How do international economic agreements influence the investment patterns of firms from emerging economies? This paper studies the ways in which bilateral investment treaties and preferential trade agreements interact with geographic and cultural distance to influence firms' investment patterns.
... See More + How does geographic and cultural proximity affect the impact of international economic agreements on foreign direct investment flows? This question is answered using data from an original survey of 700 firms from four emerging (or newly-emerged) economies: Brazil, India, the Republic of Korea, and South Africa. The findings suggest that bilateral investment treaties and preferential trade agreements increase the likelihood of foreign direct investment. Yet, the effects of these agreements on foreign direct investment depend on the distance between the origin and potential destination countries. Moreover, trade and investment agreements appear to interact differently with distance. By providing guarantees to investors and signaling credible commitment from host governments, bilateral investment treaties mitigate the higher uncertainty and transaction costs associated with investing in faraway, unfamiliar markets. By contrast, the investment attraction effectiveness of preferential trade agreements fades with distance.
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Policy Research Working Paper WPS8185 SEP 07, 2017
Social enterprises are emerging as a new area of public policy: several countries seek to stimulate private sector contribution to development outcomes, and social enterprises could be important players in that agenda.
... See More + However, those seeking a middle ground between for-profit and non-profit sectors to enable social enterprise have found legal frameworks to be lacking. This has triggered a range of legal developments over the past ten years, with a number of countries seeking to implement appropriate legal frameworks that can support and stimulate the development of social enterprise. These legal frameworks can both define social enterprise as well as to structure it, through the creation of new legal forms and regulations. The objective of this study is to analyze various definitions and forms under which social enterprises operate in five countries and the implications for public policies. The study is based on literature review and a small number of interviews clustered around Italy, Malaysia, South Korea, the United Kingdom, and United States, where social enterprise has attracted government`s interest. The study analyzes how the government operationalized its engagements with social enterprises. It takes a historical perspective to understand the legal forms available to, and adopted by, social enterprises, and the advantages and disadvantages of various approaches.
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Increasing tax revenues by reducing the shadow economy has been a central goal of tax policy and administration in the Republic of Korea since the National Tax Service was established as an independent agency in 1966.
... See More + This paper examines the Tax Incentive for Electronically Traceable Payments, which was introduced by the Korean tax authorities in 1999 to promote payments made using credit cards, debit cards, and electronic cash receipts in business-to-consumer transactions. The tax incentive allows wage and salary earners to claim tax deductions for eligible purchases made using electronically traceable payments when they file their year-end income tax settlements. The tax incentive scheme greatly contributed to changing the Korean economy into a cashless economy over the past decade and a half. Card payments as a ratio of Korea's gross domestic product have ranked the highest in the world since 2005, reaching 49 percent in 2014. The Tax Incentive for Electronically Traceable Payments scheme has changed the taxpayer ratio over business income earners from stagnant at around 30 percent through the late 1990s, to approximately 80 percent at present. The effective personal income tax rate for business income followed a continuous upward trend, from 3.4 percent in 1998 to 6.3 percent in 2013. The total revenue increase driven by the tax incentive scheme was estimated as W 3.4 trillion, with the scheme's costs reaching W 1.9 trillion. The net gain was an estimated W 1.4 trillion (approximately US$1.3 billion), which increased personal income tax revenue by 4.2 percent. The tax incentive scheme also had a positive impact on income redistribution, decreasing the Gini coefficient by 0.11 percentage points.
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Policy Research Working Paper WPS7936 JAN 09, 2017
Korea’s scores in Science, Reading and Mathematics have declined significantly since the last round. The performance of students in each subject continues to exceed the regional and the rganization for Economic Cooperation and Development (OECD) averages.
... See More + Student performance in Korea exceeds OECD averages by about 1 year in Science and Maths and by half a year in Reading.Since 2006, student proficiency in Reading hasdeclined. The percentage of students who report below basic proficiency has increased and the percentage of students who report high proficiency has decreased significantly. Since 2006, fewer students report high proficiency in Maths. In Science, the difference between students in the top and bottom socioeconomic quintile equates to 2.8 years of schooling, which is lower than the same gap among OECD countries (3.1 years). The difference between urban and rural students inScience is equivalent to about half a year of schooling in favor of rural students. Girls perform better than boys in Science, but this difference is not significant. There is no significant difference in Science performance between students who participate in Early Childhood Development (ECD) programs and those with no ECD.
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Korea is a peninsular country located in Northeast Asia at the triangular point of contact between China, Japan, and Russia. The country had spread its cultural heritage over Japan from early times to the middle ages, but became its colony in the early 20th century due to its failures in industrialization.
... See More + In the 1960s, when the Korean government faced similar challenges that developing countries are encountering today, including social needs for rapid industrialization, it began to institutionalize its resident registration (RR) system and population trend survey. Civil Registration and Vital Statistics (CRVS) refers to universal, continuous, permanent, and mandatory recording and documentation of the occurrence and characteristics of vital events such as births, deaths, marriages, divorces and annulments, adoptions, and legitimations, according to the legal and regulatory requirements in each country. CRVS systems can benchmark the RR information systems of Korea that play a key role in linking data for successful e-government services to citizens. This report is arranged as follows: (i) Chapter I begins with introduction; (ii) Chapter II of this report introduces institutional aspects of Family Relationship Registration (FRR), RR, the population change survey (PCS), and national health insurance (NHI), all of which are fundamental components of Korea’s CRVS system; (iii) Chapter III focuses on the civil management information systems (CMIS) associated with FRR, RR, PCS and NHI; (iv) Chapter IV provides information on various legal and regulatory frameworks associated with the CRVS system; (v) Chapter V discusses basic strategies that the Korean government has adopted towards e-government projects since the 1980s; (vi) In Chapter VI, the report presents lessons learned and solutions to current challenges, and continues with a discussion of the future of Korea’s CRVS; and (vii) Chapter VII contains concluding remarks.
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This economy profile presents the Doing Business indicators for Korea, Republic. To allow useful comparison, it also provides data for other selected economies (comparator economies) for each indicator.
... See More + Doing Business 2017 is the 14th in a series of annual reports investigating the regulations that enhance business activity and those that constrain it. Economies are ranked on their ease of doing business; for 2016 Korea, Republic ranks 4. Doing Business sheds light on how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying with relevant regulations. It measures and tracks changes in regulations affecting 11 areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency, and labor market regulation. Doing Business 2017 presents the data for the labor market regulation indicators in an annex. The report does not present rankings of economies on labor market regulation indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business. The indicators are used to analyze economic outcomes and identify what reforms have worked, where, and why. The data in this report are current as of June 1, 2016 (except for the paying taxes indicators, which cover the period January-December 2015).
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This paper provides a comprehensive analysis of how economies in the East Asia and Pacific (EAP) region have been integrating financially with the rest of the world since the 1990s, using bilateral data on portfolio investments, syndicated bank loans, mergers and acquisitions (M&As), and greenfield investments.
... See More + Four main messages emerge from the analysis. First, the region is increasingly more connected with itself and with the rest of the world, even relative to GDP. Second, although economies in the North capture the bulk of the region's inward and outward investments, EAP's connectivity with the South has grown relatively faster. Third, EAP is relatively more connected through arm's length financing (portfolio investments and syndicated loans) with the more financially developed North, and through FDI (M&A and greenfield investments) with itself and the South. Fourth, more developed EAP economies have a larger role in EAP’s arm’s length investments than in the region's FDI.
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Policy Research Working Paper WPS7772 JUL 27, 2016
This volume a collaborative work between the World Bank’ Global Governance Practice and a team of researchers working with the Korean Development Institute is dedicated to the proposition that there is much that can be learned from a careful and nuanced assessment of Korea’s experience with e-governance.
... See More + It seeks to draw lessons both from the large reservoir of experience as to what has worked, as well as the more limited and isolated examples of what has not. In particular, it seeks to achieve two objectives. The first is to accurately understand, capture and distill the key dimensions of Korea’s e-governance experience so that it can be properly understood and appreciated. Towards this end, some of the world’s leading experts on Korea’s e-governance experience have been engaged in its preparation, and their conclusions have been carefully vetted and reviewed by other leading scholars of the role of IT systems within government. The goal is to avoid flip generalizations or characterizations, such as political will is important or it is important to embed e-governance within a broader strategy to develop a domestic IT industry, but to truly understand the complex interplay between differing political, economic and bureaucratic interests and how they shaped decisions about developing the technological and human infrastructure that would support Korea’s successful thrust to be the world’s leading nation in this area. The second is to ponder the lessons learned and what did and did not work from Korea’s experience for other developing countries seeking to strengthen the role of information technology within their public sectors.
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Publication 106581 JUL 05, 2016
Karippacheril, Tina George; Kim, Soonhee; Beschel Jr, Robert P. (Editor); Choi, Changyong (Editor)Disclosed
This paper reviews the Republic of Korea's experience with electronic tax invoices for its value-added tax regime from the perspectives of tax policy makers and administrators.
... See More + The paper evaluates Korea's implementation of electronic tax invoicing and analyzes its effect on tax compliance through enhanced transparency of business transactions and taxpayer services. First implemented in 2011, mandatory electronic tax invoicing has been credited with lowering tax compliance costs and raising the transparency of business transactions. Effective policy design and implementation have contributed to the country's success with electronic tax invoicing. Measured in transaction value, the electronic tax invoice adoption rate reached 99.8 percent in the first year and rose to 99.9 percent by 2013, compared with 15 percent before electronic tax invoicing became mandatory. According to a survey of taxpayers and tax practitioners in Korea that was conducted as part of this research study, 69.4 percent of the respondents agreed or strongly agreed that mandatory electronic tax invoicing has contributed to curbing value-added tax evasion by raising transaction transparency, and 72.9 percent agreed or strongly agreed that it has improved taxpayer service by facilitating the convenience of tax filing or automating the issuance of invoices. The review of Korea's experiences gives credence to the contention that well-planned and well-executed compulsory electronic tax invoices can materially enhance tax compliance through significant institutional and perceptual changes in tax administration.
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Policy Research Working Paper WPS7592 MAR 07, 2016
Korea Issue no. 10: Since the late 1970s and the introduction of modern information technology (IT) in the justice sector, the development and implementation of IT solutions has become one of most important tools utilized by judiciaries for providing more efficient and effective services and improving court performance.
... See More + Providing IT solutions such as e-filing, for example, reduces litigant cost and increases access to court services where many functions can be done by the click of a mouse. This note outlines the approach taken by the Korean judiciary in developing, implementing, and successfully leveraging IT solutions for the benefit of the justice sector and its users.
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Water security and water quality affect numerous economic sectors and areas: agriculture, energy, disaster management, and others. Countries need balanced and integrated approaches that are economically, environmentally, and socially sustainable.
... See More + Threats related to climate change have added to the complexity, and to the importance, of water resource management. Korea’s integrated water resources management approach since the 1990s reflects the country’s “green” climate-resilient development path. The Korean Green Growth Trust Fund’s (KGGTF) 3rd “Knowledge Note”, Promoting Green Growth through Water Resources Management: the Case of Republic of Korea, outlines key responses to Korea’s water resource challenges. The report highlights the Korean Government’s “Four Major River Restoration Project (4MRRP)”, a multi-purpose, green-growth infrastructure initiative. Involving five ministries and 78 local authorities in a comprehensive and integrated approach, the Note showcases lessons from 4MRRP for other countries to learn from Korea’s experience overcoming institutional, legislative, governance, technical and financial hurdles.
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Working Paper 102687 JAN 01, 2016
Ishiwatari,Mikio; Wataya,Eiko; Shin, Taesun; Kim, Daeil; Song, Jiseon; Kim, SeyiDisclosed
Over the years pension systems have been an essential policy tool for the economic protection of older adults across countries and regions. But in a context of widespread inequality, not everyone enjoys the same level of protection.
... See More + Because women’s life courses are different from men’s, pension systems often have different outcomes for women and men. With populations aging in East Asia, the gender pension gap is affecting more and more women. This note summarizes the results of a study that examined pension policies and their gender dimensions in several countries of East Asia. The study examined the labor force behavior of women aged 45 years and over in China, Vietnam, Thailand, Indonesia, Mongolia, Republic of Korea, Malaysia, and the Philippines, investigating the key policy and behavioral drivers of their observed labor force participation and withdrawal. Empirical and policy analysis is supplemented with qualitative insights from focus groups and individual interviews with women in the focus countries who are nearing retirement age or have already withdrawn from the workforce. The findings fill important and policy-relevant knowledge gaps on pensions and retirement and on gender differentials in endowments, economic opportunities, and well-being at older ages.
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This economy profile for Doing Business 2016 presents the 11 Doing Business indicators for Korea, Republic of. To allow for useful comparison, the profile also provides data for other selected economies (comparator economies) for each indicator.
... See More + Doing Business 2016 is the 13th edition in a series of annual reports measuring the regulations that enhance business activity and those that constrain it. Economies are ranked on their ease of doing business; for 2015 Korea, Republic of ranks 4. A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 189 economies from Afghanistan to Zimbabwe and over time. Doing Business sheds light on how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying with relevant regulations. It measures and tracks changes in regulations affecting 11 areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and labor market regulation. The data in this report are current as of June 1, 2015 (except for the paying taxes indicators, which cover the period from January to December 2014).
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This country data report summarizes the data from the worldwide governance indicators (WGI) project for Korea Republic. The WGI report six aggregate governance indicators for over 200 countries and territories over the period 1996-2014, covering: (i) voice and accountability, (ii) political stability and absence of violence and terrorism, (iii) government effectiveness, (iv) regulatory quality, (v) rule of law, and (vi) control of corruption.
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Megacities in developing countries suffer from serious traffic congestion, high levels of greenhouse gas (GHG) emissions, and heavy air pollution.
... See More + These urban areas face a stark dilemma: economic expansion attracts more people and vehicles; but the resulting traffic and pollution hinder further growth while reducing the quality of life for their citizens. Not long ago, Seoul faced a similar conundrum. Choked with pollution and traffic jams, it changed course and helped Korea make a historic transition to green urban transport. It shifted from supply-side policies focused on expanding roadways and metro lines to green demand-side policies focused on creating transit-oriented cities. Today, Seoul boasts a passenger-trip share for metro and bus of more than 60 percent. Energy consumption in Korea’s road sector is lower than in other countries with similar gross domestic product (GDP). Congestion costs have been decreasing, and carbon dioxide (CO2) emissions in the transport sector have been kept under control. This path breaking transition was founded on multimodal solutions integrated by information and communication technology (ICT) in a context of strong political leadership and public financing.
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To achieve the new national development vision, Korean leadership took a strategic approach in which the government played an active role, similar to the visionary approach used to achieve rapid economic development in the 1960s and 1970s.
... See More + The government established a legal framework on low carbon and green growth, set up a governance structure to implement green growth initiatives systematically, and established fiscal policies and budget resources to support the initiatives firmly. The purpose of this note is primarily to explain why Korea adopted a green growth strategy as a new national development paradigm and how it was implemented by the government. Section one gives overview; section two illustrates why green growth was a necessity in Korea; section three describes how green growth was implemented by the Korean government, particularly with respect to institutional arrangements and fiscal adjustments for green growth; section four presents the key outcomes thus far; and section five identifies lessons that can be applied in other countries.
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This note lays out the rationale for including land administration quality index in the standard ‘registering property’ indicator by doing business and discusses initial evidence from the global sample, showing that many countries, including some that have performed well on Doing Business’s traditional ranking, have a long way to go to establish a system of land administration that is reliable and transparent, achieves sufficient coverage, and minimizes disputes.
... See More + The cases in this brochure document that by smartly deploying new technology, countries can make progress in this direction irrespective of their initial income level. Continued monitoring and learning from experience at all levels had an important role in facilitating such progress. Doing Business will contribute to this agenda by elevating the profile of land governance, tracking countries’ performance with respect to land administration quality index, and fostering global exchange and learning from good performers.
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This paper uses a three-step Bayesian cross-entropy estimation approach in an environment of noisy and scarce data to estimate behavioral parameters for a computable general equilibrium model.
... See More + The estimation also measures how labor-augmenting productivity and other structural parameters in the model may have shifted over time to contribute to the generation of historically observed changes in the economic arrangement. In this approach, the parameters in a computable general equilibrium model are treated as fixed but unobserved, represented as prior mean values with prior error mass functions. Estimation of the parameters involves using an information-theoretic Bayesian approach to exploit additional information in the form of new data from a series of social accounting matrices, which are assumed were measured with error. The estimation procedure is "efficient" in the sense that it uses all available information and makes no assumptions about unavailable information. As illustration, the methodology is applied to estimate the parameters of a computable general equilibrium model using alternative data sets for the Republic of Korea and Sub-Saharan Africa.
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Policy Research Working Paper WPS7174 JAN 01, 2015
Korea experienced a financial crisis in the late 1990s, which it overcame successfully. The rich experiences gained in handling past crises have helped in the establishment of a broad crisis management framework in Korea.
... See More + The successful management of the 1997 financial crisis is reported to have been guided by the following principles: (i) bold and decisive measures are required to regain market confidence, rather than incremental ones; (ii) though Government will take the lead in crisis management initiatives, private capital should be encouraged to fully participate in the process; (iii) bank recapitalization and creation of a bad bank are not mutually exclusive options; the crisis management measures should be politically acceptable and have built-in exit strategies with clear time-frames; (iv) moral hazard should be minimized; and (v) all forms of financial protectionism must be rejected. Korea responded to the 2008 global financial crisis with certain policy measures that helped the Korean financial and real sectors to weather the immediate effects of the global crisis. These included policy and financial support to stabilize the money, securities, and bond markets, to extend financial support to corporate and financial entities, and to support small and medium enterprise (SME) and micro finance sectors. The authorities introduced a series of measures to contain the stress in Mutual Savings Banks (MSBs) during 2011 and 2012 and turned them around. The stress in MSBs was largely due to an extensive industry-wide exposure to troubled real estate project financing as well as shareholder and management misconduct.4 Faced with sector-wide stress and declining depositor confidence the financial sector regulatory agencies jointly announced new mitigating measures for the MSB sector.
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