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Begin New Search Topic Economics Content Type Special Report Publishing Institution Korea Economic Institute of America (KEI)

1. South Korea as a Fourth Industrial Revolution Middle Power?

Author:
Dongwoo Kim
Publication Date:
10-2021
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This paper proposes a framework for conceptualizing middle powerism in the context of the Fourth Industrial Revolution, using South Korea as an example. The paper argues that the systemic transformation of the Fourth Industrial Revolution has created new openings for middle powerism, and proposes 1) technology, 2) networks, and 3) governance as factors that could enable it. Then, South Korea’s capacities in each of these three areas, potential barriers, and ultimately Seoul’s capacity to act as a “Fourth Industrial Revolution” middle power are evaluated.
Topic:
International Relations, Economics, Science and Technology, Governance, Industrialization, and Middle Power
Political Geography:
Asia and South Korea

2. Building on the Middle: Diversifying South Korea’s Foreign Policy Narrative and Economic Ties

Author:
Carolin Wefer
Publication Date:
11-2021
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The rivalry between the United States and China is affecting countries in its midst. This particularly applies to South Korea. The country is a strong economic player with a successful net of free trade agreements. Additionally, it has branded itself as a middle power, a multilateralist, and good international citizen. However, South Korea’s middle power perspective has recently assumed a literal definition of being situated in the middle of two great powers. Seoul’s dependencies on both the U.S. and China are undeniable. As the conflict intensifies, it is thus essential for South Korea to diversify its ties through trade policy and multilateral fora. This requires leaving the literal middle power definition behind and leveraging its economic standing towards an increase in international status, as well as refocusing on the figurative middle power narrative that brought the country to its initial global esteem. Through diversification and the build-up of its economic and multilateral prowess, South Korea stands to lessen the shocks of the U.S.-China rivalry. Joining RCEP and obtaining a guest role at the G7 were important steps in that direction. They offer an expansion of both regional and global ties and an involvement in discussions on the redefinition of international fora, but more can be done.
Topic:
Foreign Policy, Economics, Multilateralism, Rivalry, and Middle Power
Political Geography:
China, Asia, South Korea, and United States of America

3. 2020 Report on American Attitudes Toward the Korean Peninsula

Author:
Troy Stangarone and Juni Kim
Publication Date:
09-2020
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
KEI’s 2020 Report on American Attitudes Toward the Korean Peninsula focuses on U.S. views on relations with South Korea, U.S. awareness of South Korean brands and cultural products, and views on North Korea and was conducted by YouGov. The results reveal that while Americans have a favorable view of South Korea and about half are supportive of maintaining U.S. troops on the Korean Peninsula, few Americans watched or listened to Korean cultural products in the last year. Americans also view North Korea as one of the three critical challenges for the United States, but fewer than 1-in-3 approve of the administration’s handling of North Korea.
Topic:
Security, Foreign Policy, Economics, Human Rights, Politics, Culture, Public Opinion, and Domestic Policy
Political Geography:
North America, Korean Peninsula, and United States of America

4. North Korea’s Military Strategy, 2018

Author:
Chun In-bum
Publication Date:
08-2018
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
As the focus shifted from North Korea’s military advances in 2017 to its diplomatic offensive in 2018, we should not lose sight of the strategic thinking behind gaining the maximum time to develop the capacity to extend its military threat. At present North Korea needs time to perfect its nuclear strike capability. It has been very successful in developing missile capabilities, but it needs additional time to achieve its goals. Starting with high-level North-South talks on March 5, 2018, the DPRK has just gained what it needs most: time. Whenever the first talks begin with the United States and the DPRK, there should be no surprise if the DPRK comes with an improved capability to threaten the alliance. Thus, for an extended period in 2018, as diplomacy proceeds, we should expect a subdued North Korean approach: not flaunting its nuclear weapons and missiles, while striving to boost capabilities for the struggle ahead. In the seven years since Kim Jong-un officially inherited the leadership of the DPRK, his stated policy has been byungjin ( 병진, 竝進), the pursuit of both economic and military development. In conjunction with purges and efforts to eliminate rivals, byungjin may, in part, derive from Kim’s efforts at the outset of his tenure to consolidate political power. Through it, Kim displayed moderate economic flexibility, thereby gaining favor with the North Korean people through facilitating an improvement in living standards. It is tempting to see byungjin as a sign of the regime’s weakness, or as an indication of moderation, either of which would prompt the eventual collapse of the Kim regime. Correspondingly, one might see it as a reflection of Kim’s immaturity, inexperience, and lack of political and strategic acumen. These viewpoints reflect mirror imaging more than a sophisticated understanding of North Korea. Byungjin may be more of a political device and a strategic communications element of a grand strategy, as opposed to the regime’s strategy. It may be a significant instrument in the regime’s effort to maintain elite cohesion and focus the energies of the North Korean people toward productive pursuits that likewise add to the regime’s legitimacy and staying power. It by no means suggests any diminishing of the priority of making advances in nuclear and missile development in order to pose a more serious threat. Since taking power, Kim’s regime has fired close to one hundred missiles of wide variety and range compared to thirty-one for his father and grandfather combined. He has also conducted four nuclear tests, boasting of a thermal nuclear capability. During his 2018 New Year’s address, Kim Jong-un proclaimed that the DPRK had perfected its nuclear and intercontinental missile capabilities, supporting North Korea’s constitutional claim to be a nuclear power. Despite an upsurge in diplomacy after this address, we should keep our eyes on its military advances.
Topic:
Diplomacy, Economics, International Security, Military Strategy, and Weapons
Political Geography:
Asia, North Korea, and Korea

5. North Korea’s Economic Strategy, 2018

Author:
William B. Brown
Publication Date:
08-2018
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This chapter takes the perspective of North Korea’s leadership as it confronts difficult economic problems in the remaining months of 2018. The major current and potential issues are listed and prioritized. Short and longer-term remedies are presented, each with trade-offs that affect other economic and policy issues. Given the absence of direct reporting from North Korea, the issues and debates presented are speculative, designed to give the reader a more comprehensive understanding of North Korea’s current problems than is ordinarily presented in western media. Kim Jong-un’s recent diplomatic offensive, reaching out to South Korea, China, and the United States is, in this view, suggestive of these internal economic troubles in addition to the nuclear security issues. The troubles are both short-term—the collapse in trade with China in just the past few months—and long-term, the slow-motion collapse of the communist country’s “command” economy. And much more than in the past, the problems relate to the regime’s unusual and dangerous monetary system, money being a normal issue for most governments but a relatively new one for this still partially rationed, or planned, oriented system. The leadership may have little choice but to let the domestic economy move further from the plan—allowing decentralized market and private activities more sway—than ever before. This would help cushion the central government from losses due to the sanctions and open the door to a much more prosperous future. Without major moves in this direction, inflation and unemployment may cascade into social crisis. It should be noted, that the recent Assembly Meetings, which annually focus on the economy, gave little official indication of policy changes, only a sense of digging in further to protect the regime from outside forces. But just a week later, Kim may have telegraphed an upcoming sea change when, in his address to the Party Central Committee plenum, that he is instituting a new Party Line, socialist economic construction, as the total focus of the Party and the country. Major changes, if they are to occur, will likely come after the upcoming important summits with South Korea and the U.S.1 There is little doubt that the economy in 2018 is in very poor condition, delivering one of the worst productivity rates—productivity in terms of labor and of capital—in the world, but it is important to recognize that this is due not to natural circumstances but to decisions the government has made over the years, and trade-offs it has already made. This suggests that astute government policy can create solutions and restore growth. Remedies of the sort expressed here, for example in liquidating, that is selling or leasing state assets to private buyers, raising fixed prices for state delivered electricity and for water and other utilities, and giving large pay raises to the millions of state workers who now rely on rations, while culling their numbers, would require difficult economic and social trade-offs; one might say there is no free lunch for Kim and his regime although no doubt they are looking for one, even in these summits. The chapter discusses just what kinds of decisions might be made and the likely consequences. Negotiations being set with South Korea and with the United States, and likely more discussions with China, may weigh heavily in how far Pyongyang will be willing to go in these respects. In my view the regime will be looking for: outright aid, payments for pushing back the nuclear weapons program, and premature relief from sanctions, which would only give the regime time to avoid the hard choices needed to permanently fix the broken economic system.
Topic:
Diplomacy, Economics, Sanctions, Services, and Trade
Political Geography:
China, Asia, North Korea, and Korea

6. Economic Regionalism is Key to Openness and Growth: An ASEAN Perspective

Author:
Sanchita Basu Das
Publication Date:
08-2018
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The 10 members of the Association of Southeast Asian Nations (ASEAN) are involved in several regional economic arrangements, not only their own ASEAN Economic Community (AEC), but also those in a bigger geographic area, such as the ASEAN+1 Free Trade Agreements (FTAs) and the Regional Comprehensive Economic Partnership (RCEP). A subset of these countries are partaking of Asia-Pacific deals, namely the latest Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the Asia-Pacific Economic Cooperation (APEC). Some are pursuing bilateral deals in pursuit of deeper economic cooperation. Finally, all ASEAN countries are members of the Belt and Road Initiative (BRI), which although not labelled a trade agreement, is concerned with trade-related measures including transport infrastructure, policy coordination, economic connectivity through trade and investment, customs modernization, financial cooperation, and people-to-people linkages. A common feature of all these trade agreements is that they are not just focused on removing restrictions on trade, i.e. lowering import tariffs and quotas, but are much more comprehensive and include issues like trade in services, investment, labor, intellectual property rights, regulatory standards, and health and safety rules. All of these agreements deal with cooperation measures beyond national borders and can be called deep economic cooperation. They go beyond the WTO framework and are often labeled “new regionalism,” understood as state-led projects in the context of global developments. The extent of deepness varies, mainly depending on the participating countries’ development stage and the economic competitiveness of domestic sectors. What do the ASEAN countries aim to achieve? Theory has elucidated that governments have motives ranging from politics to economics when entering an economic cooperation arrangement. The political motives could be confidence building, i.e. if an international relationship was blemished by a history of conflict, economic cooperation can introduce a process of confidence building.3 For smaller countries, it could be seen as a means to increase bargaining power with the international community. Countries often see economic cooperation as a means to hasten their domestic economic reforms so as to increase attractiveness to foreign investors.4 Governments could follow a regionalism exercise also to defend domestic interests that are threatened by regionalism elsewhere. As for the economic motives, countries prefer cooperation among a limited number of players as it enables continued protection in a bigger geographical space and shuns producers from non-members. This enables them to exclude “politically sensitive,” noncompetitive domestic sectors completely from trade liberalization. Finally, regional economic arrangements are essential for creating economies of scale for producers and offering a larger market for consumers, which increases attractiveness to potential investors. This chapter elaborates on ASEAN’s perspective on economic regionalism in the Asia-Pacific. It examines key initiatives that ASEAN countries are currently negotiating or implementing in their national economies, discusses economic and strategic motives, and views the future of regionalism from an ASEAN perspective. It concludes that although the ASEAN countries are facing some uncertainties in their pursuit of economic regionalism, they will continue to support the endeavor as it serves their economic structure of openness. The countries have realized the benefits of economic integration in terms of confidence building of investors, thereby bolstering economic growth.
Topic:
Economics, Treaties and Agreements, Economic Growth, and Regional Integration
Political Geography:
Asia and Southeast Asia

7. Advancing the Regional Trade Order in East Asia with a Less Engaged United States

Author:
Korea Economic Institute of America
Publication Date:
08-2018
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
In the aftermath of Donald Trump’s election and immediate pullout from the TPP, a scramble ensued over how to proceed with constructing a regional trade order centered on East Asia. For China this brought closer scrutiny of its pursuit of the Belt and Road Initiative (BRI). In the case of Japan, questions followed about what to do with the residue of TPP. Others, notably countries in Southeast Asia, were left contemplating the balance between eastern exclusive regionalism and the western presence in regionalism. In the background were efforts in South Asia aimed at advancing economic integration with East Asia. A kind of free-for-all was in progress without the moorings that had been lost after the paradigm of competition between a U.S.-led TPP and a China hub-and-spokes BRI no longer was guiding the strategic calculations of Asian countries. Then, in March 2018 came Trump’s disruptive tariffs, threatening to set a trade war in motion. Four chapters explore the challenge of advancing a regional trade order in East Asia in the new circumstances of 2017-18. Tu Xinquan in Chapter 10 questions whether BRI is a path toward regionalism, delving deeply into the Chinese strategy for BRI. T.J. Pempel follows in Chapter 11 by exploring Japan’s thinking about TPP and the process of refocusing on TPP- 11 following the U.S. withdrawal. Chapter 12 by Sanchita Basu Das offers a hopeful ASEAN perspective on economic regionalism. Finally, in Chapter 13 Pradumna Bickram Rana traces thinking about re-energizing economic integration between South Asia and East Asia. With no finality to the RCEP talks and the recently concluded TPP-11 pact still taking shape and Trump’s “America First” trade policy casting a dark shadow, we aim to capture signs of a new trade order at a time of flux.
Topic:
Economics, Regional Integration, and Trade
Political Geography:
Japan, China, East Asia, Asia, and Korea

8. Progress and Implications of the China-Korea FTA

Author:
Li Si-qi, Tu Xin-quan, and Liu Bin
Publication Date:
07-2017
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The article focuses on the China-Korea FTA, analyzing the background of China-Korea bilateral economic relations, the characteristics of the China-Korea FTA and more importantly, the implications and future prospect of this free trade pact. So far, the China-Korea FTA is considered to be the most comprehensive compared with China's previous FTAs and may be the largest in trade terms among all the FTAs concluded by Korea and China, playing a positive role in advancing economic integration in the Asia-Pacific region. However, with lots of exceptions to tariff elimination and market access, as well as a 20-year transition period, the present version of the China-Korea FTA is far from the best in terms of the depth of liberalization and the scope of obligations on trade and investment rules. The recent bilateral diplomatic tensions due to the decision of deploying the THAAD missile system by the Korean government may also jeopardize bilateral economic ties between China and Korea, and further increase uncertainties of the China-Korea FTA. It remains to be seen whether the Chinese and Korean governments will handle this issue smoothly under the present sensitive political atmosphere and achieve substantial progress in follow-up FTA negotiations on services and investment.
Topic:
Diplomacy, Economics, Bilateral Relations, and Regional Integration
Political Geography:
China, Asia, South Korea, and Korea

9. Korea's Economic Relations with Japan

Author:
Kim Gyu-Pan
Publication Date:
07-2017
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Korea's economic relations with Japan, which were re-established as a result of the diplomatic normalization between the two countries in 1965, have transformed from dependent to interdependent. The extraordinary economic growth that Korea accomplished during the post-war period was largely due to intermediate goods imported from Japan, and technical cooperation and joint ventures with Japanese enterprises. However, in the 21st century, the dependence of Korean firms on Japanese technology has somewhat declined as global enterprises have appeared in Korea. In contrast to the post-war economic boom, Japanese companies now prefer to cooperate with their Korean counterparts, resulting in joint business ventures between Korean and Japanese firms being continuously developed. This reversal in the economic ties between Korea and Japan can be attributed to several reasons including: the rise of China; Japan's two lost decades; and Korea's push for domestic structural reform as well as economic globalization after the Asian Currency Crisis of 1997. Nonetheless, the issue of Korea's trade imbalance with Japan, which was established during the post-war period, still remains thereby serving as a serious impediment to FTA negotiations between Korea and Japan as well as Korea's TPP negotiations.
Topic:
Economics, History, Bilateral Relations, and Trade
Political Geography:
Japan, Asia, South Korea, and Korea

10. Present Conditions of North Korean Industry and Possible Reconstruction Plans

Author:
Lim Soo-ho and Hong Seok-ki
Publication Date:
07-2017
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Since the collapse of industry during the 'Arduous March' (1995-1997), Pyongyang has continuously launched reconstruction plans but has failed to see a rebound. The key is to restore industrial linkages; however, the DPRK allocated a majority of state investment to the defense industry under the 'Military First Economic Policy.' As long as the 'strategic sector' retains priority, a sound outcome seems to be out of reach. In reality, North Korea's comparative advantage lies on labor-intensive business, with abundant labor forces at a low cost. After unification, such industries will have bright prospects with technology and capital not only from South Korea, but also from China and Japan. The economic integration scenario of the two Koreas -- whether radical or gradual -- will decide industrial policies for the upper half of the peninsula in the post-unification era.
Topic:
Economics, Science and Technology, History, Reconstruction, and Industry
Political Geography:
Japan, China, Asia, South Korea, North Korea, and Korea