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6461. What Lies Ahead? Korea's Long- and Short-Term Challenges

Author:
Edda Zoli
Publication Date:
06-2017
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
For decades Korea has had a remarkable track record of economic performance. But growth has now declined, and Korea may find it difficult to move quickly to the OECD income frontier. Moreover, Korea faces serious structural challenges, many of which will imply a further decline in potential growth. These include demographic shifts, export dependence, structural weakness and corporate vulnerabilities, and the labor market. With the economy facing major structural headwinds, a comprehensive set of measures are needed in a number of areas, including corporate restructuring, labor market reform, and productivity enhancement.
Topic:
Demographics, Labor Issues, Economy, and Economic growth
Political Geography:
South Korea and Korea

6462. Corporate Debt Market in Korea

Author:
Paul Moon Sub Choi
Publication Date:
07-2017
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
This report conducts an analysis of the corporate bond market in Korea and the changes in interest rates and term structure since the 1997 Asian financial crisis. The potential risks and solutions for stabilizing the corporate debt market are discussed. Corporate bonds not only play an important role in financing long-term corporate investments but also have a positive and persistent influence on enhancing the capital markets. Thus, the authorities in Korea have attempted to increase the proportion of corporate bonds, which is a means of direct financing, rather than bank loans. Implementing specific plans to stabilize the corporate debt market that are mentioned in this report are critical to sustaining the Korean capital markets as a means towards continued economic growth and prosperity.
Topic:
Debt, Markets, Financial Crisis, Economy, and Investment
Political Geography:
Asia, South Korea, and Korea

6463. Progress and Implications of the China-Korea FTA

Author:
Li Si-qi, Tu Xin-quan, and Liu Bin
Publication Date:
07-2017
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The article focuses on the China-Korea FTA, analyzing the background of China-Korea bilateral economic relations, the characteristics of the China-Korea FTA and more importantly, the implications and future prospect of this free trade pact. So far, the China-Korea FTA is considered to be the most comprehensive compared with China's previous FTAs and may be the largest in trade terms among all the FTAs concluded by Korea and China, playing a positive role in advancing economic integration in the Asia-Pacific region. However, with lots of exceptions to tariff elimination and market access, as well as a 20-year transition period, the present version of the China-Korea FTA is far from the best in terms of the depth of liberalization and the scope of obligations on trade and investment rules. The recent bilateral diplomatic tensions due to the decision of deploying the THAAD missile system by the Korean government may also jeopardize bilateral economic ties between China and Korea, and further increase uncertainties of the China-Korea FTA. It remains to be seen whether the Chinese and Korean governments will handle this issue smoothly under the present sensitive political atmosphere and achieve substantial progress in follow-up FTA negotiations on services and investment.
Topic:
Diplomacy, Economics, Bilateral Relations, and Regional Integration
Political Geography:
China, Asia, South Korea, and Korea

6464. Korea's Economic Relations with Japan

Author:
Kim Gyu-Pan
Publication Date:
07-2017
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Korea's economic relations with Japan, which were re-established as a result of the diplomatic normalization between the two countries in 1965, have transformed from dependent to interdependent. The extraordinary economic growth that Korea accomplished during the post-war period was largely due to intermediate goods imported from Japan, and technical cooperation and joint ventures with Japanese enterprises. However, in the 21st century, the dependence of Korean firms on Japanese technology has somewhat declined as global enterprises have appeared in Korea. In contrast to the post-war economic boom, Japanese companies now prefer to cooperate with their Korean counterparts, resulting in joint business ventures between Korean and Japanese firms being continuously developed. This reversal in the economic ties between Korea and Japan can be attributed to several reasons including: the rise of China; Japan's two lost decades; and Korea's push for domestic structural reform as well as economic globalization after the Asian Currency Crisis of 1997. Nonetheless, the issue of Korea's trade imbalance with Japan, which was established during the post-war period, still remains thereby serving as a serious impediment to FTA negotiations between Korea and Japan as well as Korea's TPP negotiations.
Topic:
Economics, History, Bilateral Relations, and Trade
Political Geography:
Japan, Asia, South Korea, and Korea

6465. Korea-Mongolia Economic Relations: Current Status and Cooperation Measures

Author:
Lee Jae Young
Publication Date:
07-2017
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Since the establishment of diplomatic relations in 1990, Korea and Mongolia have broadened cooperation in various areas such as politics, economy, society, and culture given their geographical proximity and cultural similarities. However, the progress of economic cooperation which has been identified as one of the pillars of Korea-Mongolia cooperation is still weak in comparison with other areas. Thus, it is important to analyze achievements and limitations of economic cooperation with Mongolia, which has emerged as a burgeoning new market of Eurasia, and find new measures to elevate their economic relations to a new high moving forward. In this context, the main objective of this research lies in looking back upon the past 26 years and developing a new strategy on economic cooperation measures. Korea needs to formulate a new strategy that provides a coherent, systematic framework for cooperation with Mongolia and implement it consistently. Holding bilateral summit meetings and Korea-Mongolian forums on a regular basis, strengthening high-level networking, and concluding free trade and visa exemption agreements are necessary.
Topic:
Diplomacy, Bilateral Relations, Trade, and Economic Cooperation
Political Geography:
Mongolia, Asia, South Korea, and Korea

6466. Strategies for Development of Transport Infrastructure in North Korea for Unification and Beyond

Author:
Kwon Young-in, Na Hee Seung, and Kim Kyoung-Sik
Publication Date:
07-2017
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
It has been reported that passenger transport and logistics between regions in North Korea are very difficult due to deterioration and imperfect maintenance of transport infrastructure and limited investment in the facilities for several decades. If South Korea and North Korea are unified, massive investment in the development of transport infrastructure is inevitable. This investment would mainly be supported by South Korea as well as through cooperation with Multilateral Development Banks such as the World Bank Group (WBG), Asian Development Bank (ADB), and Asian Infrastructure Investment Bank (AIIB). In addition, special and efficient plans for transporting people and goods need to be established in case of reunification considering the current transport environment in North Korea. Thus, well-prepared strategies should be in place for short, mid, and long-term perspectives.
Topic:
Development, Infrastructure, Banks, and Peace
Political Geography:
Asia, South Korea, North Korea, and Korea

6467. Present Conditions of North Korean Industry and Possible Reconstruction Plans

Author:
Lim Soo-ho and Hong Seok-ki
Publication Date:
07-2017
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Since the collapse of industry during the 'Arduous March' (1995-1997), Pyongyang has continuously launched reconstruction plans but has failed to see a rebound. The key is to restore industrial linkages; however, the DPRK allocated a majority of state investment to the defense industry under the 'Military First Economic Policy.' As long as the 'strategic sector' retains priority, a sound outcome seems to be out of reach. In reality, North Korea's comparative advantage lies on labor-intensive business, with abundant labor forces at a low cost. After unification, such industries will have bright prospects with technology and capital not only from South Korea, but also from China and Japan. The economic integration scenario of the two Koreas -- whether radical or gradual -- will decide industrial policies for the upper half of the peninsula in the post-unification era.
Topic:
Economics, Science and Technology, History, Reconstruction, and Industry
Political Geography:
Japan, China, Asia, South Korea, North Korea, and Korea

6468. History, International Relations, and Public Health - The Case of the Democratic People's Republic of Korea 1953-2015

Author:
John Grundy
Publication Date:
07-2017
Content Type:
Special Report
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The historical legacy of North Korea is characterized by occupation and conflict, and economic rehabilitation and then collapse, with tragic and widespread consequences for population health. From the standpoint of the historical determinants of health, this paper reviews the health system in North Korea between 1953 and 2016. Ideology and political relations have been dominant forces in determining the evolution of the health care system and population health. Despite the development of an extensive primary health care system in the country from the early 1960s following the establishment of the DPRK state in 1948, the public health system experienced a major decline in the 1990s, with catastrophic implications for the health and survival of the population. In recent years, evidence has emerged of some important public health gains, particularly through immunization, women's and children's health, and communicable disease control initiatives. This experience demonstrates that, within the overall policy context dominated by the historical and political determinants of health, there remains the capacity for implementation of public health programs that can yield both tangible health benefits for the population in North Korea, as well as assist the health system to edge closer to a regional standard.
Topic:
International Relations, History, Ideology, and Public Health
Political Geography:
Asia, South Korea, North Korea, and Korea

6469. Targeting credit through community members

Author:
Diego A. Vera-Cossio
Publication Date:
11-2017
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
Delegating the allocation of public resources to community members is an increasingly popular form of delivering development programs and are associated with a tradeoff between improved information about potential beneficiaries and favoritism towards local elites. Unlike targeting cash transfers to the poor, the optimal targeting of credit is a more complex problem involving issues of productivity, repayment, and market responses: This paper analyzes this problem using a large-scale lending program, the Thai Million Baht Credit Fund, which decentralizes the allocation of loans to an elected group of community members, and provides three main results. First, exploiting a long and detailed panel, I recover pre-program structural estimates of household total factor productivity and find that resources from the program were not allocated to high-productivity, poor households, which is inconsistent with poverty and productive efficiency as targeting criteria. Second, using socioeconomic networks data, I show that actual targeting is strongly driven by connections to village elites and is related to lower program profitability, which suggests favoritism as a reason for mistargeting. Finally, I exploit quasi-experimental variation in the rollout of the program and uncover evidence that, in general equilibrium, informal credit markets compensate for targeting distortions by redirecting credit towards unconnected households, albeit at higher interest rates than those provided by the program. The results highlight the limitations of community-driven approaches to program delivery and the role of markets in attenuating potential targeting errors.
Topic:
Development, Economics, Microcredit, Public Sector, Local, Microeconomics, and Credit
Political Geography:
Thailand

6470. Outliers in semi-parametric Estimation of Treatment Effects

Author:
Darwin Ugarte Ontiveros, Gustavo Canavire-Bacarreza, and Luis Castro Peñarrieta
Publication Date:
10-2017
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
Average treatment effects estimands can present significant bias under the presence of outliers. Moreover, outliers can be particularly hard to detect, creating bias and inconsistency in the semi-parametric ATE estimads. In this paper, we use Monte Carlo simulations to demonstrate that semi-parametric methods, such as matching, are biased in the presence of outliers. Bad and good leverage points outliers are considered. The bias arises because bad leverage points completely change the distribution of the metrics used to define counterfactuals. Whereas good leverage points increase the chance of breaking the common support condition and distort the balance of the covariates and which may push practitioners to misspecify the propensity score. We provide some clues to diagnose the presence of outliers and propose a reweighting estimator that is robust against outliers based on the Stahel-Donoho multivariate estimator of scale and location. An application of this estimator to LaLonde’s (1986) data allows us to explain the Dehejia and Wahba (2002) and Smith and Todd (2005) debate on the inability of matching estimators to deal with the evaluation problem.
Topic:
Economics, Econometrics, Methods, and Counterfactuals
Political Geography:
Global