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21. Japan’s Approach to the Global South

Author:
Tobias Harris
Publication Date:
04-2024
Content Type:
Working Paper
Institution:
German Marshall Fund of the United States (GMFUS)
Abstract:
Japanese Prime Minister Fumio Kishida, in a January 2023 speech in Washington, DC, stressed that if the G7 countries and their developed-world peers neglect the “Global South”, “we will find ourselves in the minority and unable to resolve mounting policy issues.” These remarks set the stage for a major theme of Japan’s G7 presidency that year, during which Tokyo continued to highlight the importance of more “humility” to strengthen relations between the group’s members and the “Global South”. The G7 leaders’ communiqué at their May 2023 Hiroshima summit did not refer explicitly to the Global South—the United States and other nations did not necessarily share Japan’s preference for the term, which risks treating as monolithic an enormously diverse array of countries—but the document stressed the importance of addressing the needs of middle- and low-income states, including a commitment to “continued efforts to scale up official development assistance (ODA)” and to adopting “innovative financing mechanisms”. This emphasis on outreach to the developing countries assumed greater urgency following Russia’s invasion of Ukraine, when they were often reluctant to support Western efforts to isolate and punish the Kremlin for its aggression. Japan’s approach to the “Global South” is not merely rhetorical. The Kishida government inherited a long-standing approach to developing nations, particularly those in Asia, that seeks to leverage Japanese ODA and public and private investment. The approach has two goals: to promote growth and strengthen economic ties with developing countries, and to foster trust and political credibility that can be translated into influence. The strategy is shaped by Japan’s national interests but seeks to address developing countries’ economic needs without drawing them into an anti-Beijing bloc. The approach has worked well in Southeast Asia, where, thanks to decades of efforts by successive governments, Japan is viewed particularly favorably. Tokyo now appears increasingly determined to pursue the same strategy in other parts of the “Global South”, including South Asia, the Pacific island states, and, to a lesser extent, Africa and Latin America. As Japan’s G7 peers seek to undertake their own initiatives to improve relations with the “Global South”, the key principles and successes of the country’s policies are worth examining.
Topic:
Foreign Policy, Economics, Democracy, Business, Global South, and Trade
Political Geography:
Japan, Asia, and Indo-Pacific

22. Green Industrial Policy: A Holistic Approach

Author:
Ilaria Mazzocco
Publication Date:
02-2024
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies (CSIS)
Abstract:
In the United States, the rise of the economic-climate agenda and green industrial policy has coincided with growing attention to supply chain resilience, economic security, and a deteriorating U.S.-China relationship. As a consequence, the interaction between trade, geopolitics, domestic economic policy, and climate policy demands a new holistic approach from policymakers and civil society to find more politically sustainable and effective policy solutions. More consideration should be given to the specifics of U.S. climate strategy when it comes to trade and international relations and how to integrate climate strategy with the Inflation Reduction Act and green industrial policy efforts.
Topic:
Economics, Industrial Policy, Geopolitics, Trade, Sustainability, and Green Economy
Political Geography:
China and Asia

23. Investigating the Effect of the U.S. Semiconductor Export Controls on China

Author:
Hyok Jung Kim, Jonghyuk Oh, and Hyuk Hu Kwon
Publication Date:
09-2024
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
his report examines the significant impact of U.S. semiconductor export controls imposed under the Biden administration in October 2022. These controls, which target a broad range of semiconductor manufacturing facilities and AI chips, are part of a strategy aimed at curbing China’s advancement in critical technologies. A notable 32.5% decline in China’s imports of semiconductor manufacturing equipment has been observed, particularly in regions with advanced production capabilities and foreign company operations, such as those involving Samsung Electronics and SK hynix. While Korea experienced substantial drops in exports to China, the Netherlands saw an increase, reflecting its dominance in specific technologies like lithography. The AI chip sector has also been affected, with China turning to downgraded chips due to restricted access to high-performance models from companies like Nvidia. South Korea must adapt by strengthening its upstream semiconductor industry, considering reshoring production, and collaborating with international partners to mitigate risks. As U.S. export controls continue to evolve, the global semiconductor industry may face increased fragmentation, making strategic responses from affected nations essential to maintain competitiveness. Additionally, ongoing monitoring and adaptation to the dynamic regulatory environment shaped by these export controls are crucial.
Topic:
Economics, Science and Technology, Exports, Artificial Intelligence, Imports, and Semiconductors
Political Geography:
China, Asia, North America, and United States of America

24. Developing an International Macroeconomic Forecasting Model Based on Big Data

Author:
Sang-Ha Yoon
Publication Date:
06-2024
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
In the era of big data, economists are exploring new data sources and methodologies to improve economic forecasting. This study examines the potential of big data and machine learning in enhancing the predictive power of international macroeconomic forecasting models. The research utilizes both structured and unstructured data to forecast Korea's GDP growth rate. For structured data, around 200 macroeconomic and financial indicators from Korea and the U.S. were used with machine learning techniques (Random Forest, XGBoost, LSTM) and ensemble models. Results show that machine learning generally outperforms traditional econometric models, particularly for one-quarter-ahead forecasts, although performance varies by country and period. For unstructured data, the study uses Naver search data as a proxy for public sentiment. Using Dynamic Model Averaging and Selection (DMA and DMS) techniques, it incorporates eight Naver search indices alongside traditional macroeconomic variables. The findings suggest that online search data improves predictive power, especially in capturing economic turning points. The study also compares these big data-driven models with a Dynamic Stochastic General Equilibrium (DSGE) model. While DSGE offers policy analysis capabilities, its in-sample forecasts make direct comparison difficult. However, DMA and DMS models using search indices seem to better capture the GDP plunge in 2020. Based on the research findings, the author offers several suggestions to maximize the potential of big data. He stresses the importance of discovering and constructing diverse data sources, while also developing new analytical techniques such as machine learning. Furthermore, he suggests that big data models can be used as auxiliary indicators to complement existing forecasting models, and proposes that combining structural models with big data methodologies could create synergistic effects. Lastly, by using text mining on various online sources to build comprehensive databases, we can secure richer and more real-time economic data. These suggestions demonstrate the significant potential of big data in improving the accuracy of international macroeconomic forecasting, particularly emphasizing its effectiveness in situations where the economy is undergoing rapid changes.
Topic:
Economics, Macroeconomics, and Data
Political Geography:
Asia and South Korea

25. Disorderly Conduct: How U.S.-China Competition Upended the International Economic Order & What the U.S. Can Do to Fix It

Author:
Emily Kilcrease and Adam Tong
Publication Date:
06-2024
Content Type:
Special Report
Institution:
Center for a New American Security (CNAS)
Abstract:
To gauge the health of the U.S.-China economic relationship, one can turn to the words of Chinese Foreign Minister Wang Yi, who remarked in March 2024 that U.S. “tactics to suppress China . . . [were] reaching a bewildering level of unfathomable absurdity.”1 Rhetorical flourishes may be the one bright spot in the relationship. As tensions rise over economic restrictions and policies on both sides, economic relations have become a worrisome source of instability in the overall geopolitical relationship. The economic relationship has become increasingly dominated by security concerns, and integration is seen as not an opportunity but a risk to U.S. interests and values. The United States must develop a strong, pragmatic strategy for advancing its economic and security interests within the U.S.-China economic relationship, accounting for the fact that the security competition is now playing out across the economic landscape. To inform the development of an effective U.S. strategy for the economic relationship with China in the context of rising securitization, the United States must learn from its past attempts to advance its economic and security interests in the relationship. The first section of this report, “Where have we been?” examines past U.S. approaches, along with the challenges of pursuing similar policies in today’s geopolitical context. The second section, “Where are we going?” distills lessons from these past approaches and defines a new strategy for the United States, offering recommendations to implement it. Broadly speaking, prior U.S. strategies can be divided into two camps. First, the United States sought to bring the People’s Republic of China (PRC) into the rules-based order and incentivize it to be a responsible stakeholder.* When that failed, U.S. strategy pivoted to one of imposing costs on the PRC and taking actions to constrain behaviors that threatened U.S. economic security interests. Within those broad strategies, U.S. policymakers have pursued four main approaches, in differing combinations and intensity, all of which involve associated challenges. They are: Play by the rules: The intention of bringing the PRC into the rules-based international system was to create external pressure that would align PRC actions with U.S. economic and security interests. Key efforts under this approach included the U.S. support for the PRC’s accession to the World Trade Organization (WTO) and the later U.S. attempts to negotiate a bilateral investment treaty. Challenges for the approach include the fact that rules have a weak ability to constrain state behavior in a geopolitically contested environment where national security risks arise from economic integration. We need to talk: In light of increasing complexity in the bilateral relationship, U.S.-PRC dialogues were intended to identify and advance mutual interests while providing a regular forum to attempt to resolve disputes. This is seen in the Strategic Economic Dialogue (SED) in the Bush administration and the Strategic and Economic Dialogue (S&ED) in the Obama administration. In other contexts, such as ongoing talks under the Biden administration, dialogues have served primarily to communicate the rationale for U.S. policy actions in an attempt to put a floor under the bilateral relationship.2 Challenges to this approach include that commitments made in a dialogue process may not be enforceable, the meeting can become the deliverable, and the dialogue process cannot alter underlying geopolitical shifts. Defense is the best offense: Defensive approaches relied on domestic U.S. authorities to counter specific harms created by PRC practices and policies. The United States has a wide range of economic tools (e.g., tariffs and trade remedies) as well as national security–based tools (export controls and the Committee on Foreign Investment in the United States [CFIUS] process for conducting national security reviews of foreign investments), all of which have been used with greater frequency over the past decade. Challenges when using these tools include the disruptive and potentially escalatory nature of defensive approaches, and the lack of clear frameworks to assess the effectiveness of defensive policies. Additionally, relying on unilateral approaches can create friction within potential economic alliances. In the United States, defensive approaches have often suffered from a blending of economic, national security, and values concerns, eroding the legitimacy of the national security argument. Have more friends: These strategies centered on efforts to shape the PRC’s external environment through the negotiation of ambitious trade and investment agreements with major trading partners, with the goal of increasing economic integration with close partners, creating indirect pressure on the PRC to level up to higher standards, and developing common approaches to address concerns with nonmarket economies. Such an approach is challenging because traditional ways of shaping the external environment have not directly addressed securitization of the U.S.-China economic relationship. U.S. domestic political realities impose a considerable constraint on the use of trade policy as a strategic tool.
Topic:
Economics, Bilateral Relations, Trade, Strategic Competition, and International Order
Political Geography:
China, Asia, North America, and United States of America

26. Economic implications of revoking China’s permanent normal trade relations (PNTR) status

Author:
Megan Hogan, Warwick McKibben, and Marcus Noland
Publication Date:
09-2024
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The United States’ granting of permanent normal trade relations (PNTR) status, formerly known as most favored nation status, to China in 2000 resulted in a large expansion of bilateral trade. Concerns over Chinese trade practices and the impact of Chinese exports on US import-competing sectors have contributed to US political discontent and calls for the revocation of PNTR, including by former president Donald Trump in his reelection campaign and in the 2024 Republican Party Platform. The authors find that revoking China’s PNTR status would cause higher inflation and a short-term decline in US gross domestic product relative to baseline from which the economy never fully recovers. The loss of output and employment would be felt unevenly across the economy, with agriculture, durable manufacturing, and mining taking the biggest hits. Stock market prices would fall, with agricultural, durable manufacturing, and mining firms absorbing the biggest declines. All of these impacts would be magnified if China retaliates. Ironically, the revocation would damage the US industrial sector and contribute to a wider US trade deficit.
Topic:
Economics, Bilateral Relations, Manufacturing, and Trade
Political Geography:
China and Asia

27. The Rise of US Economic Sanctions on China: Analysis of a New PIIE Dataset

Author:
Martin Chorzempa, Mary Lovely, and Christine Wan
Publication Date:
12-2024
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Concerns over China’s national security and human rights activities have led the United States to rely increasingly on financial sanctions and export controls to curb Beijing’s behavior. But the tools are so complex it is difficult to assess their effectiveness. A new PIIE dataset sheds light on this economic statecraft. The first Trump administration added three times as many Chinese entities to export control and other sanctions lists than the previous four administrations; the Biden administration added even more to these lists. Most sanctions and controls target high-tech sectors, especially electronics, military and defense entities, aviation, space, and aerospace; targets are chosen under a veil of secrecy, raising questions over accountability and transparency. The benefits of isolating Chinese firms come with potential costs, hobbling innovation for US and allied business, encouraging circumvention of sanctions, and accelerating Chinese innovation.
Topic:
Economics, Human Rights, National Security, Sanctions, and Exports
Political Geography:
China, Asia, North America, and United States of America

28. On Science & Tech Diplomacy

Author:
Akshay Mathur and Helen Zhang
Publication Date:
10-2024
Content Type:
Working Paper
Institution:
Asia Society
Abstract:
A new era of intergovernmental science and technology cooperation has emerged, driven by the United States and its Asian partners in the Indo-Pacific such as Japan, South Korea, Taiwan, Australia, Singapore, and India. As science and technology take primacy in the modern economy, countries are introducing laws and policies to build new sovereign capabilities, protect sensitive innovations and industries, and govern cross-border cooperation. This essay examines the key trends we have observed in the United States and select Asian countries in the Indo-Pacific, the nature of agreements being inked, and the likely direction of cooperation under the next U.S. administration.
Topic:
Diplomacy, Economics, Science and Technology, and Trade
Political Geography:
Japan, India, Taiwan, Asia, South Korea, Australia, Singapore, United States of America, and Indo-Pacific

29. ASEAN's medium- to long-term trade strategies and the direction of RoK-ASEAN cooperation

Author:
Sungil Kwak, Seungjin Cho, Jaewan Cheong, Jaeho Lee, Mingeum Shin, Nayoun Park, and So Eun Kim
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
In recent years, the U.S.-China hegemony competition has intensified, dividing the world into two blocs. ASEAN has long culti-vated its position on the international stage by maintaining a certain distance between the United States and China. In that sense, ASEAN is the best partner for Korea to ef-fectively respond to the divided world. Therefore, this study seeks the directions of cooperation with ASEAN in supply chain, digital trade, climate change response, and health and development cooperation in line with changes in the international order.
Topic:
Climate Change, Development, Economics, International Cooperation, Trade, and ASEAN
Political Geography:
China, Asia, North America, and United States of America

30. Developing ODA Evaluation Methodology for Technical Cooperation

Author:
Eunsuk Lee and Hyemin Yoon
Publication Date:
03-2023
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
As the volume of Korea's official development assistance (ODA) expands, the demand for systematic management of evaluations and improvement of their usefulness is increasing. This study focuses on developing evaluation methodology for technical cooperation (TC) which is an important part of Korea’s ODA. Based on the case studies of six multilateral organizations and four bilateral development agencies, we draw lessons for Korean ODA agencies in terms of selection criteria, types, and methodological aspects of evaluation of technical cooperation and propose a four-step project management and evaluation mechanism for TC activities.
Topic:
Development, Economics, Science and Technology, and Management
Political Geography:
Asia and South Korea