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Natural Gas Development in the Eastern Mediterranean Region and Its Implications for Korea
This study explores the current status of natural gas development in the Eastern Mediterranean region and derives its implications for Korea. Our approach encompassed a thorough review of pertinent literature and statistical data,..
Kwang Ho Ryou et al. Date 2023.10.20
Economic cooperation, Energy industryDownloadContent
SummaryThis study explores the current status of natural gas development in the Eastern Mediterranean region and derives its implications for Korea. Our approach encompassed a thorough review of pertinent literature and statistical data, and insightful interviews with local government officials and industry experts, conducted through field surveys and seminars.The key findings of this study are summarized as follows: First, natural gas development in the Eastern Mediterranean region has significantly increased its prominence within the global natural gas market. Egypt, holding largest natural gas reserve in the region, now surpasses major natural gas importers of Korea, including Malaysia, Oman, and Indonesia. The total natural gas reserves in the Eastern Mediterranean region are estimated at 119.1Tcf, 41.1% more than that of Australia, Korea’s largest natural gas importer. It is estimated that there are 286.2Tcf of undiscovered natural gas resources buried along the Eastern Mediterranean coast. This means that only 29.4% of the region’s total natural gas reserves have been found to date.Second, countries in the Eastern Mediterranean have made significant efforts to develop their domestic natural gas resources and to strengthen both domestic and international cooperation. In particular, Egypt, Israel, and Cyprus, major natural gas holders in the region, have been actively pursuing exploration and development and related infrastructure projects to expand their natural gas production and export capacity. Efforts are being made to promote natural gas-related industries such as petrochemicals and hydrogen. In 2019, a regional consultative body for natural gas development, the East Mediterranean Gas Forum, was launched. Since then, through a number of meetings, countries in the region have gathered to discuss specific plans and implement methods for natural gas development. There is also cooperation between Egypt and Israel in the natural gas supply chain, using Egypt’s natural gas liquefaction facilities.The weaponization of resources in major energy producers and the expansion of global energy security threats have served as an opportunity to draw more attention to natural gas development in the Eastern Mediterranean. In the aftermath of the Russia-Ukraine war in 2021, the instability of natural gas supply and demand increased significantly, especially around the EU, and natural gas prices also showed a sharp increase in volatility. As the risks of energy supply and demand disruptions have been greatly highlighted, the Eastern Mediterranean has emerged as a new alternative destination for major energy consumers. In particular, major energy companies in Europe such as Eni and BP are showing great interest and continuing their aggressive entry into the Eastern Mediterranean region.We can use the current situation in which the threat to energy security has escalated as an opportunity to promote natural gas cooperation with the Eastern Mediterranean region. First of all, we can contribute to strengthening Korea’s energy security by increasing natural gas imports from the region. Recently, the need to diversify import sources has emerged as concerns about the instability of natural gas supply and demand have increased significantly due to the recent production disruptions in major oil-producing countries caused by geopolitical risks. As infrastructure development in the region is progressing at a rapid pace, it can be said that various entry opportunities are also open for Korean construction companies with global competitiveness in the region. In addition, the Eastern Mediterranean region can be considered a project site for the development of overseas natural gas fields, and participation in local countries’ efforts to develop gas-related industries such as petrochemicals and hydrogen could also provide good opportunities for Korean companies to enter the market. -
Cloud Services FDI and Regulatory Trends
This report examines cloud services FDI and regulatory trends. We obtain 2,442 cloud services FDI projects (firm-level) from FDI Markets for the period 2016-22, and do statistical analysis using information on investment purpose, ..
Kyu Yub Lee and Jun Hyun Eom Date 2023.10.20
Privacy, Electronic commerceDownloadContentSummaryThis report examines cloud services FDI and regulatory trends. We obtain 2,442 cloud services FDI projects (firm-level) from FDI Markets for the period 2016-22, and do statistical analysis using information on investment purpose, year, destination country, investment size, and industry. First, the total amount of FDI in cloud services from 2016 to 2022 is about $214 billion. The main purpose is to invest in overseas facilities to build ICT and infrastructure, and the telecommunications industry, software and IT services industry account for 98.7% of the total investment. Outward FDI between high-income countries accounts for about 62% ($132.9 billion), which rises to 85.5% ($183.9 billion) if transactions between high-income countries and upper middle-income countries are included. Lower middle-income countries invest more in high-income countries ($1.5 billion) than in lower middle-income countries ($900 million). There is no outward investment among low-income countries. Countries in the Americas, Europe, Asia, and Africa regions (excluding Oceania) are the most active, with the largest share (29.3%) of outward investment between the Americas and Europe. The Americas are the leading region for outbound direct investment in cloud services (61.9% of investment), and when looking at transaction patterns between regions, investment is concentrated in Europe (35.5%), Asia (25.6%), and the Americas (24.4%).Second, the total amount invested in the European region (43 investor countries and 37 recipient countries) is about $76 billion. Countries in the Americas have invested about $52.9 billion in the region, accounting for 69.6% of the total. The leading investor in Europe is the United States ($51.9 billion), and the top investee country in Europe is the Netherlands. The total amount invested in Asia (35 investor countries and 39 recipient countries) is about $54.9 billion. Countries in the Americas account for 58.1% of the total, with about $31.9 billion invested in the region. The leading investor in the Asia region is the United States ($31.6 billion), and the leading recipient country in the region is India. The Americas (37 investor countries and 21 recipient countries) received about $52.3 billion in investment. Countries in the Americas account for 56.9% of the total, with about $29.8 billion invested in the region. The leading investor in the Americas is the United States (almost $25 billion), while the top recipient country in the region is Canada. The Africa region (19 investor countries and 26 recipient countries) accounted for about $17.2 billion. The countries in the Americas accounted for nearly $6.8 billion in investments in the region, or 39.4% of the total. The United States is the only country in the Americas to invest in the region, while South Africa is the top investor in Africa. The Oceania region (12 investor countries and two recipient countries: Australia and New Zealand) totaled about $14 billion. Countries in the Americas have invested about $11.5 billion in the region, accounting for 81.8% of the total, with the United States accounting for about $10.8 billion. Countries in Asia invested about $1.5 billion (10.7%) and Europe invested about $900 million (6.5%) in the Americas. Korea invested a total of $5.8 billion in the United States, China, India, Africa, and a few other countries during 2016-22, accounting for about 0.3% of global cloud services investment. The United States, China, the ten ASEAN member countries, India, Singapore, and Hong Kong are the only countries that have invested in Korea. Korea's FDI in cloud services totaled $2.16 billion (1.0%), of which about $1.27 billion coming from the United States, $5.3 billion from ASEAN 10 and India, $240 million from China, and $120 million from the rest of the world.Third, we further examine the domestic regulations of the cloud industry in key countries. Based mainly on the U.S. Trade Barriers Report (2017-23), we find that there are discernible disparities between countries in terms of data localization, restrictions on cross-border data transfers, security certifications, mandatory sourcing of domestic goods, and content control. Data localization requirements are compulsory in China, Saudi Arabia, South Africa, Panama, Nigeria, France and South Korea. Restrictions on cross-border data transfers are enforced in China, Saudi Arabia, and South Africa. Mandatory sourcing of domestic products is obligatory in China and the Philippines. Security certifications are required in the EU (EUCS), France (SecNumCloud), the United States (FedRAMP), and South Korea (CSAP). Countries with content controls include Vietnam and Saudi Arabia. China and Saudi Arabia are identified as the countries with the highest number of most regulatory issues.We hope the findings of that report will serve as a useful reference as the government reviews FDI policies and regulatory policies for cloud services, which are as important as overseas expansion of domestic cloud service providers, in the process of formulating the Fourth Basic Plan for Cloud Computing (2025-27). -
Economic Security in the Indo-Pacific Region: Domestic Political Dynamics of Key Countries and Korea’s Economic Security Strategy
As U.S.-China geopolitical and geoeconomic competition intensifies in the Indo-Pacific region, economic security has become an important issue. This study analyzes the Indo-Pacific strategies of key countries, particul..
Jae Jeok Park et al. Date 2023.09.13
Economic security, Political economyDownloadContentSummaryAs U.S.-China geopolitical and geoeconomic competition intensifies in the Indo-Pacific region, economic security has become an important issue. This study analyzes the Indo-Pacific strategies of key countries, particularly their economic security policies, focusing on domestic political factors. It also suggests considerations for Korea’s economic security strategy and policy in its bilateral relations with key countries and in the context of the Indo-Pacific region as a whole.The study comprises ten chapters, including an introduction. Chapter 2 situates economic security in the context of the geopolitical and geoeconomic competition in the Indo-Pacific region and critically reviews existing studies on the concept and discourse of economic security. It then provides the theoretical context for the case studies that follow by discussing the interaction between domestic and international politics.Chapters 3 through 7 are case studies. They examine the economic security policies of five countries facing different domestic political environments. All case studies are organized in the following order: (1) background and definition of the economic security discourse in Country X, (2) principles of economic security policy of country X, (3) domestic political variables of country X that affect its economic security policy in the Indo-Pacific region, (4) two representative examples of how country X’s economic security policy has been influenced by domestic political variables, and (5) prediction of country X’s future economic security policy based on these domestic political factors. Chapter 8 examines China’s approach to the US-led economic security in the Indo-Pacific.Chapter 9 concludes the study by exploring the implications of the preceding discussions for Korea’s economic security strategy. The first part considers the bilateral dimension between Korea and country X, while the second part looks at the overall implications for Korea from an Indo-Pacific economic security perspective. -
Foreign Direct Investment and Gender Wage Gap: Vietnamese Evidence
On July 4, 2023, Foxconn, the Taiwanese electronics manufacturer best known for producing Apple’s products such as iPhone and MacBook, announced plans to invest more than $200 million in northern Vietnam to reduce its dependence ..
Jegook Kim Date 2023.09.08
Labor market, Foreign direct investmentDownloadContentSummaryOn July 4, 2023, Foxconn, the Taiwanese electronics manufacturer best known for producing Apple’s products such as iPhone and MacBook, announced plans to invest more than $200 million in northern Vietnam to reduce its dependence on Apple and participate in the electric vehicles market. Including this investment, Foxconn has invested more than 2 billion dollars in Vietnam. Other multinationals such as Intel, LG, Nike, and Samsung are also rushing to invest in Vietnam. As a result Vietnam is sometimes called the FDI darling.These Foreign direct investment (FDI) contributes to Vietnam’s economic growth, not only through the role of capital as a factor of production, but also through the introduction of management skills from advanced economies. The impact of FDI on the host country is not limited to the target enterprises, but includes the transfer of capital or technology to industries and regions. The impact also affects factor markets in the region, in particular labor conditions, including employment, labor productivity, and wages. These effects may vary by industry, occupation, skill, educational level, and gender. This can be a matter of discrimination, especially when other conditions are equal, but the difference is simply due to innate gender differences.Against this backdrop, this paper aims to examine the statistical and institutional status of FDI inflows and the gender wage gap in Vietnam, and to derive implications for governments and firms in Korea and Vietnam.Chapter 2 compares the status of gender equality in Vietnam with key ASEAN countries, Indonesia, Malaysia, the Philippines, and Thailand, focusing on the labor market, and assesses Vietnam’s gender equality institutions. Given Vietnam’s stage of economic development, gender equality in economic activities is good, but there is a need to expand political empowerment, provide paid parental leave, and reduce the gender gap in retirement ages. Vietnam has a large gender wage gap among the larger ASEAN countries but this varies by occupation. The gap is the largest in Technicians and Associate Professionals while Clerical Support Workers, women’s wages are higher than men’s.Similar to other major ASEAN countries, the unemployment rate for women was higher than for men. The higher level of education, the higher the unemployment rate and the wider gender unemployment gap. Vietnam has a high share of employment in the industry, including manufacturing, and a low share of employment in the services compared to the main ASEAN countries. This gap with major ASEAN countries is more pronounced for women than for men.In line with international standards, Vietnam has established gender-related institutions such as the Law on Gender Equality, the Social Insurance Law, and the Labor code. In 2021, the National Gender Equality Strategy 2021-2030 was promulgated. However, despite these legislative and policy efforts, there seems to be a lack of implementation efforts by businesses, especially Vietnamese private businesses.Chapter 3 investigates FDI inflows, gender wage gap, and labor market status in Vietnam by region or by classifications such as type of company ownership, age group, and occupational group. FDI inflows have been concentrated in the areas around the capital city of Hanoi in the north and Ho Chi Minh City in the south The variation in FDI inflows by region has been decreasing. The regional gender wage gap improved until the mid-2010s and has recently worsened, although the regional gap has narrowed. Women’s participation in vocational training falls sharply in their 30s. In most age groups, men spend about half as much time as women on domestic work. These two facts are often cited as widening the gender wage gap.In the empirical analysis of FDI and the gender wage gap, Vietnam’s six socio-economic regions and four minimum wage regions were used to account for homogeneity and heterogeneity within the metropolitan area. Taking the fixed-effects panel analysis as the basic model, the regional dummy, the FDI inflows, and the interaction term of both were used as independent variables. Although there were differences among the models, negative relationships between FDI inflows and gender wage gap were generally estimated. In particular, the estimation that includes both regional and industry characteristics suggests that FDI inflows reduce the gender wage gap in sectors with a high share of female employment. In the most developed and industrialized regions of Vietnam, the highest minimum wage region in the Red River Delta and the Southeast, an increase in the share of FDI inflows in both traditional and knowledge services is estimated to reduce the gender wage gap. Among the control variables, the share of trained labor is negatively correlated in most models, suggesting the importance of education and training in reducing the gender wage gap.Chapter 4 suggests implications for governments and enterprises in Korea and Vietnam, including planning FDI incentives to improve the quantity and quality of female employment, the importance of vocational education and training, efforts to implement gender equality systems, and strengthening women’s right to self-determination in career choice. However, due to the limitations of the data in this study, caution must be exercised in interpretation. One should be borne in mind that assessing gender equality issues in Vietnam, including the gender wage gap, requires an understanding of the historical, social and cultural context. -
Europe’s Energy Crisis, National Policies and Industrial Production: Insights for South Korea
This study analyzes Europe’s policy responses after the energy crisis after the Russian-Ukrainian war and examines the impact of policy measures on industrial production. Although the mild winter of 2022 resulted in lower-than-ex..
Yoonjung Kim and You Jin Lim Date 2023.08.28
Industrial policy, Energy industryDownloadContentSummaryThis study analyzes Europe’s policy responses after the energy crisis after the Russian-Ukrainian war and examines the impact of policy measures on industrial production. Although the mild winter of 2022 resulted in lower-than-expected energy demand, and energy prices have stabilized since the end of 2022, there is uncertainty about the severity of the winter in 2023 and the war is showing signs of prolongation. While Europe is using the energy crisis as an opportunity for the green transition, Europe is also accepting that it will continue to use fossil fuels, including liquefied natural gas (LNG), for at least the next decade and possibly even longer.The fact that Europe can no longer rely on fossil fuel supplies from Russia has significant implications for Korea, which is a net energy importer, as it may be affected by the increasing demand from Europe in the international energy market. Analyzing Europe’s policy measures on energy crisis provides important policy recommendations for potential energy price surge in South Korea due to the additional international energy demand.Chapter 2 explores the background of the energy crisis in Europe after the Russian-Ukrainian war, and explores the link between rising energy prices and inflation.We analyze the various policies implemented by the national governments of three European countries to mitigate the impact of the energy crisis, namely Germany, France, and the United Kingdom. The study demonstrates a significant increase in energy prices, providing justification for the implementation of national policy measures. We show heterogeneity across countries, including dependence on Russian energy, available fuel types, and the different institutional contexts, and further investigated the policy packages in each country. In France, the impact of rising energy costs has been relatively small, and the main policies were tax reductions on energy Imposing price caps. In Germany, tax cuts and universal household assistance were the main policy measures, with additional subsidies for energy-intensive industries. The U.K. government utilized targeted support unlike other countries, leveraging its administrative capacity. This targeted support encompasses providing cash assistance for vulnerable households and granting automatic discounts on household energy bills.In Chapter 3, we use information on the timing of the introduction of energy crisis policies in major European countries to analyze whether these policies were meaningfully related to industrial production. Using fixed effect models and policy timing to reduce electricity prices in Germany and France, we examine the correlation between the industrial production index and energy crisis policies through their impact on energy prices. Our findings indicate that the policy intervention was positively correlated with industry production. By employing two-stage least squares regression, we find that the policy implementation was negatively correlated by approximately 40-euro reduction of wholesale electricity price, and 100 euro increase in wholesale electricity price was correlated with reduction in industry production index by approximately four percent relative to the average industry production within the sample period. Additionally, we also conduct heterogeneity analyses to investigate the potentially different correlation between the energy crisis responses and energy-intensive industries, but our analysis does not yield conclusive evidence of significant heterogeneity across different industries.From our analysis, we recommend that the energy crisis policy should prioritize assisting the most vulnerable consumers. Imposing a cap on price growth or reducing energy prices or taxes can result in price distortion and regressive taxation. In the event of an energy crisis, we suggest implementing targeted policies that benefit low-income households to optimize the government's budget efficiency and protect vulnerable households. In order for this policy option to be administratively feasible, the government must possess the capacity to identify eligible households and have streamlined procedures to efficiently deliver assistance without imposing excessive institutional barriers for applicants. In South Korea, Energy Voucher Program is limited to certain types of low-income families such as single mothers, the elderly, and other public assistance recipients, and the categorical eligibility should be expanded to include other low-income households that do not fall within these categories. If there is any consideration for implementing price reductions on energy, we suggest implementing price brakes to incentivize the reduction of energy demand and encourage more efficient energy utilization.This study provides valuable insights to the existing body of research by examining the relationship between energy crisis response policies and industrial production in the context of recent events such as the Russian-Ukrainian war and the energy crisis. To optimize the utilization of government resources, it is recommended to investigate this issue by analyzing firm-level data and actual energy prices paid by companies. Such approach can provide more informed policy recommendations for industries facing significant challenges due to high energy costs. -
The Effects of Robotization on Foreign Direct Investment
This study aims to investigate the effects of robotization on foreign direct investment (FDI). We address this research question by providing a theoreti-cal prediction derived from a simple model and then empirically testing our p..
Sungwoo Hong et al. Date 2023.08.03
Industrial structure, Foreign direct investmentDownloadContentExecutive Summary1. Introduction2. Robotization and FDI: Conceptual Frameworks3. Data and Econometrics3.1. Data3.2. Econometrics4. Empirical Results5. Discussion5.1. Regional Heterogeneities5.2. Origin of Regional Heterogeneity: Role of Manufacturing and Education6. Concluding RemarksReferencesAppendixSummaryThis study aims to investigate the effects of robotization on foreign direct investment (FDI). We address this research question by providing a theoreti-cal prediction derived from a simple model and then empirically testing our prediction. Theoretically, we found that an exogenous rise in industrial robots depresses both the robot rental rate and the domestic cost of task execution. Thus, it is more profitable to perform more tasks at home, leading to a de-crease in FDI. Empirical results are summarized as follows. First, an increase in robotization in source countries negatively affects outward FDI. Second, this negative effect is not consistent across global regions. -
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Research on Green Energy Cooperation with East Africa
Sub-Saharan Africa is under pressure domestically and from abroad to achieve both economic growth through better access to energy and a sustainable environment through decarbonization simultaneously. Africa has generated energy th..
Munsu Kang et al. Date 2023.06.08
Energy industry Africa Middle EastDownloadContentSummarySub-Saharan Africa is under pressure domestically and from abroad to achieve both economic growth through better access to energy and a sustainable environment through decarbonization simultaneously. Africa has generated energy through renewable sources such as hydro-power and geothermal energy but demand for stand-alone energy generation has increased recently to improve access to energy in the rural areas. In addition, green energy has gained importance for rural energy access as the unit costs of solar and wind energy generation dropped rapidly. This research examines East Africa’s demand for green energy and current policies, together with cooperation measures in the international community, and analyzes reasons for applying solar energy technology through a case study designed to derive policy implications on Korea’s energy sector cooperation.Chapter 2 examines the energy access and green energy development status of Africa on a state level. Access to clean energy for power and cooking have improved considerably across Africa but the absolute access rate remains low compared to other regions. The study further examines energy access and green energy policies for Uganda, Kenya and Tanzania in particular. The three countries all have policies to improve energy access especially for the rural areas, and have established rural energy administrations. They also seek to establish a foundation for rural energy access through small-scale energy generation by introducing stand-alone generation facilities in the rural areas, in addition to the conventional electrification policies. To this end, private sector participation in the energy market is crucial, and thus governments in the region seek to provide incentives for small-scale energy generation by private companies. In regard to policies, Kenya’s policy index is high while that of Tanzania and Uganda need improvement.Chapter 3 derives implications for Korea by examining the cooperation strategies and policies of international organizations such as the World Bank and UNDP, as well as partner countries including the US and Sweden regarding the green energy sector in East Africa. The US seeks to increase the region’s generation capacity up to 30,000MW by 2030 and provides large scale support to Africa’s energy sector through its Power Africa initiative. Solar energy and wind power consists up to 33% and 15% each in the program, emphasizing the importance of green energy for the US. Kenya and Tanzania are the prime beneficiaries of the Power Africa initiative among the 30 countries in participation. EU’s Africa Europe Energy Partnership (AEEP) seeks to provide electricity to 100 million people by 2020 through hydro, wind and solar energy to improve green energy supply, strengthen energy security between the EU and Africa, and to increase energy efficiency in Africa. EU member countries have formed a Team Europe platform with institutions such as the European Investment Bank, and European Bank for Reconstruction and Development, through which it seeks to create a green energy initiative, as well as an environment for green energy production and investment. The World Bank and UNDP have led support to improve energy access and increase energy efficiency in Africa among international organizations. Support is given to hydro and offshore wind power as well as for stand-alone solar energy as access to electricity and the increase of green energy power generation have become the core objectives of these institutions.Finally, Chapter 4 analyzes the reasons for solar lantern usage and draws implications for solar energy cooperation from the Tanzanian case study. The results indicate that high female participation in the Solar Cow project and the will to study were the main reasons behind solar lantern usage. However, some residents did not participate willingly in the project due to the charging policy. This shows that understanding the willingness to pay is as important as understanding the demands for green energy technology is crucial to increasing the effectiveness of the project. A pre-analysis of the recipients and some form of participation compensation is required when performing development cooperation projects for green energy.Four implications can be drawn from this study. First, collaboration between East Africa and Korea is needed to improve the green energy policy environment in East Africa. Among the East African countries, Tanzania and Uganda’s institutional development is weak, while green energy related regulations and incentive policies need to be newly implemented. Institutions such as the Rural Electrification Agency and rural electrification policies have been established to provide the rural areas with electricity, but there is room for further collaboration in the actual implementation of these policies. Accordingly, cooperation on policy improvement to expand energy access and green energy adoption in rural areas of East African countries should be discussed.Second, green energy related projects could be expanded. Korea only has a limited number of energy related projects in Africa, which are mostly in the form of loans. However, when looking at the electrification strategies of international organizations and partner countries using green energy, cooperation in the green energy sector can be expected to increase in the future.Third, institutional mechanisms that promote the participation of energy companies and institutions are needed. This study suggests the expansion of financial support for companies investing in the African power market, the creation of an information sharing platform for the energy sector, and the increase of participation in the African power generation market as the main cooperation strategies.Fourth, there is a need to diversify green energy cooperation. The demand for solar energy is generally high but that is the same for wind, hydro, geothermal and other sources. The efficiency of education and health-sector related projects can be improved by supporting energy access and generation of education and health facilities. There is a need to gradually expand cooperation on clean cooking energy sources, as it is also in high demand. Most importantly, a system to support human development and equipment management is needed once a projects ends for further maintenance.Improving energy access and energy efficiency will continue to be important issues in East Africa. Support for the energy sector not only affects economic activities but also other sectors such as education and health care, and is expected to be further linked to gender inequality and support for the vulnerable. East Africa’s population in particular is larger than that of other regions in sub-Saharan Africa, and so is the demand for energy accordingly. In consideration, expanding energy cooperation between Korea and East Africa is expected to contribute to the socio-economic development of East African countries in the mid- to long-term. -
Global Efforts to Achieve Carbon Neutrality in the Industrial Sector and Implications: Focusing on SMEs
The international community has stepped up efforts to achieve carbon neutrality or net zero emissions and has begun to expand the scope of greenhouse gas management to all companies in the supply chain. In particular, the decarbon..
Eunmi Kim and Sunghee Lee Date 2023.05.28
Industrial policy, Environmental policyDownloadContentSummaryThe international community has stepped up efforts to achieve carbon neutrality or net zero emissions and has begun to expand the scope of greenhouse gas management to all companies in the supply chain. In particular, the decarbonization of industries that emit large amounts of greenhouse gases is an important task for countries not only to effectively respond to climate change, but also to improve their energy security and international competitiveness. Although decarbonization can be achieved by all companies regardless of their sizes, small and medium-sized enterprises (SMEs) are struggling with a lack of resources and capabilities. Therefore, the purpose of this study is to analyze the characteristics of national and multilateral carbon-neutral strategies, identify policy demands of SMEs based on survey results, and derive implications for the decarbonization of the industrial sector and, in particular, SMEs in Korea.Chapter 2 mainly analyzes policies to reduce greenhouse gases in the industrial sector and cases of multilateral cooperation between both major governments and global companies. Sweden, Germany, the United States, the UK and Japan are increasing their financial support for decarbonization efforts in their industrial sectors, also rearranging relevant policies and institutions. Sweden is working closely with the EU and its local governments to support carbon reduction projects, and also subsidizes investments with greenhouse gas reduction benefits but not expected to generate a return on investment without subsidies. Germany is inducing technological innovation and international cooperation among SMEs. The United States is expanding its investment in clean energy and providing research and development funding to SMEs and startups through federal agency-level programs such as SBIR/STTR programs. The UK is promoting decarbonization particularly in high-emitting industrial clusters, and is stimulating private investment through public funding for technology innovation. Japan is expanding its financial support in this area, for instance through tax benefits for companies pursuing green transformation (GX), and helping SMEs and startups enter or expand their business in developing countries through funds including Official Development Assistance (ODA).While introducing internal regulations to reduce greenhouse gas emissions, global leading companies demand that their partners participate in these efforts. The steel, chemical, consumer goods, electronics manufacturing and automobile manufacturing industries focus on supply chain management to achieve their carbon neutrality goals. Suppliers of these industries are required to establish and achieve reduction targets, and are encouraged to comply with the low-carbon purchasing guidelines or environmental codes of conduct. The companies provide education programs, consultation services and financial support for subcontractors to achieve carbon neutrality. Multilateral initiatives in which companies voluntarily participate include the RE100, 24/7 CFE, the Alliance of CEO Climate Leaders, and the SME Climate Hub.Chapter 3 reviews the policies and systems in place to support decarbonization for SMEs in Korea and analyzes the results of the survey conducted for this study. The emission data shows that SMEs in Korea produce less emissions than large corporations, but their emissions are high compared to energy consumption and the major emitting industries are diverse. SMEs remain at a relatively low level of competitiveness in climate technology, and the environmental performance of domestic SMEs measured by ESG scores also ranked at the bottom among major countries (7 countries). Domestic systems that support the decarbonization of SMEs can largely be divided into programs to introduce existing reduction facilities and fuel conversion and promotion measures for research and development of future reduction technologies. The introduction of reduction technologies and facilities is mainly carried out in a package format including site diagnosis, consulting, planning, purchase and construction, which is the biggest difference from the cases of major countries reviewed in Chapter 2. In addition, the emissions reduction technology development through cooperation between SMEs and research institutes, support for start-ups and growth, and financial support for corporate decarbonization efforts are also being carried out.According to the results of our survey conducted on Korean SMEs, only 5.2% of 250 respondents were tracking their greenhouse gas emissions. The most common way to reduce greenhouse gases was “energy saving,” with few SMEs responding they had the ICT-based infrastructure needed for energy management. Based on the first and second cumulative responses, “lack of response funds” (21.3%) and “difficulty in determining reduction efforts best for the company” (17.5%) were representative difficulties in pursuing reduction efforts. In particular, the support policies most desired by the respondents were “expanding the use of renewable energy,” “improving energy efficiency” and “expanding new energy (green hydrogen),” in that order. It is noteworthy that each policy chosen as a priority has a different desired support method or support period, and long-term support of more than five years is required in terms of related technology development or preparation for supply chain due diligence.Based on the above analysis results, this study identified the following directions to promote decarbonization in the industrial sector and SMEs: enhancing policy effectiveness, promoting technological innovation, spreading the management system for decarbonization, and strengthening international cooperation. Specific implications for each direction are as follows.First, in order to enhance policy effectiveness, the government should introduce new programs to support the entire process including searching, applying for and managing suitable programs for SMEs, and strengthen the roles of various stakeholders such as local governments, large corporations, and private investors. In particular, a large number of SMEs (77.8%) responded that they did not know much about decarbonization-related support programs. This suggests that support for SMEs is necessary from the first step of searching and applying for projects. It is also necessary to monitor and improve the overall support projects carried out by various ministries and agencies, and to closely evaluate and monitor ongoing or completed government programs.Second, with the goal of technological innovation for decarbonization, related ministries and public agencies should expand long-term support for more than five years, encourage private investors to participate, and strengthen the evaluation of expected effects of technological innovations toward reducing greenhouse gas emissions. It is necessary to nurture start-ups and small sized-enterprises with the capacity of developing innovative technologies with excellent reduction effects, and invest in their projects from a long-term perspective. In particular, investment support in the public sector should benchmark existing greenhouse gas reduction effects, such as realized in Sweden, when selecting recipients. It is also necessary to review policies to expand the scale of investment by attracting various partners from the private finance sector, as shown by the UK case.Third, companies need to incorporate decarbonization into their business management system and strengthen their capabilities to collect and manage environmental data including carbon emissions. It is important to establish ICT-based infrastructure and energy management systems considering the companies’energy consumption targets. Moreover, it is also necessary to actively publicize success stories and share information so that companies do not perceive carbon neutrality or decarbonization as little more than an obligation or unnecessary burden, and rather utilize these initiatives as a new growth engine.Lastly, active exchanges of information and cooperation between companies within and across the sectors are recommended. Korean SMEs need to pay more attention to multilateral voluntary initiatives (RE100, 24/7 CFE, SME Climate Hub, etc.) for decarbonization. Benchmarking the cases of Sweden and Japan, the government should increase the SMEs’access to participating in clean energy and energy efficiency projects in developing countries. -
A Study on the Korean Model Law of Digital Trade Agreement
The purpose of this research is to provide necessary information to prepare a basic model law for the digital trade agreement that Korea will conclude. And more, this study analyzes the “forms and contents” of several digital tr..
Hyunho Kwon et al. Date 2023.05.26
E-trade, Electronic commerceDownloadContentSummaryThe purpose of this research is to provide necessary information to prepare a basic model law for the digital trade agreement that Korea will conclude. And more, this study analyzes the “forms and contents” of several digital trade agreements concluded so far, and presents practical considerations that need to be reviewed from a legal and policy perspective when Korea has a chance to conclude digital trade agreements in the future.To this end, Chapter 2 presents specific grounds to establish the Korean digital trade agreement model at the formal or structural level. This is a formal and structural approach to consider for setting the model of digital trade agreements. To solve this problem, this study conducts a detailed review in two main aspects. First of all, the implications of the multilateral discussions on the digital trade agreement will be analyzed. Through this study, it is possible to examine the various forms or structures of digital trade agreements that appear in multilateral discussions themselves. On the other hand, what needs to be addressed in the process of forming a more realistic model is the formal aspect of digital trade agreements through bilateral, regional and plurilateral agreements or multilateral agreements. This approach will be the most realistic solution for Korea or most countries. In particular, there are various types for regulating digital trade through bilateral, regional and plurilateral agreements or multilateral agreements, such as those attached as part of FTAs or RTAs, and those concluded as independent trade agreements regardless of FTAs such as DEPA or KSDPA. Therefore, Chapter 2 presents various trade legal and policy implications, such as the meaning and characteristics of digital trade agreements concluded in different forms, and problems according to the legal perspectives of the agreement itself, which helps Korea set a model agreement.In addition, the core of Chapter 3 is the analysis of the content aspects of digital trade agreements. Here, the content aspect refers to the degree of liberalization consequently raised in the composition and content of the agreement provisions that Korea should consider when signing a digital trade agreement. In other words, this aspect is connected to the degree of liberalization of the object in the conclusion of digital trade agreement. Therefore, Chapter 3 analyzes the contents of existing digital trade agreements, examines the specific and acceptable contents and scope that should be included in digital trade agreements from Korea’s point of view, and presents the basis for determining whether it can be discussed at the level of liberalization. The research topics in Chapter 3 are basically analyzing the current situation in the digital trade and examining the results and limitations of digital trade agreements that have already been implemented in the international relations. In particular, Chapter 3 provides the meaning and limitations of the digital trade agreement model to be concluded in the future based on the analysis of the contents of digital trade agreements made at the previous bilateral and regional levels.As results of these studies, Chapter 4 of this research first evaluates existing digital trade agreements and proposes the direction of the model of digital trade agreements that Korea should maintain. In addition, as a result of this analysis, the characteristics of Korea’s digital trade agreement model are reviewed at the formal and content level, and the direction of the Korean digital trade agreement model is presented. Through this analysis, Chapter 4 classified the direction of the Korean model of digital trade agreements into the form of updating existing trade agreements, participating in open plurilateral agreements, and signing strategic digital partnership agreements, and analyzed their formal characteristics and implications for Korea. And as a result of this analysis, the model of the Korean digital trade agreement was presented by dividing it into a model based on traditional standards and a model based on the so-called ‘new standard.’Finally, Chapter 5 completes the entire research by reviewing the problems that may arise in the future for digital trade. To this end, Chapter 5 proposes factors to be considered in terms of the maintenance of the domestic legal system according to the previously proposed Korean digital trade agreement model. In addition, in connection with the definition or scope of digital trade, Chapter 5 examines the problems or characteristics raised in the process of discussing the expansion of digital trade agreements into digital partnership agreements and further into digital economic agreements. And finally, Chapter 5 briefly examines legal policy problems that may be raised from the perspective of digital transformation, that is, the future transition to an industry that can be digitized in the future.
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