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  • 미ㆍ중 갈등시대 중국의 통상전략 변화와 시사점
    China’s New Trade Strategy Amid U.S-China Confrontation

       This report analyzes changes in China’s trade strategy in response to US measures to check China’s influence at a time when strategic competition between the US and China intensifies, going on to draw implications f..

    Sang Baek Hyun et al. Date 2021.12.30

    trade policy, Chinese legal system China
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       This report analyzes changes in China’s trade strategy in response to US measures to check China’s influence at a time when strategic competition between the US and China intensifies, going on to draw implications for Korea. While there are a number of studies that have analyzed the recent US-China conflict from the perspective of the US movements against China, there are insufficient studies on how China responds to these movements on the part of the US and what kind of trade strategy it pursues. Therefore, this study examines changes in China’s trade strategy in response to the US measures against China in order to provide a balanced perspective on changes in Korea’s trade environment amid the US-China conflict.
       Chapter 2 analyzed the shift in the US’s perception of China and the Biden administration’s strategy for China. With the rise of the Chinese economy, the US’s perception of China has shifted from a “cooperation partner” to a “strategic competitor,” defined as a threat to US national and economic security. US measures to keep China in check have been in full swing since the former Trump administration, and the US Biden administration is further expanding its pressure front on China. Accordingly, we looked at the US measures against China from the perspective of high-tech sectors, supply chain stability, and new trade norms (digital trade, labor, environment).
       The Biden administration’s strategic stance toward China emphasizes the right to China’s unfair practices and a comprehensive and systematic approach to safeguard national and economic security. By utilizing various means such as entity list, export control, stronger foreign investment screening, and financial sanctions, it is countering China’s growth in advanced technology, which could threaten the national security of the United States. In addition, in the course of strategic competition with China, it is promoting the establishment of a stable supply chain in the United States by reviewing the supply chain for key industries related to national security such as semiconductors, batteries, core minerals, and pharmaceuticals in the United States. Unlike the former Trump administration, the Biden administration is emphasizing joint response and pressure with its allies. The Trade Technical Committee (TTC) was formed with the EU, and the Indo-Pacific Strategy, Quad, and AUKUS were used to build a pressure front against China. In terms of global trade norms, the US is taking the lead in digital trade rules to check China’s digital overseas expansion and lead the digital trade order in the Asia-Pacific region, while also putting pressure on China through worker-centered trade policies. What sets the US strategy apart from the previous ones is that: ① it emphasizes national security and economic security, ② takes a joint response with allies that share values and trust, and ③ leads the global trade order including new trade norms.
       The paradigm of China’s trade strategy is undergoing a major shift as the US’s efforts to check China’s rise have deepened. Chapters 3 to 5 examine changes in China’s trade strategy. China’s response strategy was analyzed in terms of economic security, alliance utilization, and norms, which are the main characteristics of the US trade strategy with China drawn in Chapter 2.
       Chapter 3 analyzes the linkage of China’s economic and security strategy, which is the most fundamental change in China’s trade strategy. China proposed a twin cycle strategy in the 14th Five-Year Plan, which is intended to minimize external risks by transforming the Chinese economic structure to enable independent circulation at home, as economic security is emphasized in order to respond to the US checks on China. Accordingly, China’s trade strategy is shifting from the existing global production base and export expansion focus to emphasizing supply chain stability and creating a huge domestic market. First, the Chinese government plans to promote technological independence, foster core industries, and secure strategic resources to stabilize the supply chain. To this end, China’s trade policy is promote localization and foster the competitiveness of China’s technology and core industries through the advancement of trade and investment. In addition, China plans to raise its status in the global market by nurturing the Chinese domestic consumption market in order to reduce its dependence on foreign countries in terms of demand. To this end, China is promoting import tax preferential policies, expanding service trade, and creating new business models for foreign trade through digitalization and smartization. In addition, by reducing the negative list in areas such as high-tech industries, digital industries, and service industries, which are necessary for the advancement of China’s economic industry, it is expanding the market opening by easing the barriers to entry for foreign investment. In addition, we looked at the establishment of a cooperative platform (FTZ, state-level events, etc.), as well as the revision of laws and systems to expand the attraction of foreign investment in China. China’s trade strategy is undergoing fundamental changes as it is pursued in connection with the economic and security strategy in response to the US measures to check its expansion.
       Chapter 4 analyzed the regional network establishment strategy pursued by the Chinese government in response to the US’s containment measures based on its alliances. China’s regional network strategy is being promoted through the establishment of an FTA network and Belt and Road cooperation projects. China’s FTA network establishment has been actively pursued with neighboring countries or developing countries, mainly for the purpose of revitalizing China’s trade and investment. However, the escalation of US-China conflicts has made geopolitical factors other than economic motives more important, and competition for leadership with the US in the Asia-Pacific region is intensifying. In addition to bilateral FTAs in the Asia-Pacific region, China is actively participating in regional FTAs such as the RCEP and CPTPP. In particular, China’s application to join the CPTPP can be interpreted as considering both the aspect of establishing a high-standard FTA and the geopolitical purpose at the same time. Accordingly, we analyze the current status of the Belt and Road Initiative, which is another important economic cooperation platform in building a regional network led by China, and the problems it faces, and changes after the US-China conflict. The existing One Belt, One Road initiative was promoted with the main purpose of revitalizing trade and investment between China and neighboring countries and linking infrastructure. However, due to internal and external obstacles such as countering measures by advanced countries (the Indo-Pacific strategy, B3W, Global Gateway, etc.), dissatisfaction on the part of partner countries (debt trap, environmental or labor issues), problems inherent in the BRI project (deteriorating profitability, increase in Chinese corporate debt), and the outbreak of the COVID-19 pandemic, the implementation of the BRI Initiative has been somewhat delayed. To overcome these US checking measures and other problems, China is emphasizing international norms compliance, transparency, and sustainability in the process of promoting BRI projects, and the scope of BRI cooperation is being expanded to digital, green, and health/medical fields. In addition, by utilizing these BRI projects, China plans to strengthen cooperation in global governance such as standards and norms. Lastly, the strategic value of ASEAN is expected to increase further as the competition for leadership in the Asia-Pacific region between the US and China intensifies. The recently promoted cooperation in network building between China and ASEAN was analyzed upon this backdrop.
       Chapter 5 analyzes the global trade governance-led strategy that China is pursuing. When China joins the CPTPP, the issues are reviewed by norm, and in particular, China’s response strategy related to the state-owned enterprise norms is analyzed. China’s response to each norm is likely to be different. China accelerates domestic reform in line with high global norms for matters that are consistent with the long-term development direction of national development, while delaying as much as possible on sensitive matters related to the national system, or it is expected that a strategy will be pursued that reflects the position. In order to participate in global governance, domestic laws and institutions must be improved. The current status of domestic legalization related to commerce, which China is currently promoting, is analyzed by dividing it into sectors such as economic and commerce, digital, and competition law. China is building a legal system similar to that of the United States in order to respond to the US enactment of legislation to keep China in check in the fields of economic, trade and competition law. In the digital field, the Chinese government’s reform of the legal system for cyber security and data security and the status of domestic regulations were reviewed. This is interpreted as a preliminary step towards establishing data sovereignty in China and promoting the digital market’s openness to the outside world and participation in global norms. Through this, it was evaluated and predicted whether it is possible to change the role from the recipient of the global trade norms to a participant or maker, whether it is possible to join the CPTPP with a high level of norms, and what the intentions of the Chinese government are.
       Based on the above analyses, the implications for Korea were derived as follows.
       ① First, the importance of economic security in the era of the US-China conflict and the necessity of establishing a trade strategy in consideration of economic security were emphasized. While preparing for the strengthening of economic and national security examinations in major global countries such as the US and China, policy implications for Korea’s export control system, foreign investment examination system, and supply chain stabilization policies were presented.
       ② The necessity of establishing a high-standard regional network strategy centered on Korea was emphasized in preparation for the competition for leadership in the Asia-Pacific region between the US and China in relation to the establishment of a regional network in Korea. Implications for Korea’s regional network expansion and active diversification strategy to ASEAN, India, Africa, Latin America, etc. were presented. In addition, we discussed how to utilize the Korea-China FTA and the Korea-China-Japan FTA as testbeds for global trade norms.
       ③ In the area of trade norms and legal systems, the necessity of reorganizing the domestic legal system in line with high global standards in preparation for competition in global trade norms was emphasized. This drew implications such as the need for active response to new trade agendas and norms such as climate change and digital trade, preparation for new trade norm issues such as the prevention of forced labor led by the Biden administration, strengthening US monitoring of China-related bills and preemptive response to ripple effects.
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  • 국제사회의 순환경제 확산과 한국의 과제
    Accelerating Transition towards a Circular Economy and Policy Implications for Korea

       The international community has been striving to achieve sustainable growth while efficiently using limited natural resources. In particular, major economies, including the EU, have recently pledged to achieve carbon ..

    Jin-Young Moon et al. Date 2021.12.30

    economic development, environmental policy
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       The international community has been striving to achieve sustainable growth while efficiently using limited natural resources. In particular, major economies, including the EU, have recently pledged to achieve carbon neutrality or net zero emissions one after another, and the ‘transition to a circular economy’ is being emphasized as one of the important policy measures to achieve this long-term goal. As the use of disposable items such as masks has increased due to the spread of COVID-19, concerns about how to deal with the increased waste are also growing. In this context, this study aims to analyze global efforts to promote the circular economy, main issues in waste management, cases of response in international cooperation, and review an empirical analysis of the effectiveness of certification system on the circular economy. Based on these results, it aims to provide policy implications for Korea.
       Chapter 2 examines the concept and importance of the circular economy, also analyzing the efforts of major countries and multilateral organizations to promote the transition to the circular economy. In this study, the circular economy is summarized as an economic system based on basic principles including minimum resource and energy input, maximum reduction of waste emission, and long-term use of products as much as possible. As the circular economy is expected to have a positive impact on the environment, economy and society as a whole, stronger efforts are being made by the international community to pursue it. The EU mandates producers to factor in circular economy principles from the product design stage and encourages consumers to purchase products with high resource efficiency. Japan has made efforts to lead global discussions on issues of its own interest, such as the 3R(Reduce, Reuse, Recycle) initiative. In the case of the UK, the private sector is taking a prominent role, and Korea has been announcing circular economy-related laws, policies, and implementation plans since 2020. At the multilateral level, the G7 and G20 suggest the policy direction of resource management policies for member countries and recommend that their progress be monitored. Multilateral organizations, such as the ISO Technical Committee (ISO/ TC323), are discussing the issue of international standardization related to circular economy, but response measures must be prepared against the possibility of some countries leading the working groups using this as a regulatory tool.
       Chapter 3 examines the current status of waste generation and treatment in selected countries and Korea, policy trends, and issues from the perspective of the circular economy. This is because waste management is one of the important steps that can decisively distinguish the linear economy from the circular economy. The recycling rate of municipal waste generated in the EU 28 countries improved from 25.2% in 2000 to 46.8% in 2018. In the United States, the waste recycling rate (excluding composting) slightly increased from 21.8% in 2000 to 23.6% in 2018. The amount of waste in Japan has decreased over the last 10 years, but the recycling rate steadily remains at 20%. China records continuously increasing amounts of waste and the country mainly depends on incineration to dispose of this waste. Korea’s waste increased from 400,000 tons/day in 2014 to 490,000 tons/ day in 2019, and its recycling rate was reported as 86.5% in 2019. The key issues of waste management in consideration of implementing a circular economy are as below. First, preventive measures to design and produce products to reduce the generation of waste, as well as promote the recycling of waste and conduct environmentally sound waste disposal, are becoming increasingly important. Second, with China’s 2017 ban on waste imports and the revision of the Basel Convention on Hazardous Waste, regulations on cross- border movement of plastic waste are being strengthened. Finally, in order to come up with an appropriate waste reduction and recycling policy and policy monitoring system, the reliability and availability of domestic and international statistics on waste generation, treatment and cross-border movement should be improved. 
       Chapter 4 analyzes international cooperation cases to establish a circular economy and related issues, focusing on support and cooperation for developing countries, the link between circular economy policies and international trade, and cases of private-led circular economy cooperation. First, in the case of support for developing countries, the waste sector occupies a large proportion in ODA, but the EU and UN are promoting support projects for developing countries through more diverse channels and methods. In particular, the EU is promoting various international cooperation projects such as Switch to Green and partnerships with Africa as part of the New Circular Economy Action Plan. Second, this study reviewed the Extended Producer Responsibility (EPR) system, green government procurement, labeling and standards as examples of major issues in terms of the relevance of circular economy policies to international trade. Basically, the key issue that penetrates each field is whether the introduction and implementation of each system imposes mutually discriminatory conditions on domestic and foreign companies. Lastly, cases of private sector-led international cooperation are generally promoted for the purpose of encouraging companies to voluntarily transition to a circular economy, developing circular economy labeling through business associations, or conveying corporate opinions on government policies. However, in reality, most cases of international cooperation at the private level are also promoted in the form of cooperative projects with international organizations, national governments, and non-rofit organizations. 
       Chapter 5 defines the circular economy as a policy agenda to boost reuse and recycling in consumption and production of goods in the economy. To promote the circular economy, the government may adopt the circular economy labeling system, which is an information-based environmental policy. The circular economy labeling system provides consumers with information on whether a product meets the circular economy standard. The labeling system aims to advertise and verify the information. In other words, the labeling system is considered a policy tool to solve any market failure caused by asymmetric information between consumers and producers about the quality of the product. We set up a simple mechanism design model to show how the labeling system can resolve the asymmetric information problem. In addition, we summarize the previous literature that mostly used hedonic price models to empirically examine the efficacy of the labeling system.
       In Chapter 6, policy implications are derived for the Korean government and the private sector to prepare for the spread of the circular economy. 
       First, it is necessary to go beyond existing waste management-focused policies and fully consider the entire life cycle of a product. In particular, more efforts must be made at the production and consumption stages with the goal of reducing the use of resources and minimizing the generation of waste itself. In the production stage, from the design process, it must be made more difficult to generate waste and more considerations made toward putting the used materials or parts into production later. At the consumption stage, there is a need to encourage consumers to purchase recyclable products, use them for a long time, and dispose of waste in a sustainable way. This requires providing consumers with sufficient information about the product and guaranteeing the ‘right to repair’ so that the products can be used as long as possible. Effort must be made to also promote the use of platforms such as mobile applications related to the sharing economy where consumers can share or rent products they do not need. Above all, it should be kept in mind that the transition to a circular economy is a mid- to long-term goal. Educational opportunities should be continuously provided from an early age so that people can realize the necessity of a circular economy and learn how to practice this in their daily life.
       Second, it is necessary to take a leading role in discussions of the circular economy related to international trade, focusing on the international standard for circular economy. Since various circular economy policies can affect international trade, it is necessary to fully consider these factors in the design and operation of circular economy-related policies. In particular, standards are closely related to various environmental policies, such as the labeling system and the green government procurement system. In addition, each country is focusing on the development of domestic circular economy standards, and it is highly likely that these standards will act as technical trade barriers in the future. Therefore, through multilateral channels such as IOS/TC323, it is necessary to identify trends in international standards-related discussions and actively develop international standards proposals. In addition, it is necessary to adjust the domestic standard system in line with these international standards and actively utilize the framework of bilateral or regional cooperation such as FTAs.
       Third, Korea needs to incorporate concrete international cooperation measures in its response to the circular economy, instead of focusing on domestic measures. Cooperation with the European Union, which is leading global responses, could serve as a good benchmark for Korea to establish bilateral and multilateral cooperation. Multilateral agreements and initiatives proposed by the European Union could be developed into global standards, such as the Global Agreement on Plastic Pollution and the Global Alliance on Circular Economy and Resource Efficiency. Korea also could develop further cooperation with developing countries based on the examples of the European Union and consider expanding cooperation with ASEAN member states and South Asian countries. Cooperation with Asian countries could enhance the competitiveness of companies and capabilities to tackle the circular economy for both Korea and Asian countries as well.
       Fourth, the government should prepare various measures to support the private sector to take the leading role in transition to a circular economy and strengthen its competitiveness in the global market. It is necessary to expand R&D infrastructure and financial support for basic research, demonstration, and commercialization of materials using resource-efficient or recycled materials. In addition, the government can also catalyze development of technologies to improve the production process or reduce the use of resources that can have a negative impact on the environment. For small and medium-sized enterprises (SMEs) with limited resources to implement transition to a circular economy, financial, technical and capacity-building support are needed. In the case of current green public procurement, criteria for mandatory purchase could be expanded to include products certified for using circular resources and to promote reuse of purchased products and product sharing system. In addition, since circular economy policies and regulations can make a significant cross-border impact on international trade and business activities, it is necessary to proactively monitor policy changes and trends in major trade partners and provide timely assistance for the private sector.
       Finally, design, implementation and monitoring of circular economy-related policies should be based on reliable, accurate and comprehensive data and statistics. Considering the different data standards and statistical system among OECD members, selected major economies and Korea, the harmonization of standards and criteria of data collection, such as waste treatment methods and recycling rate calculation, could be the first step to come up with effective measures to improve circular resource management. Therefore, domestic and international efforts are required to discuss internationally agreed statistical standards that can measure overall resource efficiency as well as waste generation and treatment. For this to happen, Korea needs a more sophisticated statistical system to capture and measure resource use and efficiency and material flows in each industry sector and the economy as a whole. Furthermore, it is necessary to develop indicators that can objectively evaluate various aspects of the circular economy and precisely monitor the performance of relevant policies.
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  • 아프리카 보건의료 분야 특성 분석 및 한국의 개발협력 방안
    Analysis of the Healthcare Sector in Africa and its Policy Implication for Korea

    One of the main changes in Korea’s foreign affairs in recent years is the expansion of Official Development Assistance (ODA), especially in Africa, which is rapidly expanding. Korea’s ODA to Africa in 2010 was 15% of its total O..

    Young Ho Park et al. Date 2021.12.30

    economic development, economic cooperation
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    One of the main changes in Korea’s foreign affairs in recent years is the expansion of Official Development Assistance (ODA), especially in Africa, which is rapidly expanding. Korea’s ODA to Africa in 2010 was 15% of its total ODA, and it rose to 25% in 2019 as Korea emphasized its role in international development. As Korea’s expansion of ODA and solidarity in international development aid to respond to COVID-19 are related, the expansion of ODA in the African healthcare sector is anticipated to continue. This study analyzed features of the healthcare sector in Africa in an effort to suggest various plans for development cooperation that are based on an evaluation of Korea’s ODA project design to enable the effective provision of ODA.
    The contents of the paper are as follows. Chapter 2 examines the five major diseases in Africa and various features of the healthcare sector, such as infrastructure, administrative systems, governance, and policies. The five main diseases in Africa that cause death or burden of disease are neonatal diseases, HIV/AIDS, lower respiratory tract infections, diarrhea diseases, and malaria, and similar results were found in Korea’s five priority partner countries: Ethiopia, Ghana, Senegal, Uganda, and Tanzania. In these five countries, heavy funding from the international community has caused rapid declines in infection rates of, for example, HIV/AIDS and malaria, whereas neonatal conditions and cardiovascular diseases, which have not received similar levels of funding, have exhibited either slow declines or increases. In the case of neonatal conditions, it is essential to have healthcare personnel who can manage births and newborns, but deaths and the burden of disease from neonatal conditions are high due to a lack of healthcare workers. In the case of cardiovascular diseases, deaths and the burden of disease have increased in Africa due to increased vascular diseases, such as high blood pressure and diabetes, as well as overweight and obesity rates. In Africa, most patients suffering from cardiovascular diseases go undiagnosed due to underdeveloped healthcare services, accessibility, and technology, and few diagnosed patients are treated and managed.
    There is evidence that the administrative systems in Africa’s healthcare sector in general and in Korea’s five priority partner countries in particular are in a very poor situation. There are poor infection control practices, availability of medical equipment, communication with medical workers in the event of a public health crisis, and health capabilities in primary healthcare hospitals and communities. In addition, the five countries have either no quarantine system or a poor one. For example, they struggle to meet quarantine obligations, perform regular quarantining, and maintain a system related to quarantine detection and response.
    Yet healthcare governance of Africa’s compliance with international healthcare norms is at a level similar to the world average. Many countries in Africa, including the five priority partner countries, have national healthcare plans, high compliance with International Health Regulations (IHR), and high financial support against health emergencies. In addition, laboratory diagnostic systems and governance related to public health preparation planning and implementation have shown rapid growth.
    The healthcare-related Sustainable Development Goals (SDGs) include comprehensive healthcare improvement measures to achieve reductions in infectious diseases, health improvement, and welfare promotion, such as a reduction in child and maternal mortality; eradication of infectious diseases, such as HIV/AIDS and malaria; reduction in early death due to non-infectious diseases; reduction in health-threatening external factors, such as drug abuse, traffic accidents, and pollution; and adherence to policies of the World Health Organization (WHO) regarding infectious diseases, such as HIV/AIDS, viral hepatitis, and sexually transmitted diseases. Similar to the SDGs, Africa’s Agenda 2063 health strategy includes comprehensive healthcare improvement measures, such as reducing child and maternal mortality, reducing infectious and non-infectious diseases, and improving healthcare systems. The healthcare strategies of the five priority partner countries include specific plans to provide quality healthcare services and increase access to these services. While the health strategies of U.S. and global funds, major donor countries, and donor organizations have centered on prevention, detection, and infectious disease response, the United Kingdom’s health strategy has focused on improving public health and responding to global health threats.
    Chapter 3 examines Korea’s African healthcare strategy and the current status of support for the health sector, and on the basis of this, conducts a comprehensive evaluation of ODA provided to the health sector in Africa from an ODA project design perspective. Korea has gradually increased the scale of its aid to Africa by establishing a strategic plan for international development cooperation as the highest level of its ODA strategy. Along with expanding the scale of aid, the Millennium Development Goals (MDGs) have undergone changes over the past decade as more diversified and diverse partnership strategies for African cooperation have been proposed. As demand for healthcare cooperation increased due to COVID-19, Korean International Cooperation Agency (KOICA) introduced the ABC Program to strengthen its ability to prevent and manage infectious diseases and improve quarantine capabilities in developing countries as well as the immediate response to COVID-19. The Export-Import Bank of Korea also prepared healthcare infrastructure support strategies, such as disease management system support, hospital construction, and supply of medical equipment through the Post-Corona EDCF Strategy, and introduced an emergency loan system that can operate at low interest rates.
    Korea has provided a total of $670 million to the African healthcare sector over the past decade, reflecting approximately a fourfold increase from $12 million in 2011 to $47 million in 2019. The main areas of support have been different for each partner country, with western coastal countries Ghana and Senegal focusing on drinking water hygiene and eastern countries Ethiopia, Uganda, and Tanzania focusing on general health. When divided into OECD Creditor Reporting System (CRS) target codes, in the case of general health and basic health projects undertaken by Korea, the number of cases of cooperation with public institutions in recipient countries is higher than in other countries, such as the United States, the United Kingdom, and Switzerland. In particular, in the case of general health, cooperation with public institutions is overwhelmingly high at 94.1% of projects. Conversely, in the case of Switzerland, the proportion of cooperation with education and research institutes is 58.8%, indicating a strategic focus on health research. In the case of maternal and child health and population policy projects, the proportion of cooperation through non-governmental organizations (NGOs) and multi-purpose organizations is relatively high, but there has been little cooperation with research institutes or private institutions. Nevertheless, about half of the projects have been carried out through public institutions. In the case of the United States, which has invested $43 billion in African aid for healthcare, evidence indicates that it is carrying out projects through various channels, such as NGOs, private organizations, and research institutes.
    Recently, as COVID-19 has amplified the importance of countries’ health and hygiene and ability to respond to health emergencies, the demand for aid in the healthcare sector and the scale of support are increasing accordingly. The necessity of establishing a comprehensive healthcare system under the operation of a simple project unit has also increased significantly. To cope with such changes in the internal and external environments, there is a need to evaluate the project experience and Korea’s present development cooperation plan to determine if they reflect the changing characteristics of Africa’s healthcare sector. Project design is foundational work that can minimize variables that may occur in the operation stage of a project. At the same time, it is an important factor that can give signals to increase the effectiveness of development assistance through business linkage between the recipient country and other donor institutions.
    Considering the accessibility and disclosure of data, the evaluation target was limited to KOICA’s projects from 2011 to 2019 in the five priority partner countries including healthcare under Country Partnership Strategy (CPS). The evaluation criteria comply with the OECD DAC’s evaluation criteria, but the evaluation items were adjusted to reflect the areas that the researchers regarded as outliers for effective project design. In addition, healthcare includes multi-layered factors, such as finance, infrastructure, manpower, and system, and since these factors interact differently depending on the nature of the project, similar projects were clustered to understand the characteristics of each cluster. The evaluation revealed that the appropriateness of indicators for African countries’ government policies or strategies of project implementation agencies were considered carefully in the project design stage across all clusters, while efficiency, effectiveness, influence, and sustainability aspects were different for each cluster. In particular, cooperative project clusters conducted jointly with international organizations received higher scores in general on all items than those conducted directly by KOICA. Especially in the case of efficiency, they were intended to increase the effectiveness of the project through a project utility analysis conducted in advance. Population policies and reproductive health clusters directly implemented by KOICA achieved low scores in terms of efficiency, effectiveness, influence, and sustainability, indicating that risk management, administrative regulation, and consistent project design procedures should be considered in the future. However, the analysis indicated that KOICA has already agreed about the need for standardization and that efforts are being made to systematize project design, and the risks arising from the planning stage are expected to improve in the future.
    There may be a gap between development demand and supply, and Chapter 4 presents an analysis of the demand for development cooperation in the African healthcare sector. This chapter outlines the demand analysis for development cooperation in the healthcare sector in Africa entailing decision tree analysis and text mining techniques. The results of the decision tree analysis are summarized as follows. This analysis was intended to identify the health needs of each type of African country. First, the most important indicators that can be used in carrying out ODA projects in the health sector are infant and maternal mortality indicators. These indicators are the variables that have the greatest influence on life expectancy prediction and directly affect national competitiveness and GDP per capita. Second, in the five priority partner countries, life expectancy is approximately 64 years old, but if the infant mortality rate is reduced to 28 per 1,000 people, life expectancy is estimated to increase by about nine years. To lower the infant mortality rate, various health ODA projects are needed in the five priority partner countries. Third, when African countries were classified by the decision tree analysis, the group with the lowest life expectancy was only 54 years old. These groups are characterized by countries with higher infant deaths than 56.5 per thousand and higher maternal deaths than 723 (per 100,000 population). There is a need to pay more attention to healthcare projects to reduce infant and maternal deaths.
    The subsequent text mining analysis was intended to identify the health ODA demand for each detailed area. In the future, African health demand is expected to have the following characteristics. First, the demand to reduce infant and child deaths and maternal deaths will persist. The need to reduce infant and child mortality is also related to the pregnancy process of mothers. This continues to be a problem in Africa, suggesting that health ODA projects that can solve this problem should increase. Second, there will continue to be a demand for preventive measures against HIV infection. Since more than half of the world’s HIV/AIDS patients are in Africa, there is a need for ODA health projects to prevent HIV infection. Third, there will be a rising demand for water at the group (village, school, etc.) level. The demand for water has been greatly influenced by insufficient water and sewage facilities in Africa and environments in which clean drinking water is difficult to obtain, and the international community is also providing steady support for drinking water hygiene. Fourth, policies, such as case management, are also needed for infectious diseases, such as malaria and tuberculosis. Fifth, there will be a growing demand for nurses, which mainly emphasizes the need for nursing education at local hospitals. This is a problem of strengthening the capacity of nursing personnel, especially at local hospitals. Sixth, there will be an issue of training facilities and manpower at the community level. Seventh, is there is a demand related to governance in the healthcare sector. It can be said that it is related to budgetary problems and governance related to healthcare. These can be said to be problems that can improve efficiency in the process of delivering health services.
    Among the above seven demands, infants, three major diseases (HIV/AIDS, tuberculosis, and malaria), and drinking water hygiene have already, for many years, received considerable investments and are of great interest to African countries and the international community. However, the areas of supplying formal health education, facility improvement, and healthcare workers’ training at the community level and healthcare governance were recognized as relatively less important than the demand side.
    In Chapter 5, the contents analyzed in Chapters 2, 3, and 4 are comprehensively summarized to derive implications and develop a strategic promotion plan for Korea’s African healthcare ODA. Although the healthcare environment has improved in the five priority partner countries, there is still a high burden of disease, especially due to the prolonged COVID-19 crisis. Consequently, the demand for improvement in the healthcare and communication systems has increased significantly. The U.S. Development Assistance Agency (USAID) and the Australian Development Assistance Agency (AusAID) have identified healthcare governance as a risk factor that may occur in partner countries, and they continue to monitor the healthcare communication system in terms of risk management plans. However, Korea mainly provides support for basic health and maternal reproductive health. Accordingly, it is necessary to respond to the demand for local healthcare governance as well as the existing fields supported by Korea. There is also a lot of room for improvement in universal health coverage and access to emergency medical facilities.
    Meanwhile, African countries have consistently spoken out since the 1974 Bucharest Conference, and the African Union specified strategies for improving healthcare through partnerships with various stakeholders to combat three major diseases—namely, malaria, HIV/AIDS, and tuberculosis—in the 2006 Abuja Declaration. In addition, the importance of joint cooperation has recently been emphasized in areas other than these three major diseases and maternal reproductive health, such as eradication of infectious diseases and universal health coverage. Further, the African Union values linking the SDGs to healthcare goals and aims to achieve major goals, such as the Maputo Action Plan; the African AIDS, Tuberculosis and Malaria End Promotion Framework; and African Health Strategies by 2030.
    The international community emphasizes access to universal healthcare services, strengthening efficiency in delivering healthcare services, and protecting Africans from public health crises, and goals such as the Triple Billion targets have been established accordingly. It also emphasizes targeting, life-cycle approaches, and approaches tailored to individual characteristics to prevent the segmentation of diseases. As a result, demand for cooperation in major healthcare areas by life cycle is increasing, without neglecting the importance of the three major diseases, and cooperation in other important areas, such as nutrition and health services, infectious and non-infectious diseases, and social services for the elderly, is expected to increase. In particular, Korea’s donation strategy centered on the three major infectious diseases and maternal reproductive health is also expected to require a slight shift, as the burden of diseases and deaths from adult diseases and traffic accidents are gradually increasing in some countries, including Ghana.
    Through the 3rd Comprehensive Plan for International Development Cooperation, Korea strengthened strategies, for example, for expanding the size of ODA in the healthcare sector, expanding public–private cooperation, responding to infectious diseases, establishing healthcare systems, and establishing basic hygiene infrastructure. However, to implement more integrated and unsegmented aid, the importance of presenting customized goals along with program access in the healthcare field is also emerging. For example, KOICA is planning a healthcare project focused on intervention in three major areas necessary to lower the maternal mortality rate using Thaddeus and Maine’s (1994) three delays model of maternal mortality. This approach is expected to be necessary not only for maternal deaths but also for areas such as basic health, general health, drinking water hygiene, infectious diseases, and infant deaths. In particular, efforts should be made for the international community and Korea to achieve common goals through healthcare donation projects. For example, USAID is carrying out aid projects by establishing programs focused on activities that allow for meeting mid- to long-term goals in the healthcare sector that will facilitate meeting the core goals. To improve project effectiveness, Korea will also need to approach this on a program basis, but it will be necessary to establish a project design focused on activities aimed at achieving key goals in the healthcare sector.
    Meanwhile, for Korea to improve the effectiveness of its aid projects in the healthcare sector, it must accumulate more information on the local area. In particular, to identify the beneficiaries of the project, on-site surveys should be conducted in more depth, but in situations where there are physical constraints, such as the survey period and budget, these are clear limitations to grasping the demands of beneficiaries. Accordingly, alternative data, for instance, from identifying local demand, can be collected through communication with officials of the partner countries. To overcome the aforementioned limitations, it is necessary to utilize not only field experts but also local experts in the pre- or project design surveys and grasp the healthcare status of the project target site through the results of the population and health survey.
    Korea will be able to cooperate with its priority partner countries to improve Africa’s healthcare delivery system. For example, Korea has a comprehensive crisis management system for the outbreak of infectious diseases, and a healthcare communication system using digital devices is well established. However, the partner countries have had communications difficulties in responding to COVID-19 despite the digitalization. Therefore, there will be a continuous demand for cooperation in establishing a healthcare delivery system in cooperation with Korea. In addition, it is necessary to strengthen the capabilities of public health centers to strengthen basic medical capabilities. Tier 2 and tier 3 hospitals in the five priority partner countries are mainly concentrated in cities, and accordingly, local residents living in rural areas must seek healthcare services from local health centers. With this in mind, it will be necessary to expand cooperation to strengthen the capacity of community health workers in public health centers. Meanwhile, information and communications technology (ICT)-based pharmaceutical supply chain management will be a promising field for cooperation as ICT can enable real-time management of medical and pharmaceutical products, such as health centers, and prevent delays in treatment due to lack of medicines.
    With the COVID-19 pandemic, global demand for Korea’s infectious disease diagnosis, tracking, and monitoring system has increased rapidly, and African countries are no exception. There is an increasing need for cooperation in the formation of infectious disease diagnosis and tracking systems in the five priority partner countries, for instances, to strengthen the capabilities of infectious disease screening centers, build digital platforms, and enhance human resource capabilities. In particular, Korea is developing or testing mobile diagnostic equipment for tropical diseases centered on startup companies, and the establishment of a mobile diagnostic system is expected to be of great help in improving the disease diagnosis rate, especially for African rural residents.
    To expand cooperation in the healthcare sector, efforts to link the cooperation sector are also needed. Public health insurance systems have not been established in the five partner countries because they require considerable national funds. However, if there is no public health insurance system, medical service costs are high, and the ratio of self-pay increases, making it highly likely that residents will deplete their financial resources to receive medical services or have very low access to healthcare services. Therefore, it seems necessary to expand cooperation to support the medical insurance system to which local residents can voluntarily subscribe, such as community-based health insurance. In addition, it is necessary to expand public–private cooperation projects in the construction of hospitals. For example, Lesotho’s project to build Queen Elizabeth II Hospital raised project funds by attracting private capital and guaranteed private profits while allowing patients to receive treatment at appropriate costs. There are various methods for undertaking public–private cooperation projects, but it is necessary to respond to healthcare demands, such as hospital construction, by attracting private capital according to the circumstances of each country.
    In addition, efforts to enhance synergy effects through a convergent approach are needed. Convergent approaches include links between projects or clusters (general health, basic health, population and reproductive health policy, drinking water and hygiene), links between grant and concessional loan aid, and links between sectors. One example is the linkage between the Export-Import Bank of Korea’s water and sewage infrastructure construction project and KOICA’s water-related education project. Another key cooperation area is the regional development project. This is a program approach in which multiple organizations participate in healthcare ODA projects, and for efficient implementation, an integrated approach is needed, such as establishing a common performance management system from the initial stage of the project (project formation, project discovery, project planning).
    Finally, multi-bilateral (multi-bi) aid projects are necessary. The proportion of multi-bi aid in African healthcare ODA exceeds 30%, which can be seen as a result of the aid strategy that takes into account the regional characteristics of Africa and Korea’s aid capabilities. Considering the restrictions on physical accessibility caused by the COVID-19 pandemic, it is expected that the multi-bi aid method will inevitably increase further. For existing bilateral aid projects that are highly workable but face many difficulties in their execution, it is necessary to reorganize them in the form of multi-bi aid with international organizations or to cooperate with only some projects.
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  • 한국의 지역별 개발협력 추진전략: 아시아 지역 ODA 지원 방안
    Korea’s Regional Cooperation and ODA Policy in Asia: Performance and Challenges

    The Asian region has drawn great attention as an emerging market with relatively stable growth since the 1990s. The COVID-19 pandemic crisis, however, has revealed its structural vulnerability, intensifying socio-economic inequali..

    Kwon Yul et al. Date 2021.12.30

    economic development, economic cooperation
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    The Asian region has drawn great attention as an emerging market with relatively stable growth since the 1990s. The COVID-19 pandemic crisis, however, has revealed its structural vulnerability, intensifying socio-economic inequality in the region. Economic activities have shrunk due to the lockdown measures, resulting in stagnation and widening the income gap. Uncertainties have also increased in the environment for development cooperation in the region, which calls for a new approach for effective implementation of official development assistance (ODA).
    This study aims at deriving Korea’s mid-term ODA strategies towards the Asian region by analyzing changes in the development context and conditions for cooperation in the region since the pandemic, as well as progress in the Sustainable Development Goals (SDGs) and the development gap. As economic interdependencies with Asian countries have intensified, Korea’s ODA has given the highest priority to the region: fifty to sixty percent of its ODA has been directed to Asia and sixteen out of twenty-four priority partner countries are in the region. The Korean government has also pursued diplomatic diversification focused on strengthening partnerships with Asian emerging markets, particularly under the New Southern and Northern Policy. 
    Establishing an effective ODA strategy in the post-COVID-19 era requires not only country-specific assistance plans but also a regional approach which incorporates the diverse development needs, so as to improve policy coherence as well as development effectiveness. As the demands from developing countries willing to share Korea’s experiences and know-how in response to COVID-19 have increased, the role of Korea’s ODA has gained its importance particularly in the health sector. The uncertainties further increased by the recent spread of the omicron variant, however, make more difficult the implementation of ODA projects in addition to normal economic activities.
    While the Korean government continues to support the Asian region as a priority, the overall strategy lacks integrated regional approach as Korea’s ODA has been based on individual country strategies—Country Partnership Strategies (CPS). In this context, the study suggests ODA strategies which reflect the regional characteristics and specific ways for strengthening the strategic alignment between ODA and the government agenda based on the Third Mid-term Strategy for Development Cooperation (2021–25) and major foreign policies. In addition to health crises, it also considers the needs for responding to various challenges caused by climate change, natural disasters, and migration from a regional perspective.
    As Chapter Two demonstrates, COVID-19 has increased socio-economic uncertainties in the Asian region in diverse ways. Economic growth has been slow due to the lockdowns and restricted economic activities. With the prolonged stagnation, poverty and food insecurity have increased, and educational outcomes and multifaceted inequality have deteriorated. International support has been limited with the implementation environment worsening, which has also had negative impacts on progress towards the SDGs in areas such as poverty reduction, food security, education, health, gender, environment, etc. To mitigate the negative impacts of COVID-19 and support the SDG implementation in Asian developing countries, development assistance must be allocated into relevant sectors by country, taking into account the differences in development needs and factors that hinder progress of the SDGs.
    Chapter Three presents the target size of Korea’s ODA to Asia along with the financial requirements and four possible paths to achieve such a target. To achieve the 0.2% of GNI goal by 2030, it is estimated that a total of 20.6 billion USD is required for the next ten years. This normative target amount calls for a detailed review of practical resource allocation plans, as well as greater efforts to mobilize such resources for responding to the development needs caused by COVID-19 and supporting SDG implementation.
    Chapter Four reviews Korea’s ODA to Asia in terms of its strategies and performances, finding that Korea’s ODA structure makes it difficult to implement integrative ODA programs in response to region-wide development challenges or in collaboration with regional bodies, since the focus of Korea’s ODA strategy has been on the individual countries. Although Korea has made efforts to promote government-wide strategic programs under the New Southern and Northern Policy, the current “bottom-up” approach, in which each ministry or agency initiates and implements its own ODA projects individually, impedes establishing integrated strategies and systematic and efficient delivery. To plan and design top-down strategic programs which reflect Korea’s policy priorities, as well as the regional development challenges, are essential in establishing a regional ODA strategy towards Asia.
    Based on the findings in the earlier chapters, Chapter Five identifies the characteristics for a regional development cooperation strategy by conducting a comparative analysis of the regional assistance strategies of major bilateral and multilateral donors and detailed reviews of “top-down” strategic programs, and finally suggests policy directions for Korea’s regional ODA strategy towards Asia, as follows.
    First, the worldwide crisis caused by COVID-19 has revealed that the development challenges which the Asian region is facing cannot be solved by individual countries but by regional or sub-regional efforts, which will require stronger foundations for integrated cooperation with regional communities. Strengthening inclusive partnerships would be a key to mitigate the development gap in the region, by supporting regional programs such as the ASEAN Connectivity, ASEAN Smart City Network, and Mekong Subregion development projects.
    In response to the pandemic and health security crisis, Korea needs to extend its assistance not only to individual counties but also for region-wide programs. The establishment of the ASEAN Center for Disease Control, contribution to the Asia Pacific Vaccine Access Facility (APVAX), and increase in support to multilateral organizations and international initiatives can be good examples.
    Lastly, new ODA modalities involving private capital in the form of public-private partnership (PPP) are required to support green and digital sectors as well as infrastructure development in the Asian emerging countries, by designing large flagship projects and encouraging participation of the private sector. Establishing strategic programs and active policy dialogues with development partners will improve the effectiveness and efficiency of Korea’s ODA. Government-wide efforts are also called for to diversify development finance through PPP, to strengthen the coordination of ODA projects with the private sector to maximize synergies, and to increase collaboration with multilateral development banks.

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  • 제조업 서비스화의 수출경쟁력 제고 효과 연구
    The Export Effect of Servitization in Manufacturing

    This study examines the status and characteristics of Korea’s servitization of manufacturing and its impact on corporate performance and exports. In particular, we focus on the phenomenon that manufacturing companies produce more..

    Hyunsoo Kim et al. Date 2021.12.30

    trade policy, industrial policy
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    This study examines the status and characteristics of Korea’s servitization of manufacturing and its impact on corporate performance and exports. In particular, we focus on the phenomenon that manufacturing companies produce more services as final goods and provide them to the market with products. The main results derived from this study are summarized as follows.
    First, the proportion of service sales in the total sales of manufacturing companies increased significantly, albeit gradually between 2012 and 2019. Service sales, which stood at 4.5% of the total sales of manufacturing companies in 2012, surged to 15.9% in 2017, and then decreased to 6.9% in 2019. Also when the rate of servitization, which is the proportion of service sales out of total sales for each individual company, was calculated and examined by distribution, it was found that the distribution of the servitization rate increased at the most positive level in 2019 compared to 2012. However, it was found that many manufacturing companies had no service-related sales at all. Manufacturing companies with less than 50 employees are not included in the survey object of the “Survey of Business Activities”, which is the key database of this study. Since small businesses with less than 50 employees showed a high servitization rate according to the previous studies, the distribution of the servitization rate may actually be more skewed toward zero than in reality.
    We checked how servitization has progressed by industry by calculating the proportion of companies selling services. In general, the trend toward servitization in labor-intensive manufacturing such as food and beverage manufacturing, textile and clothing manufacturing, and wood/printing industry has decreased, while the trend toward servitization in capital- intensive manufacturing such as petrochemicals, electricity/ electronics and machinery manufacturing is higher in 2019 than in 2012. The transportation industry, including automobile, ship, railroad, aircraft and its parts industries, did not change significantly during the analysis period, and in particular, the distribution of servitization was found to be significantly lower than that of other industries.
    Second, distribution service is the most major service business for manufacturing companies. Sales in distribution service by manufacturing companies accounted for about 74% of total service sales in 2012 and about 60% in 2019. This is interpreted as a movement by manufacturing companies to strengthen interaction with customers through expansion into distribution businesses such as the introduction and expansion of e-commerce or establishment of offline directly managed stores under a situation where product competition in the market is intensifying. In addition, professional and engineering service and R&D service, which manufacturing companies did not participate in much during 2012-14, are emerging as major businesses from 2015-16. However, this increase was found to be driven by specific industries, such as the manufacturing of electronic components, computers, images, audio, and communication equipment, and the manufacturing of chemicals and chemical products. It seems that it is due to the increase in the number of R&D activities of manufacturing companies becoming more active, and the provision of patents obtained through such activities to domestic and foreign companies.
    Third, comparing Korea's status of servitization in manufacturing with major countries such as the US, Germany, Japan, and France, the proportion of companies generating service sales among the total manufacturing companies was somewhat lower than that of the US and Germany, but similar to that of Japan and France. Compared to major countries, companies generating service sales were concentrated in some industries such as computer, electronic, optical product manufacturing and mechanical equipment manufacturing. Also, it was found that most of the sales of service subsidiaries of Korean manufacturing companies were concentrated in the wholesale and retail industry. This is a characteristic of Korean manufacturing companies compared to companies in major countries such as the United States and Germany, which earned significant amount of sales from service subsidiaries not only in the wholesale and retail business, but also in ICT, financial service, and R&D service.
    Fourth, we analyzed the effect of servitization, which is measured by service sales of manufacturing companies, on performance indicators such as profit rate, sales, and employment. We showed that servitization in manufacturing in Korea has a positive effect on both the profit rate and productivity of the company. It can be interpreted that in the recent trend toward servitization of manufacturing in Korea, the effect of increasing the productivity and profit rate of companies through servitization was stronger than the effect of intensifying market competition and lowering the profit rate due to servitization. On the other hand, when the long-term trend was controlled, causality between index related to the size of a company, such as employment or sales and servitization was not found.
    Fifth, we examined the export effect of servitization in manufacturing by comparing companies which export both products and services with companies which export products only. It was found that service exports of manufacturing companies have a positive effect on overall exports. The export effect of servitization by industry is somewhat heterogeneous. In machinery and other manufacturing and computer, electronics, optics manufacturing, it was found that service exports significantly increase overall exports, whereas in automobile and transport equipment manufacturing, the coefficient estimate has a positive sign, but is not statistically significant. Compared to other industries, there were fewer companies in the automobile and transportation equipment manufacturing industry that show a high level of servitization. A small proportion of service sales to total sales means that the proportion of service exports is likely to be small, and it is likely that the export effect of servitization may not be evident due to relatively small service exports.
    Lastly, we provide policy implications in Chapter 5 based on the findings above, such as △ designing manufacturing-service industry linkage activation policies by the level of servitization △ supporting development of business models from servitization and △ improving statistics in consideration of servitization.
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  • 인도의 통상정책 분석과 한-인도 협력 방안
    Analysis on India’s Trade Policy and Its Implications for Korea-India Cooperation

    Economic exchanges between Korea and India have been expanding since the signing of the Korea-India CEPA, which took effect in 2010, and the recent promotion of the New Southern Policy (NSP) by Korea, but the level of exchange sti..

    Jeong Gon Kim et al. Date 2021.12.30

    trade policy, foreign direct investment India and South Asia
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    Economic exchanges between Korea and India have been expanding since the signing of the Korea-India CEPA, which took effect in 2010, and the recent promotion of the New Southern Policy (NSP) by Korea, but the level of exchange still remains insufficient considering the potential of the two countries. This study aims to contribute to deepening Korea-India trade cooperation by analyzing India’s trade policy and trade investment relations. Taken overall, Chapter 2 analyzes the trends of commodity & service trade and characteristics of investment policies, centering around India’s economic liberalization since the 1990s. Chapters 3 and 4 examine India’s recent trade and investment structure with major countries including Korea, and Chapter 5 analyzes India’s status on the global production networks. In conclusion, Chapter 6 presents various implications for Korea-India trade cooperation.
    Looking at Chapter 2 in more detail, India has achieved great results in lowering tariff rates and easing investment barriers by promoting full-fledged liberalization policies since 1991. In particular, investment barriers have been significantly lowered and automatic approval is now being implemented in most areas, reflecting the remarkable improvements made in the investment environment since the inauguration of the Modi government. But at the same time, India has continued to actively utilize non-tariff barriers such as anti-dumping measures, and has been showing a trend of raising tariff barriers since 2018 with the aim of establishing its economic self-reliance. In short, India has placed its focus on developing its own production base by attracting foreign investments. And in spite of steady liberalization, India’s trade policy continues to lean towards the protection of domestic industries.
    According to Chapter 3, as intermediate goods account for an increasing proportion of total trade in goods, India’s status as a global production base is on the rise. In recent years, India’s major import destinations have switched from North America and Europe to China, Korea, and Southeast Asia, and in particular, trade with Korea has significantly expanded since 2000s. Furthermore, since the Korea-India CEPA took effect in 2011, trade between the two countries has been increasing, and Korea’s exports to India have increased even more, widening India’s trade deficit with Korea. However, India is also enjoying the positive effect of diversifying its export items to Korea. The share of intermediate goods in India’s trade with Korea is the highest among India’s major trading partners, and the manufacturing network between the two is growing stronger. Nevertheless, the volume of trade between Korea and India has not grown as much as expected following establishment of the CEPA, thus indicating a new breakthrough is required.
    In Chapter 4, we examine India’s growth into a major FDI target country in the global market. In particular, India recorded a significant increase in FDI inflow along with China in 2020, when the global economy shrank significantly due to the COVID-19 pandemic. The major fields of FDI in India are services, software, renewable energy, and infrastructure. Also, FDI investment in India has recently shown a notable increase in brownfield investment over greenfield. Korea’s FDI in India began in earnest during the 1990s with the entry of Korean manufacturing companies into India, and increased further with the Korea-India CEPA. The proportion of investment in manufacturing and green fields is relatively high compared to the United States, the United Kingdom, and Japan, but on a far smaller scale. Korea needs to diversify its investment fields and methods in response to India’s aggressive investment liberalization.
    According to Chapter 5, India is reinforcing its global connectivity as a production base. Since the Modi government took office, India has been more actively supporting foreign companies’ production in India, and it has been effective in promoting production activities of foreign companies in India. If we classify the contribution of major countries to India’s exports and production, they have in common that their contribution to production is much greater than that of exports. This means that major countries’ production linkages with India place greater weight on the purpose of meeting India’s domestic demand. Therefore, Korean companies and the government need to closely monitor demand in India and strategically strengthen production linkage with the country.
    In Chapter 6, we consolidate the research findings of the study to present implications for Korea-India economic cooperation. As shown in this study, Korea and India are excellent cooperative partners, especially in the manufacturing sector, meeting each other’s needs. Korea has the ability to invest in key manufacturing industries that India seeks to foster, such as electrical/electronics and automobiles. Meanwhile, India continues to conduct active trade in intermediate goods while exhibiting a strong will to foster its manufacturing sector. Moreover, India needs a partner that can alleviate its excessive economic dependence on China, all of which is likely to expand Korea’s opportunities.
    In the process of bolstering its production network with India, Korea should keep in mind its connection with Southeast Asia. From a strategic point of view, Korea needs to minimize the risks associated with US-China conflict by streamlining investment deployment, making it is necessary to expand the existing Korea-ASEAN production network to India. As found in this study, India has recently been trying to reinforce production connections with Southeast Asia. This could offer opportunities for Korea to establish a three-nation production network by expanding production and exports of final goods in India using Vietnamese intermediate goods. Developing these links in the mid to long term can further boost Korean companies’ trade and investment in the New Southern Region, which could also lead to expansion of India’s participation in the global production network.
    Considering this potential, Korea and India should break away from the trade imbalance issue and take the view of expanding and strengthening the bilateral economic cooperation relationship. According to the findings of this study, the Korea-India CEPA is not a direct cause of the trade imbalance between the two countries, but could instead be a result of failure to fully reflect the characteristics and potential of the bilateral trade structure. Given this fact, the two countries should shift to a forward-looking perspective to further expand liberalization through further negotiations to improve the CEPA.
    Meanwhile, Korea should actively consider diversifying its investment in India in addition to manufacturing. This study shows that Korea’s investment in India is biased toward manufacturing compared to major countries, and competition with Germany, Japan, and China is likely to intensify. It is worth noting that investment in India from major countries has been increasing recently, mainly in services, computer software /hardware, renewable energy, communication, and infrastructure. And in terms of investment methods, it is recommended to actively consider brownfield investment. According to this study, while Korea’s investment in India has been concentrated in greenfield investment, most of the major countries have a very high proportion of brownfield investment. These investment fields are where India’s demand is increasing, and companies in major countries are enjoying a rapid first-mover effect through brownfield investment.
    Korea is currently in dialogue with India’s trade authorities, focusing on improvements of the Korea-India CEPA and India’s trade relief measures with Korea, but these efforts seem insufficient to broaden its understanding of the potential for cooperation. Therefore, the country should establish regular trade policy dialogue channels with India to broadly understand each other’s core policies, raise immediate issues, and continuously discover possibilities for cooperation. In addition, the Korea-India CEPA must be upgraded into a comprehensive platform for economic cooperation by including areas such as infrastructure, energy, and digital industries, which India is currently focusing its efforts on.
    As well as the intergovernmental trade policy dialogue channel, a joint initiative should be pursued between Korea and India as a trade and investment support channel in which various economic actors, including Korean and Indian companies, governments and institutions, can participate. The Korea-India joint initiative would serve as a comprehensive platform for bilateral cooperation, which can be used as a window to specifically identify the immediate needs of the two countries, match companies, and directly communicate difficulties in business activities with the Indian government. It is also necessary to create a Korea-India cooperation fund in connection with this joint initiative. This should be utilized to further encourage projects and research across almost all fields related to bilateral cooperation. More specifically, this fund can support business matching projects between companies in both countries, and could help companies related to the CEPA and support joint research to revitalize trade investment.
    When cooperating with India, it is critical for Korea to prioritize investment that meets India’s needs. This is because India prefers partners that solve its needs through investment rather than unilateral expansion of exports. In other words, it would be feasible for the Korean government to preemptively present the investment projects that India needs in terms of economic policy and receive support from the Indian government. One such example is the India-Japan Investment and Trade Promotion and Asia-Pacific Economic Integration Action Plan agreed upon by Japan and India in 2015. At the time, Japan suggested expanding investment in India and inviting Japanese companies into the market, focusing on major projects, based on which India provided Japanese companies with trade investment benefits. In order to proceed with such large-scale projects, not only corporate investment but also government support in the form of ODA, etc., must play an important role.

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  • 글로벌 탄소중립 시대의 그린뉴딜 정책과 시사점
    Green New Deal for Carbon-neutrality and Trade Policy in Korea

    This research defines the Green New Deal, as a fiscal policy having both environmental and economic growth as its main objectives. A trade policy perspective and approach has been applied while reviewing the carbon-neutral policy ..

    Jukwan Lee et al. Date 2021.12.30

    trade policy, environmental policy
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    This research defines the Green New Deal, as a fiscal policy having both environmental and economic growth as its main objectives. A trade policy perspective and approach has been applied while reviewing the carbon-neutral policy as both carbon-neutrality and economic growth pursued by the Green New Deal are closely linked to the multilateral system and the international trade system. Climate change is a global issue that transcends national borders. There are inevitably limits to the level of greenhouse gas reduction that can be achieved through the efforts of any one region or country. Carbon-neutrality also requires an understanding of the international economy and production networks. Production supply chains are expanding all over the world and value chains are intricately connected. The Green New Deal needs to be considered in terms of trade policy. Therefore, this study tries to provide implications in terms of trade policy in relation to the Green New Deal policy for carbon-neutrality.
    Chapter 2 introduces carbon-neutral policies that major countries are adopting and compares them with past Green New Deal policies. The latter were introduced in the context of economic stimulus and eco-friendliness during the 2008 global financial crisis. In addition, we compare Korea’s current Green New Deal with its 2008-version called the low-carbon green growth policy to examine the similarities and differences. Although major countries used different names such as ‘Green Deal’ or ‘Green New Deal’ to implement policies for greenhouse gas reduction and economic growth, they were not sufficient in reducing greenhouse gas emissions. Past and current policies generally put more emphasis on short-term employment growth and economic stimulus. Korea’s Green New Deal also had limitations while considering carbon-neutrality as a policy goal until the government announced the Green New Deal 2.0 in July 2021. Discussions in Chapter 2 confirm the need for a balanced Green New Deal design which takes into consideration trade aspects for achieving carbon- neutrality and economic growth, as the effects of carbon-neutral policies promoted by major countries also affect trade.
    Chapter 3 examines the reason why each country is imposing independent carbon policies as seen in Chapter 2, and the factors to be considered when designing Green New Deal policies. As with carbon policies, multilateral cooperation is more effective than individual countries’ independent strategies for environmental policy. However, discussions in Chapter 3 shows that the multilateral discussions at the UN, WTO, and APEC did not make much progress over the past 20 years, and as a reaction, major advanced countries are increasingly adopting individual policies to try to solve the issues on their own. Chapter 3 argues that where global cooperation is difficult, it is desirable that the basic direction of the Green New Deal policy at the national level be based on ‘the principle of targeting by policy means’ which matches policy means and goals. Furthermore, under the circumstances in which major countries operate carbon-neutral policies, by only considering the environment or growth the society’s optimum as a whole cannot be achieved. Therefore, this chapter presents the role of trade policy tools to be considered while promoting the Green New Deal. First, it needs to correct international environmental externalities and second, improve the terms of trade. When designing the Green New Deal, we need to consider environment goals having in mind that environmental policies interact with industrial and trade policies. That is, there needs to establish implementation paces’ and priorities based on economies of scale and domestic export/import competitiveness in terms of trade.
    Chapter 4 answers the question of whether participation in international trade actually increases the efficiency of carbon-neutral policy under tightly intertwined global production networks, and suggests the direction of the Green New Deal policy from an industrial perspective in connection to trade. As the discussions on international cooperation for carbon emission reduction expanded, the question of whether the expansion of international trade and openness actually help to reduce carbon emission was constantly raised. In this report, we attempted through an empirical analysis to determine whether the expansion of openness helps reduce carbon emissions. In particular, unlike existing literature, openness was interpreted in terms of the expansion of trade in intermediate goods and the development of a global production network (or global value chain (GVC)), and its impact was analyzed accordingly. The results in Chapter 4 provide supports to the existing discussion that trade expansion (in particular, expansion of forward participation) helps reduce carbon emissions, and that carbon leakage does not actually increase, with the latter being statistically significant. Based on this, Chapter 4 proposes the need to consider the effect of the current Green New Deal policy on securing economic efficiency and reducing carbon emissions following openness. In addition, it was discussed that a strategic openness policy can be used as an effective carbon reduction policy based on the direction of industrial structure transformation under the carbon-neutral policy.
    Chapter 5 attempts to answer whether each country’s current independent carbon-neutral policy is cost-effective. The analysis in Chapter 5 contains the discussions of previous Chapters 3 and 4. Basically, Caliendo and Parro’s (2015) multi-country/multi-industry model is introduced to analyze the impact of a carbon-neutral policy, such as the EU’s carbon border adjustment, on the global economy under global production networks. In addition, the amount of financial support from Korea’s Green New Deal needed to offset the negative economic effects of other countries’ independent carbon- neutral policies was derived by selecting hypothetical industrial combinations. The government has budget constraints so resources that can be put into the Green New Deal are limited. The result of the analysis is consistent with the discussion in Chapter 3. In order to increase the effectiveness of the Green New Deal under a situation where a national carbon-neutral policy reduces economic welfare, both the environment and trade aspects needs to be considered in policy measures. Based on this, Chapter 5 emphasizes that it is necessary to balance carbon intensity by industry, export competitiveness, and cost effectiveness of investment in designing the current Green New Deal. At the same time, since the input of the Green New Deal causes a significant financial burden, it leads to concerns about the need for a plan to reduce the government's fiscal input by using a more market-friendly system.
    Chapter 6 examines the need to develop international standards for carbon and environment and tries to check how we can understand current increase in unilateral carbon policies in the context of current WTO regulations and find ways to induce cooperation from the multilateral system. we show that it is necessary to establish and comply with multilateral norms that lead to joint efforts for carbon-neutrality and prevent the Green New Deal from becoming a protectionist policy for the economic growth of powerful countries. In particular, from the point of view of Korea which grew  under liberalization and international order based on norms, the Green New Deal and each country’s carbon-neutral policies in the protectionist era, we should consider restoring international cooperation and order so that trade barriers and reckless competition do not spread.
    Environmental policy has been basically recognized as a domestic policy, but as the carbon-neutral policy has recently become a major part of environmental policy, it is also affecting the setting of government’s policy directions, such as the Green New Deal. At the same time, as the world economy is closely connected through global production networks and carbon moves to countries around the world through carbon-connected networks, carbon-neutral policy is inevitably linked with trade policy. Our research does not cover all the contents of the Green New Deal, nor does it claim that all economic problems related to carbon-neutral policy can be efficiently solved through trade policies. However, trade policies should be considered and fully utilized as one of various policy alternatives within the comprehensive policy platform of the Green New Deal policy. This study finally suggests that the effect of the Green New Deal can be expanded through the restoration of openness and global cooperation. More specifically, first, the Green New Deal should be pursued beyond protectionism. To this end, it is necessary to consider △recognizing the expansion of openness as one of the measures to reduce carbon intensity and △considering the structural transformation to a carbon reduction-friendly ‘GVC downstream industry’. Second, it is necessary to achieve a Green New Deal that conforms to the norms of trade. To this end, △Reorganization of the Green New Deal into ‘basic technology investment’ in climate technology, and △Securing the autonomy of the Green New Deal through improvement of multilateral trade rules can be considered. Third, the recovery of global cooperation can lead to synergies. Thus, △Consideration of climate club participation for joint-response to climate change, and △Green New Deal that contributes to the establishment of a global carbon market is proposed. 

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  • 한국-베트남 경제·사회 협력 30년: 지속가능한 미래 협력 방안 연구
    30 Years of Korea-Vietnam Economic and Social Cooperation 1992-2021: Achievements, Limitations and Suggestions for Further Expansion

    Korea and Vietnam have achieved remarkable outcomes of cooperation over the past 30 years since establishing diplomatic relations in December 1992. The rapid expansion of cooperation between the two countries is due to their geogr..

    KWAK Sungil et al. Date 2021.12.30

    economic relations, economic cooperation Southeast Asia Ocean
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    Korea and Vietnam have achieved remarkable outcomes of cooperation over the past 30 years since establishing diplomatic relations in December 1992. The rapid expansion of cooperation between the two countries is due to their geographical, historical, and cultural similarities and commonalities. Vietnam and Korea are both traditionally agricultural countries that have grown rice since ancient times, and have been influenced by Confucianism. In addition, Korea and Vietnam, which have inherited abundant cultural heritages thanks to their long history, have strong national pride. In particular, many Vietnamese scholars often take Korea as an example when discussing improving national industrial strategies and infrastructure, given that Korea has overcome the ruins of the Korean War and Vietnam is growing over the scars of the Vietnam War.

    However, since Vietnam joined the WTO in 2007, cooperation between the two countries has been mainly led by the economic sector. As economic cooperation strengthened, the two countries fell into the illusion that they knew each other well. Delusions often lead to unnecessary misunderstandings. A representative example is the dissatisfaction of Koreans with Vietnam’s quarantine response in the early stages of the 2020 COVID-19 outbreak. Vietnam regarded quarantine as a war situation and controlled it with strong discipline, but foreigners, including Koreans, did not understand this social trend. It was a misunderstanding that could have been avoided if Koreans were a bit more aware about Vietnam’s quarantine situation and culture, and conversely, Vietnamese knew better about Korean society and culture. This study analyzes the performance of cooperation in the economic, social, and cultural sectors over the past 30 years and seeks ways to enhance cooperation in the social and cultural sectors, which are relatively less successful than the economic sector. This is because the sustainable development of their bilateral relations requires not only economic cooperation but also “soft power” cooperation in social and cultural sectors.

    Chapter 2 evaluates the achievements of economic cooperation between Korea and Vietnam over the past 30 years. As of 2020, Vietnam is Korea’s third-largest export destination and Korea is Vietnam’s fourth-largest export destination. However, the amount of trade between the two countries, which had soared until 2017, has stagnated since 2018. Efforts between the two countries are needed to expand trade. The revealed comparative advantage index (VRCA) based on value-added exports of both countries was calculated year by year using the ADB-MRIO (ADB Multi-Regional Input-Output Table). Although there has been a change in the structure of the comparative advantage between them, the two countries still show a complementary relationship. The complementary relationship between the two countries is a starting point for expanding trade again. 

    In addition, it is necessary to expand trade between the two countries in order to resolve the trade imbalance issue raised as the biggest problem in trade between Korea and Vietnam. The fact that Vietnam’s export intensity index to Korea is lower than that of Korea to Vietnam suggests that Vietnam has room to expand exports to Korea. We need to think about how Vietnam can expand exports to Korea. The expansion of exports of rice, coffee, tea, cashew nuts, and natural rubber to Korea simply based on comparative advantage will be effective in improving the trade imbalance between the two countries in the short term. However, if this trade structure is prolonged, Vietnam will remain a low-value-added primary product exporter.

    Vietnam shows lower domestic value-added utilization than neighboring ASEAN member states (AMS) such as Thailand, the Philippines, Malaysia, and Indonesia. This is a chronic problem in the Vietnamese manufacturing industry rather than a problem between Korea and Vietnam. While the Vietnamese government is making various efforts to foster a supporting industry, there are also notable activities by some Korean firms to transfer technologies and build management capacity so that Vietnamese local firms can participate in the production network of Korean firms.

    Since 2014, Korea has been Vietnam’s largest foreign direct investment country. Amid a recent surge in Japanese investment on infrastructure construction, Korean firms’ investment on manufacturing sectors is meaningful. According to the Vietnamese government’s long-term development plan until 2045, it plans to attract more than $30 billion in FDI every year. This suggests that Vietnam should become a more open market, which can provide new opportunities for Korean firms. However, Vietnam’s somewhat insufficient measures in the recent COVID-19 pandemic may have created anxiety for Korean firms hoping to secure a stable supply chain. Vietnam itself needs to express a clear principle that guarantees the activities of Korean firms in Vietnam.

    Meanwhile, demands for technology transfer from Vietnam are expected to gradually increase. Based on ADB-MRIO data, backward GVC participation rates from 2007 to 2020 are always higher than forward GVC participation rates. In addition, the contribution of domestic value-added contents of exports is decreasing year by year. Therefore, Vietnam will strongly demand technology transfer to increase the domestic contents of exports. In fact, Vietnam has received relatively less technology transfer than other AMS. In particular, given the rate of foreign value-added content of exports to Vietnam’s total gross exports across industries, those of electronic equipment, primary metal, chemical product, and textile products manufacturing sectors, which Korea has mainly invested, are higher than the overall average of all industries. When technology transfer to Vietnamese local firms expands, the Korean and Vietnamese governments need to pay attention to Korean SMEs working in Vietnam so that they can preemptively seek new paths through cooperation with Vietnamese local SMEs. Special attention should be paid to the firms that need business restructuring, in particular, due to the COVID-19 pandemic and the U.S.-China competition.

    In addition, Vietnam is less dependent on regional value chains (RVCs) in the ASEAN region than neighboring AMS. The utilization rates of RVC in the ASEAN region is falling every year. 
    As uncertainties in supply chains expand due to the U.S.-China competition and the COVID-19 pandemic, the importance of regional supply chains within the ASEAN Economic Community (AEC) has increased further. In particular, not only Vietnam but also all AMS competitively attract multinational firms moving from China to Southeast Asia due to the U.S.-China competition. It is time to coordinate this competition and make efforts to more effectively establish a supply chain in the ASEAN region.

    Chapters 3 and 4 evaluate social and cultural cooperation between Korea and Vietnam after diplomatic relations in 1992.  As mentioned earlier, the performance of cooperation in the social and cultural sectors is very insignificant compared to the performance of economic cooperation between the two countries. In addition, in terms of the direction of cooperation, activities from Korea to Vietnam are wider and deeper than those from Vietnam to Korea. It is no exaggeration to say that efforts to resolve this double imbalance began in earnest only after the New Southern Policy was declared in 2017.

    Chapter 3 evaluated the performance of social cooperation between Korea and Vietnam. First, the trends in human exchanges (tourism and visits, short-term and long-term stays, etc.) between the two countries and exchanges between institutions (central administrative agencies, local governments, research institutes, etc.) were reviewed.

    First, indicators related to human exchange show the justification for improving quality in bilateral cooperation. The Vietnamese society in Korea and Korean society in Vietnam have grown. As of 2019, Vietnam is the country where Koreans visit the most and Koreans stay the most among ASEAN countries. In addition, Vietnamese visited Korea the most and the number of residents in Korea is the largest among Southeast Asians. The number of Vietnamese migrants residing in Korea for labor, marriage, and study abroad has also increased. The increase in visitors and migrants between both the countries suggests that practical and specific cooperation is needed to improve the quality of life, such as health care, along with enhancing mutual understanding.

    Since the implementation of the New Southern Policy in 2017, Korea has been implementing regular exchanges between institutions with Vietnam through various methods such as seminars, forums, performances, and exhibitions to promote public diplomacy.  Korea promoted “Hallyu (Korean Wave)” and Korean food through Korean food festivals and K-Pop festivals, and also focused on cultural exchanges such as Taekwondo clubs, volunteer activities, and Korean language education at the central government level. Local governments in Korea are signing sisterhood and exchange agreements with Vietnamese local cities. Local government exchanges are mainly concentrated in the administrative, cultural arts, and economic sectors, while youth-private group exchanges need to be expanded. Exchanges and support between research institutes to foster technical manpower have been steadily conducted. KOICA’s Vietnam-Korea Vocational College of Technology in Bac Giang project (2010-2014), Vietnam-Korea Industrial Technology Vocational College support project (2014-2019), and VKIST establishment project (2014-2020) are representative.

    Despite the achievements of social sector cooperation as described above, there is a critical view that unbalanced cooperation has been carried out. Due to the importance of the economic sector, the demand for cooperation in the social and cultural sectors was overlooked. In addition, there is a lack of careful attention and understanding of each other. From this point of view, this study has selected cooperation and conflict cases between Vietnam and Korea, reviewed the context, and analyzed the causes. In particular, in order to find actions for a future-oriented cooperation between them, more attention was paid to conflict cases than cooperation ones.

    First of all, annual trend analysis was conducted with key words for cooperation and conflict between Korea and Vietnam. Over time, it was found that key words about cooperation accounted for more weight than conflict. In the case of social conflict between the two countries, keywords related to marriage migrant women, such as “international marriage,” “domestic violence,” “migrant women,” “mother-in-law,” “multicultural families,” “marriage,” “random assault,” “women,” and “communication,” accounted for high weights and frequency. In the case of social sector cooperation, major institutions and persons who signed cooperation agreements between the two countries accounted for high weights and frequencies. Most of the keywords were classified into health, education, social security, environment, and biodiversity.

    There are two representative conflict cases as examples between Korea and Vietnam based on the key-words analysis. One is about awareness of multi-cultural families and violence against Vietnamese married migrant women, and the other is a conflict arising from the recent COVID-19 outbreak. 

    Both cases show how dangerous the perception of identifying Korea and Vietnam is. It should be recognized that there are differences in social similarities between Korea and Vietnam. Since Koreans’ emotional intimacy with Vietnam is very high, they, facing Vietnam’s reactions that do not meet their expectation, they tend to criticize Vietnam. In addition, there is a lack of effort to understand each other deeply with a vague idea of “it must be similar.” In order for Korea and Vietnam to advance into a sustainable relation, they must acknowledge and sympathize with the subtle differences found in each other.

    On the other hand, examples of true reciprocal cooperation between South Korea and Vietnam include Park Hang-seo’s appointment and achievement as the head coach of the Vietnamese national soccer team. Coach Park Hang-seo’s attitude toward the players and the people, the way of communication and leadership, and the attitude of understanding and respecting Vietnam’s history have been talked about by the Vietnamese people. Coach Park Hang-seo’s case is a major example of how to resolve the previous conflict.

    Chapter 4 evaluated cultural exchanges between Korea and Vietnam. First of all, the most groundbreaking event in the cultural sector among exchanges between Korea and Vietnam for 30 years after diplomatic relations in December 1992 was the spread of the Korean Wave in Vietnam. The Korean Wave began in Vietnam in the late 1990s with TV dramas and spread to movies and music. Accordingly, cultural exchanges between the two countries expanded, deepening mutual understanding. On the one hand, entrepreneurs proclaimed an “economic Korean Wave” and pursued economic benefits from the spread of the Korean Wave. In addition, consumption of Korean products such as cosmetics, clothing, and food increased, and the number of Korean restaurants increased. After the mid-2000s, the center of the Korean Wave seems to have shifted to Korean popular music (K-Pop). Recently, it is judged that the enthusiasm for K-Pop has exceeded the popularity of TV dramas. Around 2010, K-Pop became a major sector of the Korean Wave in Vietnam.

    Chapter 5 presents frameworks and measures to resolve the imbalance in economic, social, and cultural sectors and to enhance bilateral cooperation. This does not mean that economic cooperation should be reduced just because the pace of economic cooperation is fast, but that it is necessary to approach social and cultural cooperation with a more interest and inclusive attitude than now. Deep understanding of each other will eventually help upgrade the level and quality of economic cooperation. 

    This study made the purpose of bilateral cooperation as the establishment of a “strategic global future cooperation partnership.” This is because cooperation between the two countries is required as a global partner that can expand bilateral cooperation between Korea and Vietnam to the Mekong subregion, India, and Africa. In order for the two countries to function as global future cooperation partners, a balanced understanding and continuous empathy of each other are required in mutual trust. To this end, four principles of bilateral cooperation are presented. First, rather than pursuing mercantilist interests, it is necessary to lay the foundation for mutually reciprocal development. Second, institutional supplementation is needed to form transparent cooperative relationships. Third, it is necessary to avoid cultural supremacy and strengthen inclusion in mutual culture. Fourth, it is necessary to expand exchanges as responsible partners. Under these four principles, this study proposes ways to cooperate in the economic, social, and cultural sectors.

    First, for economic cooperation pursuing win-win prosperity, it is necessary to expand bilateral relations between Korea and Vietnam to trilateral or quadrilateral relations by including other partners. If Korea and Vietnam provide successful economic cooperation experiences together to third-party countries that wish to cooperate, it will be possible to discover new markets. The economic cooperation process between Korea and Vietnam can be modularized and applied together to the development of the Mekong subregion. In particular, if South Korea’s ODA in Vietnam, which is bound to decrease as Vietnam grows, is used to develop the Mekong subregion, Vietnam’s sense of alienation can be reduced.

    Second, it is necessary to support the formation of a regional value chain (RVC) in the ASEAN region. In the recent international trade environment, where economic and security issues must be considered together, the establishment of RVC has important implications for Vietnam and Korea in that it can secure a stable supply chain. In particular, building a new supply chain based on its own comparative advantages of each AMS can strengthen the redundancy of their value chains. Meanwhile, institutional supplementation is also needed to establish a stable supply chain. For example, it is necessary to strengthen intellectual property rights and establish a Strategic Trade Controls (STC) system. Third, it is necessary to prepare a cooperative support system between Korean SMEs and Vietnamese SMEs. If technology transfer begins in earnest, Korean SMEs that have entered Vietnam following large companies may feel threatened. Both governments and large firms need to come up with a support system together so that Korean SMEs and Vietnamese SMEs can cooperate. Instead of large companies and Korean SMEs supporting technology and management capabilities for local companies in Vietnam, the Vietnamese government and the Korean government should come up with measures to expand support for Korean SMEs to switch industries or relocate production sites. Fourth, the two countries should support the formation of the Indo-Pacific Food Global Value Chain (IPFGVC). Vietnam has abundant agricultural products that can be processed, and Korea has high processing technology. If Korea and Vietnam can build food GVCs across the Indo-Pacific region together, exports can be expanded to other AMS as well as the United States, Japan, and China. In addition, Korea can free itself at least partially from food security issues in the long run.

    Four measures are also proposed for social sector cooperation. First, it is necessary to encourage collaboration between Koreans and Vietnamese and to establish a related support system. As discussed in Chapter 3, although Vietnamese are the second most numerous foreigners to stay in Korea after Chinese, there is still a lack of communication channels between Vietnamese and Koreans in Korea. The ASEAN-Korea Centre, the ASEAN Culture House, and Asia Culture Center can be well-positioned to discover and support programs to promote cooperation among civilians. Second, fact-based information monitoring and information provision channels should be established. As seen in Chapter 3, as online media became more common, there were cases in which some groups’ opinions were misrepresented as if they were true between the two countries. It is necessary to establish a system that responds immediately when exaggerated or incorrect information is distributed through online media. Third, it is necessary to conduct in-depth research related to Vietnam and spread the research results to the public. Koreans often misunderstand that they know Vietnam well. However, in fact, very few Koreans have a deep understanding of Vietnamese society. This is because there is a lack of channels for research results conducted in academia to spread to the general public. Fourth, it is necessary to establish an innovation sharing model between universities in both countries. Vietnam-related departments in Korea are shrinking, but Korea-related departments in Vietnam are rapidly increasing. Cooperation measures should be prepared so that universities in both countries can coexist. Systems such as co-grants of degrees between Vietnamese universities and Korean universities can also be considered.

    Finally, to strengthen cooperation in the cultural sector, this study proposes four measures. First, it is proposed to hold a regular Vietnamese film festival. Vietnamese films are being introduced to Korea through the Busan Film Festival or Jeonju Film Festival, but there is little memory of Vietnamese commercial films being released in Korea. As seen in Chapter 4, considering the imbalance in cultural consumption between the two countries, it is required to provide an opportunity to introduce Vietnamese films to Korea. Second, it is necessary to support the translation and publication of Vietnamese literature in Korea. Since diplomatic relations in 1992, there have been only 29 volumes of Vietnamese literature published in Korea. On the other hand, more than 120 books of Korean literature have been published in Vietnam. It is necessary to come up with support measures to resolve the imbalance in the literary sector between the two countries through related civil societies. Third, it is necessary to consider the establishment of a Vietnamese Cultural Center in Korea. As confirmed in Chapter 4, cooperation in the cultural sector between the two countries was very disproportionate. If the two governments together set up a dedicated window for introducing Vietnamese culture to Korea, they can expect to resolve the imbalance in cultural exchanges. Fourth, it is possible to consider supporting the production of online-based bilateral cultural programs. With the recent emergence of new and diverse media that can enjoy culture, the need to utilize them is increasing. Another way is to hold a YouTube content contest every month to introduce the social culture of the other country for Koreans and Vietnamese. As the number of interactive communication media increases, misunderstandings with each other can be reduced, and cooperative relations between Korea and Vietnam can be stably advanced. 

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  • 중남미 국가의 소득 및 소비 불평등과 정책적 시사점
    Income and Consumption Inequality in Latin America and Policy Implications for South Korea

       This study analyzed income and consumption inequality in Chile, Mexico, and Brazil. The motivation for this study is the recent massive protests in Chile and Colombia. The protest in Chile, which began in October 2019..

    Sungwoo Hong et al. Date 2021.12.30

    economic cooperation, labor market Latin America
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       This study analyzed income and consumption inequality in Chile, Mexico, and Brazil. The motivation for this study is the recent massive protests in Chile and Colombia. The protest in Chile, which began in October 2019, were sparked by 30 Chilean peso increase in subway fare and led to enacting a new constitution in progress. In Colombia, the uprising occurred as people protested against the tax reform bill announced by President Ivan Duque in April 2021. 
       Why is it necessary to examine income and consumption inequality in Latin American in which a variety of social inequalities, including income inequality, have always been perceived as severe? Have the inequalities in Latin America changed significantly over time? The main goal of this study is to answer to these research questions. 
    Chapter 1 describes why a research on income inequality in Latin America is necessary. First, there are not many existing studies that have investigated the inequality of individual countries in Latin America because a number of experts have already recognized the inequality in Latin America as a serious social problem and tend to consider it constant. Second, previous studies have not examined diverse indicators related to the inequality and thus have failed to provide accurate information on the inequality of each country. Third, it is meaningful to analyze income inequality in Latin America since the inequality and economic conditions could be critical variables in forecasting future regime change in the region. 
       Chapter 2 examines inequalities in various sectors in Latin America. In general, indigenous people are recognized as the most economically and socially vulnerable class. They are likely to live in areas with poor transportation, and thus access to public education is difficult. The tax systems of Latin American countries are too dependent on indirect taxes rather than direct taxes, and thus is regressive. There is a large gap in welfare spending among Latin American countries.
       In Chapter 3, the determinants of income inequality were analyzed using micro data provided by Chile, Mexico, and Brazil, and then the outcomes were compared. As a result, the income of women in these three countries was lower than that of man, despite controlling for other explanatory variables. The income gap between men and women was the lowest in Chile and the highest in Brazil; the income gap gradually narrowed in Brazil, whereas there was no significant improvement in Chile and Mexico. In addition, rural residents had lower income than urban residents in Mexico and Brazil; in Chile, residents in Santiago had lower income than residents in the other regions. 
    Chapter 4 investigates the consumption poverty rate and consumption inequality in order to accurately grasp income inequality in Chile, Mexico and Brazil. In Chile, it was shown that a pattern of income inequality was different from that of consumption inequality, as the consumption inequality was mitigated while the income inequality worsened. These findings suggest that the low-income group may have been facing considerable financial hardship because they could not have decreased their expenditure while their income decreased. In Mexico, trade liberalization in the late 1980s and the entry into force of NAFTA in 1994 markedly reduced consumption poverty rates and consumption inequality. In Brazil, all the indicators of income and consumption inequalities improved over time. 
       Chapter 5 looks into poverty and inequality in Latin America during the COVID-19 pandemic and policy efforts of each country to alleviate these. Due to the contraction of economic activity caused by the pandemic, the middle income class experienced a decrease in income, resulting in falling into poverty. This middle income group suffered from economic hardship because many of them working in the informal sector were not able to benefit from social welfare programs. However, emergency cash aid programs for the workers in the informal sector and the self-employed have mitigated the economic damage to them. 
       This study contributes to existing researches in terms of that this study provides policy implications for the Korean government and firms. First, establishing e-government in Latin American countries could be considered as a KSP (Knowledge Sharing Program) project. Since workers in Latin America are likely to avoid tax, the establishment of e-government can contribute to securing additional tax revenues. Thus, it is expected that Latin American countries could demand the project. 
       Second, Korean firms need to seek to enter the market of Latin America through DIP (Development Innovation Program) operated by KOICA. Improving educational attainment or human capital of the low-income group is a fundamental alternative to alleviating income inequality; therefore, the firms could particularly seek to enter the education sector through the DIP. 

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  • 유럽 주요국 녹색당의 성공 및 실패 요인 분석
    Determinants of Success and Failure of Green Parties in Europe

    The Green Transformation that has begun before the COVID-19 pandemic is expected to continue to be a major economic policy of governments around the globe. Major European countries, especially the United Kingdom and Germany, along..

    Dong-Hee Joe et al. Date 2021.12.30

    energy industry, environmental policy Europe
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    The Green Transformation that has begun before the COVID-19 pandemic is expected to continue to be a major economic policy of governments around the globe. Major European countries, especially the United Kingdom and Germany, along with the European Union, are at the forefront of this transformation. However, electoral outcomes of political parties focused on climate change (i.e., Green Parties) differ significantly among these cases. Analyzing the reasons of their electoral success or failure can help understanding their role in climate-change policy. This, in turn, can teach how to make climate policy sustainable in Korea where political support for Green Parties is extremely low. We review the history of Green Parties in the UK, Germany and the EU and analyze the reasons for their success or failure. The related literature considers three major reasons for the extremely low electoral outcomes of Green Parties in Korea, namely the public’s attitude, electoral system and major traditional parties’ reactions. Following this, we focus on those three factors.
    To the concerned readers in Korea, the UK’s case shows, above all, that a substantial presence of Green Parties in the legislature is not a necessary condition for an active climate policy by the government. Instead, it emphasizes the importance of concrete commitments through legislation and institutionalization and wide consensus, including that of businesses, that the additional costs in the short run will result in net economic gains in the long run. The EU’s case shows that creating a platform on which interested parties of various types can actively participate in the discussion and formation of climate policy and putting more focus on “just transition” can be good starting points for achieving this consensus. For Korean Green Parties' electoral prospect per se, the German case hints at the needs to extend the scope and improve the competence of themselves.

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