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Tax Implicantions of International Capital Mobilty
The paper begins with a discussion of tax neutrality in an open economy. The focus is on the distinction between taxation based on the ownership of capital and taxation based on the location of capital. Even at this conceptual sta..
Joo-Sung Jun Date 1993.12.01
Capital market, Tax systemDownloadContentContents
1. Tax Neutrality In an Open Economy
A. Source-based Taxation and Capital Import Neutrality
B. Residence-based Taxation and Capital Export Neutrality
C. Implications for Optimal Tax Policy and Policy Coordination
2. The Taxation of Foreign Source Income
3. Tax Distortions to International Investment
A. The Effects of Foreign Tax Credits and Tax Deferrals on the Effective Tax Rate on Foreign Source Income
B. The Effectiveness of Investment Incentives
C. Tax Effects on Financing Decisions
D. Tax Effects on Multinational R&D Decisions
E. Relative Tax Advantage of a Portfolio vs. Direct Investment
4. Implications for Korean Tax Policy
A. Incentives in the Tax Laws
B. Tax Treaties
C. Tax Policy Concerning the Form of Foreign Investment
D. Summary of Policy Implications
〈References〉
SummaryThe paper begins with a discussion of tax neutrality in an open economy. The focus is on the distinction between taxation based on the ownership of capital and taxation based on the location of capital. Even at this conceptual stage, tax implications of moving from a closed economy to an open economy can be dramatic. The greater the mobility of financial capital among countries, the greater are the opportunities for international tax arbitrage. Efficiency considerations may require highly unrealistic constraints on the optimal tax rates such as uniform taxation, exemplifying the difficulty of international tax coordination.
The actual tax treatment of foreign source capital income is quite complex. There exist many other sources of distortion than can be described in a stylized theoretical framework. The efforts by countries to relieve double taxation of foreign source income are often incomplete and asymmetric across income types. The tax treatment of multinationals is extremely complicated, influencing both their real and financial behavior. The existence of alternative forms of international capital flows creates additional complications. Foreign direct investment faces a very different statutory tax treatment than foreign portfolio investment. The role of tax treaties and investment incentives in attracting foreign investment is not as clear as generally perceived. The rest of the paper addresses practical aspects of taxing international capital income.
The organization of the paper is as follows: Section 1 analyzes the basic principles of tax neutrality in the presence of international capital mobility. The most standard practices of taxing foreign source income are summarized in section 2. Section 3 discusses various tax effects on international investment and financial behavior, while their implications for Korean tax policy are presented in section 4. -
Leveraging Technology for Strategic Advantage in the Global Market : Case of the Korean Electronics Industry
Today, Korea is the third largest producer in the world of consumer electronic products and components, and Korean electronics have become the world's third largest industry. It is also the third largest exporter of consumer elect..
Yoo-Soo Hong Date 1993.12.01
Industrial policyDownloadContentContents
I. Introduction
II. History of the Korean Consumer Electronics Industry
III. International Competitiveness of the Korean Electronics Industry
IV. Technology Transfer and Technological Dependence
V. Concluding Remarks
References
SummaryToday, Korea is the third largest producer in the world of consumer electronic products and components, and Korean electronics have become the world's third largest industry. It is also the third largest exporter of consumer electronics, but ranks fifth with the inclusion of components and re-exports.
In 1970, Korea sold 55 million U.S. dollars worth of electronics to the world market. In 1992, two decades later, that figure has skyrocketed to 20.7 billion U.S. dollars, over 6 percent of the world market. Despite growing trade restrictions by the U.S. and by the EC, Korean-manufactured personal computers and VCR's now occupy an impressive share of their respective markets all around the globe, with exports representing more than three-quarters of total production.
Methodological Questions
Why has the Korean electronics industry-an obvious latecomer-been so successful? Can this trend continue? And what lessons does this specific case provide, if any, for other industrializing nations?
These are the issues which will be discussed in this paper. But in order to gain a better appreciation for the complexities involved in these topics, one must first understand what has made the consumer electronics industry unique from other industries in recent Korean history. -
Changing Patterns of Korea's Trade in Goods and Sevices
Korea has achieved rapid economic growth with its export-oriented industrialization policy since the 60's. The average annual growth rate of Korea's real Gross National Product(GNP) during the 1962-1992period was almost 8%, and th..
Jin-Soo Yoo Date 1993.12.01
Trade policyDownloadContentContents
I. Introduction
II. Changing patterns in Korea's merchandise trade
1. Exports and imports by commodity
2. Exports and imports by country
III. Changing patterns in Korea's trade in services
1. Trade in services
2. Technology trade
IV. Prospects
Reference
SummaryKorea has achieved rapid economic growth with its export-oriented industrialization policy since the 60's. The average annual growth rate of Korea's real Gross National Product(GNP) during the 1962-1992period was almost 8%, and the average annual growth rate of Korea's real GNP in the late 80's was above 10%. In 1992, Korea's per capita GNP became US$ 6,749, which is more than 77times of that in 1962.
Unfortunately, Korea could not maintain its trade surplus. which was attributed to the considerably weakened competitiveness of Korean products. The trade surplus in the late 80's resulted in the appreciation of the Korean won and severe labor disputes caused wage increases. The Korean won appreciated by as much as 24% in the late 80's, and wages doubled during the same period.
Recently, economic recession in developed countries is working against Korean exports. Protectionist sentiments are prevailing in major countries as well, because of the high unemployment rate in these countries. Korea is also experiencing difficulties in acquiring high technology and in attracting foreign direct investments. Accordingly, the growth rate of Korea's exports, especially to developped countries, dropped recently. The average annual growth rate of exports during the 1989-1992 period recorded 6.0%, which is considerably lower than the 80's. The average annual growth rate of imports, on the other hand, recorded 12.3% during the same period. -
The Asian Dimention of EC Integration: Problems and Prospects
The Korea Institute for Internatioal Economic Policy (KIEP), in collaboration with the Friedrich-Ebert-Stiftung (FES) of Germany, organized the international seminar on "The Asian Dimension of EC Integration: Problems and Prospect..
Bak Soo Kim Date 1993.12.01
Economic cooperationDownloadContentSummaryThe Korea Institute for Internatioal Economic Policy (KIEP), in collaboration with the Friedrich-Ebert-Stiftung (FES) of Germany, organized the international seminar on "The Asian Dimension of EC Integration: Problems and Prospects" on November 10-11, 1993 in Seoul.
This seminar gathered a number of distinguished scholars and specialists from the EC and Asian countries, who participated in efforts to share views on the issues and to develop new policy concepts that will help build foundations for further cooperative relationships between the EC and Asian countries. -
Regional Context for Korea's Dynamism
Korea's dynamism has put it in an important position to affect the Northeast Asian economy. With this in mind, a group of distinguished scholars from the U.S. and Korea participated in a seminar entitled, "Regional Context for Kor..
Chang Jae Lee Date 1993.12.01
DownloadContentSummaryKorea's dynamism has put it in an important position to affect the Northeast Asian economy. With this in mind, a group of distinguished scholars from the U.S. and Korea participated in a seminar entitled, "Regional Context for Korea's Dynamism: Certainties vs. Uncertainties" on October 12, 1993 in Seoul. During this seminar, the challenges that lay ahead for Korea at the turn of the century were scruinized in for the purpose of developing new policy directions and enhancing Korea's economic role, especially in a regional context for the near future. The meeting provided a rich opportunity to exchange various political-economic perspectives for future progress. -
Korean Strategies for the Economic Cooperation with the Russian Far East
The rapprochement between Korea and the Soviet Union in the late 1980s unveiled the Soviet Union to Koreans for the first time in decades. The initial excitement generated in Korea by this tremendous opportunity was soon replaced ..
Chang Jae Lee Date 1993.11.30
Economic cooperationDownloadContentSummaryThe rapprochement between Korea and the Soviet Union in the late 1980s unveiled the Soviet Union to Koreans for the first time in decades. The initial excitement generated in Korea by this tremendous opportunity was soon replaced by high expectations of economic cooperation with the Soviet Union.
However, the disintegration of the Soviet Union at the end of 1991, as well as the political instabilities and economic deterioration of the Russian economy that followed, constituted very serious obstacles to the further development of the economic cooperation between Korea and Russia. In addition, the fact that Russia was unable to repay Korean loans made the Korean public very skeptical as to whether economic cooperation with Russia was in Korea's best interests.
However, the long-term outlook of Korea-Russian economic cooperation is very bright due to its great potential. Furthermore, despite the uncertainties of Russian politico-economic instability, the short-term prospects for Korea-Russian economic cooperation also look promising, mainly due to the well-established basic frameworks for bilateral economic cooperation that have been created in the past several years.
The purpose of this paper is to first make a comprehensive analysis of the Russian development strategy of the Far East then deduce specific business opportunities and methods of cooperation on territorial development between Korea and Russia. -
Japan's Technology Transfer Policy to Asia, and Korea's Policy Response
Japan's technology rendered in its industrial and economic development has attracted the attention of developed, semi-developed and underdeveloped countries.Japan succeeded in promoting the domestic industry and raising its own te..
Yoo Soo Hong Date 1993.11.29
Technical cooperationDownloadContentSummaryJapan's technology rendered in its industrial and economic development has attracted the attention of developed, semi-developed and underdeveloped countries.
Japan succeeded in promoting the domestic industry and raising its own technology development by introducing, assimilating and improving upon the technology of advanced nations. In addition, after a degree of technical independence, Japan has steadily attempted to transfer and export its technology to other countries.
This report estimates that since the 1960s, Japan's technology transfer toward Asian nations has contributed to substantial economic development of Asian nations. However, there has been criticism about the form and level of Japan's technology transfer.
Following the principal axis of the U.S. and Japan, Korea has concentrated on technical imports for the assembly and processing industry, neglecting its own technology development. Therefore, since 1990, Korea has lost its international competitiveness in the world market.
Accordingly, the objective of this report is to seek strategic ways for Korea to learn from Japan and break the technical deadlock, becoming an advanced welfare country in the 21st century. -