During the transition period following the collapse of the Soviet Union, Central Asian countries underwent economic crisis and the collapse of the Soviet welfare system. In the 2000s, thanks to the income gained by oil and gas exports, Kazakhstan and Turkmenistan successfully transformed into upper middle income countries (UMIC). However, the Kyrgyz Republic and Uzbekistan are still eager to lift themselves out from lower middle income country (LMIC) status, while Tajikistan remains a low income country (LIC). There are various views on why Central Asia is lagging behind in economic development. Basically, the area’s geographical limitations as an inland region, political and security instability, and its planned economy are some of the key factors that impede the active development of trade, investment, technology and human resources. Moreover, the recent global financial crisis, the Russian economic crisis, and fall in commodity prices are causing the Central Asian economy to struggle.
  In this context, this study aims to provide an in-depth analysis on the development challenges in Central Asia, and provide policy suggestions for Korea’s development cooperation with Central Asia. Chapter 2 analyzes the current economic and social status in Central Asia based on the Sustainable Development Goals (SDGs). With additional consideration made for the national development strategies of each country, this study singles out six priority areas for cooperation: agriculture development, human resources development, trade facilitation, water management, renewable energy, and governance. Chapter 3 reviews the current status of development cooperation in Central Asia, illustrated in numbers. Case studies on Germany and Japan, two of the major cooperation partners of Central Asia, are introduced for implications to Korea’s development cooperation. Chapter 4 evaluates Korea’s development cooperation policy toward Central Asia, and identifies major achievements and key issues to be improved for future cooperation.
  This study concludes by providing some policy implications. Firstly, Korea needs to design customized strategies that reflect the demands for new development cooperation in Central Asia. Korea should identify the actual needs of the Central Asian region in accordance with changes in its internal and external situations, and establish measures to improve development effectiveness by building an organic cooperation system among different government departments. Secondly, differentiated development cooperation plans for individual Central Asian countries should be established and implemented. Such factors as basic national competence, economic development status (population, resource, socioeconomic infrastructure, etc.), and the basic directions of national development policies should be considered comprehensively. Thirdly, qualitative improvement in Korea’s development cooperation policy is necessary. This can be achieved by expanding private and global partnership, including participation on the part of NGOs and private companies, diversifying development financing through strategic utilization of foreign direct investment and remittances, and establishing field-based policies based on actual development cooperation needs. 

  Mobile healthcare or m-health is defined as all kinds of healthcare services provided with wireless communication devices such as mobile phones or mobile diagnostic devices. Recently ICT-based healthcare industry is emerging as an effective means of improving healthcare infrastructure in developing countries. On the other hand, Korean m-healthcare industry that has outstanding technology such as hospital information systems, electronic medical record management platforms, and mobile-based diagnostic devices faces premature domestic market and lack of related laws and institutions. It is also hard to create markets in other advanced economies because most Korean m-health companies are small- to medium-sized start-ups and other advanced economies have the similar market environment.
  Public healthcare service in developing countries is promising to the firms because m-health technology is easily accepted due to fewer regulations and less social interest conflict. In addition, governments of developing countries and international development agencies have strong demand for m-health to develop public healthcare infrastructure.
  This study analyzes the status and prospects of m-health industries in Kenya and Rwanda, which are the major countries in East Africa and research the cooperation approach of the Korean government and m-health enterprises. The paper also includes detail information about local cooperative government’s m-health and healthcare policy, current m-health projects and strategies of major donor countries and multilateral developing agencies, and technology and market status of the mobile health industry in Korea. Based on the local and industrial information, we suggest policy implications to design a new development cooperation project from which both cooperative governments that need improvement of healthcare services and Korean m-health companies that seek new markets mutually benefit.
  Kenya, an emerging ICT giant in East Africa through huge fin-tech (mobile–base finance service) success and Rwanda, a leading country having great experiences in its development cooperation projects are accomplishing various m-health projects to improve public health system by fostering mobile healthcare technology from the government level.
  We also examine Korean m-health firms’ technology and examples of projects in developing countries. There are two groups depending on company size, entry items, market entry projects and strategies: start-ups developing mobile healthcare devices and large enterprises and hospitals that focus on mobile healthcare platform and database.
  Since most projects in Africa are led by partner governments, especially healthcare projects, a partnership with local cooperative governments is most important. It is also important to maintain a good partnership with other donors in Africa to carry out m-health base development cooperation projects.
  Strategic region or country should satisfy the following criteria: regional integration and similarity among governments and industries, government’s wills, and business potential of scale-up. We also suggest disease and patients’ information sharing system and portable diagnostic devices as strategic areas of product and technology among various areas of mobile healthcare industry. It is necessary to select and discuss areas that harmonize the policies and strategic plans of partner country governments.
  From the m-health industrial point of view, it is vital to focus on collecting data and obtaining references to advance technology in the long term, in addition to expanding the public health sector procurement market. Enhancing policymakers’ m-health technical understanding can support the link between development aid projects and the mobile healthcare industry.
  Korea’s m-health ODA cooperation with African countries will also provide Korea with strategic cooperation opportunities with partner countries that place their economic development priority on the ICT industry. For Korea, it will be worthwhile to pay close attention to the multiplicative potentials forming in the m-health sector for Africa. 

  The UK’s decision to leave the EU (European Union) has put the Union in an unprecedented crisis. The exit per se of such a large member state in both economic and population size is causing turmoil, and the accumulated discontent towards the current system of the EU during the euro-area sovereign debt crisis and refugee crisis has come to the fore due to Brexit. Backed by this discontent, political forces arguing for their own countries’ exit from the Union have also risen in other member states, and heads of governments of other major member states and EU institutions are rushing to propose reforms to the current system. The deepening and extending of the European integration since the creation of the European Coal and Steel Community for peace and prosperity in Europe right after the World War Ⅱ is put on break, and the uncertainty on the future shape of the EU has risen to an unprecedented level. This uncertainty is likely to cause troubles not only to the EU and its member states but also to third countries including South Korea in long-term decision makings at the levels of business, consumer and government, due to the Union’s importance in world economy and international trade.
  Against this backdrop, this report analyzes the problems of the current system of the EU, forecasts its future shape and derives policy implications for Korean government.
  Chapter 1 briefly follows the evolution of Brexit, sketches the importance of the UK within the Union and outlines the plan of this report.
  Chapter 2 analyzes the major problems of the current system in the following 6 areas: European identity; decision-making structure; economic divergence among member states; public finance; management of economic crisis; labor migration and refugees. Lack of identity, decision-making structure and migration-refugee issue are known to have had direct impacts on the spread of the public demand for exit from the Union, and economic divergence, public finance and crisis management have emerged as the major problems of the current system during the euro-area sovereign debt crisis.
  Finally, Chapter 3 categorizes possible shapes of future European integration and proposes 5 scenarios. Using the AHP method, it estimates the probability distribution among the 5 scenarios and derives policy implications for Korean government for each scenario. 

  Korea has been providing development aids to support vocational education and training (VET) in Uzbekistan. This report aims to derive Korea’s policy alternatives for effective development cooperation in Uzbekistan’s VET by carrying out the following analyses. The development needs of Uzbekistan’s VET are identified, and lessons are drawn from donor communities’ VET cooperation practices. Korea’s VET cooperation efforts in Uzbekistan are also examined and evaluated. Korea’s new cooperation strategy and projects for Uzbekistan’s VET are proposed for more effective development cooperation outcomes.
  In Uzbekistan, under the government-led development policy with most of investment made in the public sector, the private sector has not played an active role in economic growth. Employment opportunities have not been created enough to provide jobs for the increasing and young labor force. To cope with this problem, the Uzbek government introduced a series of policies aimed at expanding the private sector and diversifying the industrial structure. In 2017, the new Mirziyoyev government announced the five priority policy directions to be implemented over the next five years. Economic development and liberalization is one of the priority directions, where industrial diversification, financial and agricultural reforms etc, were proposed. The improvement of education system was included in the priority direction for improvement of social services. The prerequisite for successful implementation of the industrial development policy is to increase investment in potentially competitive industries, develop industrial technologies, and cultivate high-quality technical personnel required for industrialization. However, no specific plans or strategies have been laid out by the Uzbek government to foster strategic industries and cultivate technical manpower.
  Vocational high schools have played a major role in providing compulsory vocational education in Uzbekistan, which means that access to vocational education is very high. However, the quality of vocational education is inadequate, which results from problems in facilities and equipments, curriculum, training of trainers etc. On the other hand, as the industrial structure and labor demands change, vocational training will need to be provided for new occupations and technical fields, unemployed and transferring workers, returning migrant workers etc.
  The development needs for VET in Uzbekistan can be summarized as follows. First, the mid/long-term manpower development plan should be prepared for strategic industries. Second, the mid/long-term road map for improvement of the VET system needs to be introduced. Third, the linkage between the VET system and the labor market has to be strengthened to meet new labor demands. Fourth, institutions and regulations need to be established to expand VET opportunities for adults. Fifth, credibility and acceptability of VET qualifications and institutions have to be improved. Sixth, the VET quality evaluation system needs to be strengthened. Lastly, information gathering and diffusion has to be improved in education including VET.
  About 12.5% ​​of development aids for Uzbekistan was spent on education, approximately 20% of which was provided for VET. Several implications can be drawn from the practices of major donor institutions in VET. First, as the industrial structure of Uzbekistan changes, demands for vocational training for adults will be greatly expanded. Second, Korea can improve the sustainability of VET projects by putting more aid resources on VET programs rather than VET hardwares. Third, the introduction of strategic guidelines on VET will be helpful for the effective and systematic implementation of VET projects. Fourth, cooperation with other donor institutions should be pursued to enhance the effectiveness of Korea’s VET projects.
  Korea’s ODA for Uzbekistan has been steadily increasing, and 12 aid projects have been implemented in education since 1991. While the EDCF has provided concessional loans for vocational and general education, the KOICA has carried out grant projects on vocational training, secondary and higher education. It has been pointed out that Korea’s VET cooperation projects were limited to providing supports on VET hardwares such as facilities and equipments. It is noteworthy that the KOICA recently launched its first consulting project on the vocational training system of Uzbekistan, which will contribute to the effectiveness of Korea’s VET supports. In addition, Korea can increase its VET aid effectiveness of Uzbekistan by concentrating its supports on expanding vocational training and establishing the qualification system in cooperation with other development partners including the private sector. 
  Korea’s new strategy directions for VET development cooperation in Uzbekistan are proposed as follows. First, Uzbekistan will have increasing demands for adult VET which can not be met by the current VET infrastructure and capacity. Therefore, Korea’s supports need to fill the gap in Uzbekistan’s vocational training capacity. Second, in order to increase the accountability of Korea’s VET projects in Uzbekistan, the result-oriented monitoring and management system have to be strengthened. Third, Koreas needs to help Uzbekistan establish the more effective VET system by providing legal and institutional consultation. Fourth, a list of promising VET aid projects with concrete implementation mechanisms can contribute to the effectiveness of Korea’s new VET cooperation strategy for Uzbekistan. 

  Laos is one of Korea’s priority partner countries for official development assistance (ODA) where four sectors are mainly focused such as water management and health, energy, education, and rural development based on the country partnership strategy (CPS). As of 2015, total population rises to almost 7 million among which urban population is 38.6%, and rural population is 61.4%. Although the overall trend of urban population increases rapidly, rural sectors such as agriculture and forestry that utilize abundant natural resources of land, water, grass, tree, and mining are still dominating Lao people due to the high portion of primary industry resulted from land uses. Total land in Laos consists of 78.4% of forestry (18.6 million ha), 10% of the agricultural area (2,369 thousand ha) and others.
  This research studies Korea’s agricultural development cooperation with a focus on rural development that is one of the focal areas approved by Korea’s CPS with Laos. It starts from current agricultural development and future needs for Laos scheduled in particular by agricultural development strategy to 2025 and vision to the year 2030 (ADS 2025) approved by Ministry of Agriculture and Forestry (MAF) of Lao government in 2015. Agricultural programs in Laos supported by other countries or international organizations such as Japan, Australia, Germany, Swiss, Asia Development Bank (ADB), World Bank Group (WB), World Food Program (WFP), and Food and Agriculture Organization (FAO) are discussed in detail for finding possible cooperation each other at the same fields or drawing any significant implication for suggesting promising agricultural programs. On the other hand, Korea’s agricultural capacity is essential for implementing agricultural programs suitable to Laos so that current Korea’s agricultural programs of using both grant and loans are studied for better understanding of finding bottlenecks or challenges in Laos. Based on agricultural needs in Laos and Korea’s capacity in agricultural development cooperation, it suggests several agricultural programs.
  ADS 2025 indicates specific targets and programs in both food production and agricultural commodity production. The target rate for agricultural growth by 2020 is 3.4%, and the one for nutrition is 2,600 kcal/person/day. Agricultural food crops, livestock, and fishery are the main areas for its development. The 9 action plans in agricultural food crops production include 1) agricultural land development, 2) infrastructure development, 3) clean agriculture development, 4) production management, 5) plant protection and quarantine development, 6) food crops research, 7) commercial crop production, 8) plant variety and technical research for commercial cultivation and 9) personnel development for plant protection and quarantine. There are 7 action plans in livestock and fishery development such as 1) improvement of productivity in livestock and fishery production, 2) improvement and development on sanitary measures for animal products, 3) livestock and fishery production research, 4) livestock and fishery commodity production research, 5) livestock and fishery production extension, 6) livestock production, veterinary and fishery management and administration improvement, and 7) commercial livestock and fishery production promotion.
  Laos has received almost $500-650 million annually on average from international societies. Japan’s agricultural programs focus on enhancing agricultural policy and administration capacity, land management, water resources, food production, and livestock industry by inviting private sectors as well as local farmers. Australia has agricultural programs on developing livestock and agricultural technology as well as policy and administration. Germany focuses on rural development, climate change, forestation, and enhancing various natural species in agriculture. Swiss has provided to enhance agricultural extension services for 12 years aiming at enhancing agricultural productivity, especially for small farmers. ADB’s strategy indicates enhancing local/regional connectivity and irrigation, agricultural value chain, regional infrastructure, and water resource management for food security. WB has many agricultural programs including land management and forestry cooperation to reduce emissions from deforestation and forest degradation (REDD+). WFP has supported food assistance for enhancing children’s nutrition especially using school programs. FAO has helped Laos facilitate agricultural market and technology through agricultural education programs such as farmers’ field school (FFS).
  Korea as one of important donors in Laos has provided many projects such as technical assistance through Korea Program on International Agriculture (KOPIA) center of Rural Development Administration (RDA), integrated agriculture and rural development project through Economic Development Cooperation Fund (EDCF) supported by Korea Rural Community Cooperation (KRC), agricultural and rural activities through KOICA, consulting agricultural policies through Korean Agricultural Policy Experiences for Food Security (KAPEX) from Korea Rural Economic Institute (KREI) and Knowledge Sharing Program (KSP) from Korea Development Institute (KDI). These activities should be more aligned each other in the near future for increasing aid effectiveness in Laos.
  Korea has a great experience to enhance agricultural production and marketing system within a short period of time such as increasing agricultural technology especially in rice productivity for small farmers, livestock and milk industry, forestation, farm financing and marketing through agricultural cooperatives, information on agricultural price and markets, and so on.
  In conclusion, for future direction in agricultural development cooperation with Laos, sustaining agricultural policy framework, first of all, should be continued such as KAPEX and KSP in order to initiate pilot programs for implementing good agricultural policies in Laos for mutual recognition. There are potential areas such as enhancing food security, responding to the climate change for agricultural resilience, achieving sustainable development goals (SDGs). Second, facilitating and implementing agricultural policies in Laos should be supported by Korea government’s programs in areas such as technical assistance, capacity building, and agricultural value chain. Third, agricultural development programs should be linked with current frameworks such as Korea-Laos, Korea-Mekong, and Korea-ASEAN cooperation. Fourth, incorporating private sectors and/or non-government organizations (NGOs) throughout the programs are important for sustainable agricultural development activities in the long run. These programs should contribute to the social and economic growth for Laos to graduate from the least developed country by 2020 and transform into a middle-income country by 2030 led by National Socio-Economic Development Plan (NSEDP, 2016-2020). 

Preface

Contributors

Introduction and Overview
Lee-Jay Cho

Statements by Country Representatives

Part I. China’s Economic Development and Northeast Asia Regional Cooperation in the Context of the Road and Belt Initiative

Part II. Future Tourism Cooperation in Northeast Asia

Part III: Cross-border Infrastructure and Special Economic Zones in Northeast Asia

Part IV: Building a Northeast Asian Economic Community and Its Extended Regions

Part V: Financial Cooperation in Northeast Asia

Part VI: Energy and Environment in Northeast Asia

Appendix: Hong Kong Statement and Agenda 

  This year witnessed political tensions resulting from a series of provocative nuclear and missiles tests in North Korea and from domestic political unrest, culminating in the abrupt leadership change in the Republic of Korea. All these events pose enormous challenges for minimizing the risks of military confrontation and war in the Northeast Asian region. A significant dampening factor on these possibilities is the real progress made in recent decades in economic cooperation and integration within the region, which contributes to reducing military action in the Korean Peninsula. North Korea, however, still remains the critical gap in an otherwise productive network of dynamic regional economic growth.
  For Northeast Asia, there is a continuing and growing need for promoting peaceful economic interactions and research on a common basis for cross border economic cooperation for the future common good, as a means of ameliorating political tensions and frictions in the Korean Peninsula and Northeast Asia. Toward this end, the KIEP–NEAEF collaborative project seeks to fulfill the need for timely and forward-looking research activities by focusing on some of the critical components, such as strengthening economic cooperation with China and exploring future scenarios of North Korea as an integral part of broader regional economic cooperation in the region. This collaborative work on Northeast Asia remains essential in carrying out activities aimed at building a future Northeast Asian economic community on the basis of the strong network the NEAEF has built over the years for functional economic cooperation, through discussions and consultations among stakeholder country experts on issues such as cross border infrastructure development and financial cooperation.
  This volume in the series of proceedings volumes is titled Sustaining the Momentum for Building a Northeast Asian Economic Community and comprises summaries of research presentations and discussions on building a Northeast Asian economic community presented at the planning meeting in Honolulu and at the Annual Conference of the Northeast Asia Economic Forum in Hong Kong, China, in 2017. The results of this project represent activities that have been contributing to efforts toward regional economic cooperation and have been carried out in a spirit of cooperation.
  KIEP is grateful to Dr. Lee-Jay Cho, Chairman of NEAEF, for his leadership in implementing the project, and to the authors of the presentations, conference participants and discussants who contributed to this volume.
  Drs. Lee-Jay Cho and Hyung-Gon Jeong would like to extend their appreciation to the NEAEF staff for their assistance in the course of the successful implementation of this project, and to Drs. Karla Fallon and Kennon Breazeale for their editorial review and editing of this volume. 

  Recently, India’s inbound M&A transactions have been growing together with the boom in acquisitions of Indian domestic firms by multi-national corporations (MNCs). Various types of foreign investors such as conglomerates, SMEs (small-and medium-sized enterprises), VC (venture capital) and PE (private equity) entities are hurrying to enter the Indian market through M&As with Indian firms.
  This trend may have been influenced by positive changes in both the internal and external M&A environment surrounding India or in the global market. Regarding these changes, since 2014 the Indian government has been struggling to improve macroeconomic conditions (i.e. accelerating growth, reducing inflation and fiscal deficit) while focusing on various economic reforms, and through this to promote foreign investment for the sustainable growth of India. In particular, the Indian government has continued to introduce or revise M&A-related regulations, policies, and laws, thus improving fairness and transparency in India’s M&A market.
  With the newly rising wave of M&As and reforms in India, structural changes are taking place in India’s foreign direct investment. First, we found that the share of M&A to total FDI is expanding with faster growing than green field investment. This trend is becoming more pronounced for the last couple of years. Also, within the inbound M&A market, there are some significant changes: 1) M&A transactions are more active in technology-intensive and high value-added sectors such as IT- or digital-based, pharmaceutical, finance sectors, rather than labor-intensive sectors which used to dominate the M&A market in the past, 2) the number of vertical or heterogeneous combinations between MNCs and Indian firms is increasing compared to the past when horizontal combination dominated, thus diversifying combination types, which means MNCs recently tend to focus on enhancing their value chain, seeking new business, and expanding their market, 3) asset transactions and market participation by SMEs are growing, with the boom in ‘small deals’, and diversifying investor types such as VCs, PEs, etc. In addition, most importantly, the origin of foreign investors is diversifying. In recent, emerging and developing countries are actively acquiring Indian firms compared to the past when a few developed countries dominated the Indian M&A market, therefore reducing excessive dependance on specific regions or countries.
  Despite such significant changes, Korean firms still remain in a lagging position when it comes to using M&As as a channel for breaking into the Indian market. So far, since 2001, the total number of Indian firms acquired by Korean firms stands at eight, for a value of around 120 billion US dollars, which is only one-tenth of Japan. Furthermore, M&A investment growth is slower than ASEAN countries such as Thailand, Malaysia, and Philippines.
  In these circumstances, this research provides some implications for Korean firms and government, thereby enhancing opportunities of entering into Indian market. First, firms need to utilize M&A as a strategic tool, specially focusing on promising sectors. Second, firms need to enhance their internal capability for dealing with cross-border M&A transactions, and build partnerships with both domestic and Indian M&A agencies, increasing the number of deals completed. Last, the Korean government needs to organize an ‘oversea M&A support center’ for promoting Korean SMEs’ cross-border M&A. 

Executive Summary

1. Introduction

2. TPA and 2015-TPA Trade Negotiating Objectives

3. Data

4. Empirical Methodology and Results

5. Concluding Remarks

References

Appendix 

  This paper analyzes 2015-TPA voting patterns in the Congress in the context of the trade negotiating objectives. By setting the trade negotiating objectives, the Congress lays out important trade agenda that the Administration is ex-pected to address when it is negotiating trade deals with foreign countries. Therefore setting the objectives is subject of heated debates in the Congress and an important part of TPA. LPM and probit models are used to evaluate the importance of each trade negotiating objectives in 2015-TPA voting deci-sions. It turns out that the objective on promoting U.S. agricultural exports by reducing unfair trade barriers positively affected the voting decision in favor of the TPA. The objective on enforcing strong labor standards on trade partners also had significant impacts. One other notable result is that how much each congressional region export to China was also an important de-terminant. This variable is meant to capture several negotiating objectives as well as growing worries of large trade deficits with China. This study docu-ments important issues that U.S. Congress is concerned about in making conducting and implementing trade policies. It may provide insights into the future course of U.S. trade policy and trade deals such as renegotiation of NAFTA and Korea-US FTA.

Keywords: Trade Agreements, Trade Promotion Authority, Voting
JEL Classification Numbers: F10, D72
 

  Financial market integration has contributed to risk-sharing through portfolio diversification and has provided a positive effect on economic growth by supplying funds to countries that lack capital. At the same time, however, it has caused the negative spillovers of financial shocks through the integrated financial markets. A typical example is the 2008 global financial crisis. As the uncertainties in the global financial market increase significantly during the crisis period, financial variables (asset price, leverage, credit growth, capital flows, etc.) in developed and emerging economies are not controlled by their own monetary policies, but are more sensitive to global financial market sentiments. In the end, it has greatly restricted monetary policies in many countries. In this study, we investigate on how much monetary policies have been restricted by constructing a monetary policy independence index, and try to understand monetary policy independence by trilemma, which is a main implication from the Mundell-Fleming model.
  According to trilemma, a country cannot achieve three policy goals simultaneously, i.e., one policy goal must be abandoned to achieve two. The three policy goals are exchange rate stability, capital account openness, and monetary policy independence. If trilemma holds, monetary policy independence can be secured by abandoning the stable exchange rate through adoption of floating exchange rate system in the open capital market. In order to see whether such monetary policy independence is indeed consistent with what trilemma predicts, we constructed the trilemma Index using data from 2002 to 2013 that covers 45 countries including Korea. The trilemma indexes consist of monetary policy independence index, capital account openness index, and exchange rate stability index. short-term interest rate independence index, which reflects the tendency of short-term interest rate desynchronization, is constructed to evaluate monetary policy independence.
  The monetary policy independence means the autonomy of short- term policy rate decision in narrow definition, but broadly it means the capacity to pursue domestic policy goals. In order to evaluate various aspects of monetary policy independence in this paper, we use not only short-term policy rate used in the construction of the short-term interest rate independence index, but also the long-term interest rate that plays an important role in the monetary transmission mechanism. In the transmission mechanism, short-term policy rate decisions lead to changes in various interest rate variables, particularly long-term interest rates that in turn affect the economic performance such as investment and output. However, if the short-term policy rate does not affect long-term interest rate, the effect of monetary policy independence on the real sector is reduced. In order to take this possibility into consideration, we will construct a long-term interest rate independence index (LRI) reflecting the tendency to long-term interest rate desynchronization, and analyze the economic implications of this new index.
  The results of the analysis show that we have found trade-offs among three trilemma indexes and this supports that trilemma holds. However, when we consider for the long-term interest rate independence index instead of short-term interest rate independence index to evaluate the monetary policy independence broadly, it could be seen that not trilemma but, dilemma holds. This is particularly noticeable during periods when the correlation between the two indexes has weakened since the global financial crisis. Given the stylized fact we found that the long-term interest rate independence index is a very important explanatory variable in explaining the international business cycle especially after the global financial crisis, we need to closely monitor the long-term interest rate independence index.
  In the Block-Exogenous vector autoregression (VAR) model, we examine the impact of the US short-term interest rate shock on the short- and long-term interest rates in 10 emerging market economies. The empirical results show that there is a short-term interest rate synchronization, but no long-term interest rate synchronization before the global financial crisis. Since the global financial crisis, however, there is only long-term interest rate synchronization even without short-term interest rate synchronization. This is consistent with the results of the analysis using the long-term interest rate independence index. In the empirical result of the extended VAR analysis in which high and low capital account openness country group are separately considered, we found that the long-term interest rate synchronization is more pronounced in the country with high capital account openness, which implies that the capital control or the macroprudential policy can be useful policy measures to manage the long-term interest rate synchronization.
  In the case of Korea, capital account openness index increased significantly after the global financial crisis, while vulnerability remained high in terms of exchange rate stability index. Although the short-term interest rate independence index was highly evaluated, the long-term interest rate independence index fell sharply after the global financial crisis. The impact of the US short-term interest rate shocks on short- and long-term interest rates in Korea was similar to the impulse response function of the above 10 emerging market economies. It is necessary to pay attention to the results of empirical analysis using high and low capital account openness country group. This suggests a new perspective on the role of capital control or macrprudential policy measures in relation to monetary policy independence. These policy tools have been so far mainly discussed in the context of capital flow management, but our empirical results show that these policy tools can be also useful to secure monetary policy independence for emerging market economies. 

Executive Summary

1. Introduction
1.1 China-Africa Relations

2. Methodology and Data
2.1 Methodology
2.2 Data

3. Findings and Results
3.1 Scenarios for the MBRI in Africa

4. Summary and Conclusion

References

Appendix 

  Recent development economic literatures theorize that South-South trade and foreign investment may have a larger impact on economic growth in devel-oping economies than North-South trade and investment, since investors from the South are more familiar with local developing markets and business practices, which increases their productivity spillovers (Aykut and Goldstein 2007). Amighini and Sanfilippo (2014) provided evidence that South-South trade and investments stimulate product diversification in light manufacturing industries such as agro-processing, plastic, textile and leather production.
  The Belt and Road Initiative (BRI) launched in 2013, aims to create economic opportunities as well as improve and establish new trading routes between China and connected regions. This paper attempts to evaluate the degree of trade relations between China and selected African countries along the Mari-time Silk Route (MSR) and further appraise the trade potentials and gains in-herent for African economies through the initiative. To achieve our objective, we apply quantitative techniques in trade evaluation to enable us explore and estimate the degree and intensity of trade engagements amongst selected Si-no-African silk route countries, identify the trade opportunities and potentials, which are critical for increased trade engagements between both parties along the route and to explore some of the channels through which the maritime route can impact on investment, trade and economic growth in Africa.
  Findings from the analysis indicate that while the degree of trade integration is unbalanced and favourable to China relative to Africa, the trade pattern and structure are observed to be more complementary than competitive, and this provides Africa with ample opportunity to engage in product upgrading and diversification, critical for structural transformation.

Keywords: Maritime Silk Route, Belt and Road, Africa, Trade Complemen-tarity, Trade Competitiveness
JEL Classification: F15, F17, F18, 024