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21. Industrial Policy, Rise of Skilled Labor, and Firm Growth in the Early Stage of Economic Development

Author:
Sunghun Cho and Jaehyung Kim
Publication Date:
12-2023
Content Type:
Working Paper
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This paper examines the role of education policy in raising specific human capital for industrialization during the period of economic miracle in Korea. As part of the Heavy and Chemical Industry (HCI) drive, the Korean gov-ernment built technical schools near industrial complexes, resulting in a prompt supply of skilled labor. With practical curricula and training, young and skilled workers were able to enter the new sector. We also document these two patterns by using the Technical School List and the Occupational Wage survey. This government-led education reform led to higher firm-level productivity and growth, which is one of the important aspects explaining the success of the industrial policy. Motivated by historical evidence, we combine the administrative Mining and Manufacturing survey with the Technical School List to study the effec-tiveness of industry-oriented education reform. We incorporate an education layer into the targeted industries under the HCI drive by exploiting the varia-tion in technical school openings at the county level. Our results show that plants in treated regions tend to employ and invest more than those in control regions, but value-added and labor productivity are negatively correlated with our interaction terms. This implies that firms in HCI sectors experienced disproportionate growth and should pay higher on-the-job costs for workers while education reform may reduce the overall cost of hiring industry-specific labor. In contrast, non-HCI sector firms ex-hibit a positive correlation with value added and labor productivity. These firms might benefit from the education reform that improved overall quality of skilled workers. Lastly, the effect of education reform was concentrated before the end of the HCI drive period and did not persist after 1980. In the era of emerging industrial policy, our paper presents a new mecha-nism that encourages more workers to enter a new sector targeted by gov-ernment-led plans. Our results serve as a starting point for re-evaluating con-temporary industrial policy and underscore the need to consider this addi-tional layer in future policy design.
Topic:
Industrial Policy, Economic Growth, Economic Development, and Skilled Labor
Political Geography:
Asia and South Korea

22. Mekong Subregion-RoK Cooperation to Build Stable Supply Chains in Southeast Asia

Author:
Sungil Kwak, Jaewan Cheong, Mingeum Shin, and Jegook Kim
Publication Date:
08-2023
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
The Mekong subregion has emerged as a key hub in the global value chain (GVC), driven by a surge in foreign direct investment (FDI). This development is rooted in the Mekong subregion's robust economic growth, positioning it strategically amid the ongoing competition between the United States and China for global hegemony. The RoK recognizes the strategic significance of the Mekong subregion and has embarked on cooperative efforts in this context. We delve into the potential of harnessing the Mekong subregion to enhance RoK's supply chain diversity. While it may pose challenges for the Mekong subregion to promptly function as a target for RoK's supply chain diversification due to its developmental and infrastructural status, we proactively explore potential avenues of RoK-Mekong cooperation to determine feasibility.
Topic:
Foreign Direct Investment, Economic Growth, Global Value Chains, and Supply Chains
Political Geography:
Asia, South Korea, and Southeast Asia

23. The E-Commerce and Global Value Chains

Author:
Sangjun Yea and Seungrae Lee
Publication Date:
10-2023
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This study investigates the significance of India's emergence as the world's most populous nation in 2023, surpassing China, and its consequential implications for economic growth. With a focus on the demographic dividend driven by working-age and prime-age populations, we analyze the effects of shifting age distribution on India's labor force, labor market, and economic drivers. Extending the study period by integrating additional datasets, we examine per capita GDP growth, sectoral value-added, and employment shifts at the state level. Results reveal limited influence on per capita output, but significant sectoral effects. Notably, prime age composition within the working-age population emerges as a key driver of economic growth.
Topic:
Demographics, Economic Growth, Global Value Chains, and E-Commerce
Political Geography:
Asia, South Korea, and Global Focus

24. The structural improvement for Korea's foreign exchange market and its implications on Korean economy

Author:
Hyo Sang Kim, Sungbae An, and Young Sik Jeong
Publication Date:
12-2023
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
The Korean government recognizes the imperative to improve the structure of the foreign exchange market to align with global standards, aiming for increased openness and competitiveness. The plan involves a twofold approach. One is a comprehensive reform of foreign exchange laws and regulations, notably the Foreign Exchange Transaction Act enacted in 1999, to adapt to evolving economic environments. The other is the systematic improvement of the foreign exchange market infrastructure to make the market more accessible to foreign investors. Through this procedure, Korea desires to develop a deeper and more market-oriented foreign exchange market, thereby improving the convenience and efficiency of participants. Also, it helps to internationalize the Korean won in the longer term. Amidst Korea's export-led growth and aging population, improving the foreign exchange market becomes pivotal for supporting the positioning of the Korean financial market, fostering financial openness, and sustaining long-term economic growth.
Topic:
Foreign Exchange, Markets, Economy, and Economic Growth
Political Geography:
Asia and South Korea

25. State-Centric Data Governance in China

Author:
Alex He
Publication Date:
09-2023
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation (CIGI)
Abstract:
China’s state-centric data governance regime has evolved into a framework characterized by the pursuit of a dual goal to bolster both economic growth and national security at the expense of personal information protection, which is significantly compromised due to the government’s mostly unfettered access to personal data. This paper examines three components of data governance in China and then considers data governance institutions in the country. It describes how digital platform governance and regulation on cross-border data flows have illustrated the country’s dual goal. The paper concludes with a discussion of the global implications of China’s data governance system.
Topic:
National Security, Economic Growth, State, and Data Governance
Political Geography:
China and Asia

26. Book Talk with Jessamyn Abel, Author of "Dream Super-Express"

Author:
Jessamyn Abel, Takuya Tsunoda, and Ariana King
Publication Date:
10-2023
Content Type:
Video
Institution:
Weatherhead East Asian Institute, Columbia University
Abstract:
A symbol of the "new Japan" displayed at World's Fairs, depicted in travel posters, and celebrated as the product of a national spirit of innovation, the Tōkaidō Shinkansen—the first bullet train, dubbed the "dream super-express"—represents the bold aspirations of a nation rebranding itself after military defeat, but also the deep problems caused by the unbridled postwar drive for economic growth. At the dawn of the space age, how could a train become such an important symbol? In Dream Super-Express (Stanford University Press, 2022), Jessamyn Abel contends that understanding the various, often contradictory, images of the bullet train reveals how infrastructure operates beyond its intended use as a means of transportation to perform cultural and sociological functions.
Topic:
History, Infrastructure, Sociology, Culture, Economic Growth, and Book Talk
Political Geography:
Japan and Asia

27. To what extent can urbanisation mitigate the negative impact of population ageing in China?

Author:
Alicia Garcia-Herrero and Jianwei Xu
Publication Date:
10-2023
Content Type:
Working Paper
Institution:
Bruegel
Abstract:
China is experiencing population ageing caused by a rapidly declining fertility rate and increased life expectancy. This demographic transition poses economic challenges, yet the intensity of these challenges depends on a number of factors, with the move of people from rural to urban areas being of central importance. To gain a clearer understanding of how urbanisation interacts with population ageing, we investigate changes in the Chinese labour force in both rural and urban areas. Our findings suggest a modest shrinking of the overall labour force up until 2035. However, until 2035, the labour force is projected to contract only in rural areas, while the urban labour force will continue to grow. As urban employment is more productive than rural employment, the combined effect of demographic change and urbanisation on growth will remain moderately positive (0.4 percent per year). Beyond 2035, fertility rate decline will begin to affect the working-age population in both rural and urban areas, especially since the urbanisation process is expected to level off by then. In such circumstances, China’s shrinking population will shave off 1.4 percent from GDP growth annually. These results, however, do not take into account the impact of population aging on labour productivity. China’s fast move towards robotisation and artificial intelligence might help mitigate any negative impacts by increasing productivity, but there is no sign yet that this is the case.
Topic:
Demographics, Urbanization, Economic Growth, and Aging
Political Geography:
China and Asia

28. Chinese Economy: Present Trends - A Dialogue with Huang Zhangkai

Author:
Huang Zhangkai
Publication Date:
02-2023
Content Type:
Special Report
Institution:
Brazilian Center for International Relations (CEBRI)
Abstract:
On the occasion of the XXI China Analysis Group meeting, Huang Zhangkai, associate professor at Tsinghua University, shared his outlook on the current state of the Chinese economy, the main factors impacting growth, and the perspectives and challenges he anticipates in the short- and medium-terms.
Topic:
Economy, Economic Growth, and Dialogue
Political Geography:
China and Asia

29. Components of Industry Resilience to Maintain Sustainable Economic Growth under COVID-19 Within the Knowledge-Based Economy Frame-work: A Comparative Study Between Iran and South Korea

Author:
Marzieh Asaadi
Publication Date:
11-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
COVID-19 was first reported in Wuhan, China, in December 2019 and spread rapidly across the globe. Then on March 11, 2020, the World Health Organization (WHO) declared the COVID-19 outbreak a pandemic, causing more than 600 million confirmed cases and 6.49 million deaths around the world so far. The effects of the pandemic on societies can be examined mainly by two criteria: 1) the number of lives lost due to the disease (Mortality Rate), and 2) the number of jobs lost due to social distancing rules (fall in GDP). Both have a wide consequence for economic growth and other key macroeconomic indicators. An important explanatory factor for the significant difference between Case Fatality Rate (CFR) for Iran and Korea can be related to the Worldwide Governance Indicators (WGI) components (Daliri and Asaadi 2021). The WGI is a composite index consisting of six measurement factors, including voice and accountability, political stability, government effectiveness, regulatory quality, the rule of law, and control of corruption. Furthermore, another critical factor is COVID-19 governance which can be monitored by calculating Government Stringency Index. This index is a composite measure based on several indicators which monitor the state of lockdowns and social distancing and range to values between 0-100, while 100 presents the most restrictive. In addition to the governance of COVID-19, from the perspective of public health and lives saved, maintaining jobs and supporting the resilience of industries to achieve SEG has been another important concern for nations and governments worldwide. As stated by Bernanke (2020), it is widely believed that the global economic crisis caused by COVID-19 is different from past crises in terms of cause, scope, and severity that suddenly disrupted economic activity. These necessitate research on the potential determination factors influencing the response of countries, companies, and individuals to the COVID-19 crisis. The key to ensure Business Continuity and SEG is to identify factors that increase the resilience of businesses under COVID-19 circumstances and other potential public health crises. Theoretical and empirical studies confirm that three main explanatory factors are at play: 1) macroeconomic structure and governance, 2) financial resilience of companies which is traced by available capital (i.e., the physical and human capital), and firms' adopted strategies and 3) digital evolution state and momentum and the adaptation of countries to technological innovations and Digital Intelligence, which is an indicator of transmission to KBE. By examining these components, it is possible to evaluate the structure and response of countries to the pandemic and post-COVID era. Thus, the report seeks to contribute to the literature on sustainable economic growth under crisis through a comparative study of Iranian industries with South Korea. The main research question here relates to the components of successful covid-19 governance from the perspective of SEG and business continuity within a KBE environment.
Topic:
Economic Growth, Industry, Resilience, COVID-19, and Knowledge Economy
Political Geography:
Iran, Middle East, Asia, and South Korea

30. International Spread of Anti-dumping Measures and Diversification of Investigation Methodologies

Author:
Moonhee Cho, Cheon-Kee Lee, Min Ji Kang, and Min-chirl Chung
Publication Date:
09-2022
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
As global economic growth has lost momentum due to the COVID-19 pandemic and the tension between U.S. and China, among other developments, concerns about the spread of protectionism are growing. In particular, anti-dumping (AD) measures are more likely to expand in the future in that they are relatively easy to take and have a direct effect on international trade compared to other protectionist trade policies. This study reviews the spread of AD measures and the effects of AD measures on trade. We also pay attention to the fact that AD investigation methodologies are being diversified. Focusing on particular market situation (PMS) and adverse facts available (AFA) provisions, which have been applied in many recent AD investigations on Korean export goods, we analyze the logic of investigation authorities.
Topic:
Economic Growth, Trade, COVID-19, and Protectionism
Political Geography:
China, Asia, North America, and United States of America