentary election of the Netherlands provides a special identification approach that is not available in cross-country election surveys. The panel structure of the Dutch survey allows us to observe the voting history of re-spondents in 2012, 2017, 2019, and 2021 parliamentary elections. Using this information, this paper clarifies the characteristics of voters who newly join supporting right-wing populism. In other words, we study determinants of ‘switching’ voting behavior from non-populist parties to right-wing populist parties focusing on the refugee barrier preference. We explore whether atti-tudes towards refugees affect this switching behavior in the politics of the Netherlands. The election survey on French voters covers the most recent presidential election in France. We elaborate on how immigration policy pref-erences of French voters are related with the popularity of right-wing popu-list presidential candidates in France.

Considering that non-economic factors contribute to explaining the far-right voting behavior, utilizing other non-economic variables such as individ-uals’ sentiments towards various entities (including the government, legal sys-tem, and the European Parliament), and subjective evaluation of their own health and happiness can also add explanatory power, as numerous previous findings imply. For systematic consideration of these abundant variables in the ESS data, we use LASSO for variable selection. For this exercise, we con-sider two approaches in selecting the optimal penalty term, namely cross-validation (CV) and Bayesian information criterion (BIC). It is worth high-lighting that almost all of the immigration barrier preference variables are se-lected when using both CV and BIC for variable selection criteria.

This report identifies the opportunities and challenges present in post-war reconstruction programs of Ukraine, and provides implications for the participation of Korean companies. The study comprehensively analyzes past post-war reconstruction cases and recent international community discussion trends through review of literature on the subject, statistical analysis, expert interviews, and attendance at international conferences. While there is great interest in post-war recovery in Ukraine throughout the international community and Korea, it is difficult for governments and businesses to expand their participation due to the continuing uncertainty surrounding war conditions, and the lack of specific information on funding methods or investment profitability. As large-scale investments will certainly be made for Ukraine’s recovery after the end of the war, it is necessary to carefully design the government’s participation in international community discussions and the direction of corporate investment, considering the current war situation and overall conditions.

Chapters 2–4 of this report conducted research on three major topics to provide reference materials for the participation of the Korean government and businesses in Ukraine’s post-war reconstruction programs.

In Chapter 2 we conduct an analysis of major past post-war recovery cases to present the main principles and precautions for participating in reconstruction projects. More than simple restoration of destroyed infrastructure, post-war reconstruction should be seen as an opportunity for a comprehensive overhaul of economic and social systems. This was evidently observed in cases such as the Marshall Plan after World War II, U.S. aid after the Korean War, and the reconstruction of the West Balkans in the 1990s. The Marshall Plan contributed to European economic recovery and the establishment of a market economy system, while in Korea’s case, U.S. aid laid the foundation for a liberal system. The Balkans are still undergoing reconstruction with EU-centered support, but challenges remain. Lessons learned from these cases are as follows: First, economic aid is effective when linked to improvements in the recipient country’s political and economic structure. Second, support tailored to the recipient country’s situation is necessary. Third, support that benefits both donor and recipient countries is important. Fourth, international cooperation enables the mobilization of funds to meet reconstruction needs and build international order. Korea’s participation in Ukraine’s reconstruction should also consider these points and participate not only in facility restoration but also in institutional improvement and international peacekeeping efforts.

Chapter 3 examined the current status of international community discussions on Ukraine’s reconstruction, the costs and direction of Ukraine’s reconstruction projects, governance, and key contents of core projects. Since the outbreak of the Russia-Ukraine war in February 2022, discussions on Ukraine’s reconstruction projects have been active in the West. Major Western countries and international organizations intend to modernize social infrastructure and integrate Ukraine into the EU economy. This will be enabled through attracting large-scale investments, EU integration, and application of digital and net-zero technologies, which are the main topics discussed in a series of international conferences on Ukraine’s recovery. As of the end of December 2023, the total amount of damages sustained by Ukraine and its needs are estimated at $486 billion, about 2.8 times Ukraine’s nominal GDP in 2023. The reconstruction costs are expected to increase as infrastructure continues to be destructed due to the war. Energy, transportation, housing construction, and health are the key areas that should be most urgently recovered. We summarized major projects and implementation plans for each area at the end of this chapter.

In Chapter 4, we examine the magnitude of support toward Ukraine’s reconstruction by international organizations and major countries, and discussed how to mobilize public and private funding considering sustainability and risk management. As Ukraine’s fiscal instability deepens due to uncertainties from the prolonged war, it heavily depends on support from international financial institutions such as the IMF, World Bank, EBRD, and major countries including the EU, G7, and Poland. To this end, the Multi-agency Donor Coordination Platform (MDCP) was launched in January 2023 to coordinate short- and mid- to long-term Ukraine support directions and mechanisms among various donors. This reflects the international community’s common understanding that international support alone is clearly limited for Ukraine’s stable recovery and reconstruction, and that attracting private capital is essential. The international community now discusses ways to utilize frozen Russian sovereign assets as reconstruction funds within legally possible limits, and an agreement has been reached at the G7 level on how to use the annual interest income from frozen Russian assets. In addition, discussions on practical risk management measures such as strengthening public-private partnerships (PPP), compensation for losses due to political and commercial risks, and customized policy support are deepening to activate private funding.

Based on these research results, Chapter 5 presents the current status of Korean companies’ participation in Ukraine’s reconstruction projects and future support measures. Korea is paving the way for its companies to participate based on the EDCF basic agreement with the Ukrainian government and six leading projects. The One Team Korea Ukraine Reconstruction Cooperation Delegation includes not only government ministries such as the Ministry of Land, Infrastructure and Transport and the Ministry of Oceans and Fisheries, but also public enterprises such as Korea Land and Housing Corporation (LH), Korea Water Resources Corporation, and Korea Overseas Infrastructure & Urban Development Corporation (KIND), as well as some private companies exploring the possibilities of reconstruction projects. To facilitate their smooth participation in reconstruction projects, this report proposes six support measures: first, establishing a pan-ministerial support organization under the Prime Minister for formulating reconstruction participation strategies and overseeing related ministries; second, supporting the development of integrated public-private partnership (PPP) projects throughout the project lifecycle; third, providing investment information in six key areas: energy, transportation, housing, infrastructure, industry, and complex fields; fourth, mitigating investment risks through the development of insurance products, participation in consortiums with major donor country companies, and utilization of MDCP; fifth, joint entry into reconstruction projects using Poland as a base; and sixth, strengthening bilateral cooperation with Ukraine, including KSP projects, and joint participation in multilateral cooperation.

The war will end someday, and regardless of how it ends, massive resources will certainly be poured into post-war recovery. Korea needs to set the right direction and prepare now so that it can contribute to this historic post-war reconstruction. The economic benefits gained by participating companies will be given as a bonus.

Critical minerals are essential for advanced industries like semiconductors, electric vehicles, and batteries, as well as for clean energy infrastructure. Major countries are actively pursuing trade agreements to ensure stable supplies of these minerals. This study analyzes key countries’ trade agreements related to critical minerals and derives insights for Korea’s policies and trade negotiations. The study narrows its focus to binding trade agreements between countries.

Traditionally, mineral and energy regulations in trade agreements were declarative, but recent agreements by the U.S., EU, and Japan have introduced specific obligations and linked these to environmental and labor standards. The EU includes energy and raw materials (ERM) chapters in its trade agreements, while the U.S. tends to establish stand-alone agreements on critical minerals. The EU’s proactive engagement with resource-rich countries aims to reduce price volatility and promote fair trade, while U.S. agreements, such as with Japan, are primarily driven by the Inflation Reduction Act (IRA) electric vehicle subsidies and focus on establishing supply chains with allied nations. The U.S.-Japan Critical Minerals Agreement, for example, emphasizes the management of environmental and social risks within supply chains through well-defined environmental and labor provisions.

Based on these international trends, this study proposes the inclusion of a Raw Materials Chapter in Korea’s future Free Trade Agreements (FTAs), bench-marking the critical minerals agreements of the EU and the U.S. Specifically, this proposal aligns with the “Critical Minerals Security Strategy” announced by the Korean government in 2023, which advocates for expanded bilateral and multilateral cooperation and enhanced collaboration on critical mineral supply chains in FTA negotiations. When pursuing critical minerals agreements, Korea must carefully consider various elements such as the selection of partner countries, contents and types of agreement to pursue, and the order in which to conduct negotiations, as these factors are intricately interconnected and can influence the outcomes of other aspects.

In negotiating critical minerals agreements, several key provisions should be considered, including the definition of minerals, trade facilitation, exploration and production permits, environmental protection, labor rights, and cooperation clauses. For example, trade facilitation provisions might include prohibitions on export quotas, export tariffs, and price caps to mitigate financial risks and price volatility for companies.

The environmental and labor provisions evident in the EU-Chile FTA and the U.S.-Japan Critical Minerals Agreement are essential to aligning with the global trend of enhancing supply chain ESG standards and emphasizing responsible sourcing. It is necessary that Korea incorporates these provisions into its agreements, thereby ensuring mineral procurement is conducted in accordance with international standards. However, the adherence to international environmental and labor standards and the associated monitoring may impose additional costs on companies. Thus, a balanced approach is necessary, in hand with dialogue and coordination between the government and businesses to achieve consensus before negotiations.

Executive Summary
I. Introduction
II. Theory and Hypotheses
III. Data and Methodology
IV. Empirical Results
V. Policy Implications
References

While prior research has highlighted digitalization as a potential avenue for enhancing domestic revenue mobilization—a crucial component for the long-term economic and political development of economies—the relationship between digitalization and domestic revenue mobilization remains underexplored. This working paper contributes to the existing literature by examining how the interplay between digitalization and the government’s capacity to tax is influenced by governance quality, an aspect largely overlooked in previous studies. Empirical findings based on a time-series cross-sectional dataset including up to 159 economies from 2004 to 2021 show that a higher level of digitalization alone does not necessarily translate into a higher non-resource tax revenue-to-GDP ratio. However, when digitalization is coupled with sound governance—specifically in terms of voice and accountability or regulatory quality—it significantly boosts domestic revenue mobilization. The study also finds that the interaction effects between digitalization and these governance variables vary according to the levels of digitalization and development across economies. The findings and case studies presented in this paper underscore the importance of strengthening institutional frameworks alongside digitalization efforts to ensure enduring success in mobilizing domestic revenue, offering valuable insights especially for developing APEC economies where the potential for improvement is most pronounced.

This research studies the role of international trade in the economic growth paths of five Southeast Asian nations (Indonesia, Malaysia, the Philippines, Thailand, and Vietnam). We evaluate the export-led growth strategies of the five nations and derive policy implications for Korea.

Chapter 2 elaborates on the economic growth paths of the five nations from the perspective of economic growth convergence. Introducing the comparative approach with growth convergence analysis allows the authors to delineate how the economic growth paths of these five Southeast Asian nations should be understood in terms of the speed and magnitude of the convergence. We find that the speed and magnitude of growth convergence in the five Southeast Asian nations are faster and more prominent compared to the world average. Country-specific estimations confirm that economic convergence is significantly explicit in Malaysia and Thailand, resonating with “middle-income trap” diagnoses on both nations.

We extend discussions by comparing growth convergence in these five Southeast Asian nations to that in the three East Asian nations of China, Japan, and Korea. Growth convergence is significantly identified in four nations: Japan, Korea, Malaysia, and Thailand. These four nations have already experienced rapid economic growth. Malaysia and Thailand followed convergent growth paths before joining the high-income group, and this is marked as a big difference compared to Japan and Korea, where growth convergence started after they had become high-income nations.

In nations currently undergoing accelerated economic growth, such as China and Vietnam, economic growth convergence is not statistically significant. We also could not find evidence of growth convergence in Indonesia and the Philippines. As growth convergence cannot be directly linked to growth slowdown, we analyzed the dynamics of structural change in four nations (Indonesia, Malaysia, the Philippines, and Thailand) that have accessible sectoral data. We ascertained whether a sector with higher productivity attracts more labor share within a national economy. If this productive labor reallocation is shown to occur, we can say that a country is going through growth-enhancing structural change, which is a critical factor for long-run rapid growth. According to our estimations, neither of these four nations is going through growth-enhancing structural change.

Chapter 3 clarifies how exports in the five nations are related to their economic growth. We obtain country-level export productivity measures following existing literature and estimate how export productivity can explain the economic growth of each nation. In Indonesia, Thailand, and Vietnam, export productivity has contributed to economic growth. However, in Malaysia and the Philippines, export productivity has not contributed to economic growth. The five nations are actively implementing export-led growth strategies to overcome the “middle-income trap” and accelerate their entry into a high-income economy. Chapter 4 comprehensively reviews and evaluates the history of export-led growth strategies in the five nations.

Chapter 5 extends the discussions in Chapter 4 by focusing on recent export-led growth strategies in the 2020s. Indonesia’s Making Indonesia 4.0 project and National RPJMN five-year plan, Malaysia’s New Industrial Master Plan 2030, National Trade Blueprint 2021-2025, the Philippines’ Philippine Development Plan 2023-2028 and Philippine Export Development Plan 2023-2028, Thailand’s 13th National Economic and Social Development Plan (NESDP), Thailand 4.0 Strategy and MoC Action Plan, and Vietnam’s Strategy on Exports and Imports and expansion of its trade promotion agency (VIETRADE) are introducing export-led growth strategies under the goals and constraints that these five nations are facing. All strategies target the maximized utilization of their respective comparative advantages to promote export growth and job creation.

Based on the recent export-led growth strategies of the five nations outlined in Chapter 5, we derive implications for Korean trade and investment in the areas of ① country-specific optimized cooperation, ② critical minerals/food supply chain cooperation, and ③ cooperation in future strategic industries. First, in the first area, country-specific optimized cooperation, some of the flagship projects in Chapter 5 could provide mutually beneficial business opportunities with Korea. For example, Malaysia clarifies its goals in aerospace industries in its New Industrial Master Plan 2030. Korea established the Korea Aerospace Administration (KASA) in 2024, which is poised to expand its activities in international cooperation. The Philippine Export Development Plan 2023-2028 suggests how the Philippines can utilize comparative advantages in labor-intensive sectors to attract investment. This can provide incentives for Korean businesses concerned about labor costs in Korea and its low fertility rate issues.

In the second area, critical minerals/food supply chain cooperation, we focus on national strategies provided by Indonesia, Malaysia, and Vietnam. As a net importer of critical minerals and food, Korea can proactively suggest cooperation packages through which it can contribute to the economic security of Korea and export promotion of the five Southeast Asian nations. For the third area, cooperation in future strategic industries, Korea can collaborate with all five nations in green transition, digital transformation, and semiconductor industries, which are commonly mentioned in each nation’s national strategies in Chapter 5. Working with Korean businesses allows these nations to avoid a dichotomous choice issue between the US and China. Also, as Korean businesses have already attained considerable local networks in ASEAN economies, they can serve as key contributors in constructing an ASEAN-friendly global value chain in future strategic industries.

Executive Summary

I. Introduction

II. Background and Methodology
2.1. Historical Context and Evolution of APEC Ministerial Meetings
2.2. Data Sources and Analytical Methods

III. Changes in Sectoral Composition
3.1. Sectoral Ministerial Meeting Frequency and Trends
3.2. Evolution and Trends in High-level Meetings
3.3. Analysis of Meeting Outcomes and Depth

IV. Thematic Changes in Major Ministerial Meetings
4.1. Evolution of Themes in Annual Ministerial Meetings
4.2. Thematic Shifts in Major Sectoral Meetings
4.3. Changes in Thematic Consistency Over Time
4.4. Interrelationships and Thematic Integration Across Meetings

V. Conclusions

References

Appendix 1. List of Venues for APEC Annual Ministerial Meetings
2. Sector Abbreviations and Full Names
3. Top-terms in Joint Statements by Major Ministerial Meetings
4. Dendrogram of Document Similarity (1994~2023)

This study provides a comprehensive analysis of the thematic evolution within the Asia-Pacific Economic Cooperation (APEC) ministerial meetings from its inception in 1989 to the present, examining over 460 meeting documents. The research employs both quantitative and qualitative methods, including text mining techniques, to uncover primary themes and shifts in policy focus over time. The study is organized into three main areas: first, it investigates the distribution and evolution of agendas across different levels and sectors of APEC meetings. Second, it tracks thematic changes within sector-specific meetings, with a particular emphasis on trade, finance, and small and medium enterprises (SMEs). Third, it explores the interconnections among these meetings to reveal the dynamic relationships within APEC’s framework. The findings indicate a significant increase in the number and diversity of APEC meetings, reflecting an expanded agenda addressing more complex and emerging issues such as the digital economy, sustainable development, and inclusive growth. The study also identifies a shift from foundational economic arrangements to more diversified topics, demonstrating APEC’s adaptability to contemporary global challenges. Additionally, the research highlights the evolving hierarchical structure among meetings, with a growing focus on digital economy and sustainability. This work offers valuable insights for policymakers, scholars, and stakeholders involved in regional economic integration and cooperation, showcasing APEC’s role in addressing both traditional and emerging economic challenges in the Asia-Pacific region.

This paper delves into the perceptions of urban residents in developing countries on climate change, underscoring the importance of these insights in formulating effective climate policies. As urban areas in these regions experience rapid growth and heightened vulnerability due to climate impacts, understanding local perspectives becomes crucial for both mitigating and adapting to climate change effectively.

The study contributes to the body of knowledge on public perceptions of climate change, focusing particularly on the urban populations of developing countries. Despite existing literature on the subject, there remains a scarcity of research concerning cross-national variations in climate change perception within this demographic, which this paper seeks to address. To gather detailed empirical evidence, we conducted an online survey with participants from eight major cities in countries across Africa, Latin America, Southeast Asia, and South Asia. The survey primarily assessed climate change awareness, the perceived personal impact of climate changes, and evaluations of governmental and international responses.

The findings reveal that awareness and concerns about climate change significantly differ among urban populations, influenced by educational level, economic status, and direct climate impact experiences. Furthermore, the study explores the heterogeneity in perceptions, which is shaped by a complex interplay of demographic and socio-economic factors. This diversity in perceptions impacts the public's willingness to engage in climate change adaptation measures and supports varied policy preferences at the domestic and international levels.

Also, the findings emphasize the necessity for policymakers to consider the diverse perceptions of urban residents when implementing climate policies. Engaging these communities in developing countries is crucial for achieving widespread support and effective climate action. This approach aligns with the broader goals of sustainable development and international cooperation on climate challenges. By gaining a deeper understanding of varied urban perceptions, policymakers can more effectively prioritize actions and allocate resources in areas where the impact of climate change is most severe and the potential for meaningful change is significant.

In the context of the prolonged and structured U.S.-China strategic competition, the three countries which we examine - the United States, China, and the Republic of Korea (ROK) - must find ways to maximize their respective national interests and value. Nevertheless, due to a lack of mutual understanding between the three countries, they are focusing on attacking each other’s vulnerabilities rather than on long-term strategies for cooperation and competition, thus maximizing their costs. This study is motivated by the need to discuss an approach that conceptualizes the U.S.-China-ROK triangle as a multi-dimensional matrix to address these issues.

This study aims to examine points of conflict and interdependence within the trilateral relationship between the Republic of Korea, the United States, and China. As the dynamics in the trilateral relationship become more complex, progress can be limited and strategic planning becomes more challenging. Thus, this study begins with the premise that it is difficult to perform three-dimensional analysis by examining only the interaction of the three bilateral relationships that form a triangle. In addition to demonstrating the demand for each other, as well as conflicts that may result from consideration of core interests in the interaction of bilateral relations, this study seeks to explore the possibility of stereoscopic and three-dimensional analysis of trilateral relations as a whole.

Building upon this study, the United States and Republic of Korea should work in the direction of expanding their intersecting areas while reducing areas of divergence. The ROK’s strategy should be to increase convergence with the United States and decrease divergence with China. By doing so, it can expand the space for coexistence with China and strengthen its trust relationship with the United States. With the intersection of the U.S.-Korea relationship expanding, it is natural for crises in the Sino-Korea relationship to arise, but there are gaps and places of coexistence within the U.S.-China strategic competition if the parties understand each other’s priorities and red lines and expand the intersections within Korea-China relations.

Satellite data have been used to observe Earth phenomena in a wide range of scientific disciplines, but recent advances in access to satellite data and in the technology required to process them are expanding their use in the social sciences, especially for disadvantaged countries that lack in the capacity to produce statistics or the types of statistics available. Satellites observe the world on the same basis, at regular intervals, and with detailed geographic coverage.

North Korea is one of the most underdeveloped countries in the world in terms of statistic data. It publishes very limited economic statistics, and while the outside world may provide estimates of GDP and other statistics, the reliability of these estimates is often questioned due to the lack of raw data. Therefore, recent attempts have been made to analyze the North Korean economy using satellite data.

This study makes a new contribution to the literature on North Korea’s economy using satellite data in two ways. First is the object of the study. Existing studies utilizing satellite data usually analyze at the regional and national levels. Considering the importance of enterprises and the abundance of satellite data and spatial information on enterprises, this study uses satellite data on 179 major enterprises in North Korea to create indicators to measure corporate activities, which are then aggregated at the sub-industry level to create industry indicators. In North Korea, microdata at the firm level is almost non-existent except for the database on frequency of news reports. Industry level statistics are also limited to Bank of Korea’s estimates on GDP by high-level industry classification, namely light and heavy chemical industries for manufacturing, and output of a few items, making it difficult to analyze detailed industries. This study utilizes satellite data on major North Korean companies to generate firm-level indicators of entrepreneurial activity, which are then aggregated at the industry subcategory level to generate industry-level indicators for 41 industries.

Second, this study utilizes new satellite data. Previously, most of the satellite data used to observe North Korea’s economy were based on nighttime light levels. This is because nighttime illumination is widely used and reliable as an indicator of income level in the field of economics due to the close correlation between electricity consumption and economic activity. However, the usefulness and reliability of nighttime light has been questioned in North Korea’s unique economic environment. This is because nighttime light observations are made around 1 a.m., when economic activity in North Korea is unlikely to be active, and electricity consumption may not necessarily reflect economic demand when considering the authorities’ monopoly on electricity distribution.

In this study, we aimed to observe the North Korean economy by utilizing land surface temperature captured during the daytime and SAR satellite imagery which can be observed regardless of weather conditions, in addition to the nighttime light data. The surface temperature data was used to index the temperature of the production sites of enterprises, and the SAR satellite images were used to measure the changes in goods loaded in outdoor areas within the enterprise area. Nighttime light data was used to measure the amount of light generated by enterprises at night. As all three are generated by different methodologies utilizing different satellite data, the indicators are expected to reflect different aspects of North Korean enterprises and industries by observing different aspects of firm activities, such as disparities between night and day, inside factories and outdoor areas.

The use of satellite data to generate economic statistics is a recent development and there is no established methodology. It is also the first time that such an attempt has been made for North Korean firms and industries. Therefore, this study evaluates the explanatory power and limitations of the satellite-based economic indicators generated in this study at the firm and industry level. At the firm level, we evaluate the alignment of satellite-based firm indicators with production and investment activities and the macroeconomic environment as reported by North Korean media for nine major North Korean factories. At the industry level, we generated industry indicators by weighting and averaging the enterprise indicators across sub-categorized industry units, and compared them with economic statistics such as trade and output estimates.

The organization and main content of each chapter is as follows. First, Chapter 2 reviews previous studies on economic analysis using satellite data, especially attempts to measure economic activity, and describes the research methodology and data used in the literature. Four steps were taken to derive satellite-based economic indicators: first, target firms were selected, spatial information of firms was acquired and overlaid with satellite data, and economic indicators were generated by processing satellite data at the firm level. As described above, three types of indicators were generated: the “temperature gap” metric using temperature is the average temperature gap between the production and non-production areas of a company’s premises. The "illuminance gap" metric, which uses nighttime light levels, subtracts the national average nighttime light level from the average nighttime light level of the enterprise to control for the effects of power supply at the national level. Finally, using SAR satellite imagery, we created a "load change" metric, which is the percentage of the outdoor area of a company’s property that shows a change in visible goods between two consecutive satellite images.

We then examined and briefly characterized the changes in the distribution of the three indicators (temperature gap, illuminance gap, and load change) by time, industry, and company size. In the case of temperature gap, the level of temperature gap progressively decreased throughout normal years (2013-2016), the UN sanctions period (2017-2019), COVID-19 period (2020-2022), and Post-COVID period(2023) in the lower-end companies, while in the upper-end companies, there was no significant change in the UN sanctions period and a decrease in temperature gap was observed in the COVID-19 period. For illuminance gap, the level of illuminance gap consistently improved across the four periods, especially for larger companies. In terms of load change, the lower-ranked firms showed similar characteristics to the temperature gap as the level of load change decreased over time, while the higher-ranked firms showed mixed changes during the UN sanctions and COVID-19 periods, but a consistent increase in the area of load change during the post-COVID period. By industry, the temperature gap was higher in the heavy chemical industry, including primary metals and transportation machinery, while the illuminance gap was higher in the transportation machinery, electrical and electronic, and chemical industries, and load change was higher in the transportation machinery, machinery, and electrical and electronic industries. Within industries, the variation between firms was higher in light industries such as textile and apparel and food and beverage services. Finally, by firm size, temperature gap was strongly positively correlated with firm size, while illuminance gap and load change were not.

Chapter 3 examines the explanatory power of the three satelliteindicators for nine major enterprises: Kimchaek Iron and Steel Complex, Cheonlima Steel Complex, Heungnam Fertilizer Corporation, Namheung Youth Chemical Complex, Taean Heavy Machinery Complex, Sinuiju Textile and Chemical Complex, Hamhung Disabled Soldiers’ Essential Plastic Goods Factory, Kim Jong Suk Pyongyang Textile Factory, and Pyongyang Goksan Factory. The extent to which the satellite indicators explained the production and investment activities of major enterprises varied across enterprises and time periods, and was not complete. Nevertheless, certain conclusions can be drawn: temperature gap is related to the production of enterprises, especially in the heavy chemical industry. The illuminance gap tended to increase during periods of large-scale capital investment and construction, suggesting that it is generally related to investment activities. In the case of Kim Jong Suk Pyongyang Textile Factory and Pyongyang Goksan Factory, it was also consistent with production activities. In the case of load change, unlike other indicators, it was difficult to find a consistent relationship with business activities due to the short time period (2017-2023), but in the case of the Taean Heavy Machinery Complex and the Hamhung Disabled Soldiers’ Essential Plastic Goods Factory, we found a relationship with business activities. On the other hand, we also detected a possibility of measurement error due to the influence of temperature and illumination in the surrounding area, and upward and downward rigidity of the temperature gap variable, among other factors.

Chapter 4 examines the explanatory power of satellite indicators compared to economic statistics at the industry level. We examine the correlation between economic statistics and satellite-based industry indicators for a total of 16 industries for which we have output estimates at the industry subdivision level, or for which we can construct trade statistics on intermediate goods imports, final goods imports, or final goods exports related to the industry. Only the temperature gap and illuminance gap variables generated industry-level indicators, while load changes were not used in this chapter due to the small number of firms for which data were available.

The analysis shows that temperature gap is correlated with economic statistics at least moderately for nine heavy chemical industries and four light industries, with higher correlation coefficients for heavy chemical industries. In the case of illuminance gap, economic statistics and satellite-based industrial indicators were correlated for two heavy chemical industries and one light industry, showing a lower correlation with industrial production than temperature gap. To assess the overall explanatory power of satellite-based industrial indicators, we conducted a fixed-effects model analysis of the correlation between trade statistics and temperature and illuminance. The results show that each of the temperature and illuminance gaps are significantly and positively correlated with the economic statistics, but only the temperature gap is significant when considered together, suggesting that the temperature gap is more relevant to production. Also, when separating heavy and light industries, the positive relationship is significant only for heavy industries.

The above results show that the satellite-based enterprise and industry indicators derived in this study reflect economic activities at the enterprise and industry level to some extent. However, there are limitations to the satellite-based economic indicators developed in this study that prevent them from accurately measuring North Korea’senterprise and industrial production. We found a number of limitations in the satellite data itself, such as glare in the nighttime data, and in the methodology for calibrating the satellite data and derivingindicators, such as making considerations for firm size and seasonality. Therefore, it is recommended that the indicators developed in this study be used as a supplementary data source. Nevertheless, given the scarcity of North Korean economic statistics, this study is significant in that it presents a new methodology for analyzing the North Korean economy using satellite data and confirms certain explanatory power. Further development of the methodology can be expected to expand our understanding of the North Korean economy.