The KU-KIEP-SBS EU Centre, an education & research consortium sponsored by the European Commission, was established on May 2014 by three partners; Korea Institute for International Economic Policy (KIEP), Korea University, and Seoul Broadcasting System (SBS). The KU-KIEP-SBS EU Centre is dedicated to make contribution to enhancing interest in Europe and to expanding research base in EU area studies. Therefore, the KU-KIEP-SBS EU Centre hosted 『The 1st KU-KIEP-SBS EU Centre Research Paper Competition on EU Studies』 and this book includes three best papers from the competitions. The KU-KIEP-SBS EU Centre will contribute to analyzing issues on European integration, the economic and political dynamics in EU and promoting cooperation between Korea and EU through this research competition.

The Korea Institute for International Economic Policy (KIEP) was founded in 1989 as a government-funded economic research institute. It is a leading institute concerning the international economy and its relationship with Korea. KIEP advises the government on all major international economic policy issues and serves as a warehouse of information on Korea’s international economic policies. Further, KIEP carries out research by request from outside institutions and organizations on all areas of the Korean and international economies by request.

Introduction and Overview 
Affiliations of the Contributors 
Keynote Address
Are Mega Free Trade Agreements the Best Alternative for Advancing Global Trade Liberalization? / Cae-One Kim

Session 1 Prospects for the Region’s Economies
 
Assessing Macroeconomic Policies in the US in Response to the Great Recession / David J. Stockton
Introduction 
Key Characteristics of the Recession and Recovery 
The Response of Monetary and Fiscal Policies 
Prospects for US Macroeconomic Policies and the Implications for the Economy 
Risks to the US Outlook and the Implications for the North Pacific Economies 
Conclusions
 
Challenges and Opportunities in China’s Economy / Wang Yijiang
Introduction  
Economic Challenges for China 
New Opportunities 
Concluding Remarks 

Abenomics and Beyond: The Japanese Economy in the 2010s / Tokuo Iwaisako
Introduction  
Brief Chronology of Abenomics 
Japan’s Macroeconomic Performance under Abenomics 
Potential Dangers for Abenomics 
Conclusion
 
Prospects of the Korean Economy / Il Houng Lee and Seongman Moon
Introduction  
Searching for Lost Economic Growth in Korea 
Reasons for the Decline in Domestic Demand Growth 
Conclusion
 
Commentary:
Prospects for the Region’s Economies: Discussion on Session 1 Papers / Sang-Hyop Lee
Report of the Session Rapporteur:
Prospects for the Region’s Economies: Overview by Session Rapporteur / Michael G. Plummer

Session 2 Pathways toward Trade and Investment Integration in the North Pacific Region 

The Trans-Pacific Partnership (TPP) as a Pathway to Asian Integration / Deborah Elms
The Goal: Free-Trade Area of the Asia-Pacific (FTAAP)  
Two of Four Pathways in Play 
The Launch of the TPP 
Specific Benefits of the TPP: Market Access for Goods 
Additional TPP Provisions 
Last-Minute Shaving of Quality? 
TPP Timelines 
TPP Institutional Framework 
Trade and Investment Diversion Coming 
Circling Back to the FTAAP
 
The Regional Comprehensive Economic Partnership (RCEP): Design, Status, and Challenges / Zhang Jianping and Nie Wei
Status of RCEP Negotiations  
Dilemma of RCEP Negotiations 
Compared with TPP, Is RCEP More Welcomed by Developing Economies in the Asia‑Pacific Region? 
Challenges of the RCEP under the Framework of Five “10+1” FTAs 
General Perceptions or Concerns about FTAs in China 
Implications of RCEP for FTAAP Proposals 
Implications of the RCEP for the North Pacific Economies 
Conclusion
 
China–Japan–Korea Free Trade Agreement (CJK FTA): Design, Status, and Challenges / Dukgeun Ahn
State of the Play of the CJK FTA  
CJK Trade and Economic Assessment Result 
Mega FTA Competition and CJK FTA 
Issues for Negotiation 
Challenges Ahead 

Commentaries:
Pathways toward Trade and Investment Integration in the North Pacific Region: Comments / Kiyoun Sohn
Pathways toward Trade and Investment Integration in the North Pacific Region: Discussion of Papers Presented in Session 2 / Michael G. Plummer
Report of the Session Rapporteur:
Pathways toward Trade and Investment Integration in the North Pacific Region: Overview by Session 2 Rapporteur / Theresa M. Greaney

Session 3 Assessing Economic and Social Change in North Korea 

Can North Korea Follow China’s Path of Reform and Open Door Policy? / Zhou Huji
China’s National Security, the Transformation of Political Concept and Open Door Policy  
Kim Jong Il’s Political Ideas and Survival Strategy 
“Songun Politics”: One of the Political Survival Strategies 
Improved Leader Worship: One of the Political Survival Strategies 
“7.1 Measures”: Economic Survival Strategies 
Nuclear Development and Asymmetric Dampening: International Survival Strategy 
Survival and Emerging from the Crisis: Conclusion and Discussion 

Economic Developments in North Korea / Marcus Nolan
Introduction  
Internal Developments 
External Relations 
Illicit Activities 
Conclusions
 
The Current Situation and Future Prospects of the North Korean Economy / Dongho Jo
Introduction  
The Current Situation 
The Reaction of the North Korean Leadership 
The Future Prospects 

Commentaries:
Assessing Economic and Social Change in North Korea: Discussion on Session 3 Papers / Hyung-Gon Jeong
Assessing the Economic and Social Change in North Korea: Discussion on Session 3 Papers / Nicholas Eberstadt
Report of the Session Rapporteur:
Assessing Economic and Social Change in North Korea: Overview by Session 3 Rapporteur / Anjali Nath

Roundtable Discussion on Strengthening North Pacific Cooperation 
North Pacific Integration from an International Financial Perspective / Hiroyuki Ito
Introduction  
Interest Rates Linkages and Their Implications on Monetary Policy Management  
“Internationalization” of the Renminbi 
Conclusion
 
Comments Based on the Roundtable Discussion / Tokuo Iwaisako
Comments Based on the Roundtable Discussion / Jong Seok Kim
“The Asian Paradox” 
The Limits of Bilateral Talks 
The Need for Multilateral Dialogs 
Soft Issues 
Harmony in Diversity 

Comments Based on the Roundtable Discussion / David J. Stockton
The Global Influences of Half of the World: Comments on North Pacific Cooperation / Wang Yijiang
Report of the Session Rapporteur
Strengthening North Pacific Cooperation: Overview by Roundtable Rapporteur / Duyen Bui

Conference Program
Program 
List of Participants

The conference was held on July 25, 2014 co-organized by the Korea Institute for International Economic Policy (KIEP) and East-West Center (EWC) in Honolulu. The key factors of the conference was to shape the economic future of the major North Pacific countries and the importance of economic cooperation among them. Major topics to be addressed were (1) the macroeconomic performances and outlooks of China, the United States, Korea, and Japan, and the interrelationship among them, (2) the emerging multilateral economic architecture and its implications, with specific reference to the TPP, the RCEP, and China-Japan-Korea free trade prospects, and (3) the future of the North Korean economy and its implications for North Pacific cooperation. The main sessions of the conference covered ‘Prospects for the region’s economies’, ‘Pathways toward trade and investment integration in the North Pacific region’, ‘Assessing economic and social change in North Korea’.

Korea Institute for International Economic Policy (KIEP) has expanded its cooperative relations with the world since it took the role of the hub of regional studies in public research areas of Korea. As a part of our systematic efforts to foster international exchanges and build the knowledge based through interdisciplinary collaboration, The Center for Regional Economic Studies (CRES) initiated a researcher-exchange program called CRES Visiting Fellows Program in 2008. The program brings together influential professionals from academia and the public sector to advance individual, institutional and national understanding of regional economic matters and to improve international cooperation on related research. This volume is a part of our achievements through the program and we hope this proceeding would work as another channel to deepen the understanding of regional economies in Korea.

Executive Summary
1. Introduction
2. Data
3. Results
4. Closing Remarks
Appendix: additional graphs and results

Income inequality in many countries has risen recently. Using aggregate data of 22 countries, this paper provides a new evidence about the factor which might
contribute to the rise in income inequality. The main finding is that the lack of competition, which is measured as the rise in markup, tends to be positively associated
with the rise in inequality (higher inverted Pareto-Lorenz coefficient). The result is robust with other factors considered in the previous studies, e.g. openness
to trade, capital account openness, technology, etc. I also find that facing the lack of competition, top 1% individuals gain and individuals between top 10 and
5% income shares among population lose the most. One possible interpretation is that the extra profit caused by the lack of competition would be obtained disproportionately in favor of top 1% individuals and therefore income inequality would increase.

 

The purpose of this study is to promote systematic development of the Laotian education sector for improvement of current education development cooperation projects in Laos (2013-2015) and to provide implications for the establishment of the Country Partnership Strategy (CPS) in 2015.
 The direction of the education sector development cooperation and major cooperation programs are proposed in this report are based on the Laotian government’s 7th National Social Economic Development Plan 2011-2015, analysis of needs in education development, and actual analysis on assistance from international organizations and major donor countries. To this end, published data from international organizations such as the World Bank and Asian Development Bank (ADB), research data and previous research on education cooperation were analyzed. Also, field research (July 5th-12th , 2014) was performed to identify the needs related to cooperation in education sector development and to collect the latest data in Laos. During the field research, interviews were conducted with government officials from ODA-related departments, in addition to departments in education and vocational training.
In the First Chapter, the purpose of this study, its background, and research method are presented.
Chapter Two presents the result of the research on the development plan and education development needs in Laos. During 1990-2012, industrial diversification was in progress as the agricultural sector, which was the country’s main industry in the past, decreased in terms of its share of the economy. To ensure the momentum of change and pursue modernization, industralization, social and economic development in Laos by 2010, the Laotian government promoted the 7th National Social Economic Development Plan (2011-2015). In promoting the education development cooperation in Laos, it is necessary to actively support human resource development which is vital in raising the overall level of the various communities. And in order to develop the plan, the result of the research shows that development needs should focus on primary education and early secondary education. After that, potential development needs were identified in vocational training which remains very weak at the moment. Finally, it seems necessary that strategies that effectively responds to needs in higher education development along with economic growth in Laos have to be formulated.
The Third Chapter surveyed the current status of cooperation in education development as they relate to the international community in Laos and reviewed the development cooperation cases from major donors (Germany, Japan, Australia). Analysis showed that during 2008-2012, 13.3% (54.66 million US dollars) of total ODA went toward the support of the education sector .
Chapter 4 described the performance of Korea’s education sector development cooperation by agency (e.g. KOICA, EDCF, Ministry of Education). The results showed that, in a recent five-year period (2007-2011), Korean government provided 23.12 million US dollars in support of education, which was the second largest next to drinking water supply and sanitation (29.95 million US dollars).
Based on results from chapter 2-4, Chapter 5 proposes a plan for cooperation in education sector development in Laos which can be included in the Laos Country Partnership Strategy 2016-2020. The purpose of cooperation in the Lao education sector development is “Supporting Lao education development goals by gradually increasing assistance”, with strategies suggested as follows: 1) step by step project management, 2) minimization of assistance overlap, 3) maximizing the use of Korea’s development experience as a recipient. As for operating principles of education development cooperation projects, such strategies as 1) systematic needs analysis, 2) evidence-based project management, 3) strengthening partnership, 4) systematic performance management principles, were suggested. The major areas of assistance, including secondary education, vocational training, and higher education were identified
Finally, Chapter Six summarized the research results mentioned in previous chapters and suggested implications which will help improve the current direction and project management with respect to education sector development cooperation of Korea.
The implications of proposals made in this study for overall cooperation in education sector development are as follows:
First, to improve the efficiency of education development cooperation, harmonization between Korea and other donor institutions that have served recipient countries for a long time should be considered as a critical principle.
Second, education development cooperation projects should be pursued in concert with middle and long term Laotian education sector development cooperation.
Third, policy measures which would enable development cooperation agencies to follow the education sector plans of the CPS need to be prepared.
Fourth, stronger monitoring along with increased evaluation and follow-up training for education development cooperation projects is important.
Fifth, to increase the level of quality and efficiency of education development cooperation, training of ‘education ODA advisers’ is needed who can stay in recipient countries and help develop joint projects in consultation with the Ministry of Education officials.
Finally, ODA projects in education should favor gradual expansion over rapid quantitative expansion in order to improve the efficiency.

 

The main objective of this study is to review the health sector of Myanmar and to develop and suggest future cooperation programs between Korea and Myanmar. In recent years, the importance of cooperation in the health sector became more visible. Three out of eight Millennium Development Goals (MDGs) are health-related. Many people in developing countries in Africa and Southeast Asia have lower health status and face significant risk of disease. Because of the shortage of health care workers and insufficient facilities and financing, people in those countries also have difficulty obtaining necessary health services.
 With a population of over 50 million, Myanmar is a country with very low economic status, not to mention having weak social security and health care systems. Since overall assistance to Myanmar have hitherto been very low, it is expected that many Western donors will actively try to provide assistance to Myanmar. Recently, Korea also has included Myanmar as a special target country for assistance. However, there appear to be no specific plans about ways to cooperate with the country in the near future. Therefore, this study assesses Myanmar’s health sector, reviews other donors’ experience in collaborating with the country, and evaluates Korea’s comparative advantages in terms of development assistance, to formulate how to work with the country.
In terms of the study methods, a review of the literature on the health sector of Myanmar and recent trends of assistance to the country by major donors was done. Also, in-depth interviews with key stakeholders in Myanmar, such as government officials and researchers, were conducted to identify major problems in the health sector in Myanmar and to suggest future collaboration programs.
The results of this study are as follows. In terms of overall health status, Myanmar needs to make significant improvements. Although Myanmar has seen a dramatic improvement in average life expectancy during the past 20 years, disability adjusted life expectancy(DALE) is still very low: 51.4 years for men and 51.9 years for women, respectively. Myanmar continues to have higher mortality from infectious diseases, such as tuberculosis and diarrheal diseases, and HIV/AIDS; there is also growing prevalence of and mortality from chronic, non-communicable diseases including malignant neoplasms, respiratory diseases, and cardiovascular diseases. At the same time, maternal and child health needs to be improved as well.
 Myanmar’s health expenditure per capita has increased steadily. Specifically, it went up from $2.43 in 2001 to $19.79 in 2012. However, total health expenditure as a percentage of the gross domestic product (GDP) increased only about 2.0%. This figure is the lowest among the countries of WHO’s Western Pacific and Southeast Asia region. In addition, the proportion of households falling into poverty due to health care utilization is very high because the percentage of out-of-pocket payment is almost 71.3%. This may be due to the Myanmar government’s overall low spending in health.
 The low level of investment in health is related to insufficient health care resources in Myanmar. Shortages of health care workers in Myanmar remains an important issue. Compared to the average number of physicians per 1,000 population in OECD countries (3.1) and 22 Asian countries (1.3), Myanmar has only 0.6. In addition, the OECD average of nurses per 1,000 population is 8.7, and the average for 22 Asian countries is 2.8, but the number in Myanmar is only 0.6. Insufficient health care facilities are also problematic. The average number of beds per 1,000 population among OECD countries is 4.9, and that of 22 Asian countries is 2.5, but, the number in Myanmar is only 0.6.
Most health care spending in Myanmar is financed by out-of-pocket payments by individuals, and the public financing system is still in the early stages of development. Governance structure for the health care system has so far remained centralized, but the necessity for decentralizing it to some extent has arisen recently, and thus, capacity building for local government officials in health planning should be needed.
Overall level of assistance to Myanmar by major donors has been very low compared to other developing countries in the neighborhood. However, since the new government began working together with major donor countries and resuming development cooperation, it is expected that cooperation with the Myanmar government continues to grow. Aid to the health sector in Myanmar by major donors has been focused on infectious disease control. Japan has been the leading country in assisting Myanmar in terms of developing the health sector. USA and other Western countries have primarily relied on developing 3 MDG funds to assist Myanmar. Although such a vertical approach has led to some success, the Myanmar government has also recognized the importance of using the horizontal approach, where strengthening the overall health system is pursued while also continuing project-based collaboration programs.
Based on the analysis of the current situation of the Myanmar health sector and the assessment of comparative advantage of Korea in terms of development assistance, a total of four specific areas for cooperation are suggested: 1) developing a system to improve the overall quality of health care service, such as by reforming the health care system and by developing a more efficient governance system of health care institutions, 2) strengthening the role of public health centers, particularly in areas of non-communicable disease management and health promotion, maternal and child health, and vaccinations, 3) enhancing the capacity of health care workforce by providing a variety of education and training programs tailored to policy makers, clinicians, and primary level health care personnels, and 4) assisting the government in building public health care financing system, such as introducing a pilot program for health insurance and launching a health information system.
Given that Myanmar has many underdeveloped areas, particularly in the health sector, Korea needs to formulate viable development programs to cooperate with the Myanmar government. During the process, however, it is essential to work together with multiple development partners and allowing them to participate when developing plans for assistance programs related to the health sector in Myanmar.

 

ICT is considered one of the most crucial components for the development of developing countries and is included as one of the Millennium Development Goals. Since the early 2000s, South Korea has actively participated in various ODA programs in the field of ICT. However, there is still room for improvement in order to enhance the effectiveness of Korea’s ODA programs in ICT. Within this context, this study focuses on Korea’s ICT ODA programs in Vietnam implemented in response to the steady and growing demand from the government of Vietnam. In this study, the current status of Vietnam’s ICT ODA was examined, based on findings from literature analysis and site visits. Interviews were also conducted with policy makers from Vietnam’s Ministry of Information and Communications and Korean IT entrepreneurs based in Vietnam. Based on these findings, development strategy and measures for improving Korea’s ICT ODA programs in Vietnam are suggested.
Chapter 2 examines whether ICT could make real contributions to a developing country’s economic growth, social development and reform of the public sector. Requirements necessary for these developments to occur were also examined. Unlike other fields of development such as education or health, ICT serves more as a means to development rather than representing actual development. For instance, improvements in educational level and health improve the lives of people in developing countries. However, for ICT ODA to actually make an impact in improving the lives of people, it needs to go beyond simply providing the technology and equipments to the partner country but rather help create an environment where these tools can actually be used to improve the lives of people from developing countries. The authors suggested that in order to create an environment conducive for the successful outcome of ICT ODA, the role of public-private partnership, post-management, provision of appropriate technology, and usage should be emphasized.
Chapter 3 examines the current status of Vietnam’s ICT and related development strategies. The process of establishment and implementation of Vietnam’s ICT development strategies were also examined in relation to the government’s organizational features and possible obstacles in implementing these development strategies. Vietnam has already established a basic ICT infrastructure; and the demand for the advancement of ICT infrastructure and diffusion in various fields including the economy, society and public administration are growing. It is expected that the demand for the development of e-government will be particularly high in the future. The Vietnamese government listed ICT infrastructure as one of the ten key socio-economic infrastructures, while giving high priority to promoting the development and use of ICT. The current demands for ICT development in Vietnam can be categorized as follows: ➀ establishment of IT infrastructure, ➁ establishment of a national database, ➂ establishment of a national information system. The challenges in implementing these plans come from the absence of a control tower, a role which should be fulfilled by Vietnam’s Ministry of Information and Communications, as well as the lack of cooperation between the central and local governments.
Chapter 4 examines the status of various ODA activities in Vietnam from Japan, United States, and other major development banks including the World Bank and the Asian Development Bank. From 2002 to 2012, total of 315 million USD were spent on ICT ODA in Vietnam, 73% (and the most) of which were expended by Japan, followed by South Korea. It is expected that Japan and Korea will continue to be Vietnam’s major donors in ICT ODA. By examining how the ODA were spent by these two countries, it was found that Japan concentrated its efforts in the broadcasting sector while South Korea concentrated on the informatization of the public administration sector.
Chapter 5 examines South Korea’s various ICT ODA projects and programs in Vietnam and its trends. Looking at ICT ODA made by different governmental agencies from South Korea so far, more than 70% came from concessional loans (EDCF), while 20% came from grants (KOICA), followed by ODA activities by other agencies. South Korea’s ICT ODA tended to be concentrated in public administration and education, as evidenced by the establishment of the Korea-Vietnam Friendship IT college and on-going construction of the Government Integrated Data Center. Based on the critical review of the ICT ODA in general and assessment of some of the major ICT ODA projects from this study, the following issues should be addressed in order to improve the quality of South Korea’s ICT ODA programs in Vietnam. First, the biggest challenge comes from the lack of coherent and unified development strategy which creates room for mutual cooperation and efficient division of labor among related agencies. Second, South Korea’s ICT ODA programs are being conducted without sufficient review and in-depth analysis of Vietnam’s political structure, economic conditions and culture. Such lack of prior understanding of Vietnam could pose difficulties in implementing the ODA programs including delays in implementation and the result not being applicable at the local level due to lack of localization. Given these circumstances, implementing a successful ICT ODA program requires combining South Korea’s ICT expertise with considerations for Vietnam’s local context.
Based on the discussions above, chapter 6 suggests a few areas in ICT ODA programs which South Korea can conduct in Vietnam where it would have the advantage, with recommendations on how to address the existing challenges. Suggestions on procedural improvements to conduct and enhance cooperation with Vietnam in the ICT area were also made. Lastly, the need for enhanced public-private partnerships and programs focusing on the ICT application were emphasized as important issues for the future of ICT ODA in Vietnam.
The optimal area for South Korea to conduct ICT ODA in Vietnam is informatization projects for public administration, namely the establishment of the e-government. Vietnam is already equipped with basic ICT infrastructure and the demand for ICT ODA continues to grow as its government has already identified the establishment of e-government as its national project and a necessity for administrative reform. When it comes to the establishment of e-government, South Korea has advantages over other donors of ICT ODA since its governmental agencies have already accumulated the expertise and know-how needed in the informatization of public administration, in addition to the fact that  South Korea is an ICT powerhouse.
However, in order for South Korea’s ICT ODA projects to be implemented successfully and yield favorable results, ODA programs should be conducted more systematically, based on the understanding of Vietnam’s ICT policy and governance. To cite an example of local context in ICT policy governance in Vietnam, it usually takes a long time to reach consensus among government organizations and it is not easy to collect data on the demand for ICT ODA programs due to lack of mandates for the Ministry of Information and Communications to coordinate different ICT related policies. In order to address these issues, there is a need to appoint an institution with the task of consolidating an up-to-date database of the current status and types of ICT ODA projects conducted in Vietnam so far. Due to the fast evolving nature of ICT itself, it poses another challenge for the successful implementation of ICT ODA programs, as it needs to be timely and applicable. If the assessment of demands and program implementation takes too much time, the results may not be useful as the technology has already become obsolete. To overcome this issue, it will be helpful to arrange regular meetings with Korean IT companies in Vietnam and provide opportunities for them to contribute in creating new and relevant businesses opportunities. In particular, efforts must be made to recognize successful pilot projects in ICT ODA and continue these projects as large-scale projects, be it a grant or concessional loan. It should be noted that Vietnam has taken a large amount of concessional loans from the World Bank for its ICT sector. In this context, South Korea’s ICT ODA program can also be used to create a foundation to aid its companies in entering the Vietnamese business market. In order for this to happen, it is imperative to improve operational system for ICT ODA’s and to increase the amount of ODA. Finally, the demand for the ICT application in other fields including education and health is expected to increase in the future. It will be desirable to create linkage for ICT with various other fields and find ways to improve in terms of providing proper systematic support, post-management and maintenance.