The goal of this research is to provide general position of Korea in financial service sector for FTA among Korea, China and Japan, and also to suggest policy measures to raise international competitive power of domestic financial institutions for development of financial industry henceforth. In order to decide the contents and direction of FTA negotiation in financial service sector, research not only about the current situation and characteristics of financial service in three countries but also about institutional restrictions on foreign financial companies and current circumstances of each country should be preceded. (The rest is omitted.)

According to traditional economic theory, exchange rate over-valuation and associated currency speculation are considered one of the leading causes of the currency crisis. Even though the over-valuation was not the single source of the crisis, recent experiences in Latin America and Asia has revived the issue of equilibrium currency valuation. (The rest is omitted.)

The global trading system has seen a sharp increase in regional trade arrangements (RTAs) over the past decade or so, with a total of 259 RTAs notified to the GATT/WTO by the end of December 2002. An additional 70 RTAs that have not yet been notified to GATT/WTO are estimated to be operational and another 70 are under negotiation. (The rest is omitted.)

This study is purposed to analyze the development process, major growth factors, medium-and long-term development directions, and competitiveness of the high-tech industry in China and to propose proper strategies and policies of Korean firms and government in response to the challenges of the high-tech industrial development of China. (The rest is omitted.)

The Ministerial Declaration of the 4th WTO Ministerial Meeting at Doha in November 2001 announced the launch of the Doha Development Agenda(DDA) to be completed by January 1st, 2005. It is inevitable that the Korean market will experience another wave of liberalization after the conclusion of DDA negotiations. To prepare for the liberalization, it is helpful to draw some lessons from the recently liberalized sector, namely, distribution services.This study seeks to analyze economic effects of liberalization of distribution services market in Korea. At the same time, we try to recommend a desirable direction of the adjustment policies by conducting a survey on small and medium-sized retailers. (The rest is omitted.)

The successful environment of international finance center(IFC) is closely linked to the advances in financial openness. Beyond just functioning as facilitating international financial transactions, the IFC will be sustainable under more opened financial system. On the other hand, the IFC as well as financial opening is expected to raise further the degree of financial development(FD). In this study, the effects of financial opening and the existence of IFC on the financial development are examined.In empirical work, cross-country sample of 106 countries are used and 11 of them are identified as IFC nations. The measure of financial openness are based on the IMF's annual Report on Exchange Arrangements and Exchange Restrictions(AREAER). For the degree of financial development, five quantitative indicators are used: liquid liabilities, claims of deposit money banks on non-financial domestic sectors, claims on private sector by deposit money banks and other financial institutions, stock market capitalization, total value traded on the stock market. All these FD indicators are measured as share of GDP. (The rest is omitted.)

North Korea introduced new economic adjustment measures in July 1, 2002 to resolve its current economic crisis, including five new important principles. Specifically, the economic adjustment deals with changes to the wage system, the partial adjustment of the state distribution system, the readjustment of the exchange rate to a realistic level, the partial liberalization of a private enterprise's decision-making role and the incorporation of the incentive policy to encourage productivity. North Korea's recent economic adjustment movement is being promoted by the government in a completely different atmosphere than what was observed in the past. The adjustment is now being implemented in an environment where the role of centralized planning has been significantly reduced. The policy changes are created to focus more inwardly on reform than solving its economic difficulties outwardly through opening the economy to foreign trade and investments. In addition, it is noticeable that North Korea is initiating these economic policy changes during a time where the world's political and economic scenes are going through some major changes. (The rest is omitted.)

Myung-Chul Cho et al.
On July 1, 2002, North Korea launched a number of comprehensive economic reforms: A substantial increase in both prices and wages, a shift in the price-fixing mechanism changes in the distribution system decentralization of national planning, an increase in the autonomy of enterprise management, the opening of the distribution market for production methods differentiated distribution and a social security system reform. The far-reaching reform package has been met with mixed reactions. Some say it represents the communist nation's move toward a market economy, while others say that it is a band-aid approach to the planned economic system. Still others question whether the ambitious moves will pay off or not. (The rest is omitted.)

The European Union will be enlarged with the addition of 10 new member states from Eastern and Southern Europe in the year 2004. In political and security terms, this fifth wave of the enlargement taken by the EU in 2004 marks the end of the Cold War and an arrival of permanent peace in Europe, since the Central and Eastern European countries, where communism once prevailed, will be fully absorbed into the regime of the Western capitalism, by joining the EU. The fifth enlargement would further contribute to bringing stability and prosperity into the neighboring regions by providing creating a more intimate relationship between the EU and its new border countries, including the Balkans and the former constituent countries of the Soviet Union.

In economic terms, the fifth enlargement would bring revolutionary changes to both incumbent member states and incoming ones. First of all, the number of incoming states, the size of their population and, among others, the substantial income gap between the incumbents and the incoming member states, the enlargement will provide an unprecedented challenge for the EU. The EU is in a stage of thoroughly reviewing its institutions and policies, which have been evaluated to be too generous for the underdeveloped members. To name a few, the EU needs to accommodate itself to the new situation of perfect freedom of labor mobility and extensive adoption of the Common Agricultural Policy and Regional Policy in the poorer agricultural new member states, although the policies will be adopted after three-to-five years of transition period. In this sense, the enlargement is playing a role of catalyst to accelerate the reform of the EU institutions.

On top of this, the enlargement provides an impetus to address a very important agenda such as changing the decision-making structure within the EU institutions, the future of the European political entity and, above all, the establishment of the EU constitution. All of these have been slow to materialize.
This study aims at evaluating the on-going process of the enlargement, and examining the impacts of the process on the European economy, so that we can deepen our understanding of the European economy on the eve of the enlargement. It is hoped that this will induce valuable insight with respect to the changes in the European economy.

Chapter II outlines the history of the fifth enlargement, the present stage of the entire enlargement process and future agenda. Although new member states have not yet fulfilled all the requirements for the accession criteria, they are expected to be equipped with full qualifications and to be accepted in May of 2004. Therefore, by November 2004, the new EU, with new representatives in the European Parliament and the Commission, will take off. Further accession negotiations with Rumania, Bulgaria, Croatia, and Turkey, establishing relations with new border countries, and joining the EEA are other remaining agenda worthy of note. The Agreement on the new EU constitution, which resulted in a miserable failure at the recent gathering of the EU summit meeting, will remain to be one of the most demanding issues in the years to come. Any failure of agreement on the EU constitution would put the EU in danger of a looser international community.

Chapter III and IV deal with the institutional aspects of the enlarged EU. Chapter III examines the impact of the enlargement on the EU's institutional reform process. The structure of the decision making in the Council and the Parliament has experienced substantial changes these days. An account of the background, contents, implications and limitations of these changes are provided in detail. The reforms of the EU budget and the Common Policies such as the CAP, CCP, Regional Policy and Schengen agreement are closely related with each other, and the process of the reformation cannot be free from the budget constraints of the EU, the economic burdens of the incumbents incurred by the enlargement, and the inveterate nationalism of each member states.Chapter IV takes the readers through the institutional approach towards the incoming states. In particular, the EU's pre-accession assistant programs for the incoming states (such as PHARE, ISPA and SAPARD) are explained in detail. It is also evaluated country by country how much the incoming member states are ready for the criteria, the so called acquis. Despite much progress in fulfilling the criteria, there still remain rooms for further improvement in the incoming states. The reform process, which has been strongly driven by the EU, has given the new member states enormous growing pains.

It cannot be denied, however, that this will contribute greatly to implanting capitalism and to constructing a more efficient socio-economic structure in the incoming states.
In Chapter V, we show various aspects of the resulting changes in the European economies, mainly focusing on the accession countries. In spite of higher economic growth since the mid-1990s, the incoming countries suffer from many economic problems. These include high unemployment, huge amount of budget deficits and low labor productivity. The income level of the incoming member states has been around just half of the incumbents'. Thinking of the economic geography in the EU, we can find that country specialization and industrial concentration in the EU region has been reinforced since 1980, but that a divergence from this trend has been observed in the 1990s: industrial concentration has been more or less weakened, as some industries located in Southern Europe have moved to the incoming countries.
In order to understand investment strategies taken by the European firms, we explain general features of German and French firms' investment behavior to the new member states, and analyze the changing landscape of the European automobile industry in the 1990s. The stylized facts about the investment strategies are, firstly, that there has been a lot of investment by the western European firms on the incoming countries, especially in the latter half of the 1990s. Secondly, most of the investment focused on the expansion of the production facilities for the standardized products, other than the core parts of designing, engineering and high technologies. This has resulted in a vertical division of labor between Western and Eastern Europe, substantially increasing intra-industry trade between the two regions of Europe. Investment-induced trade has also significantly increased.

In the meantime, the structures of industry and trade among the new member states have experienced a lot of changes. The share of agriculture consistently decreased. The service sector has gained its portion but this only reflects the shrinking share of the industrial sector, including manufacturing. Conspicuous productivity gain and higher economic growth in the accession countries have been observed since the latter half of the 1990s, although it has not so far reached the levels of those of the Western countries so far. After the enlargement process is completed in 2004, the adoption of the acquis by the incoming states would is expected to negatively affect some industries with a high standard of environment protection such as the steel industry. Moreover, bordering areas and SMEs that have not prepared for the regime change will be disadvantaged, too. Thus, it is anticipated that the growth gap would be widened after 2004, at least in the short term, by industry, by region and by firm size.

Chapter VI conducts empirical analyses on the convergence of the accession countries to the EU and the degree of trade integration between the two areas. The convergence analysis shows that the trend of convergence is revealed to be very weak and irregular year by year. Only 1 percent of convergence rate was observed when the year 1993 is was taken as the base year, and the impacts of Ireland and Luxembourg are controlled for. This kind of the weak convergence leads to a pessimistic view that it is expected to takes about 69 years for the incoming countries to reduce half of the existing income gap with the EU.

The analysis of the trade intensity using the standard gravity approach shows that the dummy for the enlarged EU is statistically insignificant except for the case of 1995, when severe under-trade was observed. The under-trade between the two areas in 1995 is revealed to be the main explanatory factor for the under-trade in the enlarged EU in 1995. The under-trade between the two areas disappeared very rapidly since then. The coefficients of the dummy for the trade relations in the enlarged EU after 2000 are revealed to be insignificant, as the under-trade among the incumbents and the over-trade among the incoming countries are mutually offset. The results of the gravity analysis indicate that a revolutionary momentum for trade liberalization is necessary for the trade volume between the two areas to increase more than that explained by the gravity factors. However, the enlargement in 2004 hardly provides this kind of opportunity, considering the situation of the under-trade among the incumbents.

All in all, the 2004 EU enlargement in 2004 will provide a substantial momentum in the political and historical senses, but a lot of time will be necessary before any conspicuous changes can be observed in the economic sense. In Chapter VII, we derive the implications of the EU enlargement on the Korean economy with a special emphasis on trade. The result on the Korean economy is mostly desirable as the EU enlargement will propagate trade liberalization, and eventually lead to the advanced and prosperous economies in the incoming states. Nevertheless, it would bring some negative impacts for the Korean economy, too. Most importantly, there will be a trade diversion effect, heightened trade barriers in selective areas, the extension of import restraints to the incoming countries, and the adoption of strict environmental regulations of environment and standardization, as well as stronger enforcement of competition policy. To overcome any negative impacts, institutional advancement is required to improve economic relations between Korea and the EU. To achieve this, this study recommends conducting a careful inspection on the qualitative changes after the enlargement, and beginning FTA negotiations between Korea and the EU.

The EU enlargement will not be fully completed in 2004. There will be a transitional periods after the accession and a consecutive accession negotiation process lies ahead. The reform process for the new EU will be continued as well. There is no doubt, however, that the enlargement process so far has injected fresh vigor into the European economy and contributes to leveling up the competitiveness of the European firms. We should keep a watchful eye on the process.

ASEAN has been promoting economic integration since the early 1990s. It realized ASEAN 10 by increasing its membership through the additions of Vietnam, Myanmar, Laos and Cambodia (CLMV countries) to enlarge the effectiveness of economic integration. In particular, it promoted the early realization of AFTA and has eagerly propelled Southeast Asia market integration through its AFTA-plus policy, which includes industrial cooperation, the elimination of non-tariff barriers, standards and mutual arrangements, and e-ASEAN. These processes are part of efforts toward the market integration of Southeast Asia, corresponding to the enlargement of the Chinese economy. The processes aim to attract FDI and raise economic efficiency and industrial structure from a long-term perspective. (The rest is omitted.)