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KOICA DEVELOPMENT RESEARCH AWARD 2014-15
 
Working Papers

The GDN-KOICA collaboration provided the winners (early-career developing country researchers) with opportunities to make their winning papers publishable by enhancing their research capacity through technical assistance for the strengthening of their papers. The papers were reviewed by an independent refereeing panel (comprising of two external experts) who gave constructive feedback on the papers. GDN is grateful to the mentors and experts involved in the finalization of the publishable papers. The funding for this collaboration was generously provided by the Korea International Cooperation Agency (KOICA).

Working Paper 1

Lessons for ASEAN Countries Stuck in a “Middle-Income Trap” from Korea’s Economic Development & Institutions

Daniel Kasenda, Indonesia

Abstract

Korea’s rapid transition from low-income status to high-income status in a few short decades is an impressive achievement. Many former low-income countries (LICs) that have transitioned to middle-income countries (MICs) shared similar situations and development patterns with Korea. However, many of these countries have remained mired in MIC status. This paper will analyze this phenomenon, known as the “middle-income trap” (MIT), with particular focus on the select ASEAN countries of Indonesia, Thailand, Malaysia and the Philippines. The paper focuses on governance and institutional quality during each country’s lower and upper middle-income stages, and examines significant differences among the countries. The analysis finds that Korea’s governance and institutional quality excels in many areas compared to the ASEAN countries. The paper then argues that good governance and institutions are essential for promoting effective markets and private sector development, leading to increased productivity, investments and industrialization. Furthermore, the paper observes that improvements in infrastructure, R&D and education have been important drivers enabling Korea’s escape from the MIT.

Working Paper 2

Resources mobilization by Self-Help approach to Rural Development Program in Vietnam: Lessons from Saemaul Undong in Korea

Do Thu Trang, Nguyen Thi My Hanh and Vu Thu Trang, Vietnam

Abstract

Vietnam, which started its “Doi Moi” (economic reform) process in 1986, has experienced high economic growth accompanied by rapid urbanization, but it has also widened the gap between rural and urban areas. The Government of Vietnam’s National Target Program on New Rural Development for 2010-2020 aimed at developing the rural economy and improving living standards of rural people, but after nearly five years the urban-rural gap remains substantial. Two main reasons are the lack of investment capital and lack of effective ways to mobilize community involvement. In contrast, during the 1970s rural areas in Korea experienced huge improvements under the government’s New Village Movement (Saemaul Undong). The program’s success at promoting sustainable development in Korea’s rural areas has inspired rural programs in other developing countries. In this paper, we compare and contrast NRD and SU to explore explanations for the different results in rural area between the two countries. We examine survey results from North and South Vietnam. Based on this analysis, and policy implications stemming from it, we recommend resource mobilization strategies to change villagers’ attitude and increase their involvement in Vietnam’s rural development movement. These recommendations align with the NRD inclusivity principle “people know, people discuss, people do and people check”.

Working Paper 3

Trade and Growth Nexus in South Korea: Analysis Using Vector Error Correction Model and Granger Causality Test

Denu Lemma Tsegaye, Ethiopia

Abstract

This study examines the connection between trade and economic growth in South Korea, where trade has been an important sector of the country’s economy. We reviewed the causal relationships between trade and economic growth by employing the Cobb-Douglas production function under the Vector Error Correction (VEC) model and Granger causality test, using time series data between 1960 and 2010. Accordingly, this study indicates that unidirectional long-run causality exists between exports and economic growth in South Korea, while it is bi-directional for imports. Moreover, this study has found unidirectional short-run causality running from exports and imports to economic growth; validating both Export-Led Growth (ELG) and Import-Led Growth (ILG) hypotheses in South Korea. Overall, the implications from this study are that both exports and imports could play an important role in stimulating economic growth; and that a singular trade policy that accentuates export promotion might have difficulty in sustaining economic growth.

Working Paper 4

Knowledge Economy Gaps, Policy Syndromes and Catch-up Strategies: Fresh South Korean Lessons to Africa

Simplice A. Asongu, Cameroon

Abstract

Africa’s overall knowledge index fell between 2000 and 2009. South Korea’s “economic miracle” was largely due to a knowledge-based development strategy that holds valuable lessons for African countries in their current pursuit towards knowledge economies. Using updated data (1996-2010), this paper presents fresh South Korean lessons to Africa by assessing knowledge economy (KE) gaps, deriving policy syndromes, and providing catch-up strategies. We decompose the 53 peripheral African countries based on several fundamental characteristics: wealth, legal origins, regional proximity, oil-exporting, political stability and state of “landlockedness”. We use the World Bank’s four KE components: education, innovation, information & communication technology (ICT, economic incentives and institutional regime). We employ absolute beta and sigma convergence techniques as empirical strategies. With the exception of ICT, for which “catch-up” is not very apparent, we observe African catch-up by categories (in increasing order) in innovation, economic incentives, education and institutional regime. The speed of catch-up varies between 8.66% and 30.00% per annum with full or 100% catch-up of between 34.64 years and 10 years. Based on the trends and dynamics in KE gaps, we discuss policy syndromes and compelling catch-up strategies. We dissect obstacles to KE in Africa before presenting relevant South Korean solutions.

 
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