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Policy Analyses
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Analysis of Sectoral Effects of a Korea-Japan FTA
This study estimates the economic effects of a Korea-Japan FTA on Korea's major sectors based on partial equilibrium analysis. For wectoral analyis, we broke down Korea's industry into 16 major sectors, which are two primary secto..
Chan-Hyun Sohn Date 2001.03.28
Free tradeDownloadContentSummaryThis study estimates the economic effects of a Korea-Japan FTA on Korea's major sectors based on partial equilibrium analysis. For wectoral analyis, we broke down Korea's industry into 16 major sectors, which are two primary sectors(agriculture and fishery), nine manufacturing sectors(machinery, electric and electronics, chemical products, semi-conductors, textiles, automobiles, hipbuilding, steel, IT equipment) and five service sectors(distribution, financial services, shipping, telecommunication and construction). (The rest is omitted.) -
Fighting Money Laundering: Survey of FIUs
Hyungdo Ahn et al. Date 2000.12.30
Financial policy, Financial systemDownloadContentEfforts to combat money laundering need to be improved and strengthened to accommodate recent developments in the domestic and international financial environment and anti-money laundering efforts. More than 50 countries in the world have enacted money laundering control laws and maintain FIUs(Financial Intelligence Units) with complete oversight over activities to combat money laundering. Korea, which has been recently in the process of adopting anti-money laundering legislation that also stipulates the establishment of an FIU, should closely consult with countries that already have FIUs.
In this context, a study of experiences and practices of foreign FIUs was conducted to further improve our understanding of FIUs. According to the study, FIUs are on the whole responsible for collecting, processing and disseminating information on illegal financial operations. However, with regards to more specific areas, FIUs vary from country to country according to individual needs and circumstances. For example, countries such as the United States, Canada and Australia even regulate cash transactions above certain amounts. Countries such as Japan, the Netherlands, Australia, the United Kingdom, France and others provide detailed guidelines and education to financial institutions on reporting procedures. Furthermore, in most countries, financial institutions are exempt from criminal, civil and professional liability provided they comply with the obligation of vigilance stipulated by law and report their suspicions in good faith to their FIUs.
It can be said that FIUs facilitate criminal prosecution and international cooperation as well as play an important preventive role, by making it more difficult for 'dirty money' to enter the financial system. Korea, therefore, needs to establish an effective FIU based on the said study on FIUs and by duly considering its own individual needs and circumstances.Summary -
APEC Trade Liberalization After EVSL
This paper overviews recent efforts for and experiences from trade liberalization in the World Trade Organization (WTO) and Asia-Pacific Economic Cooperation (APEC), with an emphasis on sectoral approach of APEC's Early Voluntary ..
Sang-yirl Nam Date 2000.12.30
Economic cooperation, Free tradeDownloadContentSummaryThis paper overviews recent efforts for and experiences from trade liberalization in the World Trade Organization (WTO) and Asia-Pacific Economic Cooperation (APEC), with an emphasis on sectoral approach of APEC's Early Voluntary Sectoral Liberalization (EVSL). Based on the analysis of international trade and potential welfare growth, we can draw some points to be considered for further trade liberalization activities in APEC.
With the premise of open regionalism, APEC has contributed to the integration of global economy as well as its Asia-Pacific member economies. The trial of EVSL in 1997 was a breakthrough for trade liberalization. However, EVSL failed to reach an agreement on the implementation of 9 priority sectors among the 15 sectors agreed to in 1997. The failure has been regarded as a credibility crisis for APEC. Currently, EVSL follows a three-track approach to liberalization: market opening measures, trade facilitation activities, and economic and technical cooperation initiatives. APEC members decided to transfer the tariff element of EVSL to the WTO in the name of Accelerated Tariff Liberalization (ATL) and to focus on non-tariff measures, facilitation, and economic and technical cooperation components of the sectoral initiatives.
The sectoral approach is an efficient way to further trade liberalization after achieving overall reduction of tariff barriers under GATT and WTO multilateral trade negotiations. For further trade liberalization in APEC, we should consider the environment and experiences of APEC trade liberalization and also consider the relationship between the WTO and APEC as well as trade liberalization efforts in these bodies. Some examples are as follows.
First, the APEC goals of trade liberalization mentioned in the Bogor Declaration are to be reexamined and redefined in detail. Second, as far as trade liberalization aspects of APEC are concerned, its relationship with the WTO as the multilateral trade negotiation process should be clearly defined. Third, if the Bogor goals of APEC trade liberalization are not totally changed, voluntary IAPs will not be enough to achieve the goals in consideration of the concessions in previous IAPs. Fourth, subgroupings within APEC should not undermine the multilateral efforts for trade liberalization but contribute to creating a liberalizing climate by fostering trade. Fifth, mutual cooperative complementary roles among the three pillars of the APEC process such as trade liberalization, facilitation and ECOTECH are to be strengthened. Sixth, trade liberalization and facilitation should concentrate on a few common interested sectors in the beginning to create momentum and to enhance the credibility of the APEC trade liberalization process. Besides, APEC should place priority on reducing the gap between members since it consists of diverse members in terms of economic development. In practice, the best ECOTECH policy that DC member economies can offer LDC member economies is to allow more market access for goods in which both DCs and LDCs have relatively large intraindustry trade in practice and potentially. The most appropriate commodities are especially from traditional manufacturing sectors such as processed food, textiles and apparel, parts and intermediate goods for industrial sectors, consumer electronics and others. Other sectors having relatively large differences in trade barriers among member economies should be considered and concentrated on ECOTECH prior to trade liberalization. -
Measures for Promoting Knowledge-based Economies in the APEC Region
For the promotion of KBEs in the APEC region, several new ideas and projects have been proposed: ① information sharing on best practices, ② reorganizing WGs in line with KBE promotion and strengthening ECOTECH, ③ joint business..
Yoo Soo Hong Date 2000.12.30
DownloadContentSummaryFor the promotion of KBEs in the APEC region, several new ideas and projects have been proposed: ① information sharing on best practices, ② reorganizing WGs in line with KBE promotion and strengthening ECOTECH, ③ joint business development in KBIs, ④ infrastructure development for KBEs, and ⑤ HRD for knowledge workers.
APEC's role is to assist all member economies to actively move toward KBEs. In this direction, APEC may consider several actions: ① Disseminating case study results and best practices for KBE promotion; ② Establishing a policy consultation group for KBE promotion for member economies; and ③ Inducing some existing or new ECOTECH programs towards KBE promotion for member economies. Sometimes the distinction between the specific programs for individual economies by APEC and joint programs at APEC level is blurred.
Although all APEC activities are directly or indirectly related to the promotion of KBEs, ECOTECH is more so. Considering the increasing criticism of developed economies, which more emphasized trade and investment liberalization and less contributed to ECOTECH, greater efforts by developed economies for the joint promotion of KBEs in APEC are encouraged. -
Investment Environment after the Financial Crises in the Asia-Pacific Region
The Asian crisis of 1997 gives us a valuable lesson that foreign direct investment (FDI) can play a more important role than other capital flows such as bank lending and portfolio equity investment. This paper explains the relatio..
Taeho Bark et al. Date 2000.12.30
Overseas direct investmentDownloadContentSummaryThe Asian crisis of 1997 gives us a valuable lesson that foreign direct investment (FDI) can play a more important role than other capital flows such as bank lending and portfolio equity investment. This paper explains the relationships between FDI and the crisis. Specifically, the paper studies the role of FDI for a stable economic growth. Recent developments of inward FDI policies by the Asian member economies of APEC are then analyzed after they are categorized into four groups within a framework that is developed in this paper. Some important, generalized implications for FDI policies are also provided.
Key words: Asian Crisis, Foreign Direct Investment, Economic Growth, APEC -
A Model Development for Measuring Global Competitiveness of the Tourism Industry in the Asia-Pacific Region
This study developed the evaluation model of competitiveness, and suggested "four dimensional sources of competitiveness". The primary sources of competitiveness include the subject, environment, and tourism resources. The seconda..
Chulwon Kim Date 2000.12.30
DownloadContentSummaryThis study developed the evaluation model of competitiveness, and suggested "four dimensional sources of competitiveness". The primary sources of competitiveness include the subject, environment, and tourism resources. The secondary sources of competitiveness are comprised of tourism policy, tourism planning, tourism investment, tourism tax and prices, and tourism management. The tertiary sources of competitiveness include tourism infrastructure, tourism reception system, tourism attractiveness, tourism publicity system, and tourism manpower. The fourth sources of competitiveness are comprised of tourism demand, tourism employment, overall tourism performance, and tourism export. These four sources of competitiveness are determinants which dominate competitiveness in the tourism sector.
The constantly growing number of travel destinations, and the enhanced quality of existing ones, is putting great pressure on those responsible for a given destination to find better ways to compete in the tourism marketplace and to do so in a sustainable manner. The first step in achieving this goal is to better understand those forces and factors that determine the competitiveness of major tourism destinations.
Given the wide-ranging nature of the concept, and the problems of application, it is not surprising to find that there is no unique measure for competitiveness. The notion of tourism competitiveness must be consistent with the notion of 'competitiveness' in the international economics and international business literature. The literature on international competitiveness was critically reviewed with a view to developing a framework suitable for tourism research.
This research uses a concept of tourism competitiveness, mixing with national competitiveness, like the concept of M. Porter. Competitiveness in the tourism sector is defined as the ability of the tourism market environment and conditions, tourism resources, tourism human resources, and tourism infrastructure in a country create an added value and increase national wealth. That is to say, "the competitiveness in the tourism sector" is not only a measure of potential ability, but also an evaluation of present ability and tourism performance.
By this study, it is expected that a measurement to compare strengths and weaknesses in the tourism industry of every country will be developed, and that mutual cooperation among nations will be promoted to develop national, overall competitiveness in international tourism. This means that international cooperation should be strengthened through development of evaluation indicators of competitiveness. In the international tourism market every nation finds a way to strengthen international competitiveness through common efforts. Strategic cooperation among tourism industries, expansion and utilization of investment for a high value-added tourism industry, construction of tourism information system, and international cooperation among businesses for specialization of high-quality tourism can be suggested. For example, countries holding a dominant position in a field will increase attractiveness in the overall international tourist destination, and create much stronger potential power, as supporting other countries, and constructing cooperation system with their neighbour countries.
On the other hand, policies for positioning and raising the existing tourism industry, strategically supporting and improving, and developing a new category of tourism business can also be suggested. According to the above, the following program of five stages for strengthening the competitiveness of every country in the international tourism community was deduced. In the first stage, changes in the international market are identified, and the position taken by each country. The second stage is to analyze the reasons for those positions to find key points to strengthen competitiveness. In the third stage, every country sets up its vision to demonstrate its potential power to the highest level, and to establish the purpose for objective measurement and scientific proof. In the fourth stage, every country recognizes the level of competitiveness and the reason why a gap of competitiveness exists. It is essential to construct an international cooperation system for choosing effective system and policy to bring about the highest continual benefit. The fifth stage is to suggest a substitute plan and establish an action program. -
Issues of the WTO New Round and APEC's Role
Established in 1989 as the first broad regional institution for intergovernmental dialogue on economic policy issues?in the Asia-Pacific region, APEC has emerged as one of the most powerful regional groups in the world economy, as..
Date 2000.12.30
Economic cooperation, Multilateral negotiationsDownloadContentSummaryEstablished in 1989 as the first broad regional institution for intergovernmental dialogue on economic policy issues?in the Asia-Pacific region, APEC has emerged as one of the most powerful regional groups in the world economy, assuming more than 50% of world GDP and trade volume, respectively. Over the last 11 years of its existence, APEC activities achieved a remarkable progress: the number of its members nearly doubled, the level of intergovernmental cooperation has been substantially upgraded, and since 1997 APEC has entered the stage of implementation. Also, cooperation areas of APEC have been widened continuously and the degree of cooperation deepened successively. Even though APEC attained a relatively influential position in the world economy, its importance within the world trading system remains controversial, both internally and in its external relations. APEC at the moment stands at a crossroad, and runs the risk of being marginalized not only in the world trading system, but also in the Asia-Pacific region. Not to be labeled as a qozere talk shop? APEC has to tackle both internal and external challenges. Internally, the solidarity among all member economies needs to be strengthened, which means APEC has to redesign and solidify its long-term vision, and systemize the cooperation agenda. Moreover, in its outreach to non-members, and especially in its relationship to the multilateral trading system, APEC has to find out how it can contribute to the strengthening of the multilateral trading system. In this context, it is imperative that APEC elaborates how it can assist the launch and successful operation of a WTO new round. This paper elaborated on possible contributions of APEC to a WTO new round, concentrating on three issue areas ?launching, liberalization and rules making. Main conclusions of the paper are as follows.First, the paper argues that APEC can exercise a strong influence on the shaping of a new multilateral trading system. Second, as regards the launching of a WTO new round, the paper recommends APEC to vigorously pursue the earliest possible launch of a new round, and suggests APEC establish a position that favors a comprehensive approach and a single-undertaking-approach, while paying special attention to ensure a balance of interests and concerns of its members. Third, the paper identifies a unilateral implementation of the ATL package by APEC member economies as the best policy option to deliver substantial contributions to the new round. Fourth, the paper argues that the composition of APEC, which has diversity in economic development stages with heterogeneous industrial structures, offers a chance for APEC-internal agreements to spill over to the multilateral trading system. It points out that agricultural liberalization and reform of WTO anti-dumping rules are good candidates for this approach. Fifth, the paper also regards the recent APEC initiative to set moratorium on the imposition of customs tariffs for e-commerce related product categories as a model case for the APEC process to have positive impact on the multilateral WTO process. Sixth, the paper recommends APEC to unify different APEC-intern rules of origin or at least harmonize them, and deliver those rules to the WTO, thereby to partly compensate for the negative impacts stemming from the proliferation of sub-regionalism within APEC. Lastly but most importantly, the paper argues that a strong US leadership both within APEC and in the WTO is needed to capture the opportunities for APEC and the WTO to mutually support each other. -
Investment Strategy of Japanese Business in Africa and Policy Implications
Since the mid-1980s, African countries have implemented policies which according to the World Bank are necessary for the positive contribution of foreign investment to the economic development of these economies. Typically within ..
Won-Yong Shin Date 2000.12.30
Overseas direct investmentDownloadContentSummarySince the mid-1980s, African countries have implemented policies which according to the World Bank are necessary for the positive contribution of foreign investment to the economic development of these economies. Typically within the framework of structural adjustment programmes they now permit full profit repatriation and have removed foreign exchange controls which were seen as obstacles to this. They provide tax and other incentives and have removed all the obstacles in the way of total foreign ownership of economic concerns in their territory and have in fact intensively privatized their state-owned enterprises to aid the processes. They have simplified their investment approval process and have established investment promotion institutions and now make intensive use of their representatives abroad to promote investment opportunities.
As a result, Africa is witnessing an upsurge in the level of foreign direct investments according to the 2000 World Investment Report. Foreign direct investment flows to Africa rose 25 percent from $8 billion to $10 billion in 1999, reflecting the faster growth rate being recorded on the continent, the Geneva-based UN Conference on Trade and Development (UNCTAD) said.
Since the 1980s, Japan has emerged as one of the most important investors in Africa, exerting influence on the states and peoples of the continent. Japan's presence is larger and more significant than generally believed and is certain to grow in importance.
Despite the Japanese strong presence in African markets with potentiality, the implications have not been greeted with much interest or given much attention in Korea itself. This attitude has become deeply entrenched. As a result, a large gap between perceptions and reality exists.
This paper is an attempt partly to fill this intellectual void. To review how Japan has invested, acted (or failed) and designed strategies will previde our policy-makers and businesses necessary and beneficial guidance. -
An Analysis of CO₂Emission Structures of the APEC Economies: Implications for Mitigation Policies and Regional Cooperation
We examined historical contributions of inter fuel substitution, changes in carbon efficiency and energy intensity, growth of economy and population to the APEC countries' CO₂emissions from 1980 to 1998 using a perfect decomposi..
Kihoon Lee et al. Date 2000.12.30
Environmental policyDownloadContentSummaryWe examined historical contributions of inter fuel substitution, changes in carbon efficiency and energy intensity, growth of economy and population to the APEC countries' CO₂emissions from 1980 to 1998 using a perfect decomposition approach. We also investigated whether or not CO₂emissions in the member countries are increasing by using new criteria suggested by Sun (2000). By adopting log mean Divisia method, we explained the causes of the differences of both the total and per capita CO₂emissions between the income groups of APEC countries.
The study reveals that economic growth (i.e. per capita income growth) is the most significant factor to CO₂emissions growth in most countries other than Russia, Peru, and Philippines. Population growth is another important factor that contributes CO₂emissions growth in all countries but Russia.
Changes in the energy intensity, fuel substitution, and carbon coefficient may be classified as negative contributors to CO₂emissions growth. Especially, enhanced energy intensity played dominant role in halting CO₂emissions growth in developed countries. In some less-developed countries, however, this factor played reversed role.
If the effect of per capita income growth was set aside, many countries achieved negative growth rate of CO₂emissions. Advanced countries like USA, Japan and Canada achieved more than 1% average annual decrease rate. This emission decrease is explained by improvement of energy efficiency. In most developing countries, however, they could not improve energy efficiency except China, which recorded considerable success in enhancing energy intensity.
In the income group comparison, per capita income effect explains the higher emission level in advanced countries than in the developing countries. Meanwhile other factors contributed to narrow the emission gaps between the groups. Above all, the higher energy efficiency in advanced economies is the most outstanding factor to decrease the gaps.
Based on these findings, we may draw implications on policy options for CO₂emissions mitigations and find ways to strengthen environmental co-operations among APEC member economies. Developing countries need to accelerate substitutions of fossil fuels to CO₂free or less CO₂intensive fuels, to enhance carbon emissions efficiency, and to improve energy efficiency. Improving energy efficiency through various measures will yield desirable results. Controlling population growth in low income countries is also an essential factor in checking rapid CO₂emissions growth.
In achieving emissions mitigation in developing countries, environmental cooperation among APEC member countries is essential. Developed countries need to transfer adequate technology and to finance to less-developed countries in enhancing clean and sustainable energy and economic development. To this purpose, APEC countries need to actively utilize the Kyoto Mechanism, which is Joint Implementation (JI), Clean Development Mechanism (CDM), and International Emissions Trading (IMT). The Prototype Carbon Fund to be operated by the World Bank may be a good source to expand such investment to the developing countries.
Among APEC economies, we find there exist big carbon credit suppliers and buyers. Most developing countries including China, Malaysia, Indonesia, Viet Nam, Peru, and Thailand are found to have very large potential to provide carbon credits. While USA, Japan, and Canada have to buy carbon credits to meet their commitments to the Kyoto Protocol. In that sense, activating intra-regional trading of carbon credits in the International Emissions Trading Regime proposed by the Kyoto Protocol is recommended. It may be conceivable to form an environmental bubble like the Umbrella Group that includes USA, Japan, Russia, Canada, Australia, New Zealand, etc. -
Digital Divide in the APEC: Myth, Realities and A Way Forward
There is a growing concern about the 'Digital Divide' at the APEC. Many are fearful that Digital Divide would worsen the existing gap among the member economies. While many policy prescriptions are suggested and implemented, the..
Byung-il Choi Date 2000.12.30
Technical cooperationDownloadContentSummaryThere is a growing concern about the 'Digital Divide' at the APEC. Many are fearful that Digital Divide would worsen the existing gap among the member economies. While many policy prescriptions are suggested and implemented, there is no academic attempt question the validity of the logic of Digital Divide. This paper offers a preliminary attempt to the question from an evolutionary and long-term perspective. Drawing on the time series data on the penetration ratio of fixed and mobile telecommunications lines from the APEC members, it is found that, whereas the current disparities are substantial, disparities in access to information infrastructure have been steadily decreasing and disparities are more rapidly bring declining in fixed network.
The paper concludes that there exist neither firm bases nor compelling evidences which point out the deepening of the Digital Divide over time.