Policy Analyses
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Policy Analyses
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Recent Developments in African Textile and Apparel Industries and Its Policy Implications for Korean Firms
The Korean textile industry, once a major contributor to Korea's rapid export expansion, has been losing its competitiveness due to stricter trade barriers in advanced economies, improved qualities of textiles in developing countr..
Heungchong Kim et al. Date 2003.10.31
Industrial policyDownloadContentSummaryThe Korean textile industry, once a major contributor to Korea's rapid export expansion, has been losing its competitiveness due to stricter trade barriers in advanced economies, improved qualities of textiles in developing countries and increased wage levels in the domestic economy. To cope with the challenges confronting further development of the industry, Korean textile and apparel factories have moved their production bases abroad in search of cheaper labor, while working to produce higher value-added products by developing advanced technology. Southeast Asia and Latin America had been good alternatives for new production bases, but they have been losing their comparative advantage in labor costs and the privilege of easy access to the U.S. market due to the policy change of the U.S. government. Now is the time for the Korean textile industry to find new alternative production bases.
It is noteworthy that Africa gained in growth momentum from the mid-1990s on, after a long period of economic recession and political turmoil. Recently, African countries have initiated the formation of the AU and NEPAD, reflecting their changing perception of self-fulfillment to solve African problems. These efforts were quickly followed by several preferential trade treatments, including the AGOA and the Association Agreement initiated by the U.S. and the EU, respectively. The Multilateral Investment Guarantee Agency under the World Bank Group, founded to minimize investment risk and thus alleviate business cycle fluctuations, has supported the improved economic environment in Africa. (The rest is omitted.) -
Thailand's FTA Policy and its Implications
Thailand expanded its exports to help overcome the financial crisis of 1997/98. To avoid a recurrence of the crisis and to achieve sustained economic growth, FTA policy became the most important external policy for Thailand from 1..
Kyoung Doug Kwon Date 2003.10.30
Trade policy, Free tradeDownloadContentSummaryThailand expanded its exports to help overcome the financial crisis of 1997/98. To avoid a recurrence of the crisis and to achieve sustained economic growth, FTA policy became the most important external policy for Thailand from 1998. The Prime Minister, Thaksin Shinawatra, strongly supports a free trade regime, advocating the early conclusion of an AFTA (ASEAN Free Trade Area) and FTAs with large economies such as the U.S, Japan and EU. (The rest is omitted.) -
Exchange Rate Uncertainty and Free Trade Agreement between Japan and Korea
In this paper, we empirically analyze how increased exchange rate volatility influences the volume of trade between Japan and Korea and between these two countries and the United States. Our results strongly suggest that the incre..
Kwanho Shin et al. Date 2003.10.25
Free trade, Exchange rateDownloadContentSummaryIn this paper, we empirically analyze how increased exchange rate volatility influences the volume of trade between Japan and Korea and between these two countries and the United States. Our results strongly suggest that the increased exchange rate volatility is negatively related to the trade volume between Japan and Korea and the U.S., Japan and Korea. Despite the evidence that exchange rate stability promotes trade, the discussions on the Japan-Korea FTA are proceeding without emphasis on exchange rate coordination. While the EU integration process was fortified initially by exchange rate coordination and later by the introduction of a monetary union, NAFTA presents a contrasting case of pure trade integration without monetary cooperation. The crucial elements in EU that facilitated monetary cooperation were: a large trade share among involved countries and strong political will from member countries. As the Japan-Korea trade integration process, at least in isolation, lacks both elements, it is not likely that any explicit monetary or exchange rate coordination will naturally arise. -
Finance and Economic Development in East Asia
Despite the increasing trend toward market-based finance systems, most East Asian countries still have bank-based systems. The purpose of this paper is to examine the extent to which bank-based financial development in East Asia h..
Yun Chul Park et al. Date 2003.10.20
Economic developmentDownloadContentSummaryDespite the increasing trend toward market-based finance systems, most East Asian countries still have bank-based systems. The purpose of this paper is to examine the extent to which bank-based financial development in East Asia has contributed to economic growth. To do this, a series of empirical analyses are conducted to gauge the effects of changes in the exogenous component of financial development on economic growth by using data on East Asian and Latin American countries for the 1960-97 period. Our empirical results show that the exogenous changes to financial development in East Asia have a strong, positive impact on growth rates. However, we find that there is weak evidence of a negative relationship between finance and growth for Latin American countries, a finding consistent with that of de Gregorio and Guidotti (1995). -
The Political Economy of Monetary Integration in East Asia
The Asian currency crisis of 1997 induced East Asian countries to seriously consider forming a common currency area as an alternative to the past soft-peg and the current floating exchange rate regimes. The successful launch of th..
Kwanho Shin et al. Date 2003.10.15
Financial integration, Financial cooperationDownloadContentSummaryThe Asian currency crisis of 1997 induced East Asian countries to seriously consider forming a common currency area as an alternative to the past soft-peg and the current floating exchange rate regimes. The successful launch of the euro in 1999 and its claimed benefits are also encouraging this movement. The sanctity of one country, one money has come into question. Countries joining a currency union typically benefit from reduced transaction costs and reduced uncertainty related to exchange rate variability. (The rest is omitted.) -
The Chinese Insurance Industry's Competitiveness and Strategy for the Korean Advance
In this research paper, we explain the background and recent history of the Chinese insurance industry, the competitiveness of the insurance industry and the implications for Korean companies interested in this sector. (The rest i..
Euihyun Choi et al. Date 2003.10.15
Industrial policyDownloadContentSummaryIn this research paper, we explain the background and recent history of the Chinese insurance industry, the competitiveness of the insurance industry and the implications for Korean companies interested in this sector. (The rest is omitted.) -
The Effect of Labor Market Institutions on FDI Inflows
This study examines the impact of strengthening employment protection legislation, the structure of collective bargaining (centralization and coordination) and other labor market variables (national levels of unionization, strike ..
Chang-Soo Lee Date 2003.10.15
Labor market, Foreign direct investmentDownloadContentSummaryThis study examines the impact of strengthening employment protection legislation, the structure of collective bargaining (centralization and coordination) and other labor market variables (national levels of unionization, strike levels and tax wedges on labor income) on a country's FDI inflows. Examining 29 OECD nations, our statistical analysis shows that strict EPL, which increases labor market rigidity, is usually associated with lower levels of FDI shares. Japanese investors are more sensitive to employment protection measures in choosing destinations for FDI than others. A 1-percentage-point increase in EPL causes a decrease of about 4.2 percent to Japan's FDI share, compared to the decrease of 2.2 percent that results in the worldwide share. Finally, we discuss the implications of the recent employment protection policies in Korea that focus only on the interests of 'inside' labor, reducing FDI inflows as well as neglecting the interests of 'outside' labor (unemployed and future labor). Thus, policies for spending on outside labor and promoting entrepreneurship are necessary for national welfare to increase. -
Fear of Inflation: Exchange Rate Pass-Through in East Asia
The purpose of this paper is to empirically examine the pass-through of exchange rates for import prices and consumer prices in a few selected East Asian countries - Japan, Korea, Singapore and Thailand. According to our empirical..
Sammo Kang et al. Date 2003.09.30
Financial crisis, Exchange rateDownloadContentSummaryThe purpose of this paper is to empirically examine the pass-through of exchange rates for import prices and consumer prices in a few selected East Asian countries - Japan, Korea, Singapore and Thailand. According to our empirical results, first, exchange rates had a greater impact on import prices than on consumer prices in all four countries. Second, the impact of exchange rates on import and consumer prices increased in Korea and Thailand after the 1997 currency crisis. -
The Collection of KIEP Seminar Briefings (2001. 8-2003. 6)
The Korea Institute for International Economic Policy organized a number of international conferences and seminars concerning major international economic policy issues in collaboration with the world's leading research institutes..
Co-authors Date 2003.08.30
DownloadContentSummaryThe Korea Institute for International Economic Policy organized a number of international conferences and seminars concerning major international economic policy issues in collaboration with the world's leading research institutes.
This paper is a collection of the KIEP seminar briefings to encourage Korea's sustainable development as presented at conferences from August 2001 to June 2003. -
Trade Facilitation in the WTO
The 1996 WTO Ministerial conference, held in Singapore, mandated the WTO member countries to carry out exploratory and analytical works on the simplification of trade procedures in order to assess the scope for WTO rules in trade ..
Chan-Hyun Sohn et al. Date 2003.07.31
Multilateral negotiations, Trade policyDownloadContentSummaryThe 1996 WTO Ministerial conference, held in Singapore, mandated the WTO member countries to carry out exploratory and analytical works on the simplification of trade procedures in order to assess the scope for WTO rules in trade facilitation. As a result, trade facilitation is known as one of four Singapore issues that may become subject to negotiations in the Doha Development Agenda (DDA). (The rest is omitted.)