Korea and East Asia in a Changing Regional and Global Environment

222 Pages Posted: 12 May 2016  

Heung Chong Kim

Korea Institute for International Economic Policy

Sung-Hoon Park

Korea University

Ruediger Frank

University of Vienna

Date Written: December 31, 2012

Abstract

After the global financial crisis, it has been getting clearer that the existing world economic system has wider cracks, and the world after the end of the crisis would look much different from what we have seen over the last thirty years. In the changing landscape of the world economy, some conspicuous features have emerged. China stood up as one of the major economic powers in the world, so that we cannot think of the world economy without taking the Chinese economy into consideration. Dealing with as much domestic instabilities and imbalances as many of the fast developing countries, however, China does not seem to think it has the capacity to deal with the world affairs and its domestic ones at the same time. Europe, after the brilliant history of regional integration process, is now faltering from the crisis of its common currency. Reforms in economic and political governance are on demand. The United States, which stood up as the unipolar global power after the collapse of communism some twenty years ago, was the very origin of the global crisis, and it has not demonstrated outstanding leadership in economic recovery since the crisis occurred. We are also confronting many challenges of how to deal with the financial industries within a sustainable global economy.

In a changing world environment like this, East Asia has been asked to solve problems in the region for itself. Considering its growing economic weight and importance, East Asia has sometimes been even asked to share responsibility in world affairs. In connection, Korea, as one of the economies in the region that emerged rapidly, has been asked to display leadership on peace and prosperity in the region and the faltering world as well. All of these changes have given rise to tough tasks for Asians and Koreans.

This book is an outcome of dialogue and exchange of ideas among European and Korean scholars in tackling these issues; at an international conference titled “Korea and East Asia in a Changing Regional and Global Environment” which was held in Vienna, 28-9 April 2011. This book tries to tackle the issues concerning changes in three areas: changes in economic, security and development/ODA.

The first part covers economic aspects of the changing world environment and challenges for Korea and East Asia. In chapter one, Bark Taeho and Kang Moonsung deal with East Asia’s strategy in G20 economic and trade issues. It aims to identify the trade agenda that reflects Asia’s concerns regarding the global and regional trading system against the background of G20 summit meetings after the crisis. East Asia has played an important role in the evolution of global production and trade networks. Though the region’s production networks in East Asia became the major transmission mechanism of the crisis, resulting in a trade collapse, but Asia experienced a relatively quick turnaround, demonstrating that its network was not derailed. Asian economies have also shifted their policy focus from multilateralism to regionalism, even though several challenges remain such as underuse and a shallowness of their regional trade agreements. Bark and Kang recommend that the Seoul Summit seek tangible results on resolving the stalemate of the Doha Development Agenda to strengthen the credibility of G20, integrate individual free trade agreements into broader regional trade agreements, and link the development agenda to trade.

Chapter two talks about the role of Korea and East Asia under the changing trade environment. First, Professor Song Yoocheul elaborates on his argument by emphasizing the growing weight of East Asia in the world economy. The three northeast Asian countries of Korea, China and Japan accounted for 20% of world GDP and over 40% of foreign reserves after the crisis. During the recovery from the crisis, the role of East Asian countries has been highlighted as a buffer in consumption and production cycles of the world economy with their high economic growth. Their trade performances are particularly worthy of note, as their 52% share of world trade will increase more through very active regional FTA moves within the region. East Asian countries can contribute to the prosperity of the world by pursuing close economic cooperation between Korea, China and Japan; and could engage in consolidated efforts to boost domestic consumption to reduce global imbalances. Thus the role of Korea can be highlighted in solving the regional issues in trade barriers and historic conundrum.

Professor Park Young-Joon covers financial issues in East Asia in chapter three. He reviews current developments of East Asia’s financial cooperation and makes suggestions for enhancing its effectiveness. Recent global financial crisis has raised awareness on the importance of financial safety nets. The Chiang Mai Initiative Multilateralization (CMIM) as a regional financing arrangement plays a role as a regional financial safety net in East Asia, and could be linked with the global financial safety nets such as the IMF's lending facilities. For the CMIM to be more effective, the current pool size of $120 billion, which would be insufficient in a crisis, should be increased to at least $250 billion. Efforts by ASEAN 3 along with the Asian Bond Market Initiative (ABMI) should make progress beyond establishing the Credit Guarantee Investment Facility (CGIF); e.g. establishing a Regional Settlement Intermediary, Asian Bond Standards, prudential standards for cross-border transactions in the region. A new surveillance unit, ASEAN 3 Macroeconomic Research Office (AMRO), should also play a key role in the process of East Asia’s financial cooperation.

The Second part of the volume deals with political and security environments. Professor Heinz Gürtner argues in chapter four that global solution rather than regional or local ones urgently requires overcoming current international financial crisis or terrorism. Transatlantic cooperation between the US and Europe revealed clear limitations for preserving global security. The idea of a “multi-partner world,” raised by Hilary Clinton can be one of the best concepts for global problem-solving. The new type of global security requires building functioning governments based on stable governance, rule of law and democracy. Civil-military coordination and cooperation (CIMIC) for disaster relief; in addition to enhancing nation-states’ responsibility to protect citizens from genocide, famine, massive human right violation, etc; and functioning government endowed with legitimate monopoly of the use of force. These represent essential elements in new global security.

Chapter five deals with North Korea’s foreign policy and its domestic implications. Professor Rudiger Frank explores North Korea’s foreign policy of years 1997-2010 with a certain focus on years 2008 and 2009. He does so based mainly on a quantitative analysis of official North Korean state propaganda through its news agency KCNA. The key hypothesis tested in this chapter is that North Korean foreign policy is very closely linked to domestic developments (and vice versa) and should be understood as such, which has significant implications for the international community’s approach towards the DPRK and key areas of concern such as the nuclear program.

In the next chapter, Professor Kim Sung-han introduces Korea’s evolving strategic thinking toward East Asia over the last twenty years. The Korea-US alliance has been the first strategic preference for Korea since the end of the cold war, and it was against this background Korea has engaged in comprehensive regional security cooperation including APEC with the rising of Asia-Pacific regionalism. In the future, Korea-US alliance needs to be more comprehensive and much more strategic, to preserve the peace in the Korean Peninsula. The alliance should go beyond simple responses against military threats from North Korea, and contribute to preserving democracy and capitalism as well as enhancing peace in the region. Korea needs to construct a pan-Asian network through its active soft power advocacy, towards protection of human rights. Multilateral security network such as the Northeast Asia Security Dialogue (NEASAD) should be strongly encouraged.

The third part covers the emerging topics of Overseas Development Assistance in East Asia and Korea’s strategy on development issues. In Chapter seven, Dr. Han Baran addresses the role of transnational consumer activism in international development cooperation. As examples of consumer campaigns with development impacts, the international anti-sweatshop campaigns in the 1990s, the Fair Trade coffee industry, and the Product (RED) program supporting HIV/AIDS funds are discussed. In order to increase the effectiveness of transnational consumer activism, Independent Monitoring and Labeling Agencies as well as a framework for active coordination with other development actions need to be encouraged.

Professor Kang Insoo offers an overview of Korea’s ODA policy in chapter eight. Korea is ranked 19th among 27 OECD DAC members in 2008 in terms of the size of ODA. Professor Kang argues that Korea needs to increase ODA through Country Partnership Strategies (CPS) in the future. Korea leaves something to be desired in terms of ODA including ambiguous objectives in ODA policy, inefficient and ineffective structure of ODA policy administration, lack of evaluation system, and opaque decision making system in choosing partner countries. In the future, Korea should conduct more actively new programs such as Knowledge Sharing Programs (KSP), while following the global trend of “More Aid, Better Aid, and Changing Aid architecture.”

In the last chapter, Professor Park Sung-Hoon and Professor Kim Jung-Ho introduce Korea’s ODA policy towards CLMIV countries. The biggest recipient of Korea’s ODA has been Asian countries such as Vietnam, Indonesia, Laos, Cambodia, Myanmar, Mongolia and Afghanistan. More than fifty percent of Korea’s ODA has gone to the Asian countries. Among them, CLMIV (Cambodia, Laos, Myanmar, Indonesia and Vietnam) countries are among the key countries for Korea’s ODA in Asia. Korea can increase ODA elements such as training of industrial workers, encouraging development studies, and building socio-economic infrastructure projects, which can contribute to the expansion of its counterparts’ development and human resources capacity for their sustainable development.

Keywords: Security environment, Economic environment, trade environment, Korea regional development East Asia, Korea global development East Asia

Suggested Citation

Kim, Heung Chong and Park, Sung-Hoon and Frank, Ruediger, Korea and East Asia in a Changing Regional and Global Environment (December 31, 2012). KIEP Research Paper No. Conference Proceedings-12-03. Available at SSRN: https://ssrn.com/abstract=2320267

Heung Chong Kim (Contact Author)

Korea Institute for International Economic Policy ( email )

[30147] Building C, Sejong National Research Compl
Seoul, 370
Korea, Republic of (South Korea)

Sung-Hoon Park

Korea University ( email )

1 Anam-dong 5 ka
Seoul, 136-701
Korea, Republic of (South Korea)

Ruediger Frank

University of Vienna ( email )

Spitalgasse 2, 2.3
Vienna, Vienna 1090
Austria

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