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141. Exploring Law Enforcement Hacking as a Tool Against Transnational Cyber Crime

Author:
Gavin Wilde and Emma Landi
Publication Date:
04-2024
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
In terms of revenue, 2023 will go down as a record-breaking year for ransomware, with over a billion dollars in payments going to hackers.1 The U.S. Federal Bureau of Investigation (FBI) reports a record $12.5 billion lost to cyber crime more broadly over the course of that year.2 As the quantities of affected users and organizations, payoff amounts, critical services, and pilfered sensitive data continue to rise, Western capitals have in recent years come to treat transnational cyber crime as a major national security concern. Because cyber criminals often operate from third countries where prosecution or extradition are unlikely, policymakers often look to military and intelligence services as the best (or only) entities capable of operationally disrupting cyber crime syndicates. Yet another growing trend challenges this notion: Western law enforcement agencies (LEAs) also have been expanding their own abilities to cross both technical and national boundaries to take on cyber criminals. This trend is creating new opportunities and challenges for both domestic and international cyber policy.
Topic:
Crime, Science and Technology, Law Enforcement, and Cybersecurity
Political Geography:
Global Focus

142. South Africa’s Cyber Strategy Under Ramaphosa: Limited Progress, Low Priority

Author:
Joe Devanny and Russell Buchan
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
During the decades of apartheid, South Africa was an international pariah. Since the country transitioned to majority rule in 1994, the African National Congress (ANC) has dominated politics, and the ANC has itself transitioned from a national liberation movement to a party of government. Domestically, South African cyber strategy should be seen as part of the ANC’s wider political challenge of trying to deliver economic growth, development, and prosperity. Over thirty years, the ANC has struggled to deliver on this agenda in a profoundly unequal society with infrastructure and institutions that have weakened particularly over the past fifteen years. Alongside confronting domestic challenges, the ANC has also tried to reshape South Africa’s global role. This was perhaps most visible under its first president, Nelson Mandela (1994–1999), but it was arguably pursued most systematically under Mandela’s successor, Thabo Mbeki (1999–2008). This reorientation of South Africa in the world was an ambitious and complex project, the foundations of which were the country’s leading role in its region and continent as well as its ties within the wider Global South. The project entailed tensions between the progressive promotion of human rights and freedoms, on the one hand, and the cultivation of instrumental relations with authoritarian and repressive states, on the other. These tensions continue to affect South African foreign policy, including its cyber diplomacy. South Africa identifies cybersecurity as a key national priority and has to this end adopted a national cybersecurity strategy and established a military Cyber Command. The reality, however, is that other issues have been consistently ranked above cybersecurity, such as addressing corruption, poverty, racial and social injustice, and the HIV/AIDS epidemic. Cybersecurity has therefore not been seen as a high priority by successive South African governments. This has left Cyber Command underresourced and unmotivated. This deprioritization means that South Africa is unlikely to emerge as a prominent military or intelligence cyber power anytime soon. The wider lack of national prioritization will also make it harder for so-called like-minded states—which are bound together by a mutual respect for democracy, human rights, and the rule of law—to form an effective partnership with South Africa on the topic of cybersecurity. South Africa’s approach to international cyber governance debates has been cautious and noncommittal, reflecting cyber diplomacy’s relatively low priority in its national strategy. What position South Africa takes in cyber debates is, however, of keen interest to the international community. An important question is whether South Africa will support the existing multistakeholder approach to cyber governance that is championed by like-minded states or join China and Russia in their efforts to recalibrate this approach and push for greater state control over cyberspace. Indeed, under President Cyril Ramaphosa, South Africa has not yet published its national position explaining how international law applies to cyberspace. A related question is whether South Africa will join like-minded states in elaborating how existing international law applies to cyberspace or side with China and Russia to campaign for new, bespoke international law (for example, treaties) to regulate this domain. When examining these questions, it is important to recognize the context of the ANC’s long-standing ties with Russia, both during its thirty years in government and in its previous decades struggling for national liberation. This is helpful for understanding South Africa’s interactions with Brazil, Russia, India, and China (which form the BRICS bloc with South Africa) and forecasting its future positions in cyber governance debates. For example, South Africa has been reluctant to unambiguously condemn Russia’s invasion of Ukraine in 2022, and it appears to have supported Moscow by covertly supplying it with weapons. In the longer term, South Africa’s positions in cyber diplomacy debates will likely be shaped by trends in both domestic politics—such as the ANC’s waning electoral performance—and the success of digital development. In this context, it is perhaps advisable for like-minded states, such as the United States, to focus on cyber capacity-building assistance and ensure that these efforts play into the wider development agenda in South Africa.
Topic:
Corruption, Poverty, Science and Technology, Cybersecurity, Democracy, and Racial Justice
Political Geography:
Africa, Iran, and South Africa

143. The Buildup to a Crisis: Current Tensions and Future Scenarios for Tunisia

Author:
Ishac Diwan, Hachemi Alaya, and Hamza Meddeb
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Tunisia has been living beyond its means since 2011. External support and credit flowed into the country after the 2010–2011 uprising to support its nascent democracy, but this funding ended up largely financing a consumption boom that is unsustainable. To make matters worse, macroeconomic and political instability have begun to deeply harm the country’s productive capacity. The risk of a serious financial crisis has risen and corrective action is needed to ward it off. Tunisia’s political system should be able to avoid such catastrophic outcomes. Most reasonable people agree that the risks are rising and that something needs to be done. However, the disagreement is over magnitude, timing, and the type of program required to address the country’s problems. A hard economic adjustment risks unleashing a sociopolitical crisis. Not engaging in a correction, however, may well engender a future economic meltdown. Buying time is easiest politically, but it often means only postponing the crisis, leading to an even larger explosion. The challenge is to find the narrow path to escape a crisis by generating confidence in a national program that is politically acceptable and that can lead to a brighter future. Faced with these negative dynamics—the lack of sustainability and economic regression—economic agents might not merely adjust to the new normal. Instead, they might try to push the burden elsewhere in the economy and by so doing unleash more destructive forces. Think of society, with its networked organizations, as a hydraulic system. As pressure mounts, weaker parts of the network are at risk. Pushing pressure out from one part, instead of addressing the root cause of the problem, only leads to more pressure on other parts. Ultimately, the system will burst at its most vulnerable point. Typically, deterioration is not linear. Pressure builds up in invisible ways until the system explodes in a generalized crisis. There are several ways in which this can happen: foreign exchange reserves are used up slowly until a run takes place and the currency collapses; financing the state’s losses drains the private sector, reducing investment, until there is a collapse in growth; taxes are raised or services reduced, or both, leading to a social explosion; fiscal losses are financed with new loans (or arrears) until creditors dry up, and printing money remains the only solution, leading to hyperinflation; or banks keep lending to the state until depositors lose confidence in the banking sector and there is a bank run. What is destroyed will have to be rebuilt from scratch at great cost. It is in this context that Carnegie’s new Tunisia Sustainability Lab is beginning its work. The objective is twofold. First, the lab will monitor the risks ahead and alert the public about developments. It will do so by preparing a regular scorecard of Tunisia’s economic, financial, fiscal, external, and sociopolitical domains. Second, the lab will track proposals advanced by national and international parties on possible pathways to progress, reporting on and analyzing initiatives to avoid the worst of them. So far, several International Monetary Fund (IMF) proposals have been rejected by the Tunisian authorities. There are alternative proposals, some outlined by civil society actors, but they have not materialized. To support social dialogue, we will highlight the various initiatives and try to evaluate their impact. We will also develop scenarios to assess macroeconomic trends, which we will update over time.
Topic:
Crisis Management, Macroeconomics, IMF, and Economic Crisis
Political Geography:
North Africa and Tunisia

144. Tracing the Roots of China’s AI Regulations

Author:
Matt Sheehan
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
In 2021 and 2022, China became the first country to implement detailed, binding regulations on some of the most common applications of artificial intelligence (AI). These rules formed the foundation of China’s emerging AI governance regime, an evolving policy architecture that will affect everything from frontier AI research to the functioning of the world’s second-largest economy, from large language models in Africa to autonomous vehicles in Europe. U.S. political leaders often warn against letting China “write the rules of the road” in AI governance. But if the United States is serious about competing for global leadership in AI governance, then it needs to actually understand what it is competing against. That requires examining the nuts and bolts of both China’s AI regulations and the policy process that shaped them. This paper is the second in a series breaking down China’s AI regulations and pulling back the curtain on the policymaking process shaping them. The Chinese Communist Party (CCP) and the Chinese government started that process with the 2021 rules on recommendation algorithms, an omnipresent use of the technology that is often overlooked in international AI governance discourse. Those rules imposed new obligations on companies to intervene in content recommendations, granted new rights to users being recommended content, and offered protections to gig workers subject to algorithmic scheduling. The Chinese party-state quickly followed up with a new regulation on “deep synthesis,” the use of AI to generate synthetic media such as deepfakes. Those rules required AI providers to watermark AI-generated content and ensure that content does not violate people’s “likeness rights” or harm the “nation’s image.” Together, these two regulations also created and amended China’s algorithm registry, a regulatory tool that would evolve into a cornerstone of the country’s AI governance regime. Contrary to popular conception in the rest of the world, China’s AI governance regime has not been created by top-down edicts from CCP leadership. President Xi Jinping and other top CCP leaders will sometimes give high-level guidance on policy priorities, but they have not been the key players when it comes to shaping China’s AI regulations. Instead, those regulations have been the product of a dynamic and iterative policymaking process driven by a mix of actors from both inside and outside the Chinese party-state. Those actors include mid-level bureaucrats, academics, technologists, journalists, and policy researchers at platform tech companies. Through a mix of public advocacy, intellectual debate, technical workshopping, and bureaucratic wrangling, these actors laid the foundations for China’s present and future AI regulations. This paper traces the progression of these regulations through the “policy funnel” (see figure 1) of Chinese AI governance. For both recommendation algorithms and deep synthesis rules, the initial spark for the regulation came from long-standing CCP concerns about the creation and dissemination of online content. For the former, the rise of the algorithmically driven news app Toutiao threatened the CCP’s ability to set a unified narrative and choose which stories are pushed to readers. In the case of deep synthesis, online face swap videos grabbed the attention of the Chinese public and led government regulators to consider the threat of deepfakes. Over the course of 2017–2020, these concerns made their way through China’s bureaucracy. Regulators took a series of stopgap measures in specific applications, while also tasking policy analysts and government-adjacent technical organizations with exploring different regulatory interventions.
Topic:
Science and Technology, Governance, Regulation, and Artificial Intelligence
Political Geography:
China, East Asia, and Asia

145. What works for working couples? Work arrangements, maternal labour supply, and the division of home production

Author:
Ludovica Ciasullo and Martina Uccioli
Publication Date:
05-2024
Content Type:
Working Paper
Institution:
Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
Abstract:
We document how a change to work arrangements reduces the child penalty in labor supply for women, and that the consequent more equal distribution of household income does not translate into a more equal division of home production between mothers and fathers. The Australian 2009 Fair Work Act explicitly entitled parents of young children to request a (reasonable) change in work arrangements. Leveraging variation in the timing of the law, timing of childbirth, and the bite of the law across different occupations and industries, we establish three main results. First, the Fair Work Act was used by new mothers to reduce their weekly working hours without renouncing their permanent contract, hence maintaining a regular schedule. Second, with this work arrangement, working mothers’ child penalty declined from a 47 percent drop in hours worked to a 38 percent drop. Third, while this implies a significant shift towards equality in the female- and male-shares of household income, we do not observe any changes in the female (disproportionate) share of home production.
Topic:
Economics, Labor Issues, Women, Work, and Home Production
Political Geography:
United Kingdom and Europe

146. Transitional justice and women’s representation in peacebuilding: Myanmar and the case for Feminist Foreign Policy

Author:
Nang Moet Moet and Clara Bradley
Publication Date:
03-2024
Content Type:
Working Paper
Institution:
International Women's Development Agency (IWDA)
Abstract:
February 2024 marks three years since the start of the military coup which ignited Myanmar’s Spring Revolution. For the first time in the nation’s history, women have been at the forefront of the resistance, making up over 60 percent of the resistance movement.i The unprecedented number of women in the movement signals women’s refusal to live under patriarchal military rule. The modest yet critical gains made towards gender equality during the democratic period enabled a generation of women to see the value of their participation in broader functions of society. Reverting back to military rule would not just hinder progress on gender equality, it threatens the hardwon fundamental rights of women and girls. In a country shaped by decades of militarization, this war, like those before it, has compounded women’s experience of patriarchal violence. As Ethnic Armed Organisations (EAO) and the Civil Disobedience Movement (CDM) inch closer to defeating the Myanmar military (herein referred to as the ‘junta’), attention is turning to post-coup peace and nation building processes. At this important juncture in Myanmar’s political history, women are demanding adequate representation and genuine participation in peacebuilding processes, including transitional justice initiatives that adequately address violence against women in conflict. Over the decades of political instability, women have been repeatedly told that a democratic union must come before gender equality.ii The de-prioritisation of women’s participation in public life is embodied in the Constitution 2008, which clearly proscribes that ‘nothing in this section shall prevent appointment of men to positions that are naturally suitable for men only.’iii This subjugation of women’s rights to political stability is mirrored in traditional foreign policy approaches that prioritise the security of the nation state, rather than the security of the individuals within that state. A feminist foreign policy approach inverts the traditional hierarchy, understanding that security is not possible absent the conditions required for all people to flourish. Without addressing the structural roots of pervasive violence that has oppressed both women and ethnic minorities in Myanmar society for decades, there can be no durable peace. Countries that have adopted a feminist foreign policy – or those with a values-based foreign policy such as Australia – must invest in, and advocate for, the inclusion of women from all ethnic groups in future peace and transitional justice processes.
Topic:
Foreign Policy, Women, Transitional Justice, Feminism, and Representation
Political Geography:
Southeast Asia and Myanmar

147. Climate action: Implications for factor market reallocation

Author:
Robert Z. Lawrence
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper considers climate policies, not from the perspective of their environmental impacts, but rather their likely effects on labor and investments. While the aggregate impact of the green transition on jobs and investment may be modest, it will require significant reallocation of labor and capital within and across industries. Although the green transition brings new opportunities for employment and investment in renewable technologies, many workers and communities tied to the fossil fuel industry may not benefit from these advances due to skills mismatch and geographic constraints. Both the United States and the European Union acknowledge the importance of achieving “climate justice” and “leaving no one behind” in their decarbonization efforts. However, current policies and resources in the United States may fall short, with inadequate assistance reaching too many communities and a narrow focus on green jobs. In Europe, while the Just Transition Fund complements existing programs, effective implementation of place-based policies remains challenging due to the need for specific, localized responses.
Topic:
Climate Change, Environment, Labor Issues, European Union, and Energy
Political Geography:
North America and United States of America

148. Trade policy, industrial policy, and the economic security of the European Union

Author:
Chad P. Bown
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Out of fear about its economic security, the European Union is transitioning to a new form of international economic and policy engagement. This paper explores some of the major trade issues surrounding the bloc’s economic security, the role of trade and industrial policies in achieving its objectives, and some of the economic costs of doing so. It begins by explaining why economic security is suddenly playing such a prominent role and providing early evidence to motivate these government interventions. It then turns to a case study—new policies associated with China’s exports of electric vehicles and graphite—that highlights the difficult choices and practical challenges the European Union faces in tailoring policy to address concerns over economic security. The paper then introduces the domestic policy instruments that the European Union, its member states, and other governments are pursuing to address economic security, including stockpiling and inventory management, investment or production subsidies, tariffs, export controls, and regulations on foreign investment, as well as the scope for selective international cooperation over such policy instruments. The paper concludes with some caveats about abandoning interdependence and lessons from history.
Topic:
Security, Industrial Policy, European Union, Trade Policy, and Economic Security
Political Geography:
Europe

149. Lessons from China's fiscal policy during the COVID-19 pandemic

Author:
Tianlei Huang
Publication Date:
03-2024
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Expansionary fiscal policy helped China's economy grow in 2020, a year in which most economies contracted because of the COVID-19 pandemic. Amid a broader pivot to policy and regulatory tightening, fiscal support was withdrawn in 2021. In 2022, government budget turned expansionary to ensure economic stability ahead of the Communist Party Congress, but the execution fell short and fiscal policy ended up being weaker than planned. A recurrent problem during the pandemic, however, was that local governments did not fully spend their budgets. Aside from the sharp drop in local governments' land sale revenue in 2022, which dragged down their spending, it was also caused by local governments' failure to fully utilize their special bond quotas approved by the central government for capital investment. China's fiscal policy during the COVID-19 pandemic highlights four issues with implications for fiscal policy making. First, the government needs to avoid projecting unrealistically high land sale revenue in its budgets. Second, it needs to reconsider its problematic use of local-government special bond as a major fiscal stimulus instrument. Third, it needs to make sure its deficit, growth, and inflation targets are consistent. Last, Beijing needs to be more tolerant of higher fiscal deficits, at a minimum ensuring that overall fiscal spending grows at least as rapidly as nominal output.
Topic:
Budget, Economic Growth, Fiscal Policy, COVID-19, and Fiscal Deficit
Political Geography:
China and Asia

150. The effect of lawful crossing on unlawful crossing at the US southwest border

Author:
Michael A. Clemens
Publication Date:
04-2024
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
An increasing number of migrants attempt to cross the US Southwest border without obtaining a visa or any other prior authorization. 2.5 million migrants did so in 2023. In recent years, responding to this influx, US officials have expanded lawful channels for a limited number of these migrants to cross the border, but only at official ports of entry. These expanded lawful channels were intended to divert migrants away from crossing between ports of entry, by foot or across rivers, thereby reducing unlawful crossings. On the other hand, some have argued that expanding lawful entry would encourage more migrants to cross unlawfully. This study seeks to shed light on that debate by assessing the net effect of lawful channels on unlawful crossings. It considers almost 11 million migrants (men, women, and children) encountered at the border crossing the border without prior permission or authorization. Using statistical methods designed to distinguish causation from simple correlation, it finds that a policy of expanding lawful channels to cross the border by 10 percent in a given month causes a net reduction of about 3 percent in unlawful crossings several months later. Fluctuations in the constraints on lawful crossings can explain roughly 9 percent of the month-to-month variation in unlawful crossings. The data thus suggest that policies expanding access to lawful crossing can serve as a partial but substantial deterrent to unlawful crossing and that expanding access can serve as an important tool for more secure and regulated borders.
Topic:
Security, Migration, and Borders
Political Geography:
North America, Mexico, and United States of America

151. Tackling the UK's regional economic inequality: Binding constraints and avenues for policy intervention

Author:
Anna Stansbury, Dan Turner, and Ed Balls
Publication Date:
05-2024
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper analyzes binding constraints to productivity growth in the United Kingdom’s regions outside London and the greater South East. These analyses challenge a number of common arguments about the UK’s regional economic inequality problem. The authors find little evidence consistent with the hypotheses (i) that low shares of university graduates remain the primary constraint on growth for the UK’s regions; (ii) that there is a generalized issue with access to finance for firms outside the South East; or (iii) that low or falling regional migration rates are to blame for the persistence of the UK’s regional economic inequalities. Instead, they find evidence consistent with (i) a specific relative shortage of STEM degrees; (ii) binding transport infrastructure constraints within major non-London conurbations; (iii) a failure of public innovation policy to support clusters beyond the South East, in particular through the regional distribution of public support for research and development (R&D); and (iv) missed opportunities for higher internal mobility due to London’s overheating housing market. The authors also find some suggestive evidence consistent with constraints on access to early-stage equity financing for high growth-potential small and medium-sized enterprises in certain regions.
Topic:
Finance, Economic Growth, Economic Inequality, and Productivity
Political Geography:
United Kingdom and Europe

152. The El Niño Southern Oscillation and Geopolitical Risk

Author:
Cullen Hendrix
Publication Date:
05-2024
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper investigates whether the El Niño Southern Oscillation (ENSO)—the warming and cooling cycle in the central and eastern Pacific Ocean that affects both global atmospheric and ocean conditions—is a driver of geopolitical risk at the global scale. Using nonlinear cross-convergent mapping, a technique for characterizing causal relationships in dynamic systems, it finds ENSO is causally related to geopolitical risk at the global level, but that finding is not replicated at the country level for countries whose economies are most strongly influenced by ENSO cycles. Put differently, ENSO-related geopolitical risk is an emergent phenomenon evident only at the Earth system level. Then, using monthly observations of ENSO and geopolitical risk, the paper reports a curvilinear, contemporaneous relationship between ENSO and risk, with La Niña conditions associated with lessened geopolitical risk relative to El Niño and neutral climate conditions. The effects are statistically and substantively significant, and the relationship is demonstrated to be stronger in more recent decades (post-1990). The effect for geopolitical risk of transitioning from La Niña to neutral ENSO conditions is of similar magnitude to that of the outbreak of a major interstate war.
Topic:
Security, Agriculture, Climate Change, Politics, Geopolitics, Risk, Weather, and El Niño
Political Geography:
Global Focus

153. The Evolving Landscape of U.S. Economic Security: The Confluence of Trade, Technology, and National Security

Author:
Andrea Viski
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This paper examines the current evolution of U.S. economic security discourse to demonstrate the implications, challenges, and shortcomings of U.S. economic security tools and the catalyzing impact of technology. While component economic security considerations are broad and encompass issues from natural disaster planning to cybersecurity, this paper focuses specifically on the impact of trade and technology in the economic security context. It discusses the main influences and features of U.S. economic security policy as it relates to trade, technology, and the security of the supply chain. The paper includes sections on evolving notions of the dual-use concept; the need to manage and respond to technology flows with more effective strategies, and new foreign policy efforts and tools to strengthen economic security. The paper focuses on the trends forging the path for the United States to define economic security so closely with national security, and in exploring these trends, it delineates how the United States has implemented policies and adopted, reoriented, or created new policy tools designed to strengthen economic security. The paper also explores why the rapid evolution of emerging technologies has played such a defining role. Finally, the paper examines the effectiveness of the U.S. approach to economic security and its challenges and offers insights into how it can be strengthened in the future
Topic:
National Security, Science and Technology, Trade, and Economic Security
Political Geography:
North America and United States of America

154. Japanese Economic Security as “Derisking”

Author:
Kazuto Suzuki
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This paper examines the concept of “derisking” and how the Japanese Economic Security Promotion Act (ESPA) has responded to it within the framework of deterrence theory. It explores how ESPA allows deterrence by denial against economic coercion by other states and is itself a derisking measure. It contends that deterrence by denial, which means reducing dependency and improving resilience, could include stockpiling strategic materials, diversifying sources of supply, developing alternative materials, and developing alternative products. However, this paper argues that there is a need to strengthen the mechanism for collaborative deterrence by denial, such as the “Coordination Platform” presented at the G7 Hiroshima Summit. As for other forms of deterrence, such as institutional deterrence and deterrence by punishment, their effectiveness is insufficient, and they face many implementation problems. Therefore, this paper argues that the most optimal derisking strategy at this point is the combination of ESPA and the “Coordination Platform” to strengthen the capabilities of deterrence by denial.
Topic:
Risk, Deterrence, Economic Security, and Coercion
Political Geography:
Japan and Asia

155. Is Economic Security National Security? Defining South Korea’s Economic Security for Future Industries

Author:
June Park
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This paper explores how South Korea defines “economic security.” Amidst geopolitical turbulence, the framing of this concept by governments and policy circles around the globe is reflective of the changes in the global economy post-pandemic and the ongoing war in Ukraine, two critical junctures that have revealed the geo-economic impact of weaponized interdependence. While the Biden administration has laid out U.S. policy intent to combine national security with economic security, specifically on future industries of dual-use nature ranging from chips to EVs, batteries, and generative AI, countries that are on the receiving end of policy implementation are formulating their response to the shifting geoeconomics. This paper unravels South Korea’s framing of economic security and policy response by analyzing legislation on future industries that is critical to the country’s economic growth and standing and the concerted efforts by the state bureaucracy and industry in shaping the concept. The paper draws specifically upon semiconductors in addition to other future industries that are central to the South Korean economy and related legislation in the South Korean National Assembly. It argues that South Korea’s policy response and framing of its economic security has more to do with the protection of industries for the future amid geopolitical turbulence and the reshuffling of global supply chains than traditional security issues related to the U.S.-ROK alliance. Moreover, public anxiety on the pressures toward U.S.-driven trilateral cooperation reveals concerns on a possible backlash from China and the lagging potential of Japan in future industries.
Topic:
National Security, Geopolitics, Industry, and Economic Security
Political Geography:
Asia, South Korea, and United States of America

156. China’s Perspective on Economic Security

Author:
Audrye Wong
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This paper examines how Beijing views economic security as well as other countries’ actions in this realm. Economic security is not a new or foreign concept to Chinese thinkers and policymakers, but the emphases, concerns, and priorities have evolved, due in part to changes in the international environment as well as in China’s own economic and geopolitical situation. This paper examines how Chinese leaders and scholars have approached the definition and scope of economic security, as well as recent and proposed policy responses. It draws on a range of Chinese-language official documents and scholarly writings, as well as broader secondary source analyses. The paper explores that while Chinese discussions of economic security tend to be framed as ensuring economic development and stability, development is implicitly and explicitly linked to national security. Many writings emphasize that economics is the foundation for national strength (including military capabilities). As such, it is more than just economic survival and growth for the economy’s sake; it also has implications for China’s geopolitical position in the international order. In that respect, economic stability and national security may be hard to separate. Indeed, we see a resurgence in today’s rhetoric about the notions of development and security as inextricably linked, along with the need to coordinate the two—and in service of maintaining CCP rule and regime stability. Finally, the paper shows Beijing is taking concrete steps toward increased legalization and institutionalization of economic security measures. This represents a shift, at least in the domain of retaliatory countermeasures, from its usually more “informal” approach to economic coercion, which has afforded more flexibility and minimized political costs for the regime. At the same time, actual implementation has been relatively limited thus far.
Topic:
Foreign Policy, Development, National Security, Trade Wars, and Economic Security
Political Geography:
China and Asia

157. South Korea: Caught in the Crosshairs of U.S.−China Competition Over Semiconductors

Author:
Paul Triolo
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This paper explores how countries with advanced semiconductor industries are caught in the middle of the growing U.S.-China competition in technology that is focused on advanced computing. Among them, South Korea and its national champions, Samsung and SK Hynix, have arguably incurred some of the most significant pressure. This paper explores how those firms have billions of dollars of sunk investment in China-based facilities producing cutting-edge memory, and the future of these facilities remains in doubt after a series of U.S. export control measures unleashed by the U.S. Commerce Department starting in October 2022. South Korean companies are also players in other parts of the global semiconductor supply chain, including semiconductor manufacturing tools, and China remains an important market for both components and electronic devices. This paper argues that each country caught between the United States and China in technology competition faces difficult trade-offs in determining how best to support its leading companies while navigating changing and often what is viewed as arbitrary decisions coming from Washington that have already significantly disrupted global supply chains. Finally, at the same time as U.S. export controls are having a major impact on the ability of South Korean companies to retain business operations and market access in China, major front-end manufacturers, particularly Samsung, are also looking to expand their operations in the United States and benefit from U.S. CHIPS Act funding. This paper argues that all of the above dynamics put South Korea in one of the more complex positions as the industry faces continued restructuring, buffeted by both export controls and industrial policies.
Topic:
Supply Chains, Economic Security, Semiconductors, and Economic Competition
Political Geography:
China, Asia, South Korea, and United States of America

158. The Raw Materials of Economic Security: South Korea’s Evolving Energy and Critical Minerals Policies in an Era of Disruption

Author:
James Bowen
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This paper argues that resource security is central to South Korea’s broader economic security and President Yoon Suk-yeol’s Strategy for a Free, Peaceful, and Prosperous Indo-Pacific Region. The paper contends that postwar Korea has maintained an energy and minerals-intensive economy despite domestic resource scarcity and import dependence. Recent disruptions have, however, threatened the resilience of this relationship. These disruptions include COVID-19, Russia’s war in Ukraine, the escalating climate change crisis and energy transition, and the geoeconomic and geopolitical erosion of the liberal order. Korea’s most important energy security priority is diversifying its energy mix towards cleaner energy—what this paper calls “green security.” This will be a difficult task given the intense national dependence on fossil fuels and policymakers’ desire to avoid disrupting Korea’s manufacturing-heavy, export-focused development model. Korea’s idiosyncratic decarbonization pathway, including a strong presence of hydrogen and, under Yoon, a downgrading of renewables in favor of nuclear, could provide additional challenges. Critical minerals are another rising resource security concern for Seoul. The major priority is to accelerate the development and diversification of international supply chains, particularly away from China. A major obstacle to progress is intense competition across the value chain, influenced by disparate economic and strategic priorities. The paper argues that Seoul must find ways to manage its energy and critical minerals security challenges in a way that is consistent with its preferred development model. The alternative is to accept a new equilibrium in which it has less domestic dependence on foreign resources and on resources-intensive economic activity in aggregate.
Topic:
Geopolitics, Strategic Competition, Minerals, Economic Security, and Energy
Political Geography:
Asia and South Korea

159. Economic Security and U.S.-China Competition: The View from North Korea

Author:
Rachel Minyoung Lee
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This paper argues that while North Korea does not discuss “economic security” in domestic contexts or have an established definition of the term, it thoroughly understands that the economy and national security are inseparable. North Korea is essentially unaffected by the typical economic issues that many major economies are grappling with in relation to economic security, but like other countries, it has closely tracked economic security developments and deepening U.S.-China strategic competition for potential political fallout and what opportunities and challenges that may generate. The paper shows that U.S.-China strategic competition has offered unique opportunities to North Korea, including China’s cover against fresh and existing sanctions against North Korea, and economic assistance. Moreover, deteriorating U.S.-China ties provide Pyongyang extra space to consider and put into motion alternative foreign and economic policy paths, namely, shifting away from its three-decade policy of nonalignment with China and normalization of relations with the United States. Also, China appears to be a factor in North Korea’s shift to a more conservative economic policy. Despite the opportunities presented by the U.S.-China divide, however, North Korea is wary of the risks of dependence on China and has tried to build economic resilience at home, for example by launching a national campaign on domestic production and recycling. North Korea’s somewhat cooler handling of China and its proportionately warm treatment of Russia since the Armistice Day celebrations in July is a clear example of North Korea’s China dilemma. This is where North Korea’s recent strengthening of ties with Russia comes into the picture. The paper contends that it is hard to conclude at this point whether North Korea’s moves are aimed at short-term, tactical gains or are part of a longer-term, strategic calculus, but we can be certain of this: it has just as much to gain or lose as any other country affected by economic security and U.S.-China strategic competition, though not in the same ways as other countries.
Topic:
Foreign Policy, Strategic Competition, and Economic Security
Political Geography:
China, Asia, North Korea, and United States of America

160. Emerging public debt challenges in sub-Saharan Africa

Author:
Maureen Were
Publication Date:
01-2024
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Sub-Saharan Africa (SSA)’s public debt burden remains a challenge to development. Key drivers of public debt include large-scale financing of infrastructure development, adverse impact of multiple shocks including COVID-19 pandemic, maturity mismatches, and high vulnerability to exchange rate and interest rate volatility. The tight financial conditions following interest rate hikes in advanced economies have exacerbated the debt burden and heightened debt sustainability risks. Half of the SSA low-income countries are either in debt distress or at high risk of it. Countries in debt distress include middle-income economies. Given the high cost of debt servicing and lack of fiscal space, achievement of sustainable development goals is in jeopardy. A long-term sustainable solution requires a multi-pronged approach. The G20 Common Framework for debt treatment remains limited in scope, coverage, and impact. More needs to be done including consideration for debt relief. Other strategies include access to long-term concessional finance, domestic resource mobilization, and improved efficiency in public spending and fiscal management.
Topic:
Development, Infrastructure, Sustainability, Public Debt, and Public Spending
Political Geography:
Africa and Sub-Saharan Africa