This annual report for the World Bank Group (WBG) Korea office covers the period July 2018 toDecember 2019. The WBG Korea office had an eventful past year and half as it transitioned fromphase one to phase two of the office, welcomed several new managers, and expanded its focus oninnovation and technology.
... See More + Phase two of the agreement by the Republic of Korea's Ministry ofEconomy and Finance (MOEF) to support the Korea office was signed in April 2018, which extendedthe government's support to fiscal years FYs1 2019 through 2021. Phase one of the agreement hadfocused on the successful establishment of the Korea office. Phase two will build on phase one byexpanding the office and its programs. In August 2018, Hoon Sahib Soh was appointed the new Special Representative (country manager) of the WBG Korea office. He worked previously in the World Bank's Beijing office as the program leader responsible for the World Bank's economic policy portfolio in China and Mongolia. In March 2019, Martin Raiser was appointed the director of the World Bank's programs in China, Korea, and Mongolia. Previously, he had been the country director of Brazil. And in November 2019, Jiyeon Janice Ryu was appointed the new International Finance Corporation (IFC) resident representative in Korea. In FY 2019, two new World Bank teams joined the Korea office, the Green Innovation Growth team, composed of professional staff from the energy, environment, and land administration (urban development) World Bank Global Practices (GPs), and the Fragility, Conflict, and Violence (FCV) team, consisting of two staff members from the World Bank's FCV global theme. The two teams joined two existing teams in the Korea office, the Finance, Competitiveness, and Innovation (FCI) GP's financial sector team and the Development Economics Knowledge and Strategy (DECKS) team. With the addition of these two new teams, the office needed a greater focus to enhance its impact. An extended series of consultations was carried out, both internally and externally, and the resulting consensus was to focus the Korea office on innovation and technology to support sustainable development. Going forward, the Korea office plans to refocus itself and expand its programs and staff along two pillars: (a) cross-cutting innovation and technology and (b) green growth innovation. The Korea office expects to add five new staff members to the office by approximately the summer of 2020 in order to start building the new programs.
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Since the first oil crisis in the 1970s, countries have recognized the need for energy conservation and alternative energy development. Renewables have emerged as alternatives to fossil fuels to play a vital role in expanding energy supply in a sustainable manner.
... See More + While electricity generation from renewables is taking a growing share in the energy supply mix, their inherent intermittency poses economic and technical challenges. Energy Storage System (ESS) has emerged as the most viable technology option to deal with this intermittency problem. ESS is a device used to store energy produced, to use later. There are various types of ESS, including pumped hydro storage, flywheel, compressed air system, battery storage (mostly Lithium-ion battery). Among them, Lithium-ion battery (LiB) is most widely adopted ESS in the world. It is used as a backup power and for load leveling and frequency and voltage regulation, to stabilize power supply and to help integrate renewable energy. Korea is one of the global leaders in developing and distributing LiB ESS. This report aims to identify and examine the key success factors of Korea's energy storage industry, including government policies, roles of private companies, and global market factors. It aims to share lessons learned from the country’s rapid development of LiB ESS.
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The World Bank Group and the Republic of Korea have benefited from a strong partnership for more than sixty years. The World Bank Group Korea office opened in 2014 in Songdo to enhance partnership with Korea and to leverage Korea's successful development experience to support developing countries.
... See More + The World Bank Group Korea office is expanding its Korean partnerships to help developing countries harness innovation and technology. Technology advancement is increasingly central to development work and to disrupting traditional development pathways. Korea transitioned to a high-income country by becoming a global leader in innovation and technology. Korea's success in harnessing technology for development makes it an ideal partner for the World Bank. To ensure that development is sustainable, the Korea office will continue to partner with the Korea green growth trust fund (KGGTF) to promote green innovations. The office aims to become a global center for promoting innovation and technology for sustainable development. The Korea office will work with Korean partners, global experts and the World Bank to prepare a major flagship report on Korea's development from a middle-income economy to a high-income one. The report will highlight how Korea successfully escaped the middle-income trap by harnessing innovation and technology and became a knowledge-intensive economy.
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Doing Business 2020 is the 17th in a series of annual studies investigating the regulations that enhance business activity and those that constrain it.
... See More + Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 190 economies— from Afghanistan to Zimbabwe—and over time. Regulations affecting 12 areas of the life of a business are covered: 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, employing workers, and contracting with the government. The employing workers and contracting with the government indicator sets are not included in this year’s ranking on the ease of doing business. Data in Doing Business 2020 are current as of May 1, 2019. The indicators are used to analyze economic outcomes and identify what reforms of business regulation have worked, where and why. This economy profile presents indicators for Korea, Republic of; for 2020, Korea, Republic of ranks 5.
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This paper is a comprehensive case study on how the Korean civil registration and vital statistics (CRVS) system facilitates achievement of universal health coverage (UHC) in the Republic of Korea.
... See More + The case study briefly summarizes the resident registration system - the main part of the Korea CRVS system - and the health care system in Korea; it provides an overview of UHC-related problems from the perspective of three major stakeholders: patients, providers, and government. It presents case studies illustrating how the Korean resident registration number (RRN) system facilitates implementation of UHC in Korea, including three main areas of health service provision (prevention, treatment and management, and health care data usage). It discusses key considerations for UHC implementation using RRNs, focusing on personal information protection and use of health care data in UHC implementation; and, it presents lessons learned and provides a conclusion of the study.
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An asset and liability management framework for managing risks arising from sovereign foreign exchange obligations requires a joint analysis of (i) the external financial liabilities resulting from a country's sovereign debt and (ii) the foreign exchange assets of its central bank.
... See More + Governments often issue sizable amounts of debt denominated in foreign currencies, subjecting their fiscal positions to foreign exchange volatilities. Prudent management of a sovereign’s foreign exchange position under an asset and liability management framework enables governments to mitigate risks at the lowest possible cost, hence increasing resilience to external shocks. Based on the challenges associated with the implementation of an asset and liability management framework, this study recommends a practical approach that includes analysis of the foreign exchange positions of central bank reserves and central government debt portfolios and optimization of the net position. The proposed model is tested, using the foreign exchange reserve and external debt data of seven countries (Albania, Ghana, FYR Macedonia, South Africa, the Republic of Korea, Tunisia, and Uruguay). The paper employs quantitative methods to explore the impact of an overarching asset and liability management strategy and integrated approach on the efficient management of foreign exchange risk. It provides policy recommendations on ways to minimize the risk of foreign exchange mismatches and increase the return on foreign exchange reserves.
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Policy Research Working Paper WPS8728 FEB 05, 2019
The 2018 annual report summarizes country and regional specific operational work support through the Korean trust fund and the Seoul Center for financial sector development.
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Despite a moral argument for the need to embrace refugees and other migrants fleeing dire conditions of war, conflict, violence, oppression, and extreme poverty, large influxes of migrants tend to reinforce alarmists’ calls against labor mobility.
... See More + In this context, the importance of policies to promote the mutual benefits of both sending and receiving nations (that is, co-development) through labor mobility - facilitated by well managed and controlled migration systems - is increasingly recognized. The report outlined in this policy brief recognizes this wide spectrum of migration-related issues and sets them in a clear framework focused on three separate policy objectives: control, co-development, and co-existence. Policies that support control (for example, building walls to prevent illegal entry into a country) should not be mixed with efforts to promote co-existence (for example., measures to provide new migrants with pathways to becoming active members of society, with access to key benefits that will further their productivity). The policy brief highlights the opportunity for bilateral arrangements to support co-development and describes a range of options. The report presents multiple features of the system that can be applied in other contexts, while underscoring Korea’s efforts to strengthen the system and manage the political economy over time.
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The number of individuals who have crossed borders has mushroomed over recent years. The phenomenon of international migration, however, is heterogeneous in terms of the underlying motives and aspirations of migrants.
... See More + Forced international migrants are involuntarily displaced refugees who flee conflict, violence, or persecution across an international border. Voluntary migrants can additionally be classified into two categories: (i) temporary labor migrants who migrate for economic reasons for a fixed duration of time, and (ii) immigrants who move with the intention of changing their country of residence, due to factors such as wanting to reunite with family or to benefit economically. Bilateral labor agreements (BLAs) between sending and receiving countries are institutional tools designed to facilitate migratory flows and maximize the potential benefits of temporary international migration for all concerned. This study focuses on the employment permit system (EPS) in Korea, a temporary migration program for low-skilled workers considered a good global practice among efforts toward the goal of co-development - that is, the mutual benefit of both sending and receiving nations. The EPS has accomplished several remarkable achievements, including a drastic reduction in migrants’ cost burden, enhanced transparency, reduction in the share of workers overstaying, and improved access to worker protection. The process used to match employers and temporary labor migrants also merits significant improvement.
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State-owned enterprises play an important role in economic growth and the delivery of critical public services such as health, education, water, and energy.
... See More + The underperformance of state-owned enterprises can lead to significant challenges in overall national growth and competitiveness and pose a fiscal risk to the government. Consequently, improving the performance of state-owned enterprises remains an important issue for policy makers and development practitioners. More recently, efforts to strengthen corporate governance have been gaining international momentum as a means to improve the performance of state-owned enterprises. This study aims to examine the relationship between corporate governance and the performance of state-owned enterprises. Using data from 320 state-owned enterprises in the Republic of Korea, the study examines the effects of corporate governance on various measures of state-owned enterprise performance, including performance evaluation results, customer satisfaction, and financial performance. The empirical results indicate that board size, corporatization, and transparency and disclosure are positively related to the performance of state-owned enterprises, suggesting that they have an impact on the efficiency of state-owned enterprises. Independence of the board of directors and separation between the positions of board chair and chief executive officer have an insignificant or negative impact on specific measures of performance. These results suggest that a larger board, corporatization of state-owned enterprises, and more transparent disclosure practices can be beneficial for the performance of state-owned enterprises.
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Policy Research Working Paper WPS8555 AUG 16, 2018
Bilateral labor agreements (BLAs) play an important role in facilitating temporary labor mobility across borders, especially for low-skilled workers, and promote mutually beneficial economic gains for all involved - workers and employers as well as sending and receiving countries.
... See More + The employment permit system (EPS) - implemented as a government-to-government BLA - offers a temporary guest worker program hiring low-skilled workers from 16 developing countries through memoranda of understanding. EPS allows Korean domestic employers - small and medium enterprises - to hire temporary foreign workers for low-skilled jobs.
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Bilateral labor agreements (BLAs) play an important role in facilitating temporary labor mobility across borders, especially for low-skilled workers, and promote mutually beneficial economic gains for all involved - workers and employers as well as sending and receiving countries.
... See More + The employment permit system (EPS) - implemented as a government-to-government BLA - offers a temporary guest worker program hiring low-skilled workers from 16 developing countries through memoranda of understanding. EPS allows Korean domestic employers - small and medium enterprises - to hire temporary foreign workers for low-skilled jobs.
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The Republic of Korea achieved universal health coverage in 1989, twelve years after the introduction of mandatory health insurance for employees in large corporations.
... See More + Political legitimization of the authoritarian regime and rapid economic growth contributed to the rapid extension of health coverage. Most health care providers are private. In 2000, all insurance funds were merged into a single insurer, which improved the efficiency of risk pooling and equity in contribution payments. The single insurer system also provided the national health insurance system with the opportunity to strengthen its purchasing function. Nevertheless, the Korean health system faces challenges. Policy priority was given to population coverage, with low contributions and a limited benefits package, which resulted in insufficient financial protection of the insured. The rapid increase in private-sector providers has helped the supply readiness for universal health care, but has also engendered challenges to financial sustainability due to profit-seeking behavior and the overprovision of care, which was further exacerbated by fee-for-service payments. Korea’s health system also needs to be further reoriented to respond to the rapid aging of the population, and to the introduction in 2008 of a new public insurance scheme for long-term care.
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Working Paper (Numbered Series) 122818 JAN 01, 2018
This paper analyzes the Republic of Korea's rapid and sustained growth experience for the past six decades from the perspective of the neoclassical growth model (the workhorse model of the World Bank’s Long Term Growth Model (LTGM) project).
... See More + Overall, the sources of Korea's growth were balanced among labor market and demographic factors, capital investment, human capital accumulation, and productivity growth. However, the main engine of growth evolved sequentially, e.g., labor and human capital factors in the 1960s, capital deepening in the 1970s, and then productivity growth for the following periods. The major sources of sustained growth over six decades were human capital accumulation and productivity growth rather than labor or capital investment. A counterfactual calibration of the model explains Korea's actual growth experience well, and shows why gaps between the model’s predictions and the data arise. This illustrates that an appropriate calibration of a simple neoclassical growth model provides useful lessons and tools for policy makers in developing countries in designing their national development strategies.
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Policy Research Working Paper WPS8240 NOV 09, 2017
Doing Business 2018 is the 15th in a series of annual reports investigating the regulations that enhance business activity and those that constrain it.
... See More + This economy profile presents the Doing Business indicators for Korea. Doing Business presents quantitative indicators on business regulation and the protection of property rights that can be compared across 190 economies; for 2018 Korea ranks 4. Doing Business measures aspects of regulation affecting 11 areas of the life of a business. Ten of these areas are included in this year’s ranking on the ease of doing business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation, which is not included in this year’s ranking. Data in Doing Business 2018 are current as of June 1, 2017. The indicators are used to analyze economic outcomes and identify what reforms of business regulation have worked, where and why.
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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
The 2017 annual report summarizes country and regional specific operational work support through the Korean trust fund and the Seoul Center for financial sector development.
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