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Ecotech and FEEEP in APEC
This paper that FEEEP/Ecotech Projects which APEC is now promoting is slower than TILF's proceeding speed in its importance and emphasizes that APEC members ought to promote FEEEP more positively and fast.That is, this paper sugge..
Ki-Kwan Yoon Date 1999.11.30
Economic development, Economic cooperationDownloadContentSummaryThis paper that FEEEP/Ecotech Projects which APEC is now promoting is slower than TILF's proceeding speed in its importance and emphasizes that APEC members ought to promote FEEEP more positively and fast.
That is, this paper suggests some difficulties emerged from the process of promoting FEEEP/Ecotech and some countermeasures to overcome those difficulties.
Such difficulties include : ① it has not yet been fully realized to manifest the essence of FEEEP and consensus-making among the member economies, ② there is a great difference in the levels of interest in FEEEP between developed economies and developing ones, ③ the member economies respresent the rich diversity of the region as well as differing levels of economic growth, ④ APEC is faced with many difficulties in fund raising for promoting FEEEP projects in spite of having a nature of which FEEEP-related projects should be imlemented urgently judging from their perceived importance, their start has been delayed and their accomplishment would require a super-long time frame in which to realize result, ⑤ as FEEEP cooperation has essentially a worldwide influence, a close cooperation with non-memebers would also inevitably be deemed necessary, ⑥ as APEC is a cooperation system, it is doubtful whether Asia-Pacific economies perform sincerely their engagement related with FEEEP cooperation, ⑦ as FEEEP cooperation has certain contents partially overlapping with TILF, there is the possibility that APEC's effiency could be diminished.
On the other hand, some countermeasures in order to overcome such difficulties include : ① Drawing of New Concept for Promoting Positively FEEEP Cooperation, ② Initiating a Multilateral Study to suggest Evidently Mutual Effects among Five Aspects of FEEEP, ③ Drawing Consensus-making for using ODA funds in order to raise funds required to promote FEEEP projects, ④ Strenthening publicity activities towards "FEEEP cooperation" in order to have a full response from all member's people. -
Competition Principles and Policy in the APEC : How to Proceed and Link with WTO
There is a growing consensus that competition-oriented policy framework would be instrumental in achieving the Bogor goal of trade and investment liberalization by 2010/2020. As of now, only eight economies have the experience of..
Byung-il Choi Date 1999.11.30
DownloadContentSummaryThere is a growing consensus that competition-oriented policy framework would be instrumental in achieving the Bogor goal of trade and investment liberalization by 2010/2020. As of now, only eight economies have the experience of operating competition policy more than a decade. Many emerging economies of the APEC have only begun to introduce competition policy. Even with the adoption of competition policy, it is true that many economies, developed as well as developing ones, are still haunted by the conventional policy of protecting unproductive sectors and promoting targeted sectors at the cost of overall economic efficiency. The Auckland APEC Leaders Meeting of 1999 adopted the APEC competition principles. The adopted APEC competition principles are based on the four key principles of comprehensiveness, transparency, accountability and non-discrimination. It is a significant step forward, but a more hard work lies ahead: the issue of developing specific and concrete work program to implement the competition principles within the APEC and how to put the work of competition policy in the much broad context of a multilateral trading system. The paper maps out a specific strategy to move the competition policy agenda forward at the APEC and how to link the WTO. Whether or not the WTO decides to include the competition policy in the agenda for the new round, there is a constructive role to be played by the APEC. The paper identifies the sources of such value-added and makes a proposal in order to best utilize them. -
An Assessment of the APEC's Progress toward the Bogor Goals: A Political Economy Approach to Tariff Reductions
The average tariff rate of APEC member economies has been lowered by almost half from 15.4 percent to 7.6 percent during the period between 1988 and 1998. Many countries such as Australia, China, Indonesia, Korea, New Zealand, the..
Honggue Lee Date 1999.11.30
Economic opening, Trade policyDownloadContentSummaryThe average tariff rate of APEC member economies has been lowered by almost half from 15.4 percent to 7.6 percent during the period between 1988 and 1998. Many countries such as Australia, China, Indonesia, Korea, New Zealand, the Philippines, and Thailand experienced a dramatic decline in their average tariff levels. Currently, four countries (Hong Kong, Singapore, Brunei and New Zealand) have average rates below 5 percent, while eight countries (USA, Canada, Australia, Japan, Korea, Taipei, Malaysia and the Philippines) have mean rates between 5 and 10 percent. Three countries (Chile, Indonesia and Mexico) are in the range of 10 to 15 percent levels. The remaining three countries (China, Papua New Guinea and Thailand) have their average rates above 15 percent.
Some points can be made with regard to tariff reductions. First, the IAPs of 1998 regarding tariffs have made a limited improvement, which in turn has not been uniform across APEC economies. Second, for some member economies, implementing UR commitments has eclipsed the APEC process of unilateral tariff liberalization and reduction of non-trade barriers. Third, regional integration arrangements such as NAFTA, ANZCERTA, MERCOSUR, CER and AFTA have contributed to tariff reductions in some member economies. Fourth, the Early Voluntary Sectoral Liberalization (EVSL) initiative, announced in Vancouver in 1997, still constitutes a going concern in the region. Fifth, the member economies have been giving support to the Information Technology Agreement (ITA) and the subsequent ITA II. This support will generate significant benefits in terms of production, exports, and lower prices. At the same time, ITA in the Asia Pacifi region will enforce its conclusion in the WTO. Sixth, the provision of data needs to be improved.
Tariff reductions are endogenously determined. Thus it is worthwhile to ascertain whether the extent of tariff reductions provided in IAPs is 'sufficiently bearable or reasonably sincere' in light of member economies' past experience and present 'capability.' For that purpose, we identified the elements that determine the endogenous tariff rates (current rates) as reference rates. Then we compared the IAP commitments and/or the Bogor goals with the reference rates.
The point of our empirical exercise is to devise an indicator that can be used to assess the APEC's progress toward the Bogor goals on an individual country basis. Our approach is unique in that it puts emphasis on individual country's 'ability' to implement the IAPs, and that it focuses on the political process, both internal and external, of each member economy, which eventually leads to the proposed action plan.
However, limited data availability keeps us from fully evaluating the achievements made by APEC members in the area of tariff reductions. Yet we were able to evaluate the relative performance of 18 members. When we compared the fitted values (which are supposed to reflect the ability and sincerity to implement the commitments made in their IAPs) with what these member economies actually implemented, we found that, among these members, Papua New Guinea, Singapore, and Thailand have been carrying out the most drastic cut in tariff rates. They are followed by the Philippines, China, Korea, Australia, New Zealand, Malaysia, Indonesia, Chile, Japan, Canada, the United States, and Mexico in the order of the size of their relative tariff reductions. This result contrasts with the comparable order in the Yamazawa scheme, in which Hong Kong (gets 95 points out of 100) and Singapore (95 points) lead the pack.
They are followed by New Zealand (90), Australia (85), Brunei (85), the United States (85), Canada (80), Japan (80), Korea (75), Malaysia (70), Taipei (70), Indonesia (55), the Philippines (55), Chile (50), Thailand (45), Mexico (35), China (30), and Papua New Guinea (10).
What we can infer from the present analysis is the following. First, some advanced economies in the region such as the United States, Canada, and Japan are slow or reluctant to implementing their liberalization commitments. Second, other advanced economies such as New Zealand and Australia are doing relatively well in carrying out their IAPs. Third, it is those developing economies again such as Papua New Guinea, Thailand, the Philippines that have reduced their tariff rates more drastically than what they would normally do, should they live up to the endogenous tariff determination hypothesis. -
Political and Security Cooperation, Membership Enlargement and the Global Information Society: Agenda Solutions for ASEM III
This paper discusses political and security cooperation, membership enlargement and the Global Information Society in the context of ASEM III agenda building. While the economic and business cooperation issues have so far 'monopol..
Sinonetta Verdi Date 1999.11.10
DownloadContentSummaryThis paper discusses political and security cooperation, membership enlargement and the Global Information Society in the context of ASEM III agenda building. While the economic and business cooperation issues have so far 'monopolized' ASEM's attention, it is now clear that the evolving and complex reality of the ASEM process needs to increasingly address other issues such as political and security cooperation, membership enlargement and the Global Information Society in a more concrete and focused manner. As ASEM evolves from the ideation stage to the practical implementation stage, leaders and operators need more detailed answers about all aspects of this comprehensive Asia-Europe partnership. Since all the areas of cooperation are clearly interlinked, any one area which is 'ignored' will reflect negatively on another, and in the end the whole process could potentially suffer.
Several features deserve attention. First it is necessary to reinforce the security elements in the ASEM relationship as an investment for a stronger economic and business relationship. In an interdependent world, adequate security cooperation can best guarantee stability and, therefore, economic gains on a permanent basis. The 'fruits' of the economic agenda could be jeopardized if security matters (and their political consequences) become unmanageable. In ASEM's movement towards a security community, perhaps addressing directly the single issues affecting the two regions could be a more dynamic approach instead of focusing exclusively on the creation of a security architecture, that maybe at some point in the future would also address the real issues at stake.
Second, as the ASEM III meeting in Seoul is approaching quickly, the controversial issue of membership enlargement is going to re-present itself. A country's membership in ASEM brings with it that country's distinct positions on economic, political, security, and civil society issues. When it comes to taking action, who is a member and who is not could determine the outcome for a specific issue. ASEM leaders will have to choose between the principle of widening versus the principle of deepening. However, at this still very early stage for ASEM, deepening as opposed to widening is the most efficient course to take as it is an investment in the consolidation of its procedures and the establishment of a solid identity. Indeed this strategy is going to benefit both the ASEM process and the potential candidates themselves because a well-functioning ASEM is going to integrate new members into the dialogue more fairly and efficiently. In this way synergies will emerge as opposed to lines of conflict.
Third, the Global Information Society (GIS) is a fundamental element in sustaining the ASEM economic partnership, highlighting a new era of communication and interaction between the two regions. Although at this stage, ASEM specific initiatives in the GIS can be appreciated only within a very limited context, some current GIS related issues are being addressed through relations between Europe and some Asian countries. These cover a number of areas with the final goal of creating a knowledge-based society for the 21st century. What will prove useful at ASEM III is information exchange from all sectors, both public and private, coordinated in the form of an ASEM Information Technology Council (as recommended by the AEVG). ASEM should not become a structure imprisoning or distorting the fast paced, natural flow of the GIS, therefore this Council should function reflecting the reality of the complex and fast moving Global Information Society.
Dr. Simonetta VERDI, is the EC's European Union Science and Technology Fellow in Korea and visiting research fellow at KIEP. She specializes in relations between the European Union and Korea and steel industry research. Send all correspondence to: 300-4 Yomgok-Dong, Seocho-Gu, Seoul 137-747, Korea; (Tel) 822-3460-1046; (Fax) 822-3460-1066; (E-mail) sverdi4@yahoo.com -
A Study on the Global Competitiveness Report of the WEF
A Study on the Global Competitiveness Report of the WEF Yunjong Wang·Dongwha Shin·Hyongkun LeeNational competitiveness may be defined as a country's ability to create an environment, through the use of policy and support systems..
Yunjong-Wang et al. Date 1999.11.10
Exchange rateDownloadContentSummaryA Study on the Global Competitiveness Report of the WEF
Yunjong Wang·Dongwha Shin·Hyongkun Lee
National competitiveness may be defined as a country's ability to create an environment, through the use of policy and support systems and by possessing a stable and effective social structure, which allows a company, from that country, to hold competitiveness.
According to The Global Competitiveness Report, published by the World Economic Forum (WEF) in July of this year, Korea ranked 22nd in 1999, down three places when compared to last year's ranking. In addition to this, in April, the International Institute for Management Development (IMD) announced that Korea's competitiveness has continually decreased over the past five years.
It is generally assumed that this sluggishness and decline in Korean competitiveness was brought about by the adverse economic conditions created by the 1997 financial crisis. However, while Korea suffered through this crisis, some of its competitors, such as Singapore and Taiwan, did not. Therefore, it could be suggested that Korea's diminished competitiveness may have, in fact, at least indirectly contributed to the advent of the crisis.
If this is the case, what should Korea do in order to not only recover but to also improve national competitiveness? First of all, the Korean government should create more favorable optimal business environment. Secondly, every economic body should voluntarily put more effort into improving competitiveness because improving competitiveness only through government policy and institutional reform has limitations.
In addition to improving national competitiveness we should undertake the following strategic measures:-Prepare for influences, such as integration trends in the global market and the innovative development of information technology, which easily affect national competitiveness -Put more effort and focus into intensively analyzing and understanding each item identified as a weakness in the national competitiveness evaluation-Increase the role of government as a system designer for national competitiveness.-Improve external credibility through continued reform-Publicize the ongoing Korea's structural reform process -
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Official Development Assistance : Trend and Issues of DAC Members
Official Development Assistance: Trends and Issues in OECD/DAC The Development Assistance Committee(DAC) of OECD has contributed to the formulation of development co-operation programmes and policies by donor countries and by m..
Yul Kwon Date 1999.09.15
Economic development, Economic cooperationDownloadContentSummaryOfficial Development Assistance: Trends and Issues in OECD/DAC
The Development Assistance Committee(DAC) of OECD has contributed to the formulation of development co-operation programmes and policies by donor countries and by multilateral institutions active in development cooperation since the 1960's. DAC has also been the source of information on the flow of financial resources to developing countries, and has regularly published the data collected from its member countries.
According to DAC's definition, Official Development Assistance (ODA) is defined as those flows to developing countries and multilateral institutions provided by official agencies, each transaction of which meets the following tests: ⅰ) it is administered with the promotion of economic development and welfare of developing countries as its main objective; and ⅱ) it is concessional in character and contains a grant element of at least 25 per cent.
DAC has stressed that substantial additional aid efforts will be required, both quantitatively and qualitatively, for development cooperation and has set three major ODA targets: a) a net flow of ODA equal to 0.7 per cent of the donor's GNP; b) a net flow of ODA to least developed countries of 0.15 per cent of GNP; c) the provision of ODA by each donor on terms such that the commitments made convey an average grant element of 86 per cent. According to this last target, DAC has been endeavouring to seek appropriate ways and means of untying national aid programmes and providing a framework for the orderly use of associated financing related to tied aid.
The aid volume performance of individual DAC members in recent years has varied considerably. While private flows have expanded, overall DAC aid has faltered since the beginning of the 1990's. On a net disbursements basis, total ODA from DAC countries amounted to US$48.3 billon in 1997, that is, a net flow of ODA equal to 0.22 per cent of the donor's GNP. DAC countries channelled approximately one third of their net ODA through multilateral agencies in 1997, Seven DAC countries (Denmark, Ireland, Luxembourg, the Netherlands, Norway, Portugal and Sweden), provided at least 0.15 per cent of their GNP to least developed countries.
Korean ODA is relatively small and the largest share consists of multilateral aid. Korea's ODA in 1997 was equivalent to 0.042 per cent of GNP, which was far behind the lowest level (0.09 per cent for the United States) as well as the DAC average (0.22 per cent). With regard to the current level of Korea's ODA, Korea needs to significantly expand its external Assistances quantitatively. and improve the terms and conditions of aid qualitatively. While there exists no consensus or official position on the proper level of Korea's ODA, its ODA policy has reached a turning point in its evolution, because Korea has had to prepare for its accession to the DAC sooner than originally anticipated, after obtaining OECD membership in 1996. Supposing that ODA/GNP increases by 0.01% annually, Korea's ODA wil amount to about US$559 million (equivalent to 0.1 per cent of GNP) in 2004 and US$1 billion (equivalent to 0.16 per cent of GNP) in 2010. This confronts budgeting officials with a dilemma as to how to accommodate ODA expansion with other competing domestic policy interests.
There are several future tasks facing Korea's ODA in relation to the present ODA system and policies. First, the Korean government must elaborate its aid philosophy, or ODA charter, in which aid should be justified and expanded as it begins to embark on a new stage of its ODA evolution. Second, a new approach needs to be adopted, in order to improve the capacity to plan and manage projects, through the reinforcement of policy implementation, for example country-specific programming. -
The Asian Financial Crisis and the Need for Regional Financial Cooperation
The Asian financial crisis and its policy implications can be understood on the national, regional, and global dimensions. At the national level, both directly and indirectly affected countries have to strengthen their self-defens..
Yun-jong Wang Date 1999.09.10
Financial crisis, Financial integrationDownloadContentSummaryThe Asian financial crisis and its policy implications can be understood on the national, regional, and global dimensions. At the national level, both directly and indirectly affected countries have to strengthen their self-defensive countermeasures to prevent a future financial crisis. For this purpose, countries under the IMF program, including Thailand, Indonesia, and Korea, have undertaken macroeconomic stabilization policies and bold structural reforms in financial and corporate sectors. As a result, usable foreign reserves have accumulated dramatically and the structure of external debts has much improved. In addition, policy-makers are very serious about structural reforms, although a sense of complacency can be observed among consumers, businesses, and trade unions.
At the regional level, there were also many calls for financial cooperation just after the Asian financial crisis broke out. However, the discussion on regional financial cooperation has largely remained within the realm of academia and has not been able to produce any tangible result. This is primarily due to the lack of a consensus initiating a regional framework to respond to the crisis, both in terms of crisis management and prevention. The three Northeast Asian countries - China, Japan, and Korea - officially participate in such regional fora as ASEAN+3 and APEC to discuss major issues concerning regional financial cooperation. However, in order to obtain more concrete results that can reflect the interests of the three countries, there needs to be a dialogue channel beforehand for a much closer regional financial cooperation. Such a dialogue is not necessarily exclusive to the neighboring countries around the region. Rather, it should evolve into an institution that strengthens and stabilizes the East Asian financial system. However, considering the fact that the U.S. is constrained to act globally and will not cooperate with the region as a region, the three countries have to form a consensus in East Asia on a mutually beneficial basis. The political feasibility of a regional framework will not be a burden, if we start to lead a discussion over economic and financial issues in the relevant regional context.
As exemplified by the launching of the Euro, the discussion on regional financial cooperation may focus on such sophisticated topics as monetary cooperation. However, more realistic and working-level agendas are likely to produce more tangible results. In other words, the task of regional financial cooperation is to be approached from a long-term and gradual perspective. As was the case with the Euro, the different levels of economic achievement among the East Asian countries must be considerably narrowed to meet the economic requirements for monetary cooperation. This is not to say the discussion of monetary cooperation itself is futile. A consensus on monetary cooperation will emerge when the achievement of more specific agendas shows the possibility of regional financial cooperation.
At the global community level, various issues for building a new international financial architecture are being discussed at numerous arenas. However, the major leading group is the G7, which is composed of highly industrialized countries. Furthermore, the scope for Asian participation is limited. In such regional fora as ASEAN+3 and APEC, and such extended global fora as G22 and G33, several Asian countries, including crisis-affected countries and China could have the opportunity to express their own views. However, there is a serious division between the U.S. and the rest of the G7 membership on various architectural issues. In most cases, outside inputs from developing economies are not satisfactorily recognized and incorporated.
This paper examines the need for regional financial cooperation and points out the importance of the regional dialogue channel for further close cooperation. In order to create a more formal institutional framework for regional financial cooperation, we should simply start a discussion on various possibilities in a more informal and freer way. Through successive rounds of discussion, we will discover what barriers against an institutional framework for regional financial cooperation exist.
The paper is organized as follows. Section II will review the regional actions to deal with the Asian crisis. Section III will also review the global actions to deal with the Asian crisis and its aftermath. Section IV will discuss the long-term and short-term agendas for regional financial cooperation. -
Developing an ASEM position toward the New WTO Round
This paper discusses how ASEM can play an effective role in the upcoming new WTO round and thereby further liberalization of the multilateral trade regime. As ASEM only came into being after the conclusion of the Uruguay Round, pa..
Chong-Wha LEE Date 1999.09.10
Economic cooperation, Multilateral negotiationsDownloadContentSummaryThis paper discusses how ASEM can play an effective role in the upcoming new WTO round and thereby further liberalization of the multilateral trade regime. As ASEM only came into being after the conclusion of the Uruguay Round, participation in the new WTO round will be challenging yet critical as it could demonstrate whether the ASEM process can function as a complement to multilateral trade liberalization. In this connection, ASEM members collectively and individually need to take a proactive stance towards framing the agenda of the New Round.
Several features deserve attention. First, considering the dynamic interaction towards trade liberalization between regional and multilateral initiatives, and the failure of APEC's regional initiative (EVSL), ASEM can be expected to give new momentum to the prospects for enhanced multilateral trade liberalization. This can be achieved through providing united support for further liberalization in the New Round. Second, considering the differing development stages of ASEM members, a comprehensive New Round with the principle of a single undertaking could probably best meet the divergent interests of member countries because only this approach would enable the bargaining and concessions to occur. Third, the three issues, namely trade and investment, trade facilitation and electronic commerce, seem to meet common interests of ASEM members since they are directly trade-related and have enormous potential to enhance trade. In addition, as ASEM has its own programs in these areas, especially trade and investment and trade facilitation, it could pave the way for reaching common ground in the ASEM approach to the New Round. Fourth, in order to build consensus among ASEM members, it would be necessary to use ASEM's informal features, such as people-to-people dimension and substantive political dialogue. Lastly, if the EU takes the initiative vis-?och-vis the US in advancing the New Round, it would be from ASEM that the EU seeks support in the New Round, and ASEM thus could be expected to take a leadership role.
Consequently, if ASEM provides a useful vehicle for the New Round, this would give a decisive momentum to multilateral liberalization and the ASEM process as well and contribute to Asia and Europe making great strides in cooperation at the dawning of a new millenium. -
Capital Inflows and Monetary Policy in Asia before the Financial Crisis
Asia has received sizable capital inflows before the Asian crisis in 1997. Capital inflows are contributed in part by internal factors such as high economic growth, liberalizing the financial system and opening the capital market,..
Sung-Yeung Kwack Date 1999.08.30
Financial crisis, Monetary policyDownloadContentSummaryAsia has received sizable capital inflows before the Asian crisis in 1997. Capital inflows are contributed in part by internal factors such as high economic growth, liberalizing the financial system and opening the capital market, and in part by external factors such as low rates of interest in industrial countries, especially the United States. Capital inflows supplied finance needed for a high rate of investment, imports and economic growth. At the same time, capital inflows distorted relative good prices, fed bubbles into real asset markets and inflationary pressure into the economy.
Substantial capital inflows can give rise to microeconomic and macroeconomic policy issues. Especially, capital inflow surges increase the difficulty in managing monetary policy of an open economy under a fixed exchange rate system and with unrestricted trade flows and capital flows. The higher the degree of capital mobility, the more difficult the maintenance of a fixed exchange rate and the control of the money stock.
The main purpose of this study is to empirically explore how the monetary authority in Asia did cope with the surge of capital inflows in the period 1985-1996. It statistically examines the extent to which the massive capital inflows influenced the conduct of monetary policy and the effects of the policy of sterilization and intervention in the foreign exchange market. it provides empirical evidence for what a group of seven selected countries across Asia have done. The seven countries in the group are Indonesia, Korea, Malaysia, Philippines, Singapore, Thailand, and Taiwan( R.O.C.). The regression is estimated using a panel of 84 observations for the seven countries during 1985-1996.
A capital inflow generates monetary expansion and pressure for exchange rate adjustment. It poses an important policy question as to how to deal with capital inflows. It is uncertain whether capital inflows last long or not. Asian countries regarded capital inflows as a transitional phenomenon. As a result, Asian countries decided it was desirable to minimize the impact of capital inflows on the economy.
Asian countries heavily utilized the policy categories of measures to minimize the impact of capital inflows on the money supply and exchange rate. The monetary authority conducted contraction of the domestic source in the monetary base of the central bank, primarily directed to offset the effect on the money supply of an increase in the net foreign assets of the central bank resulting from capital inflows. At the same time, the monetary authority intervened in the foreign exchange market, primarily designed to absorb pressures on exchange rates that are accompanied by capital inflows and to prevent nominal exchange rate appreciation.
The statistical results indicate that the degree of sterilization of the monetary authority is very high and that the sterilization is undertaken to control the money supply rather than to control the monetary base.
Furthermore, the effect of the intervention in the foreign exchange market is estimated to be small. The main statistical finding implies that the monetary authority took the policy of a high degree of sterilization with a low level of intervention in foreign exchange markets. The policy leads for a capital inflow to yield negligible effects on the exchange rate and small positive effects on the money supply and the price level. Consequently, the monetary authority succeeded in keeping exchange rates at desired levels and in limiting increases in monetary growth, despite a surge of capital inflows.
The majority of industrial countries allow their exchange rates to float and unrestricted capital flows. Under the world conditions, the monetary authority in Asian countries could have accepted the view that capital flows are of a permanent nature and that sterilized intervention policies are effective over a short period. If the monetary authority accepted the view, it would have floated the exchange rate. The study concludes that Asian countries could have avoided the financial crisis.