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  • 만화로 보는 세계경제 2021
    만화로 보는 세계경제 2021

    KIEP Date 2021.12.23

    United States of America Latin America China Japan Europe Russia Eurasia Southeast Asia Ocean India and South Asia Africa Middle East
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  • 디지털플랫폼에 관한 최근 EU의 규제개편 및 우리나라의 통상친화적 제도 개선 방향
    The Keynote of Korea’s Trade-friendly Digital Platform Regulation at the Outset of EU’s New Legislation

       This study aims to present policy suggestions for Korea’s digital platform regulation with particular focus on the EU’s recent drafts of the Digital Services Act (DSA) and Digital Market Act (DMA). The former is a s..

    Han-Young Lie et al. Date 2021.12.20

    ICT economy, Electronic commerce
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       This study aims to present policy suggestions for Korea’s digital platform regulation with particular focus on the EU’s recent drafts of the Digital Services Act (DSA) and Digital Market Act (DMA). The former is a social regulation to promote a transparent and safe online environment, while the latter is an economic regulation to prevent potential anticompetitive conducts by so-called “gatekeepers.”
       Chapter II of the study examines the distinctive characteristics of digital platforms from an economic standpoint. Chapter III analyzes the details of the DSA and DMA, including their compatibility with GATS. Chapter IV looks over the main contents, characteristics and structure of Korea’s laws and regulations on digital platforms, including those under parliamentary discussion. Chapter V and VI seek to put forward takeaways for Korea’s digital platform regulation, evaluating its policy space vis-a-vis trade obligations.
       Key policy suggestions are as follows. First, careful consideration must be taken of the pros, cons, and probable consequences involved when switching from ex-post regulation to an ex-ante regime. Seldom advisable is to rely heavily on ex-ante regulation. Second, benchmarking foreign law or legislation drafts should answer the respective regulatory purpose. For instance, it is not appropriate to refer to the DSA instead of the DMA when dealing with anticompetitive conducts of digital platform. Third, the definition of “gatekeeper” within the DMA is conceptually no better than a market-dominant digital platform equipped with quasi-essential facilities. This kind of approach could entail quite a trade risk, since it lacks international consensus building at the moment. Finally, Korea should be ready for potential trade conflicts in the near future over its digital platform regulation. A highly possible case would be de facto breach of national treatment obligation. In this respect, there is an urgent need to address how to harness exceptional rights of defense embedded in trade agreements such as GATS.
  • 4차 산업혁명 시대 무역원활화 제고를 위한 싱글윈도우 개선방안 및 시사점
    Single Window for the Trade Facilitation in the Era of the 4th Industrial Revolution

       The 4th Industrial Revolution, characterized by convergence of technologies, blurs the boundaries of the product classification by which import and export regulations are applied. This imposes more burden on firms’ c..

    Eun-Jae Lee and Jisoo Yi Date 2021.11.25

    ICT economy, Trade policy
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       The 4th Industrial Revolution, characterized by convergence of technologies, blurs the boundaries of the product classification by which import and export regulations are applied. This imposes more burden on firms’ compliance with the import and export customs procedures. In customs procedures, the product classification is a key criterion for determining whether they are subject to import/export regulations or customs tariffs. Still, there are often differences of opinion on item classification among related government agencies. Efforts at home and abroad to harmonize product classification are continuing, but not fast enough to keep up with the pace of the 4th Industrial Revolution.
       For this reason, the applicable regulations for import and export products are rarely predictable for companies. Companies often get lost about which government agency they should contact, when, and what kind of work they should complete. Customs clearance is being delayed, and costs are increasing. In the 4th Industrial Revolution era, the cost of customs procedures for import and export companies is soaring as such.
       This study explores ways to rationalize firms’ compliance costs with a single window for customs procedures. Single Window is a system that simplifies the processes of completing all trade-related legal requirements in one submission. The Korea Customs Service (KCS) also introduced a “Customs Clearance Single Window” in 2006 to unify the requirement verification procedure to check firms’ compliance with import and export regulations and the import and export declaration procedure of customs. This study aims to analyze the status of efforts to simplify customs procedures with the Customs Clearance Single Window (CCSW), and seek improvement measures and implications for Single Window in the era of the 4th Industrial Revolution.
       This research consists of five chapters. The background, purpose, methods, and construction of the study are explained in the first chapter. In the second chapter a literature review is conducted on inter-government information sharing, the concept of Single Window, and the status of international Single Window implementations. The third chapter includes analyzing the current procedure unification under CCSW from technological, organizational, and institutional perspectives. The fourth chapter states why the convergence of the customs procedures is necessary for the 4th Industrial Revolution era and presents a U.S. Customs Border Protection (CBP) Single Window model. The fifth chapter is for the research results summary, and also elaborates the implications for the improvement of CCSW. Further issues dealt with within the research are explained in more detail in the following sections.
       Chapter 2 summarizes previous studies on inter-government agencies’ information sharing. The reasons and solutions for the failure in introducing e-Government in the 1990s are summarized. Based on the review, this study emphasizes the need for government organizations to fulfill their role as a “steward” rather than owners of public information, promote institutional and organizational coercion, and activate sub-networks to build trust. In addition, this chapter examines the global adoption status of single windows based on the survey results of 58 World Customs Organization (WCO) member states in 2010. It also introduces the U.S. government’s efforts over the past 26 years to build a legal and organizational framework for Single Window implementation.
       Chapter 3 summarizes the analysis results on the status of integration and unification of import and export customs clearance procedures at CCSW in terms of technology, organization, and institution. From a technical point of view, the merger between the import/export declaration and the requirements verification process was insignificant. About 95% of the verification requests, 63 related standard forms from 31 agencies, are processed using CCSW. Still, as most import and export companies utilize user programs for export and import declarations, the two procedures are performed separately.
       The legal framework for CCSW is also vulnerable. The establishment and operation of a single window, the scope of integration and simplification of business procedures, the purpose of the system and evaluation of operational performance, and the roles and responsibilities of the operating and participating organizations are not stipulated in the Customs Act. In addition, there is no memorandum of understanding or service contract defining operating services and methods of cooperation with the operating organization. There is also no provision for granting access rights that guarantee access to the data log the other party maintains, even when necessary for risk management or litigation.
       This study concludes that the CCSW corresponds to stage two of the five stages of single window evolution of UN/ECE and is close to a “single submission portal” by UN/CEFACT standards. The CCSW was highly valued compared to countries where customs modernization or computerization was backward, and there was a misunderstanding in the evaluation in international reports. However, the CCSW, without adequate legal authority, leadership or cooperation, and agreement on the usage of the legacy programs, is not regarded as a valid single window.
       Chapter 4 explains the need to integrate import/export declaration and requirement verification procedures to relieve firms’ compliance burden amid the 4th Industrial Revolution. This chapter also introduces the U.S. CBP’s case of procedure integration for establishing a single window. Separate systems used by U.S. government agencies were integrated into a single window, and a data model was developed to send and receive data to and from this integrated system. The private program developers can freely design user programs for import and export companies. Developed programs that have passed the customs test are released to the public, and companies can choose the programs according to their needs. The U.S. government has released a wide range of technical documentation required to develop user programs, giving companies greater autonomy in compliance with the law and expanding options to choose the appropriate program minimizing the overall compliance costs.
       Chapter 5 summarizes the previous discussion and outlines implications for building a valid single window that reduces firms’ compliance in the era of the 4th Industrial Revolution. First, government agencies should integrate information to increase data value and faithfully fulfill their “stewardship” responsible for the accuracy, integrity, and security of data. The development of user programs should be left to the market. The Korea Customs Service and the participating government agencies should direct their administrative resources toward integrating inter-agency systems and developing data models. To this end, it is necessary to strengthen capacities in customs systems to build data models that process import/export customs information. For the “datafication” of technical information related to import and export customs procedures, a systematic human resource program should be launched to discover, nurture, evaluate, and reward talents in each ministry.
       There should also be support for establishing governance based on the autonomy of import and export enterprises. The customs clearance program market in Korea is not active, and it is difficult for new developers to access. Government support should back up start-up companies collaborating with customs brokers to revitalize the market. A system to test the quality of the developed program should also be established. 
       In addition, it is necessary to create a legal framework for a single window to clarify the purpose of a single window for customs, the scope of simplification, and the role and responsibility of the operating organization. The roles and responsibilities under the cooperation should be clarified in a memorandum of understanding or agreement between the operating organization and participating organizations. Access rights for mutual risk management and dispute resolution should also be stipulated. 
       In this process, the operating institution must have strong leadership and policy driving force and activate the arena of cooperation, communication, and network activities. Lastly, an education system with which all participating institutions can continuously develop the required capacity and a robust feedback system through which all the interest parties can continually provide their opinion at the policy level should be established.

  • The Effects of Climate Change on Income Inequality: Evidence from APEC Member Ec..
    The Effects of Climate Change on Income Inequality: Evidence from APEC Member Economies

    This study empirically investigates the dynamic effects of climate change on within-country income inequality. Using panel data of 17 APEC member economies, I estimate impulse responses via the local projection method. Temperature..

    Wongi Kim Date 2021.11.15

    APEC, Environmental policy
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    Executive Summary

    I. Introduction

    II. Related Literature

    III. Econometrics and Data
    1. Local Projections
    2. Identification Strategy
    3. Data

    IV. Empirical Results
    1. Results in the Linear Model
    2. Results in the Non-linear Model
    3. The Role of Redistribution Policy

    V. Discussion and Policy Implications
    VI. Concluding Remarks

    References

    Summary
    This study empirically investigates the dynamic effects of climate change on within-country income inequality. Using panel data of 17 APEC member economies, I estimate impulse responses via the local projection method. Temperature and precipitation shocks, defined as deviations of temperature and precipitation from their historical norms, are also exploited to measure country-specific climate change. The empirical results reveal the following. First, temperature and precipitation shocks deteriorate income inequality measured by the Gini index; these effects are long-lasting. Moreover, asymmetric effects exist: heatwaves and droughts more significantly increase income inequality than coldwaves and floods. Lastly, current redistribution policies do not seem to effectively mitigate those adverse effects. I also discuss implications of carbon pricing/tax and environmental taxes related to income inequality.

  • 미국의 스위스 환율조작국 지정 원인 분석 및 평가
    On the U.S. 2020 Designation of Switzerland a Currency Manipulator

       In December 2020, the U.S. Treasury designated Switzerland, together with Vietnam, currency manipulators in its biannual report Macroeconomic Foreign Exchange Policies of Major Trading Partners of the United States to..

    Dong-Hee Joe et al. Date 2021.11.12

    Economic relations, Exchange rate United States of America Europe
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       In December 2020, the U.S. Treasury designated Switzerland, together with Vietnam, currency manipulators in its biannual report Macroeconomic Foreign Exchange Policies of Major Trading Partners of the United States to the congress. The report conducts an enhanced analysis on each country exceeding certain thresholds in three criteria: trade surplus with the U.S., current account surplus and foreign exchange market intervention. Based on this analysis, the Treasury can designate the country a currency manipulator. Switzerland met the three criterion during the period of the analysis of the December 2020 report, from the third quarter of 2019 to the second quarter of 2020, and the Treasury’s decision was the result of an enhanced analysis.
       During the period of the analysis, Switzerland had negative interest rates and deflation; and the Swiss Franc (CHF), considered to be a safe asset in the international financial market, severely appreciated following the outbreak of COVID-19. The report acknowledged the need for foreign exchange market intervention in such a situation to counter the pressure on CHF. However, it claimed that the magnitude of the intervention was excessive; that is, at least some of it was to improve the competitiveness of Swiss products.
    This study aims at evaluating the U.S. Treasury’s decision to designate Switzerland a currency manipulator, by surveying related empirical evidences. To evaluate the claim that Swiss intervention in the foreign exchange market was to improve the country’s price competitiveness, we survey the empirical evidences on the sensitivity of Swiss exports to the exchange rate of CHF. To evaluate the legitimacy of Swiss intervention in the foreign exchange market, we survey the empirical evidences on the impact of sudden exogenous appreciation of CHF on the country’s domestic economy.
       Swiss export is characterized by high technological intensity and value-added. At the HS 4-digit level, for instance, exports are highly concentrated in high value-added and technology-intensive products such as medicine, medical products, chemicals and luxury watches. This concentration is known to be a result of the country’s strategic choice during the first era globalization, from the late nineteenth century to the early twentieth century. Thanks to this export structure, the CHF exchange rate has little impact on Swiss exports, especially of medicine, medical products and luxury watches, which take up more than forty percentage of the country’s total exports.
       Sudden appreciation of CHF due to exogenous causes leads to a reduction in import prices, which in turn puts a downward pressure on domestically produced goods, resulting in deflation and distortion in the economic agents’ decision between imported goods and domestically produced goods in Switzerland. Intervention by the Swiss National Bank (SNB), the country’s central bank, is known to be effective in reducing exogenous appreciation pressure on CHF.
       Considering the characteristics of the Swiss economy, the SNB’s intervention in the foreign exchange market appears to be for countering the effect of CHF’s sudden appreciations on the country’s domestic economy, rather than for improving the country’s price competitiveness. Deflation had been happening for some time in Switzerland, to which the SNB’s mandate of price stability urged it to react; and as it kept its policy rate negative since late 2014, reducing it further would have been ineffective and inefficient.
       When the Treasury published its December 2020 report, the SNB immediately reacted by announcing its expectation that it could persuade the then-forthcoming Biden administration that its foreign exchange market intervention is solely a reaction to the exogenous appreciation pressure on CHF, not an effort to improve the country’s price competitiveness. Indeed, the April 2021 report, the first one in the Biden administration, did not designate Switzerland a currency manipulator, even though it conducted an enhanced analysis on Switzerland, as well as on Taiwan and Vietnam. This observation supports the suspicion that the conclusion of the December 2020 report was politically motivated. The Biden administration, which was about to take office at the time of the publication of the December 2020 report, was largely expected to change the Trump administration’s policies towards foreign countries, including the designation of currency manipulators. It appears plausible that the outgoing administration tried to constrain the incoming administration’s policies.
       This observation suggests that the Biden administration is unlikely to designate Switzerland a currency manipulator in the future. There is a high chance that Switzerland, due to the characteristics of its economy, will again meet the three criterion for an enhanced analysis. However, the Swiss government and central bank have consistently reacted to such criticisms, and the April 2021 report’s evaluation agrees with their reactions. Therefore, the conclusions of the enhanced analyses conducted in the Biden administration are likely to be in line with that of the April 2021 report.
  • Does digitalization help employment stability during the COVID-19 pandemic?: Evi..
    Does digitalization help employment stability during the COVID-19 pandemic?: Evidence from Korean survey data

    This paper investigates if workers’ ICT use intensity helps to improve their labor market outcomes in the early stage of the COVID-19 pandemic using real-time survey data produced in Korea. We first find that the impacts of the p..

    Seongman Moon Date 2021.10.20

    APEC, ICT economy
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    Executive Summary

    I. Introduction

    Ⅱ. Related Literature

    Ⅲ. Real-Time Survey Data
    3.1. Survey Design
    3.2. Summary Statistics

    Ⅳ. Empirical Models
    4.1. A Model for Different Impacts of COVID-19
    4.2. Models for the Role of Digitalization

    V. Heterogeneous Impacts of COVID-19

    VI. Workers’ ICT Use and Impacts of COVID-19
    6.1. ICT Use Intensity
    6.2. ICT Skills
    6.3. Internet Activities

    VII. Policy Implications and Concluding Remarks

    References

    Summary
    This paper investigates if workers’ ICT use intensity helps to improve their labor market outcomes in the early stage of the COVID-19 pandemic using real-time survey data produced in Korea. We first find that the impacts of the pandemic on labor market outcomes are different across workers’ socio-economic characteristics and industries where they are employed: workers in service or construction industries, temporary workers, and workers who had experienced unemployment before the pandemic are more likely to be unemployed, be furloughed, work less hours, and have earnings reduced in the early stage of the pandemic. We measure workers’ ICT use intensity by weekly computer, mobile, and internet usage hours and find that workers who belong to a group with high ICT use intensity tend to mitigate the adverse effects of the pandemic on their labor market outcomes, while controlling for skill-fixed, industry-fixed, and region-fixed effects as well as for individual characteristics.
  • FTA가 중소기업의 고용과 혁신에 미치는 영향
    The Effects of Free Trade Agreements on SMEs’ Employment and Innovation

    Beginning with the Korea-Chile Free Trade Agreement (FTA) in 2004, Korea has continued to actively implement FTA policies, and as of June 2020 a total of 16 FTAs ​​with 56 countries are in effect. As a result, Korea's trade volume..

    Kyong Hyun Koo et al. Date 2021.09.02

    Labor market, Trade policy
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    Beginning with the Korea-Chile Free Trade Agreement (FTA) in 2004, Korea has continued to actively implement FTA policies, and as of June 2020 a total of 16 FTAs ​​with 56 countries are in effect. As a result, Korea's trade volume has grown rapidly since the 2000s, providing an important driving force for Korea's economic growth.
      A number of studies have reviewed the positive impacts of the FTA policy on the overall economic growth of Korea from various aspects. However, there have been few attempts to explore whether the positive results of FTAs have been shared evenly between large and small/ medium enterprises, or if most of the benefits have been enjoyed mainly by large enterprises. Addressing this research gap, this study examines the effects of Korea's FTA policies on employment and innovation activities of SMEs and analyzes how each effect varies depending on firm characteristics to draw policy implications.
      According to the empirical results, the employment and real wages of SMEs significantly increased mainly in industries where the effect of export expansion due to FTAs was higher, with innovation activities also taking place more actively in such industries. On the other hand, although the SMEs in industries with high import competition due to FTAs showed a relatively low increase in the real wage, no negative effect was found on the employment or innovation activities of SMEs. Taken together, Korea's FTA policies seem to have played a positive role in boosting overall employment and innovation of SMEs in the manufacturing sector.
      However, when re-identifying the FTA effects by firm size of SMEs, most of the positive effects of FTAs ​​were mainly centered on medium- sized enterprises, and relatively small enterprises tended to be alienated from such positive effects or conversely exposed to the negative effects of FTAs. For example, the effect of reducing the real wage growth rate due to FTA-induced import competition effect mainly occurred in small enterprises, and the effect of FTAs toward increasing the innovation activities of small enterprises was not found. On the other hand, medium-sized firms led the increase in employment and innovation activities of SMEs due to the FTA export effect, and although they experienced a decrease in employment due to the FTA import competition effect, there was no significant decrease in real wages. This suggests that unlike small-sized firms, medium-sized ones have leveraged the import competition pressure from FTAs as an opportunity for efficient resource allocation and productivity improvement through restructuring.
      Based on the results of the empirical analysis above, we discuss some policy implications for improving FTAs’ benefits for SMEs’ employment and innovation.
  • ODA 시행기관의 성과관리체계 개선방안 연구
    Study on Results-Based Management System in Korea’s Aid Agencies

       Since Korea’s accession to the OECD Development Assistance Committee in 2010, there has been a continuous rise in Korea’s aid budget as well as the number of government ministries and public agencies engaging in the..

    Yul Kwon et al. Date 2021.08.31

    Economic development, Economic cooperation
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       Since Korea’s accession to the OECD Development Assistance Committee in 2010, there has been a continuous rise in Korea’s aid budget as well as the number of government ministries and public agencies engaging in the aid industry. The proliferation of new actors has led to growing concerns on the organizational capacity to ensure aid effectiveness of new aid-spending ministries and agencies. Aside from the main aid agencies such as the Korea International Cooperation Agency (KOICA) and the Economic Development and Cooperation Fund (EDCF) under the Export-Import Bank of Korea, the number of government ministries and public agencies (hereafter referred to as non-aid agencies) that spend aid budget is up to forty-one as of the financial year 2021. In terms of budget composition, the non-aid agencies account for approximately half of Korea’s grant aid budget.
       In this context, this paper reviews aid management schemes at Korea’s aid agencies as well as non-aid agencies with special attention on their organizational capacity to ensure aid effectiveness and results-based management. Chapter two starts by reviewing the aid management schemes of Korea’s aid agencies and non-aid agencies in terms of their aid strategy and programs, key channels and modalities, budget allocation and result-management system. In addition, the paper moves on to analyze the aid portfolio and governance mechanism of the fourteen top aid-spending agencies, examining whether and to what extent there exists a strategic coordination system among multiple executing agencies to ensure internal coherence of their projects and programs. Based on a case-study approach, chapter three explores the cases of three agencies that have different cooperation schemes for results management and evaluation. The first model is the case of the main grant aid agency, namely KOICA, which has an independent evaluation unit within the agency. The second model is the case of the Ministry of Health and Welfare and its executing agency, the Korea Foundation for International Healthcare (KOFIH), which incorporates an evaluation function within the agency. The organizational structure for evaluation at the KOFIH is somehow similar to that of the KOICA, albeit with much smaller budget. The third model is the case of the Ministry of Agriculture, Food and Rural Affairs and its main executing agency, the Korea Rural Community Corporation, which delegates the evaluation function to the state-led think tank, the Korea Rural Economic Institute. Having evaluation functions within or outside the agency, the experience of these three agencies provides valuable lessons for other agencies with relatively limited budget, human resources and expertise. It was found that in order to strengthen evidence-based policy and implementation and ensure aid effectiveness, Korea’s aid agencies need to invest more on building evaluation expertise, addressing resource constraints and make more efforts to use and learn from the evaluation results and recommendations. 
       Based on the analysis, the paper concludes with suggestions for future policy direction. Amid the growing demand for evidence-based decision-making and value for money, it is recommended that the Korean government introduce periodical assessment of results management systems at Korea’s aid agencies and strengthen strategic evaluation and learning systems for increasingly diverse actors in aid industries. The paper also suggests that the newly established Office for International Development Cooperation under the Office for Government Policy Coordination of Korea exercise enhanced leadership to provide policy directions and guidelines in the realm of results-based management and evaluation systems for Korea’s aid and non-aid agencies. 

  • Consumer Responses to Price Shocks of Wine Imports in Korea
    Consumer Responses to Price Shocks of Wine Imports in Korea

    The main purpose of the study is to develop a methodology that divides consumers' responses to FTAs or commodity taxes into quantitative and qualitative margins, which cause exogenous price changes for some specific goods. The use..

    Chul Chung et al. Date 2021.07.30

    Trade policy, Free trade
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    Executive Summary

    1. Introduction

    2. Literature Review
    2-1. Research on the Effects of FTAs and Consumption in Korea
    2-2. Research on Demand Analysis

    3. Methodology

    4. Empirical Analysis
    4-1. Data
    4-2. Empirical Results

    5. Conclusion

    References
    Summary
    The main purpose of the study is to develop a methodology that divides consumers' responses to FTAs or commodity taxes into quantitative and qualitative margins, which cause exogenous price changes for some specific goods. The use of unit values as a dependent variable for consumers' qualitative choice, unlike the usual method of utilization of unit values as a proxy variable for market prices, showed that qualitative response to price changes exists and its size is significant. The methodology of separating and estimating qualitative responses to income changes as in economic crises is also presented, and the empirical analysis using this methodology showed that much of the existing income effects were qualitative responses. As a key result, the price elasticity of -1.178 estimated by the usual demand model based on a single commodity assumption is reduced to -0.712 for the quantitative margin only, and the qualitative margin is the remaining -0.466, accounting for more than a third of the overall response. The significant degree of qualitative response estimates suggests that policy makers and researchers should consider qualitative response as an important factor when analyzing the effectiveness of FTAs, especially on consumption.
  • KIEP가 함께 한 한국의 FTA 20년
    20 Years of FTAs in Korea with KIEP

    Korea Institute for International Economic Policy Date 2021.07.30

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