This study reviews Mexico’s economic performance under NAFTA, focusing on the changes in major economic indicators, and particularly, employment and income before and after the inception of NAFTA. There have been a significant improvement in inflation, budget deficits, and exports and FDI, but not as successful as in the expansion of economic activity and employment during the post-NAFTA era. We find a source of Mexico’s economic problems today in a lack of its appropriate domestic development policy. We also draw some implications for Korea’s future trade policy from the experience of Mexico under NAFTA.

Executive Summary

I. Introduction

II. Overview of Triadic Sanctions

III. A model of triadic sanctions
1. A Stage Game
2. An infinitely repeated sanction game

IV. US-Iran Sanction
1. Evolution of the US-Iran Sanction
2. Insights from the game theoretic Analysis

V. Conclusion

Reference

This paper presents a work-horse model to analyze the mechanism of triadic sanctions, where the receiver of the sanction is not the actual target. With a motivating example of the US sanctions against Iran and a simple game theoretic framework, we show that the threat of such sanction is not credible in situations where the game ends after single stage, or when the entities are not concerned with future transactions amongst each other. In a repeated game setting, on the other hand, the threats become credible, but the level of enforcement would differ across firms/countries depending on the economic interdependency and how the parties perceive the probability that the games would continue to the next period.

About the Editors/Contributors  
Foreword  
Message / Wook Chae  
Message  / Woosang Kim  
Opening Remarks / Joong-Keun Kim  
Opening Remarks / Skand R. Tayal  
Speech / Sung-Joo Han  
Speech / Chulsu Kim  

Preface  

Introduction  

Section I  Recent Economic Trends
1.  Korean Economy in Transition Toward an Advanced Economy:  Prospects and Challenges / Choong Yong Ahn and Kyttack Hong  
2.  The Indian Economy: Recent Trends and Prospects / D.K. Srivastava  

Section II  Trade Prospects and Non-Tariff Measures
3.  India-Korea Trade and Non-Tariff Barriers / Nisha Taneja, Pallavi Kalita, and Swati Saluja  
4.  Two Years In: Achievements and Challenges in the Trade Sector of the Korea-India CEPA / Choongjae Cho  

Section III  Foreign Direct Investment
5.  Trends of FDI Flows into India and Korea / Chang-Ho Kwag  
6.  Investment in the Indo-Korea CEPA / Saon Ray and Neetika Kaushal  

Section IV  Services and Green Energy
 7.  Current Status of Indian Green Energy Industry and Cooperation between Korea and India / Hyun Jae Kim and Chankook Park  
 8.  The Role of Culture in Economic Activity and Exchange Parthasarathi Shome  

Section V  Global Security Issues
 9.  Rising Powers and Asia’s Stability: Strategic Convergence between India and South Korea / W. Lawrence S. Prabhakar 
10.  India’s Changing Relations with the United States and China / Sanjana Joshi  
11.  Four-Layered Security Cooperation between South Korea and India / Cheol Hee Park  

This volume edited by Parthasarathi Shome and Choong Yong Ahn brings together papers and speeches presented at the 10th dialogue. It analyses the Indo-Korea CEPA in terms of the flow of goods, services and investment as well as discussions for collaboration on other sectors that are under consideration between these two economies. It also identifies the possibility to improve the relationship between the two countries through a revision of a number of existing tariffs, non-tariff barriers related to trade and investment linked policies. We hope that this volume will enrich our understanding of Indo-Korea relations and contribute to more significant relations between the two countries.

This volume is a collection of presentations made at the KIEP international seminar, “Economic development strategy of China’s Eastern Coastal Region during the transition period” in November, 2011. The first part entitled, 'Industrial restructuring and sophistication', analyzed today's shifting industrial structure and concomitant problems in Liaoning, Jiangsu, and Zhejiang provinces. The second part entitled, ‘New growth engines by Regions,’ elaborates on regional economic development strategies and strategic industries in Guangdong, Shandong, and Greater Capital Economic Zone that includes Beijing, Tianjin and Hebei province. 

This latest volume contains analysis of economic development and current issues involving Chinas coastal regions, along with appropriate response measures for business people, researchers, and policy makers. It is expected that this collection will enhance our understanding and eventually promote greater cooperation with China.

 

2011 Summaries of Research Report

Message from the President
Mission and Brief History

I. Overview of KIEP's Projects
1. Overview of Projects
2. Affiliated Bodies and Research-Related Activities

II. Review of 2011 Projects
1. Research Trends in 2011
2. Basic Research Tasks

III. Research Plan for 2012
1. Research Plan for 2012
2. Basic Research Tasks

IV. Appendix
A Glimpse at KIEP
List of Publications (2011)

 

In 2011, those of us at KIEP had designated four main research topics we deemed most pertinent to current circumstances, and engaged in twenty major projects in line with those topics. These include negotiations for liberalization of the services market and other multilateral trade issues in response to WTO regime reforms and other changes in the world trading environment; economic cooperation in APEC and other regional issues; and current bilateral trade issues including free trade agreements. KIEP conducted research to address changes in the macroeconomic environment surrounding Korea, such as changes the internationalization of the Korean won as a result of Korea's increasing prominence on the international economic scene, and presented basic resource materials and provided directions to prepare for changes in North Korea. Policy responses to global inequalities in light of the current rapid transnational movement of capital were forwarded, in addition to measures to facilitate Korea's entry into foreign markets and attract foreign investment. In recognition of rising demand for research on the world's regions, KIEP did not limit itself to providing data on Korea's major trading partners such as the US or China, but made efforts to provide basic data on Central/South America and Africa that had hitherto been lacking.

This book presents a detailed record and an in-depth analysis of the negotiations that took place within the G20 – the premier forum for international economic cooperation – to achieve historic outcomes on the IMF quota and governance reforms in the lead up to and at the G20 Seoul Summit in 2010. It captures the entire negotiation process that was adopted to shift quota shares and improve governance structure of the IMF, thereby enhancing its legitimacy, effectiveness and credibility. We, the authors, worked on the preparation of the Summit as working level staff and were privileged enough to get involved in one of the most successful multilateral negotiation processes in action. As such, we thought our experiences and analyses of the negotiation process might be helpful to others who may be involved in negotiation processes from time to time or carry out research on negotiations. So we decided to share our experiences and analyses by writing this book.

As the massive global financial crisis swept the world in 2008, one of the major tasks the G20 Leaders focused on at their first Summit in Washington was the reform of the international financial institutions. The G20 delivered its first concrete result in April 2009 when it agreed to increase the IMF resources by more than 500 billion dollars at the London Summit. Then, in Pittsburgh in September 2009, the G20 Leaders further agreed to shift at least 5 per cent share of the IMF quota to emerging market, developing and under-represented countries and undertake governance reforms. But making promises was the easy part. Delivering on them required a lot of hard work and careful negotiations. That’s why when these commitments were finally delivered at the Seoul Summit in November 2010, people said it was the most comprehensive reform in the history of the IMF. While it took many years of negotiations to achieve this result, the book mostly focuses on the negotiations that took place between the Pittsburgh Summit and when Korea hosted the G20 Summit in Seoul.

Shifting IMF quota shares amongst countries is a zero-sum game. If one country wants its quota share increased, it cannot be achieved without a corresponding decrease for some other countries. That is why the IMF quota share reform process was so arduous. Although the 2010 IMF reform was agreed in almost record time, when compared to past agreements, it too was a rough journey consisting of many formal and informal meetings, disagreements and, at times, complete stand-offs in the course of negotiations. This book meticulously records and analyzes the whole 2010 IMF reform negotiation process. But rather than provide a witness statement in a chronological order, the authors divided up the negotiation process into four stages – preparation, exploration of negotiation strategies, actual negotiation and settlement – and evaluated what happened in each stage against a theoretical framework for multilateral negotiation. In addition, the IMF’s major functions, structure and role are explained throughout the book. The authors adopted this approach to enhance readers’ understanding of the issues and provide meaningful insights to those who may have to go through similar negotiation processes in the future.

Finally, the book does not record or evaluate Korea’s role as one of the participants of the negotiation. Rather, it records and evaluates its role and position as the chair country of the G20. However, the book is not an official record or assessment of the implications and achievements of the Seoul Summit.  Official records and assessments can be found in the White Paper published by the Presidential Committee for the G20 Summit. This book was written by working level staff to complement the White Paper by focusing on technical aspects of negotiations and providing lots of firsthand experiences with the negotiation in the form of anecdotes.

In conclusion, we the authors hope that this book will enhance readers’ understanding of the IMF quota and governance reforms, but at the same time provide good insights to general procedures and characteristics of international negotiations. We look forward to it being used as a practical guide for other negotiations in the future.
 

 

This study aims to analyze the productivity spillover effect of inward foreign directive investment in Korea by FDI mode and present some policy implications to improve the policy in order to increase FDI into Korea. To overcome the limitations of previous studies on this subject, a dynamic panel model is set up in this study using the System Generalized Method of Moment (System GMM) with the aggregated FDI data by industry and by mode, i.e. Greenfield-type and M&A-type FDI.
This study shows that inward FDI in Korea has a significantly positive productivity spillover effects, with the effects of Greenfield-type FDI being greater in terms of productivity than M&A-type FDI, considering the overall effect including intra-industry and inter-industry effects. It also shows that total inward FDI as well as each mode of that investment causes significant intra-industry spillover effects. In particular, the effect is greater when FDI for upstream and downstream industries includes service industries. Moreover, Greenfield-type FDI leads to inter-industry linkage effects, while M&A-type FDI does not.
Based on this analysis, we draw out implications for FDI policies of the Korean Government. First, Korea’s FDI policy needs to remain active in order to continuously improve the productivity of the domestic industry. Second, The effort to improve the investment environment in Korea will have to focus on increasing Greenfield-type FDI in terms of productivity spillover effects. Last, it is necessary to take further liberalization actions for FDI, as well as improve the investment incentive system related to service industries in light of the direct and indirect linkage effects upon productivity by FDI.