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Russian Economy and the COVID-19 Pandemic: The Past, Current and Afterwards
KIEP Opinion Russian Economy and the COVID-19 Pandemic: The Past, Current and Afterwards

This manuscript summarizes the economic impacts the COVID-19 brought to the Russian economy and assesses the Russian government's responding actions to the vehement spread of the unexpected epidemic. It also discusses briefly whether or not the Russian economy will continue to recover.

Minhyeon Jeong
Merger Review Regimes in the ASEAN Region and Case Analysis of Grab-Uber Merger
World Economy Brief Merger Review Regimes in the ASEAN Region and Case Analysis of Grab-Uber Merger

In 2018, the largest yet cross-border M&A deal between digital platforms in Southeast Asia was reached, namely the Grab-Uber M&A case. The local digital platform Grab consolidated the regional operations of San Francisco, California-based Uber, a development which had significant effects on competition and consumer welfares in the Southeast Asia digital market. The competition authorities in the region independently initiated their investigation and started to deliberate the merger case to determine the anti-competitive effects on their domestic market, and to decide whether this transaction should be restricted or approved. Even though the two merging and merged firms completed their transactions, each authority applied different logic and imposed different remedies in deciding the case. Authorities in some member states such as Singapore and the Philippines decided that the Grab-Uber merger was anti-competitive, while others such as Indonesia and Viet Nam considered the merger not anti-competitive. Upon this backdrop, this article reviews the competition policies and laws of four major ASEAN countries – Indonesia, Singapore, Viet Nam, and the Philippines – from institutional and legal perspectives, focusing on M&A review regimes. Then, we briefly introduce how these com-petition authorities decided on the Grab-Uber merger case, also analyzing the competition effects of the case on the ride-hailing market in the countries. Based on the analysis results, we propose overseas competition policies for Korea.

Yungshin Jang and Gu Sang Kang
Time of Troubles or New Confrontation
World Economy Brief Time of Troubles or New Confrontation

We have moved into the zone of a new confrontation, and so far, we cannot even clearly define its boundaries. It seems that the new confrontation is primarily associated with an understanding of the future and the role of people in its creation, writes Valdai Club Chairman Andrey Bystritskiy. The article is published as part of the Valdai Club’s Think Tank project, continuing the collaboration between Valdai and the Korea Institute for International Economic Policy.

Andrey Bystritskiy
Korea’s Strategy on Trade Agreements with Developing Countries in Africa and the Pacific Regions
World Economy Brief Korea’s Strategy on Trade Agreements with Developing Countries in Africa and the Pacific Regions

As the US-China trade conflict intensifies, high dependence on US and China has been pointed out as a potential risk to the Korean economy. This calls for trade policies including diversification of trading partners and the establishment of a new model for trade agreements suitable to such diversified partners. Meanwhile, the necessity for such policies grows as protectionism spreads globally and trade order changes after the Covid-19 pandemic. Africa and the Pacific (AP) regions, the main areas of interest in this report, have been excluded from Korea’s FTA network despite their high growth potential and strategic significance. Most countries in the AP regions are geographically distant from Korea and mostly underdeveloped, so we have approached the region only in terms of development cooperation. Currently, trade agreements and systems for trade and investment with AP countries are insufficient, and the size of economic cooperation with these countries remains small. However, Africa has high market potential, owing to various factors such as its high population growth, middle-class growth, and transition to digital economy, while the Pacific island countries have abundant fisheries and marine resources, and wield voting power in international organizations. In this regard, it is necessary to build the foundation for cooperation with AP countries in the mid-to-long term. Against this backdrop, this study seeks mid- to long-term strategies to promote trade cooperation with AP countries. First we consider introducing and expanding nonreciprocal arrangements for developing countries in the AP regions, as currently provided to United Nations-defined least developed countries. Then we consider introducing a reciprocal trade agreement, for example, an FTA. As a result, we found that it is necessary to introduce an FTA model suitable for developing countries in the AP regions instead of introducing further nonreciprocal agreements. Based on the results of the study, this paper proposes strategic directions for trade cooperation with the AP regions, and furthermore, provides policy suggestions that should be included in the agreement with those countries.

Meeryung La
GVC Linkage of Materials, Parts, and Equipment Industries in China, Japan and Korea
KIEP Opinion GVC Linkage of Materials, Parts, and Equipment Industries in China, Japan and Korea

Over the past 20 years, CJK's industries in the materials, parts and equipment have grown significantly and led a major change in the global value chain (GVC). The spillover effects of all three countries to each other increased in these industries, and China’s influence has continued to rise throughout the past 20 years. However, CJK represent one of the most sensitive regions to non-economic shocks such as natural disasters and disputes between the United States and China. Therefore, it is necessary to shift from the existing cost- and efficiency-based management of GVCs to more rational GVC management based on supply chain stabilization.

Hyung-Gon Jeong
Reshoring: An Overview, Recent Trends, and Predictions for the Future
World Economy Brief Reshoring: An Overview, Recent Trends, and Predictions for the Future

With the rise of globalization beginning in the 20th century, came the inevitable rise of offshoring — companies moving at least some parts of their operations abroad in order to cut costs and increase profits. In recent years, however, international developments, such as the rise of wages in what were typically considered low-cost countries, coupled with uncertainties created through global political tensions, have incentivized companies to move their operations back to their respective home countries or to make new investments in United States-based facilities. This phenomenon, known as reshoring, has only increased in 2020 and 2021, amidst US - China tensions and the COVID-19 pandemic. Reshoring is growing in popularity particularly among companies based in the United States. In May 2021, for example, a US solar energy systems manufacturer called GAF Energy announced that the company would relocate its operations from Asia to Silicon Valley, expecting to add 400 jobs in research, engineering, and manufacturing roles (Szal, 2021). Around the same time, cycle and treadmill machine maker Peloton announced that it would invest $400 million to build its first US-based factory, citing heightened demand and the pandemic highlighting uncertainties that come with its global supply chain (Thomas, 2021). The company, which has announced that the US factory will be based in Troy Township, Ohio, stated that it expects to create over 2,000 jobs in the area. Also, in May 2021, Ford Motor announced a joint venture with South Korean battery maker SK Innovation to manufacture battery cells for electric vehicles in the United States (Wayland, 2021). The venture will be based in the US, marking a significant decision for Ford Motor, which operates worldwide and has notably been in the press in recent years for its decisions to offshore operations. Though an increasingly important and growing phenomenon, reshoring has not been studied nearly as much as offshoring. Experts predict that reshoring will only continue to increase as global supply chain uncertainties get revealed through political tensions and fallout from the pandemic. As companies gain a deeper understanding of the vulnerabilities in offshoring their production, they will become more incentivized to invest in their home country-based facilities. As such, it is more important than ever to understand reshoring, the reasons behind why companies decide to reshore, the recent trends among companies moving operations back home, and predictions about how reshoring is likely to evolve in years to come. This paper offers an overview of the aforementioned points, specifically focusing on companies based in the US, which are some of the more likely companies to make the decision to offshore and subsequently reshore.

Jennifer Dikler
Changes in the Regional Structure of China's Domestic Market and Implications
World Economy Brief Changes in the Regional Structure of China's Domestic Market and Implications

In response to intensifying conflict with the United States and the shock of Covid-19, China reinforced its strategy to expand domestic demand. China's domestic market is an important factor affecting Korea's exports and economic growth. Accordingly, a large body of research has been conducted in Korea on China's expansion policy and changes in its domestic market. However, most studies have analyzed changes in China's consumer market, import market and imported items, limiting the overall understanding of China's domestic economy. In addition, most studies on China's regional domestic market have analyzed the market segmented by region. Recognizing this gap, this study expanded the scope of analysis of the domestic market in China to the entire domestic final demand, and analyzed inter-regional trade relations and other economic relations based on an inter-regional input-output analysis, which has rarely been attempted in analyses of the Chinese domestic market. In addition, the changes in the regional structure of the Chinese import market and Korea's competitiveness were analyzed using Chinese trade statistics. In particular, by synthesizing the changes after the global financial crisis, a turning point in China's economic structure, we project future changes in the regional economic structure of China, which emphasizes the independence of its domestic economy. In addition, in the era of US-China conflict, the study aimed to select regional markets meaningful to Korea, and to present strategic directions toward China focusing on regional cooperation and approaches into the domestic market.

Jihyun Jung, Won Seok Choi, Hong Won Kim and Joo Hye Kim

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