This event is made possible by generous support from the Korea Foundation and other friends of the Korea Program.
Asia has made remarkable progress over the past decades and is now at the forefront of the global economy in growth terms. That said, there are several near-term risks that could derail Asia’s growth momentum, including trade tensions and too-low-for-long global interest rates. In this talk, Changyong Rhee will discuss the Asian economic outlook, focusing on Korea in the context of regional and global challenges.
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Rhee is the Director of the Asia and Pacific Department at the International Monetary Fund (IMF), where he oversees the Fund’s work on the region, including its lending operations and bilateral and multilateral surveillance of economies ranging from China, Japan, and India to the Pacific Islands. Prior to joining the IMF in 2014, Rhee was Chief Economist of the Asian Development Bank (ADB); Secretary General and Sherpa of the Presidential Committee for the 2010 G-20 Seoul Summit; Vice Chairman of the Financial Services Commission (FSC) and Chairman of the Securities and Futures Commission of Korea; professor of economics at Seoul National University and the University of Rochester. He has also been a frequent policy advisor to the government of Korea, including in the Office of the President, the Ministry of Finance and Economy, the Bank of Korea, the Korea Securities Depository, and the Korea Development Institute. Rhee has published widely in the fields of macroeconomics, financial economics, and on the Korean economy. He holds a PhD from Harvard University and an undergraduate honors degree from Seoul National University, both in economics.
Changyong Rhee
<i>Director, Asia and Pacific Department, IMF</i>
Mira Yoo joined the Walter H. Shorenstein Asia-Pacific Research Center (APARC) as a visiting scholar for the winter and spring quarters of 2020 from the Constitutional Court of the Republic of Korea, where she serves as rapporteur judge, as well as director of the Basic Rights Research Team at the Constitutional Court's Research Institute. At APARC, she will be conducting research on Korea's domestic and international political relations, particularly with North Korea, through the lens of Korea's legislation and constitutional adjudication.
On a recent Friday afternoon at Stanford, the weather reminded me of some crisp yet clear winter days in Japan. The sun brightly lit the Falcon Lounge on the 5th floor of Encina Hall as six alumni from the 2014 to 2018 Reischauer Scholars Program (RSP) and Sejong Korean Scholars Program (SKSP) cohorts gathered to celebrate the new year. This annual shinnenkai (literally, “new year gathering,” in Japanese) luncheon offers alumni of SPICE’s pre-collegiate online courses to meet or reconnect over lively conversation and delicious food. For the SPICE instructors, the shinnenkai is often the first time to meet alumni in person.
The RSP is an online course on Japan and U.S.–Japan relations that is offered to U.S. high school students each spring, and will welcome its seventeenth cohort in a few weeks. The SKSP is preparing for its eighth cohort, and offers an intensive online study of Korea and U.S.–Korea relations to U.S. high school students. SPICE also offers a third online course to U.S. high school students on China and U.S.–China relations, the China Scholars Program. The CSP is preparing for its sixth cohort.
One of the attendees, James Noh (RSP ‘16, Stanford University ‘22), reflected on his RSP experience following the shinnenkai: “My RSP experience not only nurtured my interest in East Asia, but also made me realize that I wanted to incorporate my interest in East Asia into both my academic and professional careers. Looking back, I think participating in RSP played an important role in influencing my decision to take a gap year to study Mandarin in China after high school and major in international relations with a focus on East Asia.” During the shinnenkai, it was interesting to hear other alumni share thoughts on how their experiences in the RSP and SKSP helped to prepare them for and also shape their college life. Comments ranged from “informing choices” like class or major selection to “honing skills” like writing research papers.
Through the many years in which SPICE has engaged U.S. high school students in these intensive online courses, we have been fortunate to work with many exceptional students such as James. As the instructor of the RSP, I especially treasure the face-to-face opportunities to meet with alumni of these courses. These opportunities are rare treats given that our courses take place entirely online. The annual shinnenkai is truly a highlight of my year.
Moon Jae-in administration increased South Korea’s minimum wage by nearly 30 percent in 2018 and 2019 under its political slogan of "income-led growth." The idea was that the higher minimum wage would boost low-wage earners’ earnings, thus the income inequality would be reduced while promoting economic growth with increased labor income and expenditure of low-wage workers and their households. This idea was, however, heavily criticized by those who argued that the minimum wage could not be a tool for economic growth and there could be a negative effect on employment.
Lee will discuss empirical findings from his research on the Korean minimum wage including the effect of the recent wage hikes. Using employer-employee matched data and longitudinal data on the universe of establishments, he estimated the effect of the minimum wage on net job growth and tried to decompose the effect into job creation and destruction by existing establishments as well as by establishment entry and exit. He found a significant negative effect of the minimum wage on employment growth; and also that ignoring the minimum wage’s effect on the self-employed could underestimate the adverse effect on total employment. To explain the mechanism, he focuses on the Korean labor market's unique feature—a high share of the self-employed in the workforce and their financial marginality. His findings demonstrate that the minimum wage’s effect and its channels should differ across countries depending on labor market institutions and structure.
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Jungmin Lee is a professor of economics at Seoul National University in Korea, and also a Research Fellow at the Institute for the Study of Labor in Germany and at the Center for Research & Analysis of Migration at University College London in UK. Previously, he was an assistant professor at University of Arkansas and Florida International University, and an associate professor at Sogang University in Korea. His current research focuses on Korean labor market and education policies, interactions between health and labor market outcomes, and North Korean refugees. He has been a member of editorial board of many economics journals in Korea. He was the chief editor for the Korean Journal of Labor Economics and he is currently a Co-Editor for the Korean Economic Review; and was a member of the committee on youth employment of the Korea Tripartite Commission. He has published more than 50 papers in academic journals, mostly about the Korean economy. He received a bachelor’s degree in international economics from Seoul National University and PhD in economics from the University of Texas at Austin.
Jungmin Lee
<i>Professor of Economics, Seoul National University</i>
Using a dynamic microsimulation model, a research team, including APARC Deputy Director and Asia Health Policy Program Director Karen Eggleston, shows that there are differentially positive health gains of smoking reduction among subgroups of smokers in South Korea, Singapore, and the United States.
Tobacco use is responsible for the death of approximately eight million people worldwide, estimates the World Health Organization, and countries are increasingly making tobacco control a priority. Indeed the relationship between smoking and the burden of chronic diseases such as cancer, lung disease, and heart disease, and, in turn, premature mortality, is well documented. Yet little is known about the health effects of smoking interventions among subgroups of smokers.
Do interventions targeted at heavy smokers relative to light smokers lead to disproportionately larger improvements in life expectancy and prevalence of chronic diseases? And how do these effects vary across populations? In today’s rapidly aging world, it is crucial to understand the potential health gains resulting from interventions to reduce smoking, a leading preventable risk factor for healthy aging.
That’s why a research team, including APARC Deputy Director and Asia Health Policy Program Director Karen Eggleston as well as Stanford Health Policy faculty member Jay Bhattacharya, set out to examine the health effects of smoking reduction. To do so, the team simulated an elimination of smoking among subgroups of smokers in South Korea, Singapore, and the United States.
The team’s findings, discussed in a new paper published by the journal Health Economics, show that smoking reduction can achieve significant improvements in lifetime health as measured by survival while also reducing the prevalence of major chronic diseases, though the effects are heterogeneous. Whereas interventions in both subgroups and in all three countries led to an increased life expectancy and decreased prevalence of chronic diseases, the life-extension benefits were greatest – 2.5 to 3.7 years – for those who would otherwise have been heavy smokers, compared with gains of 0.2 to 1.5 years among light smokers.
The team developed a dynamic microsimulation model to estimate the health gains of reducing smoking among heavy smokers and light smokers. Microsimulation models are powerful tools for assessing the value of health promotion: they model individual health trajectories while accounting for competing risks, thus providing valuable information about the impact of interventions and how they may interact with the changing demographics and socioeconomic profile of a population to determine future health. The team’s study applied microsimulation models tailored to the demographic and epidemiological context in the three countries, then compared the gains in survival and reduction in chronic disease prevalence from a given reduction in smoking and how these impacts vary depending on initial smoking intensity.
The team’s findings indicate that there are differentially positive health effects from smoking reduction. The life‐year gain among heavy smokers quitting well exceeds that of light smokers quitting in each country, but the magnitudes differ substantially: 11.2 times for South Korea, 6.8 times for Singapore, and 1.7 times for the United States. The lower life expectancy among Americans is related to the greater extent in which they suffer from risk factors, such as obesity, relative to the Asian counterparts in the study.
The findings illustrate how smoking interventions may have significant economic and social benefits, especially for life extension, that vary across countries. They are particularly important for aging societies that are concerned about the sustainability of their health insurance systems in the face of increasing burden of chronic disease.
Shorenstein APARC's annual overview for academic year 2018-19 is now available.
Learn about the research, events, and publications produced by the Center's programs over the last twelve months. Feature sections look at U.S.-China relations and the diplomatic impasse with North Korea, and summaries of current Center research on the socioeconomic impact of new technologies, the success of Abenomics, South Korean nationalism, and how Southeast Asian countries are navigating U.S.-China competition. Catch up on the Center's policy work, education initiatives, and outreach/events.
The substantial social and economic burden attributable to smoking is well‐known, with heavy smokers at higher risk of chronic disease and premature mortality than light smokers and nonsmokers. In aging societies with high rates of male smoking such as in East Asia, smoking is a leading preventable risk factor for extending lives (including work‐lives) and healthy aging. However, little is known about whether smoking interventions targeted at heavy smokers relative to light smokers lead to disproportionately larger improvements in life expectancy and prevalence of chronic diseases and how the effects vary across populations.
Using a microsimulation model, the authors examine the health effects of smoking reduction by simulating an elimination of smoking among subgroups of smokers in South Korea, Singapore, and the United States. They find that life expectancy would increase by 0.2 to 1.5 years among light smokers and 2.5 to 3.7 years among heavy smokers. Whereas both interventions led to an increased life expectancy and decreased the prevalence of chronic diseases in all three countries, the life‐extension benefits were greatest for those who would otherwise have been heavy smokers. The authors' findings illustrate how smoking interventions may have significant economic and social benefits, especially for life extension, that vary across countries.
U.S.-China relations have evolved from past templates of "responsible stakeholder" and "G2" to new ones emphasizing strategic competition. What is the impact of this competition for broader stability in East Asia? How does the ongoing U.S.-China trade war impact U.S. allies in Asia? In particular, how does strategic competition between these two power affect the choices of key allied states like Korea? Professor Cha will present some research-in-progress on these topics that seeks a broader conceptualization of the costs and benefits behind the latest turn in U.S.-China relations.
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Victor Cha is a 2019-20 Koret Fellow at Stanford's Shorenstein Asia-Pacific Research Center during the winter quarter. He is Vice Dean and holds the D.S. Song-KF Chair in Government and International Relations at Georgetown University, and is also Senior Adviser at the Center for Strategic and International Studies (CSIS) in Washington D.C. He formerly served on the National Security Council staff and as the US Deputy head of delegation for the Six Party talks. Professor Cha received a PhD in political science and a master's in international affairs from Columbia University; an MA in philosophy, politics, and economics from the University of Oxford; and an AB in economics from Columbia University.
Victor Cha
<i>Professor of Government, Georgetown University</i>
The recent escalation of diplomatic and trade disputes between South Korea and Japan has alarmed numerous observers and is rather confusing to many around the world to whom the two countries seem to have much to lose and little to gain by the deterioration of the bilateral relationship. What underlying forces are driving the conflict? Are these new forces, or the same historical forces coming to a head? How much are factors from the international environment, such as the behavior of the United States, influencing the current escalation?
These were some of the questions that took center stage at a recent conference, “Japan and South Korea on the Brink: Escalating Friction Amidst an Uncertain World,” convened jointly by APARC’s Japan Program and Korea Program. The conference brought together experts in the international affairs and trade relations of South Korea, Japan, and the United States to shed light into the current conflict between the two U.S. allies.
In his welcome remarks, APARC Director and Korea Program Director Gi-Wook Shin reminded the audience that Japan and South Korea have experienced tensions over colonial and wartime history and hence, in that sense, the recent conflict is nothing new. In the past, however, the tensions were mostly kept under control because the two countries well understood that it was in their mutual interest to maintain a cooperative relationship and keep history issues separate from other important economic and security issues. Over the past year, however, tensions over history have permeated economic and security issues amid rising nationalism in both countries.
A Problem of Alliance Management
The conference opened with a panel on diplomacy and international relations. Kak-Soo Shin, former Korean ambassador to Japan, situated the current crisis in the context of the regional strategy environment, noting that the Northern triangle – composed of North Korea, China, and Russia – has been gaining influence, while the Southern triangle – composed of South Korea, Japan, and the United States – has weakened. “The souring Japan-Korea relationship is a big blow to the maintenance of the Southern triangle and its ability to cope with the volatile security environment in Northeast Asia,” Shin cautioned.
Hitoshi Tanaka, chairman of the Institute for International Strategy at the Japan Research Institute, ltd., offered an overview of the reasons underlying the escalation in the bilateral relationship between Japan and South Korea, foremost of which, he said, is the declining mutual importance of the two nations to each other vis-à-vis China’s emergence as their largest trade partner. “Unless we feel that the future relationship is essential to both nations there is no way to address the conflict,” he said.
Joseph Yun, former deputy assistant secretary of state for Korea and Japan and former special representative on North Korea, emphasized that Tokyo and Seoul are “eroding the trilateral security arrangement that the United States has led in Northeast Asia since the end of the Second World War” – an arrangement that has been responsible for prosperity throughout Northeast Asia. The root problem, he argued, is alliance management, from which the United States “has been conspicuously absent.”
Watch the panel:
A Conflict in an Age of Changing Global Trade Order
The second panel turned eyes to the trade issues involved in the conflict between Japan and South Korea. Professor Yukiko Fukagawa of the School of Political Science and Economics at Waseda University, an expert in Korean economic development, observed that the friction between the two countries has escalated since 2000, when Korean global businesses like Hyundai and Samsung rose to fame. Since then, she argued, what has happened in Korea is a process of economic nationalism and “Korea seems to find it or interpret it as a kind of transitional justice against Japan.”
Seokyoung Choi, former Korean ambassador to the WTO and UN and former deputy minister for trade, explained the background for the Japan-Korea trade row and each side’s arguments. As a way forward, he said, both countries must consider several important imperatives, including the needs to cooperate in an era of tectonic changes to the global trade order, to address expanding fault lines in East Asia given the spillover effects of the U.S.-China trade war, and to complement for deficits of leadership and trust in Northeast Asia.
Aiko Lane, executive director of the U.S.-Japan Business Council, discussed the main concerns the Japan-Korea friction poses for U.S. businesses, including regulatory uncertainty, supply chain disruptions, and delays in shipment. Further escalation in the relationship, she argued, could potentially inflict long-term damage to the regional ICT and manufacturing industries. Potential impacts include driving costs up for consumers and making it more lucrative for other countries to supply semiconductor materials to Korea.
