Korea Institute for International Economic Policy

The interface between industry and the universities is of key importance in the promotion of technological change in many industries. There is intense interest in the characteristics of universities that have contributed most importantly to industrial innovation in various fields, but unfortunately very little systematic study has been devoted to this important and complex topic. Also, we know little about the factors determining which universities firms will support to do R&D of various types. Based on data obtained from a carefully selected sample of major US firms in the electronic, information processing, chemical, petroleum, pharmaceutical, instruments, and metal industries, this paper sheds new light on these topics.

Gross inequities in disease burden between developed and developing countries are now the subject of intense global attention. Public and private donors have marshaled resources and created organizational structures to accelerate the development of new health products and to procure and distribute drugs and vaccines for the poor. Despite these encouraging efforts directed primarily from and funded by industrialized countries, sufficiency and sustainability remain enormous challenges because of the sheer magnitude of the problem. Here we highlight a complementary and increasingly important means to improve health equity: the growing ability of some developing countries to undertake health innovation.

As trade integration deepens in East Asia, closer links among the business cycles of East Asian countries can be expected. Theoretically, however, increased trade could lead to either closer or looser business cycles across trading partners. This paper seeks to understand how the business cycles of 12 Asian economies have been influenced by increased trade among them. It finds that the increasing trade itself is not necessarily associated with an increased synchronization of their business cycles. Intra-industry trade, rather than inter-industry trade or the volume of trade itself, is the major channel through which their business cycles become synchronized. This result has important implications for the prospects for a unified currency in the region.

This paper analyzes the civil revolution in Ukraine, which is also known as the Euromaidan Revolution. It is regarded as the Revolution of Dignity by Ukrainian citizens. In this respect, this paper focuses on a clarification of the dynamics of the Ukrainian civil revolution. The authors will try to trace the essential causes, processes, and historical implications of the Euromaidan Revolution. In addition, we plan to assess the nature of civil revolution. This study not only was based on the primary sources in Ukrainian language but also was described from the perspective of the participants of the revolution.

Abstract Previous studies find that a trade treaty positively impacts foreign direct investment (FDI). But does a trade treaty always have positive effects on FDI? What is the effect of bilateral free trade agreement (FTA) on bilateral FDI among developed countries? Based on the Knowledge‐Capital model, I hypothesize that bilateral FTA has negative effects on bilateral FDI in developed–developed country pairs, but positive effects in developed–developing country pairs. To test this hypothesis empirically, I conduct the within estimator, the Difference‐in‐Difference estimator and the Arellano–Bond estimator with panel data of bilateral FTA and outward FDI in 30 OECD countries and 32 non‐OECD countries between 1982 and 2005. The result supports the hypothesis. The existence of bilateral FTA decreases bilateral FDI in the OECD–OECD country pairs but increases bilateral outward FDI in the OECD–non‐OECD country pairs. The finding of negative effects of bilateral FTA on FDI is robust to different country classifications by gross national income (GNI) per capita and secondary school enrolment. Hence, the results are consistent with what Carr et al. (2001) predicts about the effects of trade cost on FDI in developed–developed country pairs and in developed–developing country pairs.

We derive a foreign ownership return as the weighted average return of foreign stocks that are connected to a stock through common ownership. The foreign ownership return is of similar economic significance as traditional country and industry factors in explaining international stock returns. It is not related to omitted fundamentals or wealth effects but shifts substantially around ADR and index listings when the investor habitat changes. A decomposition shows that the foreign ownership return is driven by active reallocations of global institutions as opposed to fund flows from end investors. Our findings have important implications for international portfolio diversification.

The crustacean order Bathynellacea is a primitive group of subterranean aquatic (stygobitic) invertebrates that typically inhabits freshwater interstitial spaces in alluvia. A striking diversity of species from the bathynellacean family Parabathynellidae have been found in the calcretes of the Yilgarn palaeodrainage system in Western Australia. Taxonomic studies show that most species are restricted in their distribution to a single calcrete, which is consistent with the findings of other phylogeographic studies of stygofauna. In this, the first molecular phylogenetic and phylogeographic study of interspecific relationships among parabathynellids, we aimed to explore the hypothesis that species are short-range endemics and restricted to single calcretes, and to investigate whether there were previously unidentified cryptic species. Analyses of sequence data based on a region of the mitochondrial (mt) DNA cytochrome c oxidase 1 gene showed the existence of divergent mtDNA lineages and species restricted in their distribution to a single calcrete, in support of the broader hypothesis that these calcretes are equivalent to closed island habitats comprising endemic taxa. Divergent mtDNA lineages were also observed to comprise four new and 12 recognised morphospecies. These results reflect the findings of previous studies of stygobitic arthropods (beetles, amphipods and isopods) from the Yilgarn region and reinforce the usefulness of using DNA-sequence data to investigate species boundaries and the presence of cryptic species.

Abstract Veto power consists of the right of one or more players to unilaterally block decisions but without the ability to unilaterally secure their preferred outcome. Our experiment shows that (i) committees with a veto player take longer to reach decisions (are less efficient) and generate less consensus than without a veto player, (ii) veto power substantially enhances proposer's power, and (iii) non-veto players are substantially more willing to compromise than veto players. We relate our results to the theoretical literature on the impact of veto power as well as to concerns about the impact of veto power in real-life committees.

This paper examines the macroeconomic determinants of cross-border mergers and acquisitions (M&As). Using a panel dataset of bilateral M&A deal values for 101 countries for 17 years ranging from 1989 to 2005, we investigate both home and host-country factors that may play an important role in determining the size and direction of M&A flows. Overall, the empirical results suggest that legal and institutional quality and financial market development increase M&A volume across borders. The significant effect of institutions, however, may disappear for transactions between countries in similar stages of the development.

China's ambitious global infrastructure investment plan, embodied in the Belt and Road Initiative and backed by massive financial resources, is an attempt to secure cooperation from developing countries in Asia and beyond to support its rise as a global power. Such cooperation, however, is not guaranteed. Despite the power asymmetry between China and partner countries, as well as the latter's significant infrastructure investment needs, host countries still need to be convinced of the specific benefits of China's projects, thus creating a bargaining opportunity. Significant room for negotiations emerges due to the domain characteristics of infrastructure development and China's strategic motives and industrial policy needs which often misalign with the host country's development priorities. I construct an analytical framework drawn from bargaining theory to explain when power asymmetry may fail to prevail in China's infrastructure diplomacy, which is illustrated by its high-speed rail negotiations in Southeast Asia. The relative bargaining power of a host country is influenced by its threat points, which interact with the project terms offered by China to produce final bargaining outcomes. This article offers a new perspective on the agency of weaker states in the context of China's rise.

This paper investigates whether financial markets in East Asia are integrated with global markets or with each other.We use two approaches: a volume-based approach and an asset price approach. Our overall results suggest global integration of these markets rather than regional integration and that there is no anchor market in the region that would match the advanced markets such as the United States. Though global integration is not a force that competes with regional integration, there seems to be no strong sign of the creation of an effective financial market mechanism in East Asia.

In the last months of 1997, the value of the Korean currency lost over half its value against the dollar, and the ruling party was swept from power in presidential elections. One of the fundamental causes of this national economic crisis was the widespread failure of Korean companies to earn their cost of capital, which contributed to massive shareholder losses and calls for corporate governance reform. Among the worst performers, and hence the main targets of governance reform, were family‐controlled Korean business groups known as chaebol. Besides pursuing growth and size at the expense of value, such groups were notorious for expropriating minority shareholders through “tunneling” activities and other means. The reform measures introduced by the new administration were a mix of market‐based solutions and government intervention. The government‐engineered, large‐scale swaps of business units among the largest chaebol—the so‐called “big deals” that were designed to force each of the groups to identify and specialize in a core business—turned out to be failures, with serious unwanted side effects. At the same time, however, new laws and regulations designed to increase corporate transparency, oversight, and accountability have had clearly positive effects on Korean governance. Thanks to reductions in barriers to foreign ownership of Korean companies, such ownership had risen to about 37% at the end of 2006, up from just 13% ten years earlier. And in addition to the growing pressure for better governance from foreign investors, several newly formed Korean NGOs have pushed for increased transparency and accountability, particularly among the largest chaebol. The best governance practices in Korea today can be seen mainly in three kinds of corporations: (1) newly privatized companies; (2) large corporations run by professional management; and (3) banks with substantial equity ownership in the hands of foreign investors. The improvements in governance achieved by such companies—notably, fuller disclosure, better alignment of managerial incentives with shareholder value, and more effective oversight by boards—have enabled many of them to meet the global standard. And the governance policies and procedures of POSCO, the first Korean company to list on the New York Stock Exchange—as well as the recent recipient of a large equity investment by Warren Buffett—are held up as a model of best practice. At the other end of the Korean governance spectrum, however, there continue to be many large chaebol‐affiliated or family‐run companies that have resisted such reforms. And aided by the popular resistance to globalization, the lobbying efforts of such firms have succeeded not only in reducing the momentum of the Korean governance reform movement, but in reversing some of the previous gains. Most disturbing is the current push to allow American style anti‐takeover devices, which, if successful, would weaken the disciplinary effect of the market for corporate control.

The present study attempts to reconstruct the phylogenetic relationships among species of Atopobathynella Schminke, 1973 in order to elucidate their distributional patterns and to seek a mechanism for the worldwide colonisation of the limnic interstitial by the Parabathynellidae. We describe six new Atopobathynella recently discovered in Western Australia: A. gascoyneensis, sp. nov., A. hinzeae, sp. nov., A. schminkei, sp. nov., A. wattsi, sp. nov., A. readi, sp. nov. and A. glenayleensis, sp. nov. The phylogenetic relationships among these species and four previously known species in the genus are assessed using 28 morphological characters. The analysis yielded two most parsimonious trees 71 steps long with consistency index 0.5070, retention index 0.5270, and rescaled consistency index 0.2672. One of these trees supports the grouping of A. readi, sp. nov. + (((A. wattsi, sp. nov. + A. glenaylensis, sp. nov.) + (A. hospitalis Schminke, 1973 (A. gascoyneensis, sp. nov. (A. schminkei, sp. nov. + A. hinzeae, sp. nov.)))) + (A. valdiviana (Noodt, 1964) (A. compagana Schminke, 1973 + A. chelifera Schminke, 1973))). We discuss the monophyly of Atopobathynella and its phylogenetic position within the family Parabathynellidae. The results of the phylogenetic analysis and the biogeographical data suggest that the ancestors of Atopobathynella colonized groundwater via limnic surface water.

We quantitatively analyse the trade effects of enhanced trade facilitation with extended gravity equations. Our findings confirm that RTAs comprised of countries equipped with better trade facilitation are more likely to be trade‐creating, less likely to be trade‐diverting, and are thus more likely to lead the world economy toward global free trade. We also find that (i) the traditional gains from shallow integration through eliminating tariff barriers will be greater for South‐South RTAs in East Asia such as an ASEAN‐China RTA, provided that the tariff‐reducing schedule is strictly fulfilled, (ii) the gains from deeper integration through enhancing trade facilitation will be greater for North‐North RTAs in East Asia such as a Japan‐Korea RTA, and (iii) the gains from a combined trade liberalisation strategy through tariff reductions and enhanced trade facilitation will be greater for North‐South RTAs in East Asia such as a China‐Korea and an ASEAN+3 RTA.

Six new species of a new genus of the Parabathynellidae are described from the Kimberley Region, Western Australia. The erection of the new genus, Kimberleybathynella gen. nov., is based on the two‐segmented antenna, the partial fusion of the second and third segments of the maxilla, and the setal condition of the uropodal exopodite, where the outer seta is longer than the inner one. The one‐segmented exopodite of thoracopods I–VII and hemispherical form of male thoracopod VIII suggest the close relationship of Kimberleybathynella to the genus Atopobathynella.

Accurate demand forecasting is important for automotive manufacturing and sales planning because it allows firms to minimize costs and improve their effectiveness. Based on the limitations of existing literature, this paper seeks to establish a novel machine learning-assisted hybrid-input automobile demand forecast model by focusing on the research gaps in input data, methodology, and the scope of demand forecast. To achieve the research aim, the firm-level forecasting performance of the machine learning algorithms based on the hybrid micro-/firm-level (endogenous) and macro-level (exogenous) factors were analyzed to present the optimal approach. The study collected and used monthly vehicle sales and related firm-level data from South Korea from 2011 to 2020. Linear regression, neural network, random forest, stochastic gradient descent, and ensemble learning were used to build the models and verify significant input features using the RReliefF algorithm. The paper presents significant theoretical and managerial contributions that advance the methodological frameworks in the auto demand forecasting literature based on the ML-assisted hybrid-input model, highlighting less well-known endogenous factors that affect company precision to enhance businesses' practical operations.

The objectives of this article are threefold—(1) to test target-zone models using more efficient and direct econometric methodology than previous research, (2) to identify an implicit band, if it exists, from observed data and to test target-zone models based on the estimated implicit band rather than the stated official band, and (3) to examine whether the exchange rate can be modeled as a managed float system with a central parity that lacks a band. We find strong evidence that a model with intramarginal intervention and a narrower implicit (unofficial) band can describe the dynamics of the French franc/Deutsche mark exchange rate from January 1, 1987–July 30, 1993.

ABSTRACT In the Early Childhood Longitudinal Study Kindergarten Cohort, I find that the gender gap is not uniform across the distribution of math skills and that these quantile‐specific gaps vary with age. Specifically, girls at the top of the distribution initially fall behind boys but manage to catch up later. At the same time, girls in the lower parts of the distribution lose ground. In fifth grade, a gender gap of 0.2 standard deviation, about 2.5 months of schooling, is observed across the entire distribution. Overall, these patterns indicate the possibility that low performing girls become worse and vice versa. These results demonstrate important dynamics of the gap that are relevant for policy, but that the mean gap fails to show.

We use individual-level data from the United States Current Population Survey to examine effects of the COVID-19 pandemic on employment losses across metropolitan area status and population size. Job losses spiked in April 2020, and partially recovered in subsequent months. Non-metropolitan and metropolitan areas of all sizes experienced significant employment losses, but the impacts were much larger in large metropolitan areas. The COVID-19 infection rate was initially higher in large metropolitan areas and this is a significant factor explaining the higher early employment losses in large metropolitan areas. However, higher job losses for large metropolitan areas persisted through summer and fall 2020 even after COVID-19 infection rates became higher in less populous areas. We find evidence of persistent effects of early COVID-19 infection rates on later employment.

Abstract By estimating a dynamic panel-gravity model of bilateral foreign direcr investment (FDI), this article investigates the location determinants of inward FDI in South and East Asia and assesses their short-run and long-run effects. The econometric results highlight the importance of the vertical specialization-, trade-, and international integration-related location factors. The gravity-specific variables are also found to be significant location determinants, whilst some of the traditional determinants are found to have either a weak or statistically insignificant effect (except host-market size) on inward FDI in South and East Asia.