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Why North Korea Chooses Self-Sufficiency: Changes in the North Korean Economy in the First Quarter of 2021
KIEP Opinion Why North Korea Chooses Self-Sufficiency: Changes in the North Korean Economy in the First Quarter of 2021

Aiming to discuss the changes in North Korea's economic strategies and policies, and the reasons why North Korea suddenly resumed trade with China in March 2021, this article is largely composed of two parts. The second section introduces the debate between South Ko-rean economists about North Korea's economic strategy and policy changes. The last section attempts to analyze the reasons why North Korea has suddenly resumed imports. The COVID-19 pandemic and recent sanctions against North Korea are causing rapid chang-es in the North Korean economy. In the academic community studying the North Korean economy in South Korea, various topics are being discussed about these changes in the North Korean economy. The first topic is how the North Korean economy is seeing rapid changes in its economic strategy. The second topic is why North Korea's economic management system is showing horizontal centralization. The last topic is why North Korea does not resume imports to China despite increasing eco-nomic difficulties. Why North Korea suddenly resumed trade with China in March 2021. North Korea resumed trade with China on a small scale in March 2021. Trade has reportedly been resumed, but exports have been negligible and only a small amount of goods have been imported. Imports were completely suspended for six months from mid-September 2020 to mid-March 2021, and then imports were abruptly resumed in March 2021. Imports from Chi-na totaled $12.98 million, and exports to China totaled $4.55 million from January to March. The imports conducted in March were non-commercial in nature and led by the authorities. Most of the imports came from the necessities required for industrial production, especially in the agricultural sector. Agricultural materials, that is, fertilizer raw materials (urea, ammonium phosphate, organic sulfur compounds ‒ 71.0%), agricultural vinyl (8.2%), pesticides (insecti-cides, herbicides ‒ 5.4%), etc. were mainly imported. Other imported goods included news-papers and printing paper (8.3%), detergent raw materials (sodium hydroxide ‒ 2.7%), and low flash point fuel for steel production.

Jangho Choi
The Indian Startup Ecosystem and Policy Implications
World Economy Brief The Indian Startup Ecosystem and Policy Implications

A startup refers to a company with ideas and innovative technologies, which have a short period of experience. Recently, startups are leading the fourth industrial technological innovation and affecting job creation and industrial productivity growth, so that its economic importance is increasing. In particular, India is emerging as a startup powerhouse based on its fast-growing economy and relatively cost-efficient excellent talent pool. Also, global investment towards the Indian startup market is increasing. While the number of Korean companies entering the Indian startup market is increasing, only a few have made stable inroads into the market. Based on quantitative data, literature analysis, corporate case analysis, surveys, and in-depth interviews, we objectively identified the Indian startup ecosystem and drew policy implications to increase the accessibility of Korean firms to the Indian market.

Hyoungmin Han , Jeong Gon Kim , Jeong Gon Kim , Sunghee Lee and Jong Hun Pek
The Crisis of the WTO and New Direction for Negotiation Strategies of Korea
World Economy Brief The Crisis of the WTO and New Direction for Negotiation Strategies of Korea

The WTO is facing a historical crisis. Its main functions ‒ namely, providing a negotiating forum, administrating WTO trade agreements and monitoring national trade policies, and resolving trade disputes ‒ have been significantly paralyzed. Although the cause of the crisis is partly institutional, higher uncertainty is also a considerable problem aggravating the fate of the multilateral trading system. Such uncertainty comes from two factors: rising protectionism, and trade frictions between developed and developing countries including those between the United States and China. Meanwhile, the WTO also needs to respond to rapid structural changes in global trade. The center of the world’s trade is shifting towards trade in services. The development and spread of information and communication technology (ICT) are making it easier to supply services across borders. The regionalization or localization of global value chains (GVCs) continues and GVCs are shifting towards knowledge-based goods. Therefore, the WTO faces a historical challenge it is highly unlikely to survive without proper reflection on the new trends of global trade. With Korea no longer claiming for preferential treatments as a developing country, it could take relatively firm negotiating positions at the WTO concerning market expansion and improved access towards foreign markets. Moreover, Korea could contribute as a mediator to speak for balancing the interests of both developed and developing countries on conflicting issues, such as the developing country status. Korea also needs to establish a more precise give-and-take negotiation strategy in future WTO negotiations on agriculture, non-agriculture, and service sectors to maximize its national interests. In particular, Korea should put stress on services and TRIPs negotiations to ensure its international competitiveness on those sectors. Trade in services and IP will dominate trade in goods. Korea also should focus on how to raise the efficiency and stability of the East-Asian regional value chains by strengthening its co-operation with China, Japan, and Southeast Asia. At the same time, Korea needs to consider ways to become the bridgehead connecting East Asia’s value chains to either North America’s value chains or the EU’s value chains utilizing given FTAs with those economies. Finally, Korea should prepare for the emergence of various forms of plurilateral negotiations and where appropriate, take lead and reflect its national interests on the final outcome.

Jin Kyo Suh, Cheon-Kee Lee, Jukwan Lee, Jihyeon Kim and Myeonghwa Jung
ASEAN Economic Integration on Services: An Analysis of Economic Impacts and Implications
World Economy Brief ASEAN Economic Integration on Services: An Analysis of Economic Impacts and Implications

ASEAN continues its efforts to liberalize services trade in the region as part of the process of establishing the ASEAN Economic Community (AEC). ASEAN has been increasing the level of regional liberalization through package negotiations of the ASEAN Framework Agreement on Services (AFAS). After signing the 10th AFAS package, the package negotiations were replaced by the ASEAN Trade in Services Agreement (ATISA), which takes a negative list approach and includes regulatory cooperation between member states. Upon this backdrop, this paper attempts to examine the progress of service market integration within ASEAN and analyze the impact of service liberalization pursued by ASEAN. Based on the analysis results, we also present policy implications to enhance cooperation with ASEAN in the service sectors.

Meeryung La
Analysis of Determinants of Foreign Capital Flow: Focused on Interest Rate and Exchange
World Economy Brief Analysis of Determinants of Foreign Capital Flow: Focused on Interest Rate and Exchange

As the linkage between domestic and foreign financial markets grows stronger, concerns have been raised about the inflow and outflow of foreign investment capital as a source of financial instability whenever the financial market becomes unstable. Considering that opening the capital market is not an option, it becomes essential to examine the determinants of foreign investment to maximize the benefits of foreign capital inflows and outflows for sound growth in the real sector as well as the financial sector. Accordingly, this study attempts to produce evidence-based policy implications by empirically analyzing the determinants of the inflow and outflow of foreign investment funds.

Deok Ryong Yoon , Wonho Song and Jinhee Lee
Increasing Global Climate Ambition and Implications for Korea
World Economy Brief Increasing Global Climate Ambition and Implications for Korea

Since the adoption of the Paris Agreement, wider and decisive actions to tackle climate change and reduce greenhouse gas (GHG) emissions have been called for in the international community. Many countries are seeking a sustainable economic recovery plan that reflects climate change and environmental considerations. The private sector has also been trying to expand environmentally sustainable investments and disclose relevant information on climate change. In particular, major GHG emitters such as China, the United States (U.S.), European Union (EU), Japan and Korea have pledged to move forward carbon neutrality. For this goal, the EU has established action plans for the European Green Deal, including a plan for introducing a Carbon Border Adjustment Mechanism (CBAM). In this context, this study aims to propose policy recommendations for Korea by analyzing measures to strengthen reduction targets and the economic impact of the EU's CBAM. The following implications can be derived. First, it is necessary to support low-carbon transition efforts in industries. Second, it is also important to support low-carbon technological innovation. Third, monitoring and response measures for the CBAM should also be prepared. Fourth, the private sector should expand voluntary efforts to reduce emissions and environmentally sustainable investment. Lastly, it is necessary to actively engage in international cooperation, not only in terms of reducing GHG emissions but also responding to climate change.

Jinyoung Moon
Democratic Backsliding amid COVID-19: The Latin American Case
KIEP Opinion Democratic Backsliding amid COVID-19: The Latin American Case

The process of democratic consolidation preceded by the post-1978 wave of democratization in Latin America has been far from successful. Since the turn of the century, democratic institutions across the region have deteriorated, and in some cases, broken down. The pandemic arrived in difficult times, providing authoritarian-leaning governments with excuses to consolidate executive power and erode checks and balances. The bad news is that the negative socioeconomic consequences of the health crisis are yet to fully uncover. Real tests to the region’s democracy will come after the COVID-19 pandemic. There is every reason for concern that its outcomes will put most of fragile Latin American democracies in a danger they have not faced since democratization.

Seungho Lee

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