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Begin New Search Political Geography Global Focus Content Type Policy Brief Publishing Institution Korea Institute for International Economic Policy (KIEP) Publication Year within 5 Years

1. Catch-up and Leapfrog Strategies for Developing Countries: Making a Case for a Social Spring

Author:
Leonardo Paz Neves
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
There is an ongoing consensus that we are on the brink, if not already started, of a major technological revolution. The Fourth Industrial Revolution has a wider and deeper transformative power. It could be considered a major paradigm shift of our time. Its importance is characterized by a wave of innovation in many fields, yet it is not compartmentalized in silos of technological advancements and product innovation. Each of those breakthroughs ripples in many other spheres as productive, labor, social, economic, health, etc. And in every transition, every transformation, new opportunity arrives. In paradigm shifts like these, ‘Windows of Opportunity’ are opened. Perez and Soete (1988) studied the entry phase, which developing countries should use in their development strategies to catch-up with industrialized countries, arguing that from time to time, the entry barriers recede, creating a window of opportunity for those developing countries. Taking advantage of these windows of opportunity is fundamentally conditioned to the ‘social capability’ of these lagging countries (Abramovitz 1995). There is because, in the moments in which the edge based in tech experience is not a determinant factor and the entry barriers recede, latecomers have a better chance in catching-up. But, they will only be able to compete with the leading economies if certain social conditions are met. With fewer development pol-icy options, these countries will have to go be-yond the classic developmental approach to succeed in leapfrogging and take the lead. Thus, while forging their path towards devel-opment, developing countries should try to take their own past experience and reassess it from a different perspective.
Topic:
Science and Technology, Economic Development, and Opportunity
Political Geography:
Global Focus

2. Covid-19 Crisis and Shifts in the Corporate Competitive Landscape: Comparisons with Previous Economic Crises

Author:
Sang-Ha Yoon, Yaein Baek, Wontae Han, Yoonsoo Lee, and Daisoon Kim
Publication Date:
04-2023
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
In terms of economic fluctuations, it is well recognized that the effects of an economic crisis have a detrimental impact on the entry, growth, decline, and exit of firms. In addition, the magnitude of the impact varies both within and between industries depending on the size and other characteristics of the firm. The economy is going through significant changes due to the emergence of new industries and the decline or disappearance of current ones. This study looks at how big economic events like the COVID-19 pandemic and the global financial crisis have affected businesses and industries. After completing a study at several levels of top international corporations, larger domestic enterprises, and domestic small and medium-sized businesses, it attempts to draw policy implications. First, it is necessary to foster and support top-tier companies to defend against global economic fluctuations and strengthen international competitiveness. In particular, the institution in charge of competition policies domestically and the institution that helps companies improve their competitiveness are different and the focus of policies is distinctive, so comprehensive attention and perspective of policymakers are needed. Second, it is urgent to respond to new issues related to competition policy in the domestic market. The behavior of emerging big tech and platform companies is different from monopoly companies in the past, so consumer welfare is not impaired, but it burdens nearby and other market participants. Therefore, a view that deviates from the focus on monopoly pricing is also essential for competition policy. Third, measures to support global corporate growth and countermeasures against changes in the industrial landscape should be prepared. Investment and R&D expansion at the corporate level is essential for corporate growth, and measures are needed to boost investment in recently emerging intangible assets. In addition, it is important to revitalize the movement of economic resources to cope with changes in the inter-industry landscape accompanied by the crisis. Fourth, policies to revitalize start-ups and closures are required. The decline in new companies' market entry and exit rates is a symtom of an aging economy contributing to the overall decrease in productivity. Therefore, enhancing the revitalization of the corporate ecosystem and expanding the size of enterprises are essential to enhance the dynamics of the economy. Fifth, it is necessary to find an appropriate combination of government roles in times of crisis. In particular, it is important to grasp the detailed status of economic stabilization policies in relation to SMEs, and at the same time, clear judgments on the appropriate size of support measures, the period of support, and the timing of collection are urgently needed.
Topic:
Economics, COVID-19, Corporations, Economic Crisis, and Competition
Political Geography:
Global Focus

3. Analysis on the Determinants of Labor Share and Its Policy Implications

Author:
Yaein Baek, Minsoo Han, Wongi Kim, and Hyunsuk Kim
Publication Date:
02-2023
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
There has been a significant decline in the global labor share, leading to numerous studies about the cause of this drop. The labor share is used as one of the main indicators of inequality because a decrease in the labor share can lead to aggravation of income inequality. This is because low-skilled workers can be greatly affected by such a decline in the labor share and the main source of in-come for the low-income class, including the self-employed, is labor income. Among various indicators of inequality, this study analyzes the determinants of the change in labor share. Technological changes such as adoption of robots, advancements in information and communications technology (ICT) and the Fourth Industrial Revolution (4IR) are expected to change the labor market. Hence, this study analyzes the impact of technological changes on labor share and suggests policy responses.
Topic:
Economics, Science and Technology, Labor Issues, and Inequality
Political Geography:
Global Focus

4. Exchange Rate Predictability Based on Market Sentiments

Author:
Hyo Sang Kim, Eunjung Kang, Yuri Kim, Seongman Moon, and Huisu Jang
Publication Date:
09-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
It is well-known that exchange rates are difficult to forecast using observed macro-fundamental variables. This discrepancy between economic theory and empirical results is called the Meese and Rogoff puzzle. The purpose of this study is to address this puzzle from a new approach. Rather than pursuing a linkage between macro-fundamentals and exchange rates, we focus on the market sentiment index as a factor that could possibly enhance exchange rate predictability. The analysis folds into three phases. First, we conducted an assessment of the traditional exchange rate predictability model, as well as the augmented traditional model incorporating the market sentiment index. Second, we predicted the exchange rate by applying the market sentiment index, based on the contrarian opinion investment strategy commonly used by foreign exchange dealers. Finally, we analyzed if the machine learning model incorporating both economic fundamentals and market sentiment index could enhance the predictability of the exchange rate.
Topic:
Economics, Markets, and Exchange Rates
Political Geography:
Global Focus

5. Boom-bust Cycles Revisited: The Role of Credit Supply

Author:
Hyo Sang Kim, Sangyup Choi, and Yuri Kim
Publication Date:
02-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This study investigates the impacts of credit supply on economic growth and financial crisis. Excess credit supply can make the economy and financial markets more vulnerable. While credit supply can drive economic growth by reallocating resources, it can also make the economy and financial markets more fragile. Asset prices sharply fall when deleveraging occurs in the case of a negative shock to the financial or real sector in a system where credit is excessively supplied. Furthermore, economic activity might be substantially reduced, extending the length and breadth of the recession.
Topic:
Markets, Financial Crisis, Economy, Economic Growth, and Credit
Political Geography:
Global Focus

6. Changes, Challenges and Implications of Fiscal and Monetary Policy Directions in the Post Pandemic Era

Author:
Sungbae An
Publication Date:
05-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
COVID-19 has changed the way of our lives since it started emerging as a pandemic early 2020. The global experience leave a trauma, and eventually work as a main driver to reconsider and improve our system. The need for change becomes even bigger as the pandemic continues beyond initial expectations. With that, we are now entering the era of the great transformation. The brief focuses on examining the policy environment changed by the COVID-19 pandemic and analyzing the points to be considered when implementing future fiscal and monetary policies.
Topic:
Monetary Policy, Economy, Fiscal Policy, Pandemic, and COVID-19
Political Geography:
Global Focus

7. COVID-19 and Global Value Chain

Author:
Hyoungmin Han
Publication Date:
03-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
The ongoing spread of COVID-19 has increased biological risks from infectious diseases and limits the movement of human and material resources. Various evidence supports that there is a significant correlation between COVID-19 and the globalized production network. This study aims to analyze the changes in the global value chain structure “before and after” the spread of COVID-19 and derive government-level countermeasures and policy tasks using quantitative data, empirical analysis, case study, and corporate survey.
Topic:
Economy, Global Value Chains, and COVID-19
Political Geography:
South Korea and Global Focus

8. Impacts of New International Tax System on Multinational Firms’ FDI

Author:
Sangjun Yea
Publication Date:
04-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
In this study, I present a theoretical model to quantitatively assess the economics impact of Pillar 1 and Pillar 2, especially focusing on the changes in the FDI patterns of multinational enterprises (MNEs). Pillar 1 offsets the incentives of MNEs' profits-shifting for tax-planning purposes, thereby reducing the inbound FDI into the countries with low corporate income tax rates. Pillar 2 burdens MNEs with 'top-up' taxes attributed from the subsidiaries in low tax countries. As the profits after tax (PAT) of MNEs shrink at the global level, innovation and R&D investment for new products will decrease, and as a result, global FDI flows will hamper.
Topic:
Economics, Foreign Direct Investment, Multinational Corporations, and Tax Systems
Political Geography:
Global Focus

9. Immigrants and COVID-19 Travel Restrictions

Author:
Young-ook Jang
Publication Date:
05-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This study attempts to examine the impact of the presence of foreign workers on COVID-19 related border closures. In the countries that are highly dependent on foreign workers, there have been difficulties in supplying labor due to entry restrictions and border closure during the COVID-19 pandemic. The empirical analysis shows that the entry restrictions were passively imposed where the share of immigrant is high. This trend was observed more conspicuously in high-income countries where various policy combinations could be used in addition to entry restrictions. The cost of entry restrictions could be alleviated by placing other measures which are deemed more efficient, including 3T (test, trace/isolate, treatment) strategy and Special Entry Procedure. It is necessary to develop policies to minimize negative effects on immigration and immigrants, while controlling epidemic waves at the same time.
Topic:
Immigration, COVID-19, Travel, and Immigration Policy
Political Geography:
Global Focus

10. COVID-19 and the Exacerbation of Gender Inequality: How the Pandemic Disproportionately Affected Women around the World

Author:
Jennifer Dikler
Publication Date:
12-2021
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
The gender wage gap, or the idea that women have historically and consistently earned less than men, has been widely studied and accepted over the past few decades. This gender wage gap exists globally and serves as a powerful indicator of the gender inequality experienced by women. As of 2019, according to data amassed by the Organization for Economic Cooperation and Development (OECD), South Korea’s gender wage gap among full-time employees is the largest among the countries that make up the OECD, coming in at 32.5%. Japan was second at 32.5%, followed by Mexico, the United States, and Canada at 18.8%, 18.5%, and 17.6%, respectively. Notably, in countries with higher levels of racial diversity, the gender wage gap is usually significantly exacerbated for women of color. Despite narrowing in recent years, the gender wage gap is extremely stubborn, and very much existent, as is the general global gender inequality that it reflects. In the past 18 months, the world's population and the global economy have been significantly upended by the COVID-19 pandemic. The virus has affected virtually every country in the world, especially nations with fewer resources to help combat its spread. Studies are also beginning to confirm that COVID-19 has had a disproportionate economic effect on women in many countries, amplifying the gender inequality that persisted in the global economy even prior to the pandemic. For example, as outlined in a study published by McKinsey in July 2020, “Women make up 39 percent of global employment but account for 54 percent of overall [COVID-19- related] job losses” (Madgavkar et al. 2020). However, the widening of the gender gap during the pandemic has been far from universal, with some countries seeing the opposite results. This brief seeks to provide an initial exploration, specifically highlighting how variably the pandemic has affected the United States, South Korea, El Salvador, Guatemala, Nicaragua, the Honduras, Australia, the United Kingdom and Germany. When it comes to global gender equality, where progress is so essential and yet so slow, it is extremely important to explore the economic setbacks created by the pandemic. If not addressed properly, these setbacks might not only slow the fight toward gender equality, but could also slow down the global economy.
Topic:
Gender Issues, Women, Inequality, Economy, and COVID-19
Political Geography:
Global Focus