The Latin American region, while still abundant in fossil fuels, is also regarded as having significant potential in the renewable energy sector. The global transition to renewable energy presents an opportunity for industrial development in Latin American countries, which hold comparative advantages in this field. Many Latin American countries possess strong cost competitiveness in solar and wind energy. These global needs, coupled with the region's strengths, underline the necessity of fostering green energy. However, it is evaluated that the conditions required to realize these goals are not fully in place, necessitating responses through international cooperation. This study aims to analyze the current status and institutional foundations of the green energy industry in Latin American countries and, based on this analysis, propose directions for the advancement and cooperation of Korean companies.

This report seeks to understand the structure of the green energy industry in Latin America, focusing on solar, wind, and hydrogen energy, and to explore pathways for Korea's cooperation with the region. It especially highlights Chile, with its significant advantages across all renewable energy sectors and high political stability; Brazil, with the largest market in Latin America and strengths across almost all energy sources; Mexico, which ranks next in market size and holds great potential in solar energy; and Colombia, where energy accessibility is a major issue and official development assistance (ODA) could serve as a key cooperation channel.

Chapter 2 provides a macro-level discussion on the energy transition in Latin American countries. By examining shared and persistent characteristics, it identifies factors to consider for the development of the green energy sector and collaboration with Korea. It points out that underlying the region’s longstanding issues of low growth and inequality are problems in the corporate growth ecosystem, particularly institutional issues such as favoritism toward state-owned enterprises. Many Latin American countries find it difficult to meet energy transition demands on their own, requiring external investment. However, outdated institutional factors in Latin America are likely to continue to act as barriers to attracting investments for energy transition and green energy development.

This chapter also delves into the green energy potential of Latin America. According to IRENA (2023), countries like Brazil, Chile, and Mexico have significant cost advantages in the solar and wind sectors. Northern Chile, Peru, and Mexico hold immense potential in solar energy, while the Patagonia region (southern Chile and Argentina), parts of Colombia, and eastern Brazil excel in wind energy. Additionally, Brazil and Argentina are well-suited for bioenergy production using agricultural resources. These diverse renewable energy resources contribute to the region being one of the largest renewable energy producers globally.

The study highlights the role of hydrogen as an energy source for achieving carbon neutrality, with particular attention to green hydrogen (produced using renewable energy), which is attracting the interest of many companies and nations. Latin America, with its abundant solar and wind resources, has the potential to supply electricity for hydrogen production at the lowest global cost and aspires to become a leading exporter of green hydrogen. Emerging international hydrogen industry platforms, including the Global Hydrogen Council, could facilitate Korea’s collaboration with Latin America in this field.

Lastly, the issue of a just and equitable transition is emphasized not merely as a social concern but as a practical challenge that significantly impacts the identification and execution of projects. International organizations like the Inter-American Development Bank (IDB) are focusing on technical cooperation to support a fair transition. While private companies may concentrate on business aspects, governments and public sectors need to take responsibility for related areas, such as community development, and actively consider relevant models.

Chapter 3 explores Korean companies’ perceptions of the renewable energy industry and Latin America’s potential, based on a survey of 100 professionals from diverse energy companies and institutions in Korea. While respondents generally recognize Latin America’s cost advantages, they do not view it as a critical strategic region. This is attributed to not only a lack of information but also challenges such as political instability, licensing issues, and land ownership disputes in the region, underscoring the need for policy responses.

The chapter also examines the technical advantages of Korean companies to identify comparative strengths. In solar energy, midstream and downstream capabilities stand out, while in wind energy, partnerships with European firms are suggested as a key strategy. In the hydrogen sector, Korean firms are recognized for their strengths in hydrogen-powered vehicles, tankers, and ammonia co-firing technologies.

Chapter 4 provides an in-depth analysis of Chile, Brazil, Mexico, and Colombia and proposes strategies for cooperation. Chile is identified as the most favorable country for entry due to its excellence in both solar and wind energy, clear hydrogen-focused policy direction, and proactive stance on foreign investment and collaboration. The report suggests positioning Chile as a hub country, offering an empirical model for other Latin American nations. It emphasizes establishing stable domestic and international demand plans, leveraging Chile’s interest in securing customers, and building long-term relationships through human exchanges and joint research.

For Brazil, while it is the largest economy in South America, significant challenges such as foreign exchange risks and a lack of information and relationships are noted. The report proposes a detour strategy through partnerships with European companies already established in Brazil and suggests targeting unique growth areas like biofuels and internal combustion engine components.

In Mexico, despite its technical potential, the report anticipates that regulatory practices favoring state-owned enterprises will remain entrenched. It recommends focusing on small-scale distributed energy markets and energy demand along the U.S. border. For Colombia, the report highlights the country’s market-friendly policies and status as a priority ODA partner. It advocates for continued ODA projects targeting regions excluded from the power grid and active involvement in Colombia’s hydrogen energy plans.

Chapter 5 synthesizes the findings to propose strategic cooperation directions for the four major countries and draws lessons from the collaboration approaches of other donor nations. A key feature of advanced donor nations’ energy policies is the integration of energy cooperation with other development projects. Many countries are implementing policy-oriented ODA projects to drive the entry of their domestic firms. Energy cooperation requires not only private investment but also government collaboration, necessitating comprehensive partnerships, including policy coordination. Korea’s experience with initiatives like the Knowledge Sharing Program (KSP) and the Energy Industry Promotion Program (EIPP) offers advantages. However, Korea’s relatively short history of collaboration with Latin America suggests the need to focus on partnerships with willing countries in the region or to actively pursue collaborations with European nations or international organizations that have longstanding relationships with Latin America.

Lastly, the report highlights policy recommendations, including the identification of cooperative projects through international organizations like CABEI and IDB, strengthening intergovernmental cooperation through knowledge sharing and joint research, and improving internal feasibility studies for business development in Latin America.

The green transition and shifts in industrial paradigms have intensified the global competition for critical minerals essential to renewable energy systems and electric vehicles. The rising demand for these minerals has created more complexities for global supply chains, presenting greater challenges compared to the era of fossil fuel. In response, both mineral producers and consumer countries are formulating strategies to enhance economic security and diversify mineral supply chains, promoting public-private partnerships as well as bilateral and multilateral cooperation.

With its abundant reserves of these minerals, Africa is emerging as a key partner for economic diversification. Major mineral-rich African countries are revising mining-related laws and regulations to attract foreign investment and secure the needed increase state participation in the mining sector. Meanwhile, major global economies are bolstering diplomatic ties with these countries while supporting private investment into Africa. However, the expansion of the mining activities for critical minerals has led to various environmental and social concerns including human rights abuses, environmental degradation, and corruption in Africa. Consequently, establishing responsible and ethical mineral supply chains is important for achieving a just transition.

This study explores the potential for Korea to strengthen its partnership with Africa in securing supply chains of critical minerals. As a country heavily reliant on imported minerals, securing stable supply chains is vital to Korea’s economic resilience. Fostering cooperation with Africa, particularly in the development of graphite and rare earth elements, is crucial for maintaining stability in the supply chains of batteries and electronic vehicles, which are central to Korea’s economy.

To enhance Korea-Africa cooperation in the critical minerals sector, this study outlines three key strategies for the Korean government. First, policymakers must develop approaches tailored to Africa’s unique regional characteristics, and pay close attention to the shifts in the priorities and policy directions of African partner countries. Second, efforts should be made to revitalize resource diplomacy, strengthening bilateral cooperation with African mineral- producing countries while engaging in multilateral cooperation with global partners to complement Korea’s capabilities. Third, expanding financial and non-financial support will be essential to incentivize the private sector to engage in mineral resources and infrastructure development in Africa. Diversifying funding sources and bolstering the operational capability of support institutions will be instrumental in achieving these goals.

South Korea, with its heavy economic reliance on international trade, has undergone significant changes in its labor market due to trade shocks. Since the early 2000s, for example, the rapid economic growth of China and Vietnam has dramatically increased trade volumes between these countries and Korea. This surge has notably altered Korea’s industrial employment landscape, affecting worker income levels and job security. Workers in industries facing heightened import competition from China and Vietnam have experienced diminishing earned income growth rates and an increased risk of involuntary job loss, while those in industries with rising exports to the countries have benefited from enhanced income growth and job stability (Koo and Kim 2020, Koo et al. 2022).

This study aims to investigate how South Korean workers have transitioned across industries and occupations in response to trade-induced shocks resulting from the economic rise of China and Vietnam. It assesses whether the Korean labor market has efficiently realigned labor from industries at a comparative disadvantage to those at a comparative advantage, given the evolving trade structure. ​The study further explores the mechanisms through which these labor shifts impact worker incomes and overall economic welfare, identifying inefficiencies in the labor reallocation process.​ These findings inform discussions on policy approaches that could enhance the effectiveness of labor reallocation.

The main distinctions of this study compared to previous research are as follows. ​First, it is the first study to empirically examine the impact of trade shocks with China and Vietnam in terms of labor reallocation across domestic industries and occupations.​ Second, by using a general equilibrium trade model that explicitly considers friction costs of inter-industry labor reallocation and industrial linkages, the study estimates the labor adjustment costs by industry and the resulting welfare effects. Third, by utilizing the Employment Insurance Database, an administrative record containing information on all employees enrolled in Korea’s employment insurance system, the study provides a more accurate and comprehensive analysis of long-term labor reallocation trends—from 2003 to 2019.

The primary research focus and findings of each chapter are outlined below. In Chapter 2, diverse micro data including the Employment Insurance Database are used to analyze the overall inter-industry labor mobility in Korea since the 2000s. The focus is on identifying the patterns and characteristics of average worker movements, particularly between the light industries, which face stiff competition from Chinese and Vietnamese imports, and the heavy industries, where export growth is concentrated. Chapter 3 estimates the impact of changes in South Korea's trade with China and Vietnam, driven by their rapid economic growth since the 2000s, on the movement of domestic workers between industries and occupations. Unlike Chapter 2’s descriptive analysis, Chapter 3 emphasizes revealing causal relationships through a 2SLS econometric model using instrumental variables, while enhancing accuracy with the employment insurance administrative database. In Chapter 4, a dynamic general equilibrium trade model reflecting the domestic labor market and input-output structure by industry is employed to assess how the trade shocks with China and Vietnam since the 2000s have impacted Korean welfare and how the adjustment costs required for labor reallocation between domestic industries have contributed to this. Finally, Chapter 5 examines recent key advancements in South Korea's vocational training, higher education, and employment support policies, focusing on effective strategies for facilitating labor reallocation in response to trade shocks. Additionally, it explores specific areas for policy enhancement and provides recommendations for improvement.

Recently, major countries have been strengthening support policies for companies in strategic industries, emphasizing digital and green transitions, competition to secure advanced technologies, and supply chain stabilization for economic security. Among these, the increase in so-called “strategic investment subsidies,” where governments directly or indirectly support corporate investments in strategic industries, is particularly notable.

As the strategic industries designated by major governments often align with high value-added sectors or those with significant potential as future growth drivers, South Korea, with its prominent multinational corporations in such industries, is likely to be directly impacted by these changes. For example, the strategic investment subsidies provided under the U.S. Inflation Reduction Act (IRA) and the CHIPS Act are significantly influencing multinational corporations’ investment decisions and reshaping global supply chains. In addition to the U.S., other major economies such as the EU, Japan, and China are also implementing strategic investment subsidy policies, with continued support expected for key multinational corporations. Therefore, the Korean government must prepare for these changing trade environments and seek ways to leverage these changes as opportunities to maintain global competitiveness.

Against this backdrop, this study aims to provide an economic analytical framework to assess the impact of strategic investment subsidies on foreign direct investment (FDI) and global supply chains of multinational corporations. Furthermore, it seeks to offer insights that the Korean government can use when designing its strategic investment subsidy policies.

Chapter 2 examines the recent trends and characteristics of strategic investment subsidy policies using the GTA database and the NIPO (New Industrial Policy Observatory) database. The analysis reveals a sharp increase in both government interventions and strategic investment subsidies since 2020, with strategic investment subsidies generally having longer durations than ordinary interventions. The surge in government interventions post-2020 is attributed to the aftermath of COVID-19 and intensified technological competition. The U.S. leads in general government interventions, while China dominates in strategic investment subsidies. Key types of interventions include export-import policies, financial subsidies, and government loans. Strategic investment subsidies mainly involve financial subsidies, along with government loans and tax reductions. Technologically, general government interventions are heavily focused on intermediate goods, whereas strategic investment subsidies increasingly target advanced IT products, power and batteries, and eco-friendly products. Korea, on the other hand, emphasizes financial support and trade finance to secure overseas markets rather than directly incentivizing domestic facility investments, highlighting the limitations in its policies to attract domestic investments. Examining global cases in the semiconductor and battery industries, the U.S., EU, and Japan provide substantial subsidies to production facilities, including cash refunds for tax credits even when companies incur losses. In contrast, Korea relies on regional investment grants and non-liquid tax credit schemes, which offer weaker incentives. Korea’s strategic investment subsidy policies require improvements in these areas.

Chapter 3 introduces representative strategic investment subsidy policies of major countries and evaluates them from the perspective of WTO subsidy agreements. The analysis indicates that these policies, such as cash grants and tax reductions, are generally likely to violate WTO rules. However, the U.S., China, the EU, and Japan have made efforts to justify their policies by utilizing WTO exceptions for environmental and national security reasons. The EU’s “Temporary Crisis Framework,” which provides temporary tax benefits and favorable loan terms citing environmental and energy supply chain crises, is a prime example. Korea’s heavy reliance on tax credits necessitates diversifying support mechanisms, such as consumer tax credits and equity investments, which are less likely to violate WTO rules. Moreover, Korea must strengthen policy rationales for claiming environmental and national security exceptions and establish clearer grounds for supporting advanced strategic industries like semiconductors and batteries. Concurrently, major countries are working to reinforce WTO subsidy rules to address China’s practices, emphasizing stricter regulations and accountability for subsidy impacts. Korea must consider this context and design long-term policies to avoid excessive subsidy competition.

Chapter 4 explores the theoretical basis for supply chain stabilization policies and analyzes how strategic investment subsidies influence investment decisions of multinational corporations considering supply chain stability. The key findings are as follows: (1) Major countries’ supply chain stabilization policies are rational as interventions to address supply chain uncertainties arising from external factors, and international policy coordination is essential to achieve optimal policy levels. (2) Assuming that multinational corporations prioritize supply chain stability, outcomes deviating from the traditional horizontal FDI model with a proximity- concentration tradeoff may occur. (3) Governments aiming to attract advanced industrial facilities must consider tradeoffs between productivity screening and increased attraction probabilities when designing investment subsidies, optimizing between fixed-cost and production-cost subsidies depending on specific conditions.

Chapter 5 evaluates the impact of the U.S. IRA-based strategic investment subsidies targeting electric vehicle and battery companies on supply chains using structural modeling. The analysis demonstrates that “path-dependent subsidies,” which identify participating countries in the supply chain to allocate subsidies, are more effective than traditional subsidies in countering Chinese automotive and battery firms, as shown through simulation results.

Chapter 6 presents policy implications based on the previous chapters’ analyses. First, Korea should relax investment subsidy eligibility requirements. Although strategic investment subsidies have shifted towards incentivizing domestic investments through tax credits for facility investments and R&D since 2023, their effectiveness remains limited for companies with low profits or losses. Measures such as cash refunds for tax credits, credit transfers, or conditional clawbacks for excess profits could mitigate uncertainties and encourage investments. Second, Korea must design its subsidies to align with WTO rules. Utilizing consumer tax credits and equity investments and strengthening justifications for environmental and national security exceptions are critical. Third, differentiating investment subsidies by strategic technology and providing tailored support for facility and workforce investments can enhance policy efficiency. Finally, Korea must adopt a strategic approach to changes in global supply chain policies. Strengthening communication channels with host countries and addressing risks in investment realization, while advocating for the retention of subsidies such as those under the U.S. IRA, are crucial. By leveraging these approaches, Korea can navigate the changing trade environment and ensure sustained global competitiveness.

Cybersecurity can be defined as a state where national and citizen safety is guaranteed by defending against cyber attacks or threats, thereby ensuring proper functioning of cyberspace. Cyberspace is composed of ‘information systems’ and the ‘information’ stored within them.

International discussions on cybersecurity norms have continued, showing a standoff between Western liberal democratic countries led by the United States versus Russia and China. The United States and other Western nations recognize cyberspace as a separate domain and argue that international law can be directly applied to it. Non-Western countries like Russia and China contend that cyberspace is not a separate domain, and that domestic laws of the location of systems or information should apply.

The United States adopted an active defense strategy and strengthened collaboration with the private sector, considering that a significant portion of infrastructure is owned or operated privately. The EU implemented various voluntary certification systems and mandated labeling. Japan’s active cyber defense strategy is similar to the United States’, and it established a voluntary conformity assessment system for IoT products. South Korea also adopted an offensive cyber defense strategy in 2024. However, unlike major countries, we do not have a unified cybersecurity law.

The potential application of international trade law to cybersecurity measures is as follows. Even when arguing that cybersecurity measures do not apply to like products, such actions will likely be found by the panel as violations of WTO agreements. All WTO precedents addressing national security exceptions relate to wartime or emergency situations in international relations. There is a view that for measures during peacetime to be recognized under national security exceptions, there must be subjective evidence of understanding the purpose at the time of the measure and evidence of indirect supply to military facilities. Panels can assess whether parties have made good faith judgments about measures necessary to protect their essential security interests. A similar conclusion was reached in the international investment arbitration case of Seda v. Colombia.

Implications for South Korea’s cybersecurity policy are as follows. First, self-defense cannot be exercised for cyber misuse or cyber attacks that do not reach the level of armed cyber attacks. Second, offensive defense strategies must be pursued cautiously. While there is a view that preemptive self-defense targeting imminent armed attacks is permitted under international customary law, there are controversies regarding specific criteria for determining imminence. Third, the legal principle of state responsibility for domain management or due diligence in cyberspace can be usefully applied in responding to cyber threats from North South Korea. Fourth, there is a need to establish a unified cybersecurity law.

Implications for South Korea’s trade policy are as follows. First, South Korea Government must continuously observe cybersecurity measures introduced by major countries to minimize negative impacts on our export companies. Second, the government should support our companies to gain a competitive advantage regarding cybersecurity labels and certifications when competing with third countries in markets like the United States or EU. Third, when implementing cybersecurity measures, precise institutional design and operation are necessary to avoid conflicting with trade norms. Fourth, even when a country claims national security exceptions in trade agreements, review will be conducted in accordance with the principle of good faith.

This study aimed to comprehensively analyze China’s advanced semiconductor innovation capabilities, focusing on policy support systems, High Bandwidth Memory (HBM), and third-generation semiconductors, and suggest response strategies for South Korea.

The analysis revealed the following characteristics of China’s advanced semiconductor innovation. First, China’s research in high-bandwidth memory has shown rapid growth since 2015, with strong research groups centered around Huazhong University of Science and Technology and Tsinghua University. Research topics have expanded from application technologies like GPU computing and system performance optimization to fundamental technologies such as hardware acceleration and architecture design.

Second, China’s HBM research has been developing through systematic research networks. Co-author network analysis revealed close collaboration systems between major universities, companies, and research institutes. Notably, Chinese researchers affiliated with overseas institutions, particularly in the United States, are actively conducting joint research with domestic researchers, transferring global-level research capabilities.

Third, in terms of future fundamental technology research, systematic support is being provided through the National Natural Science Foundation. Between 2019-2022, 474 semiconductor-related projects were supported, with general projects and young scientist fund projects accounting for about 45%, indicating a focus on nurturing next-generation research personnel. Additionally, according to the State-owned Assets Supervision and Administration Commission’s analysis of state-owned enterprise performance, among 49 advanced semiconductor-related products, core electronic components were the most numerous with 18 items, and 14 products were evaluated to have reached international leading levels.

Fourth, in the third-generation semiconductor field, systematic technology independence is being pursued through the National Semiconductor Technology Innovation Center and China Advanced Semiconductor Industry Innovation Strategic Alliance (CASA). Through the ‘1+N+X’ open joint construction and collaborative innovation operating model, they are promoting organic linkages between basic research, applied research, and industrialization, while focusing support on the localization of core materials such as SiC and GaN and linkages with demand industries like electric vehicles and renewable energy.

In response to these Chinese innovation trends, Korea needs the following strategies. First, to maintain its current competitive advantage in the HBM field, there needs to be a shift from manufacturing-centric to design-manufacturing integrated innovation. As shown in the research network analysis, while Korea is concentrated on hardware manufacturing technology, China shows a comprehensive approach at the system level, making it urgent to secure comprehensive technological capabilities through strengthening design capabilities. Second, diversification of global research networks is necessary. Co-author network analysis showed that while Korea actively researches with traditional partners like the US and Japan, collaboration with emerging research entities like India and Singapore is limited. New innovation opportunities need to be created through diversifying research collaboration partners.

Third, in the third-generation semiconductor field, a comprehensive strategy encompassing fundamental technology development, applied technology acquisition, and market expansion is needed. Particularly, as China provides many incentives for the spread of products based on domestic technology in addition to technical support, Korea also needs to introduce policies supporting market demand creation and technology diffusion along with technology advancement.

Finally, to enhance the effectiveness of these strategies, systematic government support including industry development stage-specific support policies, strategic R&D investment considering technological characteristics and timeliness, and talent development is necessary. In particular, policy focus should be placed on building an innovation ecosystem connecting basic research to commercialization and strengthening global cooperation networks.

This study is a research project that aims to more objectively and comprehensively understand Russia's new foreign policy direction, the Global South Strategy, after the outbreak of the Ukrainian War in February 2022. In particular, the main purpose of the study was to examine the structural changes and reorganization processes of the world order after the outbreak of the war, and to analyze the new foreign strategic direction of the Russian government in the midst of structural changes in the foreign strategic environment.

Chapter 2 examines the Russo-Ukrainian War and the rise of the Global South. The Russo-Ukrainian War has had a significant impact on the changes in the international order in terms of political diplomacy (deepening the process of fragmentation of international relations), security (creating a military confrontational structure between the West and Russia), and economic (damaging economic ties between Russia and the West). Meanwhile, the Global South is rising in the process of transforming international relations, symbolized by fragmentation. This is because, as the presence of the Global South (continuous economic growth and strengthening of political autonomy) has been highlighted since the war, its strategic value and importance in recent global international relations have increased even more. Ultimately, the Russo-Ukrainian War is creating a new phenomenon in international relations: the division of the world, changes in the international order, and the rise of the Global South.

Chapter 3 analyzes Russia’s Global South strategy concept, perception of the situation, goals, and tasks. Russia has recently preferred the term “World Majority” instead of the term “Global South.” According to Russia’s perception of the situation, the multipolarization of the world order, the growing interest in a new economic cooperation system, the emergence of comprehensive security threats and the risk of conflict between great powers, and the West’s all-out pressure on Russia are emphasized. The goals and tasks of Russia’s Global South strategy can be summarized in four points: promoting multipolarization of the world order through cooperation with Global South countries, intervention in the security of Global South countries, expanding economic cooperation with Global South countries, and spreading friendly perceptions of Russia in Global South countries.

Chapter 4 examines Russia’s Global South strategy in a multilateral context. In particular, it examines the launch and development process of BRICS, as well as Russia’s policy direction and economic relations toward BRICS. The recent expansion of BRICS has become a significant turning point and starting point in the history of BRICS, and a milestone in which BRICS has come to occupy the most important position in Russia’s “world majority” plan encompassing the global South.

Chapter 5 analyzes Russia’s Global South strategy in a regional context. In particular, it examines the nature and characteristics of the development of Russia’s relations with the Middle East, Africa, and Latin America, given that Russia has strengthened its diplomatic activities in the Middle East, Africa, and Latin America since the war in order to gather friendly forces to establish a multipolar order.

Chapter 6 presents policy implications for the research content and suggests policies that take into account the new external environment. First, policy implications are presented for each chapter: Chapter 2 (The Rise of the Global South and Pragmatic Balanced Diplomacy), Chapter 3 (Russia’s New Foreign Strategy and Seeking Changes in the World Order), Chapter 4 (The Means of BRICS Expansion and Potential Factors for Development), and Chapter 5 (Russia’s Means of Promoting Global Regional Strategy and Challenges). In addition, policy suggestions include strengthening and expanding middle-power diplomacy, establishing strategic cooperation plans for the Global South, establishing new perspectives and strategies for developing and fostering multilateral agendas at the global level, and establishing strategic management plans for Russia.

This paper investigates the global race in industrial policy and its intersection with national economic security strategies, examining how the Republic of Korea (ROK) can establish its strategic direction to mitigate risks from policy competition while maximizing its national interests. Driven by isolationist motives, a new trend in industrial policy has emerged, leading to the fragmentation of global value chains and, even worse, toward “deglobalization.” This trend threatens not only the international free trade system but also potentially undermines the ROK’s economic security interests. To address these challenges, we draw upon empirical and model evidence to propose strategic positioning for the ROK through clearly defined industrial policies.

Chapter 2 analyzes historical trends in industrial policies across the United States, the European Union, and China, emphasizing government interventions in the semiconductor industry, secondary battery sector, and critical mineral supply chains. Our analysis reveals that since 2010, industrial policies have become increasingly integrated with national economic security interests. In response to political restrictions and shortcomings in government action, these countries implemented various isolationist measures through their industrial policies. In the U.S., industrial policies reemerged after a long period of institutional hibernation, though the sustainability of their current political and industrial success remains uncertain. The EU developed a horizontal industrial policy framework to coordinate member states’ interests, although their responses to economic security risks have been delayed by substantial coordination costs. China’s industrial policy incorporated state objectives and an “asymmetric decoupling strategy” for strategic sectors, though this commitment to national autonomy ironically requires international cooperation. Isolationist approaches to industrial policy face a fundamental “trilemma” between simultaneously promoting domestic industrial competitiveness, safeguarding national security interests, and maximizing economic profits.

Chapter 3 examines international trade flows, investment patterns, and research and development (R&D) cooperation to assess the impact of government interventions since the 2010s. Using the Global Trade Alert (GTA) data set, we confirm an increasing trend in harmful (“red-alerted”) government interventions, which we use as a proxy for isolationist industrial policy. As countries have diversified their trading partners, China’s share of global trade has declined. However, global dependence on China for energy and critical minerals sector continues to increase. Our findings indicate that harmful industrial policies are contributing to a fragmentation of global trade flows between the global North and South. Using the Orbis Crossborder Investment data set, we observe declining investment flows between the U.S. and China, creating an “investment gap. This gap has been partially filled by countries such as Korea, Japan, and Vietnam, which have either captured China’s previous investment share in the U.S. market or attracted investment capital seeking to detour U.S.-China tensions While China has nearly matched U.S. levels of R&D investment since 2010, bilateral R&D cooperation has declined significantly as tensions between the two nations have escalated. Similar decoupling trends are evident in Life Sciences, Artificial Intelligence, and Secondary Battery research. This growing separation poses significant challenges for addressing global challenges such as climate change and digital transformation.

Chapter 4 investigates the global competition in industrial policies and its associations with the ROK’s semiconductor and secondary battery sectors using data sets from New Industrial Policy Observatory and Korea Customs Service. The data shows that government interventions have been more pronounced among advanced economies compared to developing countries. Across all country groups, policy implementation has focused primarily on dual-use products, advanced technologies, and the low-carbon sector, indicating that global policy competition targets similar strategic sectors for economic security purposes. In the ROK’s semiconductor and secondary battery industries, exports of final products and machinery to the U.S. have increased while the same exports to China have declined. In contrast, imports of materials and equipment from China have shown significant growth in both sectors. To quantify the direct effects of global policy competition, we build a Bayesian Network Model incorporating government interventions and global uncertainty. Our counterfactual analysis illustrates that the benefits of participating in the policy race are minimal, resulting in an export trade-off between the US and China. These findings imply that the ROK needs a balanced strategy of cooperation with both the U.S. and China, rather than exclusively aligning with either nation, to retain the benefits of international trade.

In the final chapter, we propose a strategic framework to guide the ROK’s industrial policy development. Best practice in industrial policy requires clear targets, well-defined national priorities, effective policy instruments and robust governance structure, all informed by comprehensive private sector feedbacks. However, the ROK’s current industrial policy tends to imitate global policy trends without establishing distinct domestic directions and objectives. To address this, we introduce the “CORE” framework to reshape the philosophical foundation of the ROK’s industrial policy. “C” represents cooperative and coexistent approaches, “O” emphasizes openness, “R” stands for resilience, and “E” encompasses efficient and eco-friendly values. Following these CORE principles, we recommend that the ROK position itself as a “Green Premium Supplier” within global value chains. Moreover, we propose that the ROK’s bilateral cooperation strategy should emphasize how its supply chain capabilities can address its trading partners’ critical needs. We also recommend establishing an "Economic Security Conflict Dialogue" to reduce policy uncertainty and foster international cooperation. To implement these recommendations effectively, the ROK government should develop a decentralized network governance system supported by a coordinator program. These government-appointed coordinators would serve as intermediaries, gathering insights from private sector stakeholders and facilitating communication channels to strengthen public-private cooperation.

The three North American countries have traditionally been an economic region with active supply chain linkages. If the three countries of North America were considered a single nation, by 2020, for every dollar of exports generated within North America, $0.94 of the added value would by added within the region itself, demonstrating a high degree of self-sufficiency. The North American Free Trade Agreement (NAFTA), a free trade agreement among the three nations that came into effect in 1994, has evolved into the United States-Mexico-Canada Agreement (USMCA) with the aim of strengthening regional supply chain contributions. The Biden administration, through the Inflation Reduction Act, introduced requirements such as conducting final assembly of electric vehicles in North America and sourcing battery components and critical minerals from North America or specific countries to qualify for green vehicle subsidies. In addition, the revivedNorth American Leaders’ Summit under the Biden administration has sought to advance cooperation by focusing on key issues such as a trilateral semiconductor forum, identifying investment opportunities through supply chain mapping, and critical minerals exploration.

Although a potential second Trump administration is expected to pursue policies with a degree of international isolationism under the banner of “America First,” a significant reduction in North American cooperation seems unlikely. Ironically, the unilateral trade policies of Trump’s first administration, particularly with China, have increased the US dependence on Canada and Mexico. This is because it remains difficult to establish fully self-contained supply chains within the US, especially in key industries like semiconductors and batteries, remains challenging. If the U.S. were to raise trade barriers against China, it would be difficult to quickly replace Chinese imports with domestic production.

In this context, this paper examines the supply chain policies and collaborative efforts of the three North American countries and seeks to identify implications for South Korea.

In Chapter 2, various policies of the three North American countries are reviewed. Beyond the trilateral leaders’ summits, there are numerous bilateral consultative bodies in place to promote trade and investment. The USMCA, as previously mentioned, enhances regional trade and cooperation among the three countries. In particular, the USMCA improves rules of origin for automobiles and other products, increasing the proportion of value added within North America to reinforce trade and supply chains centered on the region. However, the agreement also includes new provisions, such as labor-related requirements, that are not present in NAFTA and that align the USMCA more closely with U.S. interests.

As noted earlier, the U.S. pursues a supply chain strengthening strategy centered on North America through policies such as the Inflation Reduction Act. In addition, industrial policies like the CHIPS and Science Act include large investments to strengthen manufacturing capacity, which also influence organic policy shifts in Canada and Mexico. The newly inaugurated Sheinbaum administration in October 2024 is expected to continue most of the policies pursued by the Obrador government, suggesting little change in the overall framework. Mexico is likely to maintain policies aimed at promoting nearshoring and strengthening domestic control over critical minerals. A key example is the “Tax Credit Decree for Promoting Nearshoring,” announced in October 2023, which applies to investments made between the date of enforcement and December 31, 2024. Items eligible for tax credits include agricultural products like food, feed, and pesticides, as well as pharmaceuticals, medical equipment, batteries, and various automobile and transportation components. Two criteria must be met for the tax credits: investment must be made in the production, processing, or manufacturing phase of the eligible items, and over 50% of the revenues generated by the investing enterprise’s Mexican operations must come from exports.

As the U.S. promotes tax incentives and subsidies to secure raw materials and advanced industries domestically, Canada and Mexico are wellpositioned to become major beneficiaries of supply chain restructuring. For example, electric vehicles manufactured in Canada that meet a 75% regional value content (RVC) threshold qualify for USMCA preferential tariffs. Canada also serves as an option for meeting the North American final assembly requirement under the Inflation Reduction Act’s electric vehicle subsidy criteria. Amid these changes, the Canadian government unveiled a comprehensive plan in March 2023 to accelerate supply chain restructuring under the “Made in Canada” initiative. This initiative aims to maintain Canada’s competitive edge in the global market and address two fundamental challenges: the need for significant long-term investment to create a sustainable framework for supply chain restructuring and a net-zero future, and the mitigation of competitive disadvantages resulting from the U.S. Inflation Reduction Act. To address these issues, the Canadian government is focusing on sectors such as green energy, electric vehicles, batteries, and critical minerals, supported by various strategies and policies.

Chapter 3 examines the current state of the supply chain for semiconductors, batteries, and critical minerals in North America is examined. In semiconductors, as of 2022, the U.S. held a 48% share of the global semiconductor market, with particular strengths in upstream supply chain areas like design, design tools, materials, and equipment. Leveraging these strengths, the U.S.-centric North American semiconductor supply chain is well-established. Canada is a leader in AI research, notably through institutions like the University of Toronto, Alberta, and Waterloo, whose graduates fuelresearch in U.S. AI companies and drive downstream semiconductor demand. Additionally, Canadian strengths in design and AI research have attracted companies like Synopsys and NVIDIA to establish R&D centers there. On the midstream side of semiconductor manufacturing, Canada hosts companies like Teledyne DALSA and facilities for U.S. firms such as ON Semiconductor. Mexico, meanwhile, has attracted investments in mid-to-downstream semiconductor production, with companies like Vishay, Skyworks, Infineon, Texas Instruments, and NXP setting up production facilities.

In the battery sector, the U.S., Canada, and Mexico are competitively attracting leading global companies. This has boosted intra-regional trade, with notable exports of cathode materials from the U.S. to Canada and Mexico and significant reliance on Canadian imports of natural graphite for anode production.

Regarding critical minerals, the U.S. remains highly dependent on imports, with a notable concentration on a few countries. In 2023, the U.S. was 100% dependent on imports for 12 critical minerals and had over 50% dependency for 29 minerals. Mexico’s mineral exports to the U.S. exceeded 50% of its total mineral trade in 2023, reflecting its strong U.S.-centric orientation. Canada updated its critical minerals list in June 2024 to include 34 minerals, largely imported from the U.S., with iron and copper imports predominantly sourced from Mexico. However, policies in North American countries aim to enhance domestic value-added for critical minerals, with greater national control as a key strategy. Mexico revised its mining law in April 2022 to strengthen national control over lithium, a critical mineral for EV batteries and energy storage, creating a state-owned company, Litio para México (LitioMX), under the Ministry of Energy to oversee exploration, mining, use, and value chain management. Similarly, under the Biden administration, the U.S. has sought to boost domestic value-added for critical minerals, using mechanisms like Title III of the Defense Production Act (DPA). For instance, in March 2022, President Biden designated sustainable domestic mining, beneficiation, and processing of strategic materials for large-capacity batteries in the automotive and stationary storage sectors as critical to national defense, supporting domestic activities through various measures. Canada’s Critical Minerals Strategy, announced in December 2022, emphasizes locating critical mineral value chains within the country in partnership with allies. To achieve this, Canada implements tax credits such as the Critical Mineral Exploration Tax Credit (CMETC) and Clean Technology Manufacturing Investment Tax Credit.

In Chapter 4, the economic impacts of strengthened North American supply chain integration are analyzed from three perspectives. Section 4.1 examines the impact of North American supply chain integration on Korea’s forward and backward industries. To this end, the study devised a North American supply chain integration index using the international input-output table. Usingthe international input-output table, the value added contributed within North America for every unit of export within the region was measured, subtracting the added value contributed by the U.S., Canada, and Mexico to their respective exports. This approach aimed to assess the value added purely generated within North America through the activation of trade among the U.S., Canada, and Mexico.

Using this supply chain integration index, various trends have been observed. Notably, the index has shown a gradual upward trend since 2016. Given that the Trump administration began in 2017, it is noteworthy that North American supply chain integration has strengthened overall despite the “America First” policies of the Trump administration. This phenomenon remains consistent even when limited to the manufacturing sector and is particularly pronounced in industries such as automobiles, coke and petroleum refining, electrical equipment, and computers, electronics, and optical products. The supply chain integration index also shows a statistically significant positive (+) correlation with Korea’s total exports and value-added exports. A one-unit increase in the North American supply chain integration index (a $1 increase in the value-added contribution from North American trade) increases Korea’s value-added exports by about 10.5–12.7% ($0.105–$0.127). Furthermore, when North American supply chain integration occurs in one industry, it significantly contributes to Korea’s value-added exports in other industries as well. A closer examination by individual industries reveals that Korea’s retail trade, electrical equipment (batteries), and chemical industries benefit from North American supply chain integration within the same industries. In contrast, Korea’s value-added exports in coke and petroleum refining and computers, electronics, and optical products, increase more significantly when North American supply chain integration occurs in other industries. Section 4.2 analyzes the impact of policies aimed at strengthening North American trade and supply chains, such as the USMCA and the IRA, on Korea’s exports to the U.S. The quantitative analysis shows that these policies are associated with an increase in Korea’s exports to the U.S. Notably, after the IRA went into effect, monthly U.S. imports of Korean EV batteries more than doubled, driven by increased U.S.-directed investment by Korean battery manufacturers and the corresponding surge in exports of these items to the U.S.

Section 4.3 uses an event study approach to analyze the impact of the U.S.’s Section 301 tariffs on China on U.S. imports from Canada and Mexico. Tracking the long-term effects over 36 months revealed that the U.S. tariffs on China significantly and statistically increased imports from both Canada and Mexico in the long run. By industry, the effect was particularly pronounced in intermediate goods for Canada and capital goods for Mexico during the mid-term. With the expectation that the Trump administration’s second term will continue to increase U.S. efforts to contain China, these policies are likely to have positive effects on trade between the U.S. and its North American partners, Canada and Mexico.

Considering the preceding analysis, the Trump administration’s second term is expected to bring both obstacles and opportunities for North American supply chain cooperation. Potential obstacles include the possible suspension of government-led channels such as trilateral summits among the three North American countries. If the USMCA is amended again in favor of U.S. interests, tariff benefits may decrease, leading to a potential decline in North American trade. Additionally, Trump has expressed his intention to impose additional tariffs on Canada and Mexico, citing issues such as immigration and fentanyl, which could reduce U.S. imports from these countries. On the other hand, strengthened measures to contain China are likely to increase U.S. dependence on Canada and Mexico. Moreover, if universal tariffs are imposed globally rather than specifically targeting Canada and Mexico, the relative impact on these two countries could be mitigated. Overall, considering the already advanced level of integration among the three North American countries, significant disruptions to supply chain cooperation are unlikely.

Based on this outlook, the following implications are presented:
Given the high likelihood of USMCA revisions, it is necessary to review the current state of North American supply chain integration in major export sectors such as automobiles, which are central to Korea’s exports to the U.S., and prepare for a possible tightening of regional rules of origin. Since Korean automobiles enjoy stable exports driven by strong U.S. demand, it is worth considering a gradual expansion of local production volumes not only in the U.S. but also in Mexican production facilities. Additionally, in the semiconductor sector, Korea should actively pursue supply chain integration with USMCA member countries, including the U.S.

Although the three North American countries form a large economic bloc, they cannot achieve supply chain completeness on their own. Therefore, Korea should consistently develop cooperative strategies leveraging its complementarity with the North American countries. The findings from Chapter 4 suggest that industries such as retailing, electrical equipment (batteries), and chemicals, as well as semiconductors included in computers, electronics, and optical products, are closely related to Korea’s value-added exports when North American integration strengthens. Therefore, cooperative strategies can be developed, focusing on forward and backward linkages in these sectors.

Furthermore, to continuously identify agendas, it is essential to activate regular diplomatic channels such as summits between Korea and the three North American countries. By leveraging Korea’s manufacturing strengths in sectors such as semiconductors, critical minerals, and batteries—key areas of focus for the North American countries—Korea can create sustained demand for cooperation. While organizing trilateral North American summits may not be a priority for the Trump administration’s second term, if pursued, efforts should be made to align these summits with Korea-North America meetings. Even if such trilateral summits do not occur, Korea should upgrade its U.S.-focused cooperation strategy to a broader North America-focused approach through various government communication channels.

This research rigorously analyzes structural changes in Central Asia’s global value chains following the Russia-Ukraine war and proposes new directions for economic cooperation between Korea and Central Asia. Given the high likelihood of prolonged Western economic sanctions against Russia, which have been sustained at unprecedented levels since the war, it is essential to examine the structural impact of these sanctions on Central Asia’s global value chains. In particular, as Central Asian countries have exerted national efforts to enhance export competitiveness to achieve stable economic growth, this study identifies the effects of the sanctions on Central Asia’s trade structure, primarily from the perspective of exports. Moreover, amid the deepening fragmentation of the global trade environment, it is necessary to explore new directions for economic cooperation that reflect the impact of the sanctions on Central Asia’s global value chains to enhance the quality of Korea-Central Asia economic cooperation. Based on the analysis of Central Asia’s global value chains, this research presents future directions for economic cooperation between Korea and Central Asia. In Chapter 2, we analyze the foreign value-added in the exports of Central Asian countries. Specifically, using Eora’s MRIO data, we decompose the value-added of Central Asian exports from 2014 to 2022 to quantitatively identify which countries’ value-added was utilized and in which industries. There are commonalities and differences among the five Central Asian countries in terms of the share of foreign value-added in total exports, the industry-specific share of foreign value-added in exports, and changes in foreign value-added in total exports over time. Since the 2014 Crimea crisis, the share of foreign value-added in exports increased in Kazakhstan and Uzbekistan, while it declined in all other Central Asian countries. In terms of industry-specific trends, Kazakhstan and Uzbekistan primarily utilized foreign value-added in manufacturing exports, while Kyrgyzstan and Tajikistan relied more on foreign value-added in service exports. Notably, the share of foreign value-added in manufacturing exports for Kazakhstan and Uzbekistan also declined after the Crimea crisis, similar to the trends observed in the other three Central Asian countries. The relative importance of Russia as a major supplier of export value-added for all five Central Asian countries weakened after 2016. These findings suggest that the 2014 Crimea crisis has served as an external shock, triggering structural changes in the export trend of Central Asia. If the 2014 Crimea crisis has acted as an external shock that caused structural changes in Central Asia’s exports, the Western sanctions against Russia introduced after 2014 could represent those economic effects. Based on this intuition, Chapter 3 analyzes the impact of Western sanctions on Russia on the export structure of Central Asia. To this end, this research uses bilateral trade data for 190 trading partners in 26 industry categories from 2011 to 2022. Total export volumes are divided into intermediate goods and final goods exports to separately identify effects of sanctions against Russia on Central Asia’s exports of intermediate and final goods, respectively. Additionally, exports to 35 sanction-participating countries and 155 non-participating countries are distinguished to examine how sanctions against Russia influence Central Asia’s integration into global value chains. The sanctions imposed after the 2014 Crimea crisis led to a decline in intermediate goods exports from Central Asia until 2016. However, a sharp increase followed until 2018, after which the growth slowed. In contrast, final goods exports did not experience significant declines around 2014 but steadily increased after 2015, with growth moderating slightly after 2019. These findings suggest that the sanctions have heterogeneous effects on intermediate and final goods exports from Central Asia. Also, significant differences were observed in intermediate goods exports to sanction-participating and non-participating countries. After 2015, exports to sanction-participating countries continued to decline, while exports to non-participating countries recovered rapidly. This indicates a possible shift in Central Asia’s global value chain participation after the 2014 Crimea crisis, suggesting that intermediate goods exports initially directed to sanction-participating countries were redirected to non-participating countries. Notably, in the manufacturing sector, exports to non-participating countries began to concentrate more rapidly after 2014, indicating a deepening of export concentration patterns in manufacturing intermediate goods. Finally, the sanctions significantly reduced Central Asia’s intermediate goods exports, excluding those to Russia and Ukraine. Additional sanctions against Russia are estimated to have decreased manufacturing intermediate goods exports from the five Central Asian countries by 10–20%. This raises concerns that economic sanctions against Russia could limit the participation of Central Asia’s manufacturing sector in global value chains.

Based on the analyses in Chapters 2 and 3, it seems that the 2022 Russia-Ukraine war serves as an external shock that delays the integration of Central Asian exports into global value chains, both upstream and downstream, as long as economic sanctions against Russia persist. In particular, similar to the structural changes following the 2014 Crimea crisis, the 2022 war is likely to have a significant adverse impact on Central Asia’s manufacturing exports. In this backdrop, Chapter 4 explores policies to expand economic cooperation between Korea and Central Asia, focusing on the manufacturing sector. The findings in Chapter 2 reveal that, despite substantial progress in trade volume between Korea and Central Asia, Korea’s relative contribution to the value-added of Central Asian exports remains minimal. Therefore, to effectively enhance bilateral economic cooperation, it is essential to identify new cooperation strategies that reflect the structural changes in Central Asia’s trade environment caused by the Russia-Ukraine war. In particular, to respond to Central Asia’s increasing demand for cooperation aimed at export expansion(enhancing export competitiveness) and manufacturing development after the war, emphasis should be placed on strategies that enhance the value-added of Central Asia’s manufacturing exports. Additionally, with the growing importance of stabilizing supply chains for strategic resources, Central Asian countries are aiming to add higher value and expand exports of their abundant mineral resources. Central Asia is rich in key minerals critical to Korea, such as uranium, copper, anthracite, and nickel, which are also designated as strategic minerals in Korea. Furthermore, Uzbekistan and Kyrgyzstan are actively pursuing lithium development, making it necessary to explore cooperative directions for critical mineral resources as well.

In Chapter 4, an extensive review of the literature examines the development strategies and industrial status of the manufacturing and mining sectors in Central Asia. It identifies opportunities and risks for cooperation in each sector. Based on this analysis, specific directions for collaboration in these areas are proposed. For the manufacturing sector, differentiated cooperation strategies tailored to each country’s economic development stage and industrial structure are necessary. For instance, high-value-added manufacturing sectors, such as automobiles and automobile parts, are promising areas for collaboration with Kazakhstan and Uzbekistan, the more industrially advanced countries in Central Asia, given their established industrial infrastructure, financial industries, institutional frameworks, and manufacturing bases. It is important to note that the impact of sanctions against Russia varies across sectors in Central Asia’s exports. While these sanctions have significantly hindered the region’s exports of intermediate goods, their effect on final goods exports has been relatively small. Thus, cooperation between Korea and Central Asia in the manufacturing of intermediate goods should focus on supporting local production of final goods. Specifically, Korean intermediate goods manufacturers should establish a presence in the region to facilitate the local production and export of final products. Notably, Kazakhstan and Kyrgyzstan, as members of the Eurasian Economic Union (EAEU), utilize tariff benefits when exporting within the union. Additionally, Uzbekistan and Kyrgyzstan benefit from the European Union’s Generalized Scheme of Preferences Plus (GSP+), which allows duty-free exports of over 6,000 items to the EU. Local production of manufactured goods can thus offer advantages in terms of tariff reductions for exports, and the overall trade environment is expected to improve gradually.

In mineral resource cooperation, the key priority is creating high value-added through mineral processing. The five Central Asian countries, all landlocked and facing challenging international logistics conditions, have relatively underdeveloped transportation and logistics infrastructure, rendering value creation an urgent necessity. Local mineral processing not only helps overcome high logistics costs but also aligns with Central Asia’s goals of advancing its mineral processing industries to add value to its resources. In the long term, improving transportation and logistics infrastructure must include efforts such as building roads, railways, and airport facilities, as well as enhancing traffic network management through digital technologies. Since the physical expansion of logistics infrastructure requires active private sector participation, appropriate government measures are essential to encourage such involvement. Many infrastructure projects in Central Asia are currently carried out as public-private partnerships(PPPs), necessitating accurate information sharing and sufficient guarantees to mitigate risks. Additionally, initiatives such as logistics network digitalization can be pursued as part of development assistance (ODA) programs. Meanwhile, corruption poses a critical barrier, especially in the exploration, extraction, and development of natural resources, underscoring the importance of government actions. Similarly to logistics infrastructure, mineral resource cooperation generally involves large-scale, long-term investments. Thus, it is vital to establish and maintain regular intergovernmental communication channels to ensure robust enforcement of contract against corruption and rent-seeking behaviors. Given the significant power wielded by political elites in Central Asia, intergovernmental mediation and resolution efforts are even more critical when issues arise. Furthermore, as with the expansion of transportation and logistics infrastructure, it is necessary to develop policies that induce private companies to participate in mineral resource exploration, extraction, and development with a certain level of government guarantees to help distribute risks effectively.