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Recent Development in Korea's Export Structure and Prospects on Korea's Exports
Recent Developments in Korea's Export Structure and Prospects on Korea's Exports Inkyo Cheong, Chang Jae Lee Though the importance of exports is emphasized as a mean of overcoming the current financial crisis, the performance of ..
Inkyo Cheong et al. Date 1998.10.25
Trade structureDownloadContentSummaryRecent Developments in Korea's Export Structure and Prospects on Korea's Exports Inkyo Cheong, Chang Jae Lee Though the importance of exports is emphasized as a mean of overcoming the current financial crisis, the performance of Korea's exports has very poor since May of this year. This paper is concerned with the causes for the recent poor export performance and predicting future export prospects by region and commodity. The authors found that worsening external economic conditions were more important than internal economic conditions for Korea's recent poor export performance, and predicted that external economic conditions for next year would be worse than this year.
While Korean policymakers can do little to revive external demands, the authors suggest the adoption of trade promotion policies, such as an automatic discount system by the Bank of Korea, temporary relaxation (removal) of credit limits for large companies, strategic economic alliance, etc. -
Korea and Central America
■ Central American Countries in the past decade have rapidly achieved democratic as well as economic stability. Sustained economic growth, increased foreign investment, exchange rate stability and low inflation rates have transfo..
Won-Ho Kim Date 1998.10.20
Economic cooperationDownloadContentSummary■ Central American Countries in the past decade have rapidly achieved democratic as well as economic stability. Sustained economic growth, increased foreign investment, exchange rate stability and low inflation rates have transformed the region's economic outlook in a strongly positive direction. Central America not only possesses abundant tourist resources, but also an advantageous geographic location at the crossroads of North and South America, and the Atlantic and Pacific. Central America also benefits from preferential tariff rates with the United States and EU, which are enhancing the position of Central America as a new and invaluable market of trade and investment.
■ The Central American Common Market (CACM), created in 1960, experienced a serious collapse of confidence in the 1980s due to the political and economic problems in the region. However, the CACM has reversed course and is now entering a new era of development, taking advantage of the political and economic stability in the region. The CACM is not only deepening the economic integration in the region, but is also strengthening its relations with the EU, and actively is promoting the formation of the Free Trade Area of Americas (FTAA).
■ Due to the geographical and cultural distance between Central America and Asia, the extent of cooperation between the two regions had remained relatively insignificant. However, relations between the two regions are now making remarkable progress owing to Central America's increasingly large potential for economic growth and development derived from its commitment to liberalize trade and investment, while maintaining macro-economic stability. In particular, Korea's cooperative relations with Central America will be strengthened by the establishment of Korea-Central America Forum for Dialogue and Cooperation, the brainchild of the 1996 Korea-Central America Summit, and by Korean firms increasing trade and investment in the region. -
Technology Cooperation in the APEC
This research is undertaken to have a close look at the current status of technology cooperation in the broad context of ECOTECH drawing on the case of the APII(Asia-Pacific Information Infrastructure). The expectations were such ..
Byung-il Choi et al. Date 1998.10.14
Technical cooperationDownloadContentSummaryThis research is undertaken to have a close look at the current status of technology cooperation in the broad context of ECOTECH drawing on the case of the APII(Asia-Pacific Information Infrastructure).
The expectations were such that the pursuit of the APII would help to reduce disparities among the APEC member economies in telecommunications and information sector. Statistical analysis of telecom infrastructure of member economies reveals that, despite rapid growth of the developing economies, disparities between the developed and developing economies show no sign of reducing. The analysis of the activities of telecom working group(TEL) at the APEC shows that, even though the TEL strives for a balanced attainment of the goal of TILF and ECOTECH, more weight is geared towards TILF. Many activities on ECOTECH remains small-scale event-type lacking enthusiastic participation of private/business sector from developed countries. The paper calls for a more balanced treatment of ECOTECH and TILF for reducing disparities in telecom sector. -
A Study on the Adoption of EU Information Network Model in APEC Region
A Study on The Adoption of EU Information Network Model In APEC Region Kwon, Tae Hyoung; Won, Chong-Keun; Lee, Sang-Woo; Joo, Jae-Beom; Shin, Bongsup In this paper we attempt to investigate the possibility of whether or not the i..
Tae-Hyong Kwon et al. Date 1998.10.14
DownloadContentSummaryA Study on The Adoption of EU Information Network Model In APEC Region Kwon, Tae Hyoung; Won, Chong-Keun; Lee, Sang-Woo; Joo, Jae-Beom; Shin, Bongsup
In this paper we attempt to investigate the possibility of whether or not the information network found in the EU can be applied to APEC. At the end of our investigation, we make some suggestions thought to be essential for the establishment of an EU type information network in the area. This research begin by reviewing the existing literature on the area of 'organizational changes and control'. The following are our findings from this review : i) there are close relationships between the following three aspects-organizational strategies, structure and environment. Individual organizations have to account for them before making any decision about organizational structure. ii) only if the three are in a good harmony can an established organizational structure be expected to offer a reasonable degree of efficiency and effectiveness. iii) organizational changes are not just determined by the environment which an organization faces. But before making a decision, the main actors of the organization consider their objectives and existing organizational structure as well as the environment. This process is usually subject to negotiations and political struggles.
To characterize the information network found in the EU, the European Documentation Center (EDC) and the European Information Center (EIC) networks, which are considered to be dominant in the area, are chosen for analysis. The activities of these two networks are carried out under the support of the European Commission. The two share the regulations of the information flow and the activities of small and medium firms within the EU. But the immediate situations faced by each are not the same. The two also operate different type of networks under different types of strategic supports. We have found that the type of information supplied by each network is not identical. The EIC supplies business information, particularly for small-medium firms within the EU, while the information for academic research on the EU is supplied by the EDC. Our analysis showed that, owing to higher resource dependence, geographical advantage and the supply of business-related information, combined with highly formalized, decentralized and complex organizational structures, and the variety of strategic supports, the EIC has become more efficient and effective than the EDC.
Given these findings, we then compare APEC and the EU. Various differences were noticed. Although APEC has initiated a plan called APII to develop an information-infrastructure within the area, this still remains at the infant stage. The unformalized and centralized structure seen in APEC was another constraint upon the efficient use of the EU-type information network, particularly the EIC network. There are no regulations concerning the information flow and the activities of small-medium firms within APEC. The uneven level of development of information-related technologies between member states, geographical disadvantage and the low level of integration also emerged as a hinderance to the adaptation of the EU network. We therefore conclude that, given the current situational and organizational characteristics found in APEC, the possibility that this could lead to the same degree of efficiency and effectiveness as the EU has experienced is presently small. But, at least, it can be said that the EU network offers a very useful model which could be used to make a number of significant improvement to the area of information networks.
Finally, we make a few suggestions which we consider essential for the establishment of an EU type network in APEC. In brief there are as follows: a careful investigation of the information market with APEC; the development of information-related technological infra; the regulation of the information flow and the activities of small-medium firms; the formalisation and decentralization of the central organizational structure ; the development of APII as a relevant strategy; and the supply of business-related information. -
Analysis and Evaluation of 1997 Individual Action Plan
Analysis and Evaluation of IAPs 1997 Individual Action Plan Keuk-Je Sung Individual Action Plans of 1997 was an expansion of the IAPs of 1996, covering as many as 15 areas including tariffs, non-tariffs, investment and services. ..
Keuk-Je Sung Date 1998.10.14
Economic opening, Economic cooperationDownloadContentSummaryAnalysis and Evaluation of IAPs 1997 Individual Action Plan Keuk-Je Sung Individual Action Plans of 1997 was an expansion of the IAPs of 1996, covering as many as 15 areas including tariffs, non-tariffs, investment and services. The actual improvement was, however, rather limited from a general perspective. This lack of improvement was visible in market access area such as tariffs, non-tariffs, services, government procurement and UR implementation. The improvements, if any, were the repetition of already committed WTO commitments in basic telecommunications, financial services and Information Technology Agreement. Rules area including competition policy, standards, and deregulation, showed similar tendency of repetition; this time, basic principles.
This lack of improvement may be unavoidable due to the short history and nature of APEC's voluntary liberalization. Unless controversial MFN problem is resolved, such reluctance to unilateral liberalization cannot be easily overcome, as long as there are non WTO members. Creative ideas, however, may help induce member countries to pursue liberalization in an indirect manner. For example, requirement of reporting only the improvement for the next couple of years would generate significant peer pressure to the members. Same kind of pressure may be exerted if reporting formats were more detailed in the rules area of standards, deregulation and UR implementation. In the areas of non-tariffs and investment, establishment of five-year plans may help pursue further liberalization. -
Korea's Trade and Industrial Policies: 1948-1998
Korea's Trade and Industrial Policies: 1948∼1998Why the Era of Active Policy is Over Chan-Hyun Sohn, Junsok Yang, Hyo-Sung Yim Throughout its history, Korea has based its economic policies on ideas of how to best promote exports..
Chan Hyun Sohn et al. Date 1998.09.30
Trade policy, Industrial policyDownloadContentSummaryKorea's Trade and Industrial Policies: 1948∼1998Why the Era of Active Policy is Over Chan-Hyun Sohn, Junsok Yang, Hyo-Sung Yim
Throughout its history, Korea has based its economic policies on ideas of how to best promote exports and control foreign exchange reserve levels. Even during periods of liberalization, more attention was given to promoting exports than liberalizing imports.
The review of Korean trade and industrial policies showed how the trade policy, which began by effectively utilizing international competition, evolved into an industrial policy which encouraged close cooperation between the government and the private sector. Such close ties led to crony-capitalism which is the underlying root of the current economic crisis. Thus, activist industrial policy must no longer be a part of government's policy options. The theoretical justifications are no longer as clear in the 1990s as in the 1960s, and the potential for misuse and the negative effect on the rest of the economy is too high to be tolerated.
Instead, Korea must now engage in policies which undo the ties between the public and private sectors fostered during the last fifty years. In the short term, this means that the government must acknowledge and reveal publicly the quasi-legal and illegal ties it maintained with the private sector since the 1980s. In the long run, it means that the government must change their emphasis and engage in policies designed to lower the concentration of market power in a few select large conglomerates, increase competitiveness, and thus promote the innovativeness and the flexibility of the Korean economy. -
The Role of Cross-Border Mergers and Acquisitions in Corporate Restructruing
The Role of Cross-Border Mergers and Acquisitions in Corporate Restructuring Yunjong Wang, Jong Keun Kim In Korea, a market for mergers and acquisitions (M&As) has virtually not existed until recently, because there was only ..
Yunjong Wang et al. Date 1998.09.15
Business managementDownloadContentSummaryThe Role of Cross-Border Mergers and Acquisitions in Corporate Restructuring Yunjong Wang, Jong Keun Kim
In Korea, a market for mergers and acquisitions (M&As) has virtually not existed until recently, because there was only a limited number of market participants, and furthermore the activity of mergers and acquisitions was perceived as an immoral and cold-blooded one against the Korean business culture.
After the currency crisis broke out in late 1997, the pace of foreign direct investment through cross-border M&As has picked up markedly, despite ongoing concerns regarding profitablity of Korean firms, labor unrest and difficulties attending the acquisition process. Compared to 700 million dollars or only 10% of total foreign direct investment in 1997, foreign acquisitions of outstanding Korean stocks has increased to 700 million dollars or about 40% of total foreign direct investment by the first half of 1998. If the acquisitions of assets are included in the statistics of cross-border M&As, the amount of cross-border M&As would be even larger.
Cross-border M&As have various merits to our national economy: foreign capital inflow in this critical time of currency crisis; facilitation of corporate restructuring; enhancement of market contestability; advancement of corporate governance; and transfer of advanced technology and managerial know-how. In order to take advantage of these benefits, the Korean government need to improve the environment for foreign direct investment. Furthermore, various policy measures should be undertaken continuously to strengthen the role of mergers and acquisitions as a powerful market mechanism by which inefficient management could be disciplined. -
The Role of Foreign Direct Investment in Korea's Economic Development: Productivity Effects and Implication for the Currency Crisis
This paper seeks to investigate the role of foreign direct investment (FDI) in Korea focusing on productivity spillover effects in manufacturing and implications for the current currency crisis. Estimation results of a random-effe..
June-Dong Kim et al. Date 1998.09.10
Foreign investmentDownloadContentSummaryThis paper seeks to investigate the role of foreign direct investment (FDI) in Korea focusing on productivity spillover effects in manufacturing and implications for the current currency crisis. Estimation results of a random-effects model with instruments using the annual data of six subsectors in manufacturing industries reveal that foreign direct investment had a positive but statistically insignificant effect on the productivity of Korean manufacturing during 1970-1996. The paper also examines whether or not FDI has the role of preventing bail-out loans in a currency crisis. The probit estimation results using cross section data of 90 developing countries show that the incidence of bail-out loans from the IMF during 1994-1997 is negatively associated with FDI stock relative to total GDP. The probit analysis using pooled data of 84 countries in 22 years of 1973-1994 also reveals that FDI inflow relative to total debt is negatively associated with both currency crashes and the IMF rescue loans. -
Change in Japan's Trade Policy Directions since the 1980s and Implications for Korea
Change in Japan's Trade Policy Directions since the 1980s and Implications for Korea Sungsup Ra This study intends to investigate changes in Japan's trade policy directions since the 1980s. Since the 1980s, facing changes both i..
Sungsup Ra Date 1998.08.31
Trade policyDownloadContentSummaryChange in Japan's Trade Policy Directions since the 1980s and Implications for Korea Sungsup Ra This study intends to investigate changes in Japan's trade policy directions since the 1980s. Since the 1980s, facing changes both internationally and domestically, Japan's trade policy, once known as "managed," has been gradually transformed into a liberal policy, yet it is still taken as an example of export-led trade or industrial policy.
Japan's trade policy since the 1980s has, in its principles, shown three distinctive changes: firstly, it has increasingly interacted with competition policy and its scope include an area where trade and competition policies interact together; secondly, Japan has been inclined to take more active or aggressive reaction toward foreign pressure in formulating its trade policy than before; finally, Japan has shown its effort to enhance harmonization between the Japanese and the international economy.
Under these changes in the principles, Japan's economic growth strategy has shifted from export-led to domestic-led since the 1980s. Steps have also been taken towards deregulation and structural reform in Japan's economy. Some measures for promoting import and foreign direct investment into Japan have also implemented. And Japan has actively supported a multilateral trading system under the framework of GATT/WTO as a free and non-discriminatory trade dispute settlement mechanism. However, these Japanese efforts are, in this study, evaluated to be partial in scope and several sectors including agriculture, construction and certain services, especially financial, remain subject to restrictive regulation that affect both foreign market access and better allocation of domestic resources.
This study firstly overviews the background affecting changes in Japan's trade policy since the 1980s and identifies important aspects of changes in Japan's trade policy through careful examination of trade policies and policy instruments taken by Japan and case studies on the U.S.-Japan semiconductor issue, the U.S.-Japan automobile and auto parts issue, and the U.S.-Japan film issue. This study also shows that Japan is expected to continue the trade policy directions into the 21st century. Finally, evaluating Japan's trade policy, implications for Korea are drawn. -
Bilateral Investment Treaties of the United States: Implication and prospects of the BIT between Korea and the U.S.
Bilateral Investment Treaties of the United States: Implications and prospects of the BIT between Korea and the U.S. Kwan-Ho Kim Korea and the U.S. agreed at last June's Summit to conclude a Bilateral Investment Treaty by the end..
Kwanho Kim Date 1998.08.20
DownloadContentSummaryBilateral Investment Treaties of the United States: Implications and prospects of the BIT between Korea and the U.S. Kwan-Ho Kim
Korea and the U.S. agreed at last June's Summit to conclude a Bilateral Investment Treaty by the end of this year. The treaty will prescribe a wide range of investment protection standards: including non-discriminatory treatment; prompt, adequate and effective compensation in the event of expropriation; and free transfer of all kinds of funds. The treaty will also contain topics regarding investment liberalization. Performance requirements such as local content will be prohibited.
It was unusual that the treaty was inititated not by the U.S., but by Korea, which is in the position to import capital. This reflects the changing circumstances in Korea, which is undergoing rapid structural reform and actively seeking to attract foreign direct investment. Rather than waiting for a proposal from the U.S., Korea decided as a matter of policy to conclude a BIT with the U.S.
Korea hopes the BIT with the U.S. will help establish a favorable investment climate, bulid confidence, and send a positive signal to investors. While the BIT may contribute to some growth in foreign investment, we should not have too many expectations. The BIT with the U.S. is only a tool - one factor creating a favorable investment climate. Existing studies show that BITs play a minor and secondary role in influencing foreign investment flows. Unless we can offer a secure profit-making ventures to foreign investors, the existence of the BIT will not itself attract investment.
Some of Korea's policies might be challenged by the BIT with the U.S., e.g., the screen quota system which is contrary to the obligation to not enforce local purchasing requirements. Korea is currently maintaining this policy to foster its film industry. Whether we should expose this cultural industry to open market competition will be a contentious issue.