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 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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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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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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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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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
