Aiming at strategic and effective aid delivery, the Korean government has established and implemented its first Country Partnership Strategy (CPS) for each of the 26 priority partner countries. As most of the first Country Partnership Strategies are set to expire by 2015, it is essential to conduct a comprehensive evaluation and draw lessons on the CPS framework and operations before formulating the next CPS. The current CPS system, however, lacks to some extent a tool for result-based management or an evaluation framework, which makes it difficult to fulfill comprehensive assessments of CPS for all 26 partner countries within the next one or two years. In order to assure the effectiveness of Korea’s aid delivery through CPS, it is necessary to examine the achievement of current CPS and identify areas for improvement.
Against this backdrop, this study is based on timely recommendations that seek to elicit policy implications to improve the CPS framework and ultimately to enhance aid effectiveness, by examining the CPS and its implementation status with Bolivia as a case example. Bolivia is one of the poorest countries in Latin America with severe poverty gaps and inequalities in income distribution. Chapter 2 discusses the development environment and needs in Bolivia; and the prospects of and challenges facing the national development plan the Bolivian government has implemented. Chapter 3 presents case studies of major donors in Bolivia, analyzing their cooperation strategy documents and practices with particular focus on the purposes of CPS, as well as its usefulness and limitations. In Chapter 4, after a detailed review of the contents of Korea’s CPS for Bolivia and its implementation status, the study identifies the assessment criteria based on the implications drawn from earlier analyses, and examines whether the CPS fulfills the criteria, namely the purposes for which the Korean government establishes and operates the CPS. Chapter 5 discusses ways to improve aid effectiveness in Bolivia with emphasis on enhancing strategies for formulation of CPS and developing new modalities of ODA implementation.
The major donors analyzed in the study include five bilateral donors, i.e. Japan, Spain, Switzerland, Denmark and Canada, and four multilateral organizations, i.e. Inter-American Development Bank (IDB), the World Bank, UN agencies and EU. The analysis suggests that the core function of CPS is to confirm the legitimacy of development activities with CPS as an official cooperation framework mutually agreed by both donor and recipient government. To provide useful guidelines in policy consultation with the recipient government, CPS should stipulate clear goals and implementation strategy for each priority sector. Another important function of CPS is the coordination of roles and activities among various actors of the donor country; therefore, CPS is required to include all relevant domestic stakeholders in order to coordinate and monitor overall development activities in the recipient country.
Korea’s CPS for Bolivia lacks clear goals or concrete implementation strategies. Although the CPS specifies three priority sectors, namely transportation infrastructure, health and agriculture, it is not very clear on what ground the three sectors were selected as priority sectors or which indicators can be used to measure achievements. It includes EDCF and KOICA as main agencies for implementing the CPS but does not mention other ministries or agencies that are carrying out development projects in Bolivia, so it is difficult to expect coordination or overall monitoring of development activities being implemented by Korean actors. In addition, it is difficult to claim that the CPS for Bolivia gives full consideration to the unique characteristics of Bolivia, as its action plans or implementation strategies are virtually same with CPS for other countries. The CPS document itself has limitations in fulfilling the purposes of CPS which the Korean government claims to pursue through CPS, such as strengthening integrated strategy, coordinated implementation and strong result-based management system.
In practice, Korea is developing and implementing a number of projects according to the priority sectors specified in the CPS. Although the assessment of achievements would be limited until the ongoing projects that were initiated recently are completed in a few years, it should be appreciated that Korea has developed a close relationship not only with the Bolivian government but also with many other development agencies in such a short period since its establishment of a local office in 2010. In particular, Korea has been appointed as co-chair of the GruS (Group of Partners for the Development of Bolivia) starting in 2016, which shows the well-respected status of Korea in the field of development cooperation in Bolivia.
Based on the analyses of major donors’ and Korea’s CPS operation in Bolivia, the study draws the following implications for Korea’s current CPS system.
First, Korea’s CPS lacks a feedback mechanism which enables the results from the country strategy evaluation to be reflected in the next strategy. In order to improve aid effectiveness by implementing the CPS, it is required to that lessons be drawn through an evaluation and identify areas for modification in the strategy, which would provide the foundation for formulating the next CPS. For this, it is essential to specify measurable goals with verifiable indicators in each priority sector and concrete implementation strategies to realize the goals.
Second, implementation strategies in CPS should be devised with a full consideration of unique characteristics and risk factors of the recipient country, so that the stakeholders concerned can refer to the CPS as a useful guideline for their aid activities in the country. For example, an implementation strategy in the current CPS such as ‘to review the possibility of utilizing the Bolivian governmental system’ should be further elaborated to address what the Bolivian governmental system is like, how this system can be utilized in implementing a project, and so on. As for ‘promotion of the Public-Private Partnership (PPP)’, the strategy should be more concrete and practical, providing information on the PPP environment in Bolivia and the current status and prospects of Korean private sector’s involvement in the country.
Third, CPS should encompass all relevant ministries and other agencies, in addition to the two major agencies, EDCF and KOICA, to coordinate activities among different actors involved in development cooperation. Furthermore, it is desirable to clarify roles and responsibilities of each ministry or agency in implementation strategies. For instance, specification of implementation strategies and tasks at government-wide, headquarter or local office level should be made so that respective ministries/agencies can establish their own operation plans based on the implementation strategies in CPS and carry out the plan with a sense of responsibility. This will in turn enhance the overall effectiveness of CPS implementation while contributing to alleviation of the fragmentation problems.
Finally, the study suggests ways to improve the CPS formulation and management at government-wide, headquarter and local level. It especially proposes that the Prime Minister’s Office play a central role in devising enhanced ‘formulation guidelines for CPS’ as well as collecting, updating and monitoring operation plans which the relevant ministries/agencies establish in line with CPS. The study also emphasizes the importance of strengthening the foundations of development activities at the local level and capacity building of human resources in the local office by accumulating field-based knowledge and experiences.

 

The government of Korea selected 26 countries as major development partners and formulated Country Partnership Strategies (CPS) for these countries. To improve the implementation performances of the CPS, it is necessary to evaluate the results. However, the only performance evaluation framework for a mid-term review has been made in 2013. This research aims to derive the comprehensive and systematic ways to improve the implementation performances of CPS for Sri Lanka. Since the first CPS for Sri Lanka covers the period from 2012 to 2016, it is difficult to evaluate the implementation performances rigorously. However, it is necessary to prepare the 2nd CPS for Sri Lanka by reviewing the development demands of Sri Lanka and finding effective ways for implementation.
Chapter 2 examines the development demands of Sri Lanka based on the national development plan (Mahinda Chintana) and governance structure. Chapter 3 analyzes the CPS of major donor groups and elicits important implications. Chapter 4 summarizes the key contents of Korea's CPS for Sri Lanka and analyzes the implementation performances by using the evaluation framework. The analysis mainly focuses on relevance, efficiency and effectiveness. Chapter 5 suggests main areas of Korea's aid for Sri Lanka. The main results of the research are summarized as follows.
According to Mahinda Chintana, the government of Sri Lanka formulated specific development plans including the following key areas; ① expansion of national infrastructure, ② development of rural areas and productivity improvements in the agricultural sector, ③ productivity improvement in both the public and private sectors, and ④ education and health sectors. Korea selected ① economic and social infrastructure (improvement of road, development of hydro resources and renewable energy), ② human resources development (TVET and secondary education), ③ improvement of governance (improvement of administration system and capacity building of the government sector) as 3 major areas of development assistance for Sri Lanka. These 3 areas are consistent with the development demands of Sri Lanka. However, it needs to be aligned with previous areas in Sri Lanka's development demands within a more specific context. In order to improve the effectiveness of ODA, the particularities of Sri Lanka should be considered when Korea selects the ODA projects/programs.
First of all, in terms of social and economic development it should be considered that Sri Lanka is still recovering from the aftermath of its long civil war. Reconstruction of infrastructure is still in progress and there remain pockets of poverty (especially, in the northeastern areas). Even though rural area development is not a major area in Korea's CPS, it is necessary to expand assistance for rural area development. However, such assistance needs to be comprehensive programs, not independent projects.
Second, development demands, commonly identified with middle-income countries, are increasing in Sri Lanka. Since Sri Lanka is expected to become a middle-income country sooner or later, demands for social safety nets, capacity building for science and technology, and improved public services will increase. As the Sri Lankan government aims to construct a knowledge-based society, Korea needs to increase the IT related projects/programs.
Third, Korea needs to provide more policy consultations. Korea's development experiences would be very helpful because the Sri Lankan government is very keen on expanding the manufacturing sectors for sustainable development. However, the experiences of Korea cannot be applied to Sri Lanka directly. It is necessary to localize (or modify) these experiences by allowing for the specific circumstances of Sri Lanka.
Fourth, it is necessary to cooperate more actively with the development partners for harmonization. Since there are leading development partners for each major areas and the ownership of Sri Lankan government is strong, the information sharing and prior consultations with the development partners would increase the effectiveness of ODA. Even though the activities of the Development Partners Forum (DPF) are not satisfactory at this moment, KOICA and EDCF need to participate more actively in this forum.
Fifth, it is necessary to prepare an exit strategy. The relations with Sri Lanka will likely change from a recipient-donor to economic cooperation partner. In order to strengthen the basis for cooperation, it is necessary to expand private sector development and invitation training programs.
CPS of major donor groups also provides meaningful implications for Korea. For example, CPS of Japan has rolling plans and emphasizes economic cooperation through aid. Australia emphasizes aid harmonization and actively uses local experts from the private sector. On the other hand, MBDs (such as ADB and World Bank) are clearly focusing on the demands of Sri Lanka and their implementation process is systematic. ADB recently adopted Multitranche Financing Facilities (MFF) as aid modality, which emphasizes the sustainability of large size long term project/program, participation of recipient country and co-financing of other donor groups. World Bank is actively communicating with the stakeholders and regards consultation process as an important step. Risk management and flexibility are also emphasized by the World Bank. UNDP recognizes the importance of exit strategy for sustainability. These characteristics of other donors' CPS need to be reflected in Korea's CPS and its implementation.
To improve the implementation performances of CPS, Korea needs to ① select proper major assisting areas, ② strengthen the linkages with the private sector including PPP, ③ strengthen the linkages between grants and loans, ④ improve the predictability of aid by expanding rolling plans, and ⑤ improve aid harmonization.

 

In the 2000s, there have been noticeable changes in world economy, international financial market and international specialization system. The importance of the US is declining in world economy and trade. The reorganization of international monetary system has been discussed based on the US dollar decline phase, increasing importance of other countries except the US in international financial transactions and trade, and limits of currency system focused on US dollar. These changes insist that analyzing impacts of US dollar exchange rate only on the trade be insufficient. Also, with the progress in the international specialization, interrelations among countries are emphasized. Therefore, the necessity of new analyzation on the relationship between exchange rate volatility and Korea’s trade.
This study discusses evaluation of influence of the exchange rate of Korean won to yuan, yen and euro on competitiveness in exports of Korea and policy implications. The main works and results of this study are as follows. Chapter II describes changes in economic and political environment that make Korea’s current exchange rate policy based on dollar insufficient. Chapter III analyzes the impact of exchange rate on Korea’s trade and trade balance by each major currency and industry. Chapter IV provides the transition of exchange rate system of Korea and indicates that exchange rate determined by the current system has fundamental limits to recover the balance of foreign transactions. In chapter Ⅴ, we suggests summary of the findings and some policy implications.
To be specific, US dollar decline phase due to global imbalances happened. The importance of the US is overwhelmed by China in the trade environment of Korea and various currencies except US dollar, such as yuan, euro and yen are emerging as settlement currencies. The necessity of analyzing international trade conditions based on Global Value Chain is increasing. Therefore, it is required that evaluation of influence of the exchange rate of Korean won to various currencies on competitiveness in exports of Korea.
In Chapter III, we analyze the influence of exchange rates of major currencies on total, industrial and regional trade balance of Korea. For exchange rate data, won-euro, won-yuan and won-yen exchange rate as well as won-dollar exchange rate are used and we analyze the impacts of each exchange rate on balance of trade. VAR model is employed and the results can be summarized as below. First, won-dollar, won-yuan, and won-yen exchange rate has greate influence and won-euro exchange rate is following them. In the previous studies won-dollar exchange rate was suggested as the most important factor, however recently won-yen and won-yuan exchange rate are considered as important as won-dollar exchange rate . Second, the one standard deviation shocks of won-yen and won-dollar exchange rate on trade balance of Korea are found to be similar. Since 2013, the range or revaluation of won-yen exchange rate has been larger than that of won-dollar exchange rate and the revaluation of won-yen exchange rate exerts negative influence on trade balance of Korea. Lastly, according to variance decomposition, not only the Won/Dollar but also Yen/Dollar exchange rates have significant impact on the Korean economy.
In Chapter IV, since the Won-Dollar exchange rate is the most stable, it makes sense that the current exchange rate system is reasonable. According to cross-correlation between each exchange rate and current account balance (trade balance), the change in each exchange rate has limits to recover the balance of foreign transactions. Also, a comovement-analyzation using DCC-GARCH, Korea Won-Dollar exchange rate is affected more by volatility of Dollar’s value in the international financial market than trade balance (or, current account balance) of Korea. This implies that rebalancing ability of the current exchange rate system is insufficient. We suggest improvement plans for above mentioned problems as globalization of Korean Won, regional monetary cooperation and diversifying the vehicle currencies.
In Chapter V, we suggest improvement directions considering the above results. First, won should be globalized. Globalization of won helps to determine exchange rate more favorable to market. Also, supply and demand of won besides that of foreign currencies can affect exchange rate and it helps to improve the political influence on stabilization of exchange rate. Second, financial infrastructure, such as cross-currency market, regional monetary system, is needed to respond the increasing importance of major currencies. Third, systemic approach for effective management of current account is required. Policy means, such as improvement of overseas investment, cooperation with the central bank, regional monetary cooperation, can be recommended and building up a system for effective utilization of them.  

 

Soon after Vladimir Putin secured his third term as Russian president, the Russian government established for the first time the Ministry for the Development of the Russian Far East in May 2012. In addition, a national program called the ‘Socio-Economic Development of the Far East and the Baikal Region’ was adopted in March 2013. Then the program was completely revised and transformed in 2014. From this one can witness Russia’s unprecedented interests in developing the Far East and the Baikal region. This study systematically analyzes the development of the Far East and the Baikal region and presents detailed policy responses while taking into account the geopolitical and geoeconomic significance of the region.
The security situation in the Russian Far East and the Baikal region remains fragile due to their close proximity to Northeast Asia which exhibits a degree of strategic instability. In addition, these regions represent links that connect Russia to Northeast Asia geopolitically. From a geo-economic perspective, the Far East and Baikal region are viewed as underdeveloped areas located close to rapidly growing Northeast Asia and the Asia-Pacific area, in addition to being resource-abundant regions. The development of the Far East and the Baikal Region has several geopolitical and geoeconomic significance as follows. First, from the Russian perspective, it can strengthen the role of Russia as a Eurasian superpower and become a new growth engine for the sustainable economic future of Russia. Second, from Korea’s standpoint, the region is important in that it can be a medium for enhancing opportunities to engage in geopolitical cooperation with Russia and build a new growth base outside the national territory. 
Russia’s development policy can be divided into two aspects: the ‘plan(program)’ and ‘institutional mechanism’. First, the ‘plan(program)’ is essentially based on the ‘Strategy for the Socio-economic Development of the Far East and the Baikal region until 2005’ which is in accordance with the government program that was adopted in March 2013, and revised in April 2014 called ‘Socio-Economic Development of the Far East and the Baikal region’. Regarding this ‘plan(program)’, three sub-programs which include two existing federal target programs are currently being implemented. Second, ‘institutional mechanism’ is identified with implementation of preferential law and institution. The details are as follows: 1) the establishment of the Ministry of the Far East Development and expansion of its authority, 2) in addition to the already-existing ‘OJSC Far East and Baikal Region Development Fund’, formation of ‘Dalny Vostok’, ‘Agency for Investment Attraction and Export Support in the Russian Far East’, and ‘Agency for Human Resource Development’ followed to promote expansion in the Far East related institutions, and 3) enactment of preferential tariff law, establishment of 14 ‘zone of advanced socio-economic development’, extension of the time period for Special Economic Zone in Magadan Oblast, and the formation of Vladivostok ‘Industrial-production’ Special Economic zone.
The Far East and Baikal region development policy is regarded as a paradigm shift from conventional policy for the following reasons. First, the notion is based on ‘a leading role in development strategy’ instead of previous ‘catch up development strategy’ for the Far East and Baikal region, focused on aligning industries with an efficient market, and it aims to develop export oriented industries in the Asia-Pacific region. It is also directed towards the promotion and growth of economic relations with regional countries. Second, innovative methods for federal governance was developed in order to strengthen the institutional aspects of the development plan, including introduction of new laws and institutions to improve investment attractiveness. Third, regarding the finances; a feasible and appropriate federal funding plan was prepared. Fourth, in terms of political commitment, local development through cooperation with the Asia-Pacific countries were publicly declared several times by President Putin. Finally, above all, the institutional mechanisms for the development of the Far East and Baikal region is now guaranteed by federal law and not just by federal government decree as in the past. Previously, the Far East and Baikal development program by federal government decree did not include a systematic institutional mechanism nor did it guarantee legal stability. But Putin’s third term government established institutional mechanisms needed to implement the ‘plan(program)’, and through the federal law, policy measures for preferential tariff, leading development area, public-private partnerships were ensured.  
After reviewing and assessing the cooperation among Korea-Russia and the major economies concerning the development of the Far East and the Baikal region, there are measures Korea can and should take with respect to regional development: first, the region should be made a part of new international division of labor involving production of semi-finished products or components of goods at major socio-economic development zones where a wide rage of preferential treatment is provided, and export of those products back to Korea or a third country for processing into finished products. This is consistent with the Russian government’s policies which aim to foster export-oriented industries and incorporate the Far East into the Asia-Pacific value chain. Second, given the competitiveness of Korea, cooperation in expansion of oil/gas processing and plant construction sectors hold much promise. In particular, since the Russian government is emphasizing the importance of fostering ‘deep processing’ industries in the energy sector, the possibility of cooperation in this area is large. Third, in addition to oil and gas production, cooperation in large-scale infrastructure projects which are the driving force of the Russian economy is feasible. Especially, in the case of port infrastructure, Korean firms have a competitive edge in terms of both technology and experience, which means Korean-Russian cooperation is likely to lead to success. Fourth, there is cooperation linked to tri-lateral economic cooperation between the two Koreas and Russia. If the Najin-Hasan project generates a commercially successful outcome, it can become a platform for other projects such as gas pipeline through South Korea, North Korea, and Russia; efforts toward power grid connection and agricultural cooperation will also gain momentum.
To support the cooperation in these sectors, we would like to suggest several measures as follows: holding regular prime ministers’ meetings between the two countries, establishing a partner organization for Far East development and PPP projects, providing support measures for paticipation in leading socio-economic development zones, increasing access to capital through fund platform, offshore banking, and private financing; innovation in methods of providing information while taking into account the needs of information recipients, taking additional step towards multilateral cooperation; and proposals for the trilateral Korea-China-Russia joint research project to interconnect Russia’s ‘Look East Policy’, China’s ‘New Silk Road Initiative’, and Korea’s ‘Eurasia Initiative’.

Executive Summary

I. Introduction

II. Empirical Analysis
1. Panel VAR Model
2. Data
3. Dynamic Fiscal Multiplier

III. Empirical Results
1. Baseline results
2. Robustness checks

V. Conclusion

References

Appendix

This paper examines the role of income inequality in determining fiscal policy effectiveness by using panel data of 42 advanced and developing countries during Q1 2000？Q3 2007. Our panel VAR analysis shows that the effect of fiscal policy on output is smaller in economies with high income inequality: the 1-year fiscal multiplier for a country with relatively equal income distribution is estimated to be significant at 0.52 or greater significantly, while that for a country with relatively unequal income distribution is insignificant from zero. The responses of consumption to an expansionary fiscal policy shock show that consumption is more crowded-out for relatively more unequal economies, thus affirming that the low-income households in the economies with high inequality tend to have strong incentives to save additional income from fiscal policy for precautionary reasons.

Recently, in Korea, the role of small and medium enterprises (SMEs) is receiving emphasis as an engine for economic growth. It is a trend that figures prominently in recent policies of the United States and Japan. Furthermore, Germany, which has traditionally had strong SMEs and Finland, currently overcoming the decline of Nokia by activating SMEs, are concentrating their efforts on re-establishing the foundations for growth of SMEs. The recent policies of these countries have something in common as they recognize internationalization as an important element in SME development. Internationalization of SMEs is significant for the national economy as it contributes to export increase, job creation, and globalization and growth of companies. In case of Korean SMEs, they have recently tended to diversify their exports and investment in emerging markets, but the share of exports and FDI of SMEs is shrinking. Therefore, this study assesses recent Korean policies and analyzes the determinants of export and investment of Korean SMEs, and derives implications for Korea based on the analyses of the policies of the aforementioned four countries.
Since 2013, the new government of Korea has been expanding the budget and establishing a support system for SMEs which emphasizes collaboration among institutions to eliminate the inefficiencies with respect to such support. Aside from this, there are also moves to bolster support for entry of these companies into emerging markets. However, there are some limitations (which implies the need for improvement) such as a less-than-uniform supporting systems, lack of assistance based on their stage of internationalization, and breakup of supporting institutions. In addition, lack of industrial diversity in support measures is another important limitation, as support of internationalization of SMEs is mostly focused on manufacturing businesses. More specifically, efficiency of information provision, supporting overseas marketing, customized programs, and various forms of support for overseas expansion should be strengthened. According to the empirical analyses of this study, Korean SMEs currently show lower levels of increase in exports and investment through FTAs compared to large firms, and also more vulnerable to various obstacles such as complexity of foreign countries’ contract and taxation systems, exchange rate volatility, and the geographical distance, etc. In addition, Korean SMEs tend to avoid exporting to countries that have complex customs procedures, and are more likely to export and invest in countries that have relatively low income per capita. This is possibly due to lack of competitiveness of Korean SMEs compared to large companies.
Keeping these results in mind, this study derives policy implications by analyzing SME internationalization policies and the outcomes in the US, Germany, Finland and Japan. First, Korea needs to strengthen the status of policies for internationalization of SMEs, by forming a high-level inter-ministerial committee that determines priorities at the national level and build collaborative mechanism involving all departments. Furthermore, enactment of laws regarding internationalization of SMEs must also be considered to ensure sustainability of policy.
Second, Korea's SME policy needs to focus on expanding the number of exporting companies. It is necessary to provide intensive support to the companies that have begun to export, and to strengthen the step-by-step support starting from preparation and market study to follow-up support. Furthermore, operating countries and regions in the Export Incubator program should be expanded, and support for matching between SMEs and foreign buyers should be strengthened by taking advantage of local consulting firms and Korean Chamber of Commerce in activities abroad.  
Third, support for internationalization of diverse non-manufacturing industries should be increased. In case of the services sector, respective policies are executed by different ministries which lead not only to less uniform support but also to hindrance of connectivity among supporting policies. Furthermore, support for various forms of internationalization is necessary as there is a tendency that internationalization of the service sector is made in different forms aside from direct exports. Therefore, it is required that a collaboration system be established among organizations of each service sector and organizations that can provide internationalization support such as KOTRA and SBC, etc.
Fourth, SME support measures should be provided to companies with competitiveness and strong commitment to internationalization. In particular, technology-intensive industries require longer time to develop products and technologies at the initial stage, and thus the industry has greater needs for a consistent system of support that include a broad range of support measures including technical development, commercialization, marketing, and overseas business. In this respect, establishment of a common support program incorporating projects of related organizations including those organizations that can provide support related to internationalization, technology, and finance; is needed. Korea has recently begun establishing the Creative Economy Innovation Centers in major cities across the country. These centers could serve as an effective SME support platform by providing one-stop support measures including technical development, business startup, overseas expansion, forming business relationship with foreign enterprises, and foreign investment.
Fifth, SME support measures should aim at diversification of overseas markets. Policymakers should not only strengthen its economic cooperation strategy and restructure the system of support measures towards emerging markets in which Korean enterprises have already started doing business, such as China, but also other emerging markets with high growth potential. There are diverse barriers to entering those emerging markets including the difficulty of finding potential overseas customers or partners, developing an effective marketing strategy, securing of human resources, and communication problems due to language barriers. In particular, contacting potential buyers is an important factor in facilitating SME internationalization, thus business matching support through events inviting interested business groups from emerging markets represents an example of an effective support measure.
Another task in strengthening the support for SME internationalization is to enhance SMEs’ access to information by systematically supplying information published by diverse organizations. In addition, Korea needs to develop a mechanism for providing customized information to SMEs based on individual company profiles.
Based on the empirical findings of this study, there is growing demand for legal advisory services from SMEs doing business abroad, and establishment of an official center for support regarding legal matters and regulations could be an option to consider. Korea was designated as a leading country for civil and commercial dispute resolution at the 2009 APEC Summit. Active pursuance of capacity building projects related to creating a legal framework in developing countries will provide an enhanced legal safety net for Korean enterprises as well as harmonization with the domestic legal system.
Furthermore, emphasis should be given to the need for an enhanced overseas network. A solid overseas network could become a vital ‘infrastructure’ for internationalization of SMEs. One of the main tasks in this regard is the formation of an amicable relationship with the local business community. Also, linkage between government and private organizations located overseas needs to be enhanced. In doing so, SME-support agencies should be gathered under one roof to increase access to government support for SMEs. This would also further improve networking among the supporting agencies, thus contributing to a more effective SME supporting mechanism.
Sixth, as forms of SMEs' internationalization become diverse, an integrated support system needs to be established covering exports, FDI and others. In this regard, Korean financial organizations in export/investment need to enhance their international competitiveness. There is also a growing demand for financial support from companies making direct investments. For instance, in case of a company that chooses to invest overseas, especially in developing countries, it is often difficult to secure financial support from local financial agencies. As the legal basis for direct support of domestic company’s overseas business with limited or no domestic foundation is not easily found, we suggest establishing joint bilateral funds with major emerging countries.
Seventh, government efforts to address foreign business and trade barriers are very important in the support of internationalization of SMEs. As confirmed by the empirical analysis in this study, Korean government needs to consistently respond to issues related to foreign exchange fluctuation and make efforts to enhance FTA utilization of SMEs. International cooperation in customs is another area that demands attention. SMEs have high tendency to avoid doing business in regions where customs procedures are complex and difficult. Accordingly, Korea needs to pursue active international cooperation in customs and support emerging countries’ trade facilitation projects. For instance, Korea could lead international efforts toward cooperation on Authorized Economic Operator( AEO) and continue efforts to remove trade barriers through bilateral channels such as FTA negotiations. In addition, Korea should actively put SME related issues on the FTA negotiation table, organize a working group on SMEs to support enterprises doing business in the FTA partner country and pursue bilateral SME cooperation.

Up until recently, Korea has maintained a trade surplus vis-a-vis its trade with Latin America. The area accounted for a mere 7% of Korea's total exports but the surplus with Latin America stood at USD 18 billion, or about 41% of Korea's total trade surplus. However, exports to Latin America has been declining since 2011 by 4.9% annually, which is 5 times higher than Korea's average rate of export drop during the same period. Meanwhile, export to the region from other major exporters, such as the Unites States, China and Japan, have increased and Latin America's import from the world also grew by 4%. This study analyzes the factors causing drops in Korea's exports and suggests some measures to regain Korea's export competitiveness in Latin America.
Chapter 2 depicts Latin America's import structure and Korea's export to the region. For the last 10 years, the annual import growth in Latin America was 10.7%, which far outstripped the world average of 7.9%, with developing countries emerging as major trading partners. On the other hand, Korea's export to Latin America has slowed since 2011. Especially, exports to Venezuela, Brazil and Colombia have shown a clear decreasing trend. And sales of major exporting goods such as large ships, vehicles, petroleum and related products, steel and display devices declined rapidly. Korea's export to Latin America also showed overconcentration in certain products and countries. Mexico and Brazil accounted for about 54% of total exports and the top 10 exporting goods capture about 72% of exports, which makes Korea's exports vulnerable to the business cycle of trading partners. The proportion of capital and intermediate goods is higher than consumer goods. There are several obstacles that Korean firms face in export markets. According to the survey with Korean exporters, they are struggling with fierce competition, particularly with Chinese firms. They pointed out other export barriers such as complicated customs procedures, additional taxes and arbitrary tariff rates.
Chapter 3 examines the export competitiveness of Korea. The share of Korean products in Latin America's import has been declining since 2010 and the drop is noticeable regarding Chile. In general, Korean products have been losing their relative comparative advantage, with the largest drop coming in vehicle exports. The major competing countries in vehicle exports include Japan, China and the United States, and competition with China has intensified since
2011. For the last 10 years, Korea's export growth in Latin America was attributed to improved purchasing power in the region, and not to full exploitation of the growing import demand in certain products nor improved competitiveness in exporting goods.
Chapter 4 analyzes the causes of Korea's sluggish exports to Latin America. According to the vector autoregressive model, VAR, the recent drop in exports to the region resulted from diminishing import demand of the region. The real effective exchange rate did not have a meaningful impact on decreasing exports, which is consistent with the survey results. Korean exporters indicated that non-price factors, such as quality and design, are more important in maintaining their competitiveness in this market. They pointed out that  competition with other countries hindered their export growth and the VAR result also showed that the fall in Korea's export can be attributed to competition with the United States.
Chapter 5 suggests measures to restore Korea's export competitiveness in Latin America. First, Korea needs to diversify its export markets and exporting goods. There is potential to expand exports to other countries including Argentina, Bolivia, the Dominican Republic, El Salvador, Costa Rica, Paraguay and Venezuela. As the middle class grows and many governments expand investment for the development of industry and infrastructure, Korea can find export opportunities in education, health care, transportation equipment, machinery, industrial equipment and construction equipment. Cooperation in distribution with Latin American multinationals can also facilitate export activity. Second, measures to alleviate trade imbalance between Korea and Latin America should be adopted to avoid future trade conflicts. Third, free trade agreements with more countries and upgrading the current agreements and can contribute to additional export growth. Fourth, Korea can facilitate trade with the region by lowering non-tariff barriers. The successful measures that are implemented in several Latin America nations can be extended to other countries, such as the Korean e-clearance system and authorized economic operator.

The aim of this research is to suggest policy implications for industrial cooperation in the ICT sector between Korea and the Maghreb countries including Morocco and Tunisia, with an investigation of ICT industrial structure, market situation and industrial policies of those countries.
As the two countries have shown high potential for ICT industry development with their open door policy related to the ICT market, Korean companies are attempting to enter the market to realize those business opportunies. They should, however, identify market risks stemming from cultural and language barriers and fierce competition between market players. For successful performance of Korean companies in the market, some implications for corporate strategy and government policy should be considered as follows.
First, joint investment with foreign capital is needed to minimize the market risks mentioned above. As they lack business experience in the region, Korean companies should seek co-investment partners in Europe and the Middle East with abundant knowledge of and experience in the North African market. As a matter of fact, the number of joint investment between European and Middle Eastern companies are increasing in the market after the mid-2000s.
Second, Korean companies should focus on their advanced goods and services utilizing their comparative advantage including high speed internet networks and services. In addition, differentiated goods and services should be developed for new consumers in the market while considering their income level and preferences in using the ICT machines. This will help Korean companies to occupy emerging innovative markets and expand their market share at the initial stage of market entry.
Third, a wider market entry strategy for Europe, Sub-Saharan Africa and the Middle East should be prepared from the long-term perspective when they enter the Moroccan and Tunisian markets. Despite relatively low income levels and population sizes, Morocco and Tunisia can become footholds for making inroads into neighboring countries, by utilizing their economic, political and cultural relations with those countries.
Fourth, the role of the government should be emphasized in promoting ICT industry cooperation with the Maghreb countries at its initial stage in order to  establish government-to-government cooperative network and support Korean companies' market entry. In particular, public institutions like KOTRA can provide Korean companies with information about government-initiated projects and changes of regulations and laws in the sector. This can be helpful especially for small and medium enterprises since they often experience difficulties obtaining such information due to lack of human network and financial resources.

This study analyzes the competitiveness of the Indian cultural industry with emphasis on film, broadcasting and animation; and provides suggestions for further cooperation between Korea and India. Mutual cooperation in the cultural industry has been included in the form of co-production agreements in Chapter 9 of the Korea-India CEPA which went into force in 2010. Furthermore, the leaders of two countries adopted an MOU to include discussions on an implementation plan for cultural exchange in their meeting of early 2014.
India’s cultural-content industry, centered on film and broadcasting, already ranks14th in the world. It is anticipated to expand by more than 10% in the next five years, and grow into a powerhouse on a global scale in the near future. In particular, India is a promising partner country in the global value chain, as it is highly competitive in certain parts of each sector, and is likely to provide a huge market for Korean companies.
In Chapter 3, the relative competitiveness of the Indian culture industry compared to China and South Korea was analyzed. Four major sources of the competitiveness of culture industry, namely production factors, demand conditions, business environment, and related and supporting industries, were ranked by their respective scores. In terms of production factors, composed of capital, labor and technology, India is slightly ahead of China and behind South Korea. In particular, if Korea's advanced technology and planning ability is combined with India’s highly skilled labor, it would increase the competitiveness of both countries. Regarding demand conditions, with a population of 1.3 billion and a continually expanding economy, India shows significant potential as a consumer market. Though the business environment of India was far from competitive and innovative, India is ahead of Korea with respect to overseas experience of its professionals. It would be a win-win strategy for Korea to enter the innovative fields through collaboration with experts from India. Finally, the competitiveness of India’s related and supporting industries was very low, especially due to the absolute shortage in the number of screens. Entering related and supporting industries of India, centered on the establishment of multiplex cinemas, would represent an efficient strategy for Korean companies.
In Chapter 4, in view of the relative competitiveness between the two countries outlined in Chapter 3, a cooperation strategy vertically classified by a short, medium and long-term time periods was presented within the framework of value chains in their respective sectors. In this classification, a relatively effective field with low input costs and risk of market failure led to giving higher priority to the short-term scheme .Suggestions for the short term focused on cooperation without the added cost or market failure while being relatively effective in the short-term guarantee scheme. In the medium term, full-scale cooperation projects could be pursued that reflect the competitiveness of the two countries. They include implementing Korea-India co-production by providing funds and incentive schemes, in addition to participation from the planning stages, conducting hardware businesses(cinema, broadcast network) in related and supporting industries, and expanding exchanges of India’s skilled workforce that possess a high degree of expertise and international exposure. As for long-term cooperation, it should be expanded across the entire value chain. The two countries can establish a common strategic plan targeting the global market by leveraging India’s competitiveness in audiovisual exports.
Chapter 5 presents the policy challenges and suggestions for substantive cooperation measures introduced in the previous chapters. The most effective way is to use the CEPA audio-visual co-production agreement as a starting point for cooperation between the two countries. The study proposed provision of incentives to producers such as guarantee in common release and co-production fund to encourage mutual co-production. The cooperation agreements may also provide support for local language dubbing for the elimination of the language barrier. Second, we may consider establishment of departments and agencies dedicated to cooperative projects under the cooperation agreement signed in the FTA. It is essential to utilize relevant organizations, as most companies in the cultural industry are mostly small scale businesses and they lack of information and networks for local delivery. The study also proposes that the two countries cooperate in developing a professional knowledge workforce, a key component of the creative industries.

The Greater Tumen Initiative (GTI) is an intergovernmental cooperation mechanism with four member countries, all in Northeast Asia: China, Mongolia, Republic of Korea and the Russian Federation. Because of the lackluster performance of the GTI in the past, member countries have shown little interest in actively participating in GTI. Only recently has more attention been directed towards GTI by member countries, as the growth potential of the Russian Far East and the Northeast provinces of China were realized by policy makers. Korea also has been actively participating in GTI activities as the GTI can be a stepping stone for pushing ahead with the Park administration’s Eurasia Initiative. Furthermore, developing the Greater Tumen Region (GTR) provides an opportunity for the two Koreas to prepare for eventual unification. Although there exists some studies in trade facilitation in the GTR, little work has been done using empirical methodology along with analysis based on survey results. To our knowledge, our proposal represents the only work using both empirical and descriptive approaches to analyze trade facilitation issues of GTR.
Unlike other economic cooperation mechanisms such as ASEAN or EU, the inter-regional trade concentration ratio has fallen recently, implying that there is room for economic integration in the GTR. Also, we find that some GTI member countries have poor transportation infrastructure and lack appropriate trade facilitation measures. The current status of implementation of the trade facilitation in the GTR thus highlights the necessity of economic cooperation, to facilitate trade in the region. The empirical result of the proposal implies that trade partners, both the exporting country and the importing country, should improve their trade facilitation measures to fully benefit from trade. We considered a set of policy variables and logistic performance variables that affect the volume of trade of GTI member countries. We find that among the policy variables, logistical infrastructure has the greatest impact on trade, followed by custom procedures and logistics service capacity. Among logistic performance variables, timeliness has the most impact on trade, followed by international shipments and tracking and tracing.  
We complement our empirical analysis by conducting interviews with customs and traders working in the GTR. The 4-steps custom procedures are common to the member countries; document preparation & custom declaration, physical inspection, duty collection, out approval. However, required documents and other regulations for each step varied among the GTI member countries. For instance, the e-payment system is not fully implemented in the Russian Federation and Mongolia while Korea and China allow duty payments through the Internet. GTI member countries also had issues in common regarding custom transparency and high levels of physical inspection rates, hampering the efficient movements of cross-border trade.
The level of implementation of trade facilitation measures varied in many aspects. Korea was the only country to fully implement paperless trade. Other countries have partially introduced paperless trade, but for some countries the partial implementation has actually become burdensome to traders as the legal framework has not changed accordingly. Advance ruling is a measure that could help prevent disputes of classification and issues related to valuation, but Mongolia has yet to introduce such a policy. Also, even though risk management, AEO and AEO MRA are recommended for countries with high physical inspection rates, these trade facilitation measures were also not fully implemented for some countries.
Based on our analysis, we propose short-term and long-term goals for trade facilitation in the GTR. Publication of laws, regulations and procedures is pointed out as our top priorities and objectives, as it relates to timeliness which has been verified to have the greatest impact on GTI countries’ trade among logistics performance measures. We also discuss the possibilities of securing the funds to obtain this goal. For trade capacity building in Mongolia, we may consider utilizing the WTO TFAF or using a bilateral aid fund from Korea. The second short-term goal we propose is to evaluate regularly the non-tariff policy measures of GTI countries using either the OECD trade facilitation index or following the APEC Supply-chain Connectivity Framework Action Plan.
The following goals are classified as long term. As Russia and Mongolia lacks the AEO system consistent with WCO, only after these countries have fully implemented the AEO program could we expect to conclude AEO MRAs with all GTI member countries. The results of the pilot study of the Korea-China AEO MRA prove that the completion of AEO MRAs of all GTI member countries could contribute to trade facilitation in the GTR significantly. Although a significant impact from the implementation of the Single Window in GTR trade facilitation is expected based on our empirical study, securing the considerable amount of funds required to complete this task may not be easy. Thus, as a second-best plan, we propose to support the developing countries of GTI in the form of sharing knowledge for ICT and custom automation. Lastly, we also consider the possibility of constructing a common classification system at a disaggregate level. As the classification is based on domestic industry and involves politics, unifying the system may take time. However, as we know that the common classification of ASEAN and EU has contributed to trade facilitation in the region, starting a discussion on this issue may be meaningful in the long run.