Sogang ilas research series on international affairs Volume 9

Volume 9, 2009 ISSN 2093-193XSOGANGIIAS RESEARCH SERIES ON INTERNATIONAL AFFAIRS Regional Integration in Africa: Focusing on External and Internal Constraints Teke Nicolyn Nyinmaah & Ky

Trang 1

Volume 9, 2009 ISSN 2093-193X

SOGANGIIAS RESEARCH SERIES ON

INTERNATIONAL AFFAIRS

Regional Integration in Africa:

Focusing on External and Internal Constraints

Teke Nicolyn Nyinmaah & Kyu Young Lee

Impacts o f Intellectual Property Right Protection

in Foreign Countries on Korea's Exports

Nguyen K Doanh, Yoon Heo c£ Nguyen T Gam

Development and Transformation of the CIA

and American Covert Action:

Comparing the Cold War Era and

Post-911 Period

Sang-eun Lee & Jae Chun Kim

Internal Negotiation o f KORUS FTA: Korean Perspectives

Hong Ryul Lee

Changing Pattern o f Korea-Vietnam Trade Relations

Tran Nhuan Kien & Hong Ryul Lee

Institute o f International and Area Studies

Sogang University

Trang 2

Volume 9, 2009

So g a n g I I A S Re s e a r c h Se r i e s o n

In t e r n a t i o n a l Af f a i r s

C O N T E N T S

Focusing on External and Internal Constraints

Teke Nicolyn Nyinmaah & Kyu Young Lee

Impacts o f Intellectual Property Right Protection 33

in Foreign Countries on Korea’s Exports

Nguyen K Doanh, Yoon Heo & Nguyen T Gam

and American Covert Action:

Comparing the Cold War Era and

Post-911 Period

Sang-eun Lee & Jae Chun Kim

Internal Negotiation of KORUS FTA: Korean Perspectives 131

Hong lfyul Lee

Changing Pattern o f Korea-Vietnam Trade Relations 170

Tran Nhuan Kien & Hong Ryul Lee

Số hóa bởi Trung tâm Học liệu – ĐH TN http://www.lrc-tnu.edu.vn

Trang 3

1 Editor’s Note

It is my great pleasure to present the ninth volume of the Sogang

11AS Research Series on International Affairs, the journal of the Institute

of International and Area Studies (I1AS) o f Sogang University.

The IIAS o f Sogang University has the goal of promoting research

on international issues from diverse perspectives, since it was founded

in 1997 Publishing this journal is one of the major activities of the

IIAS to achieve the goal.

This volume includes five papers written by scholars of diverse fields,

including international trade, international relations, and area studies

This fact is very much consistent with the journal’s policy of promoting

multi-disciplinary international studies Let me briefly summarize the

papers o f this volume.

The paper by Teke Nicolyn Nyinmaah and Kyu Young Lee is titled

as “ Regional I n t e g r a t i o n in Africa: fo c u s.n g on External and Interna,'

„ art,cle deals with the subject o f regional integration Constraints This an

wore regionalorganizations in Africa today that

in Africa There are ww B

i n any other continent and most Africancountries are members o f mote

than one regional integration initiative A t the sam e tim e, it ;s widely

Has these initiatives produced onft limited results so far? Were the

anenges and constraints simply «*> difficu/t? The underlying reasons

Trang 4

for the disappointing record need to be thoroughly examined and

understood if African integration initiatives are to realize their potentials

There has been limited, if any, significant change in the structure of

African economies since independence In order to reap the benefit of

trade, some basic economic fundamentals must first be addressed.

The paper by Nguyen K Doanh, Yoon Heo, and Nguyen T Gam

is titled as “Impacts o f Intellectual Property Right Protection in Foreign

Countries on Korea’s Exports” This paper investigates the impacts of

IPR protection in foreign countries on Korea’s total exports and exports

by commodity Using the modified gravity equation with fixed effects

and random effects models for the panel data, our results are summarized

as follows First, reinforced IPR protection in foreign countries has a

positive effect on Korea’s total exports, indicating the dominance of

market expansion effects Second, stronger protection o f IPRs induces

Korea’s exports to all foreign countries regardless o f their level of

development The effects are stronger in medium-income and high-

income countries, followed by low-income countries where the effect

is not clear Third, Korea tends to export more to countries with strong

imitative ability when the IPR protection in these countries is

strengthened, suggesting the market expansion effects Finally, stronger

protection o f IPRs in foreign countries with weak imitative ability leads

to ambiguous reduction in Korea’s exports, demonstrating no market

power effects Efforts to increase the GDP, improve social infrastructure,

accelerate domestic reforms (openness to trade) and importantly

strengthen IPR protection in foreign countries are suggested as a remedy

Trang 5

for obstacles to Korea’s exports.

The paper titled as “Development and Transformation o f the CIA

and American Covert Action: Comparing the Cold War Era and

Post-911 Period” is coauthored by Sang-eun Lee and Jae Chun Kim

The objective of this paper is to place American covert action in the

context of larger roles that American intelligence community has played

in the post WWII era Among 16 intelligence organizations that make

up American intelligence community, the CIA has been in charge of

American covert action American intelligence activities can be divided

into TECHINT and HUMINT, depending on the means that activities

rely on Covert action is one particular type o f HUMINT, and since

the CIA is in charge o f running American HUMINT, it is also in charge

o f covert action as well The paper also summarizes some of the changes

that the end o f the Cold War has brought about to American intelligence

policies in general and the CIA and covert action in specific The CIA

was going through identity crisis in the wake o f sudden collapse of the

Cold War international order Covert action was no longer thought of

as legitimate foreign policy tool o f the US, because it lost much of its

raison d’etre - exigency o f coping with Soviet communist threat But

911 once again brought the CIA and covert action to the forefront of

US foreign policy making.

The paper by Hong Ryul Lee is titled as “Internal Negotiation of

KORUS FTA Korean Perspective’ The main objective o f this paper

is to analyze internal negotiations o f KORUS FTA in Korean perspective

Trang 6

using Putnam’s two-level game theory and Lohmann and O’Halloran’s

model In the KORUS FTA, the nature o f negotiation issue is

heterogeneous; the reaction o f domestic interest groups is asymmetric;

and the negotiation issue is politicized in Korea President’s leadership

variable is flexible Presidents tend to consider the national interests than

his or her political interests The political leadership o f the presidents

had contributed significantly to the conclusion o f the FTAs The

empirical results in the case o f Korea show that except for inflation,

other independent variables do not have statistical significance The

impact of inflation on the tariff rate shows negative Regarding the effect

o f the President’s party, coefficients indicate that Republican presidents

in Korea tend to decrease the tariffs This effect, however, is not

statistically significant at the 0 to 10 percent level The result o f the

divided government shows that a shift from a unified to divided

government increases the tariff rate However, this impact is not clear,

since it does not have statistical significance at the conventional level

(0- 10%).

The Tran Nhuan Kien and Hong Ryul Lee’s paper “Changing Pattern

o f Korea-Vietnam Trade Relations” analyzes the trends in bilateral trade

between Korea and Vietnam over the past decade and to draw possible

implications for their future trade relations The main findings o f this

paper are as follows First, the commodity trade patterns between Korea

and Vietnam remained virtually unchanged even though the bilateral

trade between the two has expanded significantly over the past decade

Second, there has been a high and growing share o f intermediate goods

Trang 7

in Korean exports and of consumption goods in Korean imports Third,

the technological level embodied in Korea’s exports to Vietnam is much

higher than that of Vietnam’s export to Korea Fourth, Vietnam’s exports

had been less diversified as compared to Korea Fifth, the bilateral trade

between Korea and Vietnam has been less intense than their respective

trade with other countries in the world during the recent years Sixth,

Korea-Vietnam bilateral trade has been mainly inter-industry trade

Seventh, Vietnam enjoyed a comparative advantage mainly in either

primary products or low-technology manufactures while Korea enjoys

a comparative advantage primarily in manufactured products and

machinery and transport equipment The high degree of trade

complementarity between Korea and Vietnam suggests that a free trade

agreement will bring about greater benefits for the two countries.

1 hope this volume will contribute to the advancement of international

and area studies in Korea by facilitating academic discussions Further

1 promise that the IIAS o f Sogang University will make its effort to

increase the number o f articles and improve the qualities of the papers

published in this journal in the next volumes.

Prof Se Young Ahn

Trang 8

Regional Integration in Africa: Focusing on

External and Internal Constraints

Teke Nicolyn Nyinmaah*

Kyu Young Lee**

Abstract

The global trade environment is increasingly characterised by

regional integration agreement Most o f the regional arrangements are

trade focused while others are based on cooperation on a broader range

o f economic and political issues Regional trade agreements are more

complex and comprehensive in their scope, design and depth Despite

this increasing interest in regionalism, there are different viewpoints

on the desirability and design o f agreements for development These

differencesrevolve around two choices: trade focused regional

integration and development-based integration whose objectives are

much broader than trade integration Opponents o f trade focused

integration argue that development objectives sought through trade

integration can be targeted more directly by focusing on a broader

set o f economic 'fundamentals' and that static welfare gains from

regional trade integration are typically modest The performance of

* Ph D Candidate at Graduate School o f International Studies Sogang University

** Professor at Graduate School o f Intematinal Studies Sogang University

Trang 9

trade focused regional integration in developing countries has been

dismal and the trade specific objectives o f RTAs are best achieved

through multilateral (WTO) agreements, which are considered more

welfare enhancing than RTAs Proponents counter that broad-based

regional integration agreements tend to lack commitment, policy

harmonization and the inability to catalyze trade liberalization needed

to assure private investors It has been argued that this partly accounts

for the continued existence o f overlapping memberships in numerous

regional agreements especially in Africa and their historically dismal

performance There are more regional organizations in Africa today

than in any other continent and most African countries are members

o f more than one regional integration initiative At the same time,

it is widely recognized that many initiatives have not live up to

expectations Why has these initiatives produced only limited results

so far? Were the challenges and constraints simply too difficult? The

underlying reasons for the disappointing record need to be thoroughly

examined and understood if African integration initiatives are to realize

their potentials There has been limited, if any, significant change in

the structure o f African economies since independence In order to

reap the benefit o f trade, some basic economic fundamentals must fust

Trang 10

It has been widely acknowledged that African regional integration has

bore little fruits despite all the integration initiatives that have been put

forward Decades after independence, African countries continueto

grapple with seemingly intractable developmental challenges.1 According

to Qobo Mzukisi earlier strategies, including import substitution

industrialization (ISI) and structural adjustment programmes (SAPs),

failed to reverse Africa’s declining economic fortunes Against a

background o f precarious dependence on the international market and

general developmental malaise, regional integration is widely accepted

as the roadmap to Africa’s development.2 In recent decades, the urgency

for regional integration has been underscored by a conjuncture of external

1 Africa is not a country, as such the different countries had different dates in the

attainment o f independence as follows; 1847-Liberia; 1951-Eygpt; 1956-Sudan, Tunisia

& Morocco; 1957-Ghana; 1958-Guinea; 1960- Chad, Benin, Nigeria, Ivory Coast,

Madagascar, Central African Republic, Mali, Niger, Senegal, Burkina Faso, Mauritania,

Togo, Zaire Somalia, Congo Gabon, Cameroon; 1961-Sierra Leone, South Africa

(recognized as the Republic o f South Africa, the indigenous people (Black Africans),

were living under apartheid, and thus not truly independent); 1962-Algeria, Burundi,

Rwanda, Uganda; 1963-Kenya Tanzania; 1964-Malawi, Zambia; 1965-Gambia; 1966-

Bostwana, Lesotho: 1968-Equatorial Guinea Mauritius, Swaziland; 1969-Guinea- Bissau

Libya; 1975-Angola Cape Verde Comoros Mozambique Sao Tome; 1976-Seychelles:

1977-Djibouti; 1980-Zimbabwe; 1990-Namibia; 1994- Indige-nous Black Africans free

from apartheid in South Africa http://www ipoaa.com/african_independence.htm( Search

date: 20.01.2010)

2 Qobo Mzukisi, The challenges o f regional integration in Africa In the context o f

globalization and the prospects fo r a United States o f Africa Institute for Security Studies

ISS Paper 145 (Johannesburg June 2007) pp 1-3 http://www.issafrica.org/dvnamic/

administration/file_manager/file_links/PAPER145H.pdf?link_id=&slink_id=4674&link_t

ype=&slink type=13&tmpl_id=3 (Search date: 03.30.2009).

Trang 11

Teke Nicofyn Nymmaah / Kyu Young Lee

and internal factors The end of the cold war and the acceleration of

the globalization process, along with Africa’s risk of further

marginalization in a multi-polar world dominated by trading blocs in

North America, Europe and South-East Asia, have presented regional

integration as an imperative These external pressures are augmented at

the regional level by Africa’s fragmentation, the ubiquity of poverty,

the prevalence o f conflicts and the disconcerting asymmetry in the

economic power relations between Africa and its northemtrading

partners On the global level, the multilateral trading system has been

extended to new issues such as competition, intellectual property rights,

non-tariff barriers, and investments which have been strengthened by

the establishment o f the World Trade Organization The international

structure is becoming more diverse with a mix o f countries and groups

at various stages o f integration In the quest to regionalize, Africa is

faced with dilemmas relating to how regionalism has to be achieved

The first is the approach to integration: whether integration should follow

an introverted state-led or an extroverted market-based approach The

second is the sequence o f integration: whether economic integration

should precede political union or vice versa, or whether these two

processes should be pursued simultaneously A third option should be

considered, social and cultural integration African development requires

a model o f integration that will ensure maximum mobilization o f regional

resources while minimizing external dependence With the slow gains

o f integration in Africa, it necessitates the following questions: Why

deepening integration has been slow? What are the constraints on

economic integration-extemally and internally? And what needs to be

Trang 12

done to push forward real economic integration and trade in Africa?

The answers to these questions are not only relevant but urgent as the

progress o f regional and global integration is necessary to address the

key challenges o f poverty and development in Africa Policies and

institutions constitute the back bone o f any regional integration initiative

As Oakerson and Scheider put it, regional institutions and policies are

important in defining the issues, mobilizing resources, providing

differential access, mediating interests and in implementing policies.3

Regional integration occurs naturally, albeit very unevenly, during the

course o f the development o f private markets “Natural” market

integration is a process characterized by progressive convergence of

economic and social parameters between locals and regions and

increasing degrees o f interdependence Regional integration can also be

driven by policy-induced regional cooperation, or regionalism.4 Regional

Cooperation between two or more countries can also take place without

pretensions o f regional integration.5 Functional regional cooperation

involves an adjustment o f policies and activities between countries to

3 Roger B Parks and Ronald J Oakerson "Regionalism, localism and metropolitan

governance; suggestion from the research program on local public economics." Stale and

Local Government Re\iem; Vol 32 No 5 (2000), pp 169-79 quoted in Michael Keating

and John Loughlin (eds.) The Political Economy o f Regionalism (London: Frank Cass

1997), pp 34-35.

4 Robert Delvin and Lucto Castro "Regional Banks and Regionalism a ne*\ frontier

fo r developing financing " Presented at the conference on Financing for Development:

Regional Challenges and the Regional Development Banks, Institute for International

Economics (Washington D.C: February 19 2002), p 1 www.iie.com(Search date: 04.

05.2009).

5 B Balassa, “Towards a theory o f economic integration,” Kyi os Vol 16, No 35 (1961)

Trang 13

Teke Nicolyn Nyinmaah / Kyu Young Lee

achieve outcomes that the parties prefer to the status quo Mutually

beneficial functional regional cooperation is possible in practically any

field o f public policy, ranging from security matters to economic,

environment, disaster management, epidemiological issues, etc While

functional regional cooperation can and does emerge independently of

formal integration processes, it also can constitute a parallel track to

a formal regional integration process, or through time contribute to the

emergence o f such a formal process Regional integration in Africa is

not a new phenomenon Regional integration talks in Africa date as far

back as the 1910s with the establishment o f the South African Customs

Union (SACU) in southern Africa Some 50 years later, the regional

integration scheme was undertaken on a continental level through the

adoption o f the OAU Charter and its establishment Following the

establishment o f the OAU, different initiatives were made to further the

efforts o f integration, among which the Lagos Plan o f Action is taken

as a landmark.6 The essence o f the LPA was the establishment of a

Common Market for Africa In line with this, heads of state signed the

treaty establishing the African Economic Community (AEC) in June

1991 The most recent African plan for economic integration and

development is the New Partnership for Africa’s Development (NEPAD)

The market creation effect, which will also attract investment around

the world and improve competition, is among the advantages o f regional

integration African countries represent small markets, which make their

participation in the international trade less meaningful, this necessitates

“ United Nations Economic Commission for Africa; Lagos Plan o f Action Document

www.uneca.org/adfiii/riefforts/ref'other2.htm(Search Date: 04.20.2009)

Trang 14

the formation o f regional blocks Apart from the continent-wide

movement, there are many overlapping regional blocks within the

continent Despite the existence o f many regional integration schemes,

Africa has not yet reaped the fruits of integration like its model, the

EU.

In the 1990s, a different framework of regionalism emerged Though

not strictly with a security function, it promises to go beyond the

nation-state and to enable state to overcome the security dilemma

associated with it.7 This conception of regionalism found its most

sophisticated expression in regional integration theory, an intellectual

high point o f post-liberal institutionalism The sovereignty-eroding

potential o f this form o f regionalism was captured from a neo

functionalist standpoint by Ernst Haas, who defined integration as ‘a

process whereby political actors in several distinct national settings are

persuaded to shift their loyalties, expectations and political activities

towards a new center, whose institutions possess or demand jurisdiction

over the pre-existing national states’.8 The new regionalism o f the 1990s

was led by trade agreements with objectives o f creating free trade areas

or common markets The policy framework encircling the “old" post-war

regionalism in developing countries involved an inward-looking and

protectionist/state-led import substitution strategy (often in the context

o f authoritarian regimes) Meanwhile, the new regionalism is inserted

7 Amitav Acharya "Regionalism and the emerging world order: Sovereignty Autonomy

Identity," Schaun, Breslin et al (eds.), New Regionalism in the Global Political Econorm-

(London: Routledge, 2002) pp 20-32.

8 Emst Hass "The challenges o f Regionalism," International Organization, Vol 12 No.

Trang 15

into a framework o f policy reform that promotes open and competitive

private market-based economies in a modem democratic institutional

setting “New” regionalism in Africa can be seen in the evolution of

a security based OAU to a more open and trade focused African Union,

which promises more trade and development than its predecessor

initiative The ultimate goal o f regional integration is to merge some

or all aspects o f economies concerned This usually evolves from simple

cooperation on and coordination o f mutually accepted aspects amongst

a given number o f countries to full integration or merger of the

economies in question.9 The history o f regional integration in Africa

shows that the reasons or objectives for integrating have beenchanging

over time They have shifted from the initial focus on the political

decolonization o f Africa to the current emphasis on socio-economic

integration Africa is also in the struggle to increase growth and

development and to foster a stronger bargaining power in post

independent era Economic integration is one of the main development

paths chosen for development in Africa Trade liberalization is the

clearest link to the structural reform process in the enhancement of

commitments to trade liberalization, which has been a central feature

o f many developing countries’ development strategy Institutional

modernization is also an objective o f new regionalism Regional trade

agreements, especially those with deep objectives, or the so-called

“second generation” free trade areas which go beyond traditional market

9 Mothae Maruping “Challenges for Regional Integration in Sub-Saharan Africa:

Macroeconomic Convergence and Monetary Coordination.” Jan Joost Teunissen and Age

Akkerman (eds ), Diversity in Development: reconsidering the Washington Consensus

(Seoul: KJEP, 2006), pp 130-131.

Trang 16

access in goods, encourage modernization of institutions and through

regional competition.10 Export growth and diversification reciprocal opening,

guarantees o f market access, preferences, provide new opportunities for

export and diversification Regional markets also serve as an outlet to

an important array o f products like textiles, dairy, meat, food processing,

which confront very high levels o f international protection Geopolitics

also describes an objective o f new regionalism A group o f like-minded

countries can use their regional scheme to, among other things, establish

a security network for fragile democracies, promote disarmament and

peace among neighbors, and enhance bargaining power in international

fora Integration in Africa will overcome economic fragmentation by

reducing the smallness o f borders and land-locked nations According

to the theory o f functionalism and neo functionalism, a spill-over effect

from economic integration could affect other areas o f policy It is in

line with this that one can claim that a more integrated Africa will

promote peace and security which is essential for trade and development

to occur.

2 Constraints to A frican regional integration

There is no doubt that regional integration and development in Africa

has beenthe most disappointing amongst regional arrangements around

the world in attaining its objectives The reasons for this run the gamut

10 Yongzheng Yang and Sanjeev Gupta "Regional Trade Arrangement in Africa Past

performance and the way forward, " IMF working paper 05/36, IMF, Washington DC,

2005 www.imf.org/extemal/pubs/cat/longres.cfm?sk=1797!.0 (Search date: 05 15.2009).

Trang 17

from political, economical and at times geographically The first Lome

convention signed on the 28th February 1975 between the nine member

states o f the European Economic Community and 45 African, Caribbean

and Pacific states (ACPs) was hailed as a significant achievement and

a new direction in the history o f international economic relations At

its inception, a number o f African nationalist leaders, such as Nkwame

Nkrumah o f Ghana, were already warning against the dangers of Africa’s

association with Europe under the prevailing circumstances.11 They were

o f the opinion that the association was deeply flawed because of the

inequality o f the partnership between Europe and Africa and warned

that it was detrimental to the African strategy of economic independence

and self-sustained development After 25 years o f being the largest aid

and trade agreement between developed and developing countries, the

Lome Conventions expired in February 2000 Viewed by many as ‘a

welcome development’, ‘a natural step in the process of decolonization',

the Lome failed to live up to its expectations.12 In evaluating the EU’s

contribution to North-South relations, it is impossible not to notice that

the EU’s share o f world trade improved drastically from 7% in 1970

to 25% by the late 1990s (excluding internal EU trade) This has

expanded primarily at the expense o f less-developed countries.13 A case

in point is the damage on poorer countries by the Common Agricultural

11 S Siri, “ECC’s brand o f Neo-colonialism,” Economic and Political Weekly- Vol 14

No 2 (1979), p 693.

12 William Zartman, The Politics o f Trade Negotiation between Africa and the EE

(Princeton University Press, 1971), pp 43-50.

13 J Peterson and E Bomberg External Trade Policy: Decision-making in the European

Trang 18

Policy (CAP).14 Besides, the Lome agreement did little by itself to

alleviate grinding poverty in Africa The Stabilization of Export Earnings

(STABEX)15 regime supported the exploitation and trade o f raw

materials rather than financing industrialization through the Lome’s aid

provisions.16 Historical structuralist viewed the STABEX system as a

mechanism for ensuring that ACP countries continue to supply Europe

with cocoa, coffee and other raw materials than an intervention project

to make trade in raw materials sustainable for ACP countries.17 The

Loméconvention was seen as a detriment to African regional integration

Shaw and Aluko argued that the maintenance of ‘vertical’ ties to Europe

inhibited the forging o f ‘horizontal’ cooperation in Africa As such, it

is claimed that attempts at African regional integration in the likes of

the Lagos Plan o f Action were thwarted by the preponderance of

‘extroverted’ links to Europe.18

Post World War II development has been different between the Asian,

Latin American and African regions Although there have been some

significant improvements in Latin America, the standard o f living of

the majority o f people just like in Africa has significantly regressed

In 1990, John Williamson codified the praise for East Asian economy

14 Ibid

15 Martin Guy, " The political economy o f African - European relations from Yaounde

I to Lome 11, 1963-1980: a case study in neo-colonialism and dependency, " Diss Indiana

University, 1982, pp 299-335.

16 William Brown, The European Union and Africa: the restructuring o f North-South

Relations (London: I B Tauris Publishers, 2002), pp.8-9.

17 John Ravenhill Collective Clientelism: The Lome Conventions and North - South

Relation (New York: Columbia University Press, 1983), pp 36-50.

18 Timothy M Shaw and O Aluko (eds), Africa Projected: From Dependence to

Self-Reliance by the Year 2000? (London: Macmillan 1985), pp 112-130.

Trang 19

management into what is known today as the Washington consensus.19

The Washington Consensus advocated fiscal discipline, redirection of

public expenditure, tax reform, interest rate liberalization, competitive

exchange rate, and trade liberalization, liberalization o f inflows of direct

foreign investment, privatization, deregulation, and secure property

right.20 These policies were very much supported by US government

and by the International Monetary Fund (IMF) and World Bank as the

solution to economic problems faced by developing countries Other

critics sum up the Washington Consensus as an economic programme

focused myopically on short and medium-term stabilization of output,

prices and the balance o f payments and not on long-term sustained

growth, particularly in the poorest countries The one “size-fits-all” type

o f economic policies falls short to improve development in African

countries Chang saw this approach as “kicking away the ladder” He

argues that the UK and the USA were the first countries to build their

economy on protectionism, like almost all the rest o f the developed world

today used tariffs, subsidies and other means to promote their industries

in the earlier stages o f their development Cases like Germany, Japan,

and Korea are well known in this respect As such, he proposes that

the WTO rules should be re-written so that the developing countries

can more actively use tariffs and subsidies for industrial development.21

19 John Williamson “The Washington Consensus as policy prescription for development.'

A lecture in the series Practitioners o f development delivered at the World Bank January

13, 2004 Jan Joost Teunissen and Age Akkerman (eds.), op Cit pp 215-222.

20 Wing Thye Woo: Serious inadequacies o f the Washingon Consensus: Misunderstanding

the poor by the Brightest in Jan Joost Teunissen and Age AJdterman (eds ) op a t pp

9-15.

21 Ha-Joon Chang “Kicking away the ladder-Development Strategy in Historical

Trang 20

Africa alone harbors more than 10 regional trade arrangements many

o f them are part o f the overall deeper regional integration initiative The

United Nations Economic Commission for Africa notes that one o f the

problems that have impeded the integration progress in Africa is the

creation o f numeious regional economic communities (REC) that has

overlapping memberships with other communities It describes a form

of ‘spaghetti bowl’ economic arrangement in Africa which lack

adherence to the implementation o f its programmes but that also have

insufficient technical capacity, divergent and unstable macroeconomic

policies and lack the link with the general African economic community

The over supply o f regional initiatives is counter intuitive to the precepts

o f functionalism and neo-functionalism theory One could expect that

the interrelatedness between the regional groupings will lead to an even

deepen community This is not the case in Africa The different regions

and countries in Africa pursue the goals o f integration from the point

of view' o f narrow economic interests, rather than being part o f a broader

and single vision towards continental unity.

The ARIA II (2006) report stipulates that true integration cannot take

place unless the economies o f participating countries in an integration

area deal with economic shocks harmoniously.22 As a result, assessing

the presence o f shock evenness and synchronicity o f business cycles can

Perspective," Post-autistic economic review Sept 4th 2002 Issue No 15 Art 3, wwvv

btintemet com/~pae_ne ws/re vie w/issue/15 hhtm( Search date: 04.27.2009)

22 UNECA; ARIA II op cit., pp 109-115.Assessing Regional Integration in Africa III:

Towards Monetary and Financial Integration in Africa Economic Commission for Africa

July 2008 Addis Ababa, Ethiopia Retrieved on June 12, 2009 from: http://www.uneca.org

aria/aria3/index htm

Trang 21

provide useful evidence o f the potential for deeper integration in a given

REC Stable macroeconomic coordination helps increase growth, trade

and investments, macroeconomic stability and monetary integration is

crucial for Africa’s integration efforts At the core o f these efforts are

prudent fiscal, monetary, exchange rate and debt policies pursued at the

national level and harmonized at the regional and continental levels.23

Cooperating in the area o f macro economic policy also is difficult, but

increasingly necessary where partners have attained a significant degree

o f economic interdependence through trade, investment and risks of

financial contagion.

There is an intense debate about the weight attached to the various

factors that have stalled development in Africa Emphasis is given to

the economic development paradigm chosen by African elites, which

pundits have claimed has been the most debilitating factor to Africa’s

development and integration Several years after independence, African

countries are still struggling to improve its economies and ensure

sustainable development Earlier strategies including imports substitution

industrialization (ISI), structural adjustment programmes (SAPs), Lome

conventions have failed to reverse Africa’s declining economic fortunes

Rapid import liberalization imposed on underdeveloped countries via

structural adjustment programmes has more often than not intensified

poverty and inequality The characteristics of Africa’s post-independence

development is summed up by Ayittey who calls it 'one giant false start ',

characterized by a wrong political system (one-party states); a wrong

economic system (statism); a wrong ideology (socialism); and a wrong

Trang 22

growth path (industrialization through import substitution).24 With the

present situation in Africa, there is a call for new approaches to

development.

A large body o f literature on economic integration has its roots in

some works at the beginning o f the European Community.25 Primarily

concerned with the economic effects o f trade liberalization among a

group o f countries, the political aspects were not explored in details,

though it was recognized that the effects of tariff reductions and complete

liberalization on government revenue and the welfare effect on different

sectors o f an economy has clear political implications.26 Regional

economic integration as stated before involves a series o f cooperative

efforts from free trade area, customs union, common market and

economic community Regional integration in Africa is hard to define

Strands such as ‘developmental regionalism’ and ‘open regionalism’

outlined fail to capture theoretically what obtains in the continent’s

interstate relations.27 Succinctly summarized by De Melo and Panagariya,

regional integration among developing countries in the 1960s “was a

failure, both in terms o f implementation and in terms o f the stated

objectives o f accelerating the pace o f industrialization by raising

"4 Qobo Mzukisi op c i t p 5

25 B Balassa and A Stoutjesdijk "Economic Integration among Developing Countries."

Journal o f Common Marker Studies Vol 14 No 4 (1976), pp 37-55.

26 Mary FaiTell, “From EU Model to Policy: the external promotion o f regional

integration." 2004 http:' Www.princeton.edu/~smeunier/Farrell%20Memo.pdf (Search

date: 06.30.2009).

27 Louise Fawcett "Regionalism in Historical Perspective.” L Fawcett and A HurTell

(eds.) Regionalism in World Politics: Regional Organization and International Order

(Oxford: Oxford University Press 1995) pp 9-36

Trang 23

intraregional trade”.28 The dismal outcome o f Africa’s initial efforts to

integrate can be attributed to the low level o f structural complementarity

o f the economies This, in turn, has inhibited expansion in production

and opportunities for trade creation and led to unmet expectations about

gains from integration African policy makers need to go back to the

basics, forming and implementing policies propped by the right

institutions in order to improve Africa’s lot Africa has abundant arable

land and labor which, with sound policies; this could be translated into

increased production, incomes and food security This has not

materialized because o f lack o f consistent policies and/or effective

implementation strategies Thus, despite agriculture accounting for 70

per cent o f the labour force, over 25 per cent of GDP and 20 per cent

o f agribusinesses in most countries, it continues to be given low

priority.29 Agriculture also has a high multiplier effect, which means

that agricultural investment can generate high economic and social

returns and enhance economic diversification as well as social

development Africa imports 50% o f its food at a cost of approximately

$18bn every year The existing infrastructure is therefore handling some

18 million tonnes o f food imports When seen against the backdrop that

80% o f Africa’s exports leave through ports, a focus on improving port

2* Ja]me De Melo and Arvind Panagariya (eds.), “New Dimensions in Regional

Integration; and introduction.” Jaime De Melo and Arvind Panagariya (eds ) New

Dimensions in Regional Integration (Cambridge: Cambridge University Press 1993) p

247

29 Economic Report on Africa (ERA) “African Union Developing African Agriculture

through Regional Value Chains, United Nations Economic Commission for Africa." Addis

Ababa, April 2009, http://www.un.un.org/regionaJcominissions/crisis/ecaera09.pdf I Search

Trang 24

facilities would create substantial incomes as well as employment

Similarly, food security would save Africa billions o f dollars annually

which could be invested in other sectors.30

The small size and primary production structure of the typical African

economy provided the rationale for pursuing mutually beneficial

economic cooperation and regional integration particularly among

adjacent states In order to fully transform Africa, a regional social policy

backed by resources has to be put in place Regional social policies will

play an important role in creating parity between the poorest countries

in Africa and the few ‘rich’ones Social policy is defined as the provision

o f social services such as education, health, employment, social security,

housingand utilities like water Social policy is also about redistribution,

social justice and the regulation o f market institutions and social

structures to alter the unequal distributive outcomes o f economic

activity.31 The regional social policy will be able to address issues that

benefit from intergovernmental cross-border cooperation on the

following areas; regional social redistribution ranging from intra-regional

transfers and development aid which can be used to target depressed

areas or redress inequalities It can also foster regional regulations on

health and labour standards to combat intra-regional ‘race to the

bottom'as well as the regulation o f private social services and utilities

30 Report o f the Workshop on Meeting the Challenges o f Regional Integration

Intra-African Trade and Economic Growth in Africa Hotel Intercontinental Nairobi Kenya

January 31 - February 1, 2007, pp 15-25, http://siteresources.worldbank.org/EXTPAR

TNERSHIPS/Resources/PolicyWorkshopReport.pdf (Search date: 07.10.2009).

31 Bob Deacon et al., "Regional Social Policy." UN Department of Economic and Social

Affairs Working-Paper N 37ST/ESA/2007/DWP/37 (2007), pp 17-20, www.un.org

esa.desa/papers/2007/wp37_/2007.pdf (Search date: 06.30.2009).

Trang 25

such as water and electricity There is a lesson to be learned from the

EU The emphasis on cohesion was in part a policy to develop the EU

internal market As such the EU set a range of policy instruments, known

collectively as Structural Funds which directs transfers from wealthy to

poor regions, designed to assist lagging areas to build infrastructure,

human capital and create jobs.32 Unlike the EU, the African Union which

is the overarching organization amongst the numerous regional economic

communities in Africa lacks the capacity to finance and implement

regional social policies The combination o f sound policies, resources,

and strong institutions with high managerial skills is needed bolster

regional integration in Africa Countries participating in an economic

integration initiative can reap significant benefits when the governments

implement market-friendly domestic policies to promote investment,

growth and trade In such an initiative, regional trade and infrastructural

policies form the underpinnings for success On the other hand,

conflicting policies without aclear implementation process will lead to

a break down o f economic integration, which has been the case in the

integration process in Africa Prestowitz posit that regionalism serve as

a second best route to establish trade linkages in Africa, both internally

and externally.33 Interdependency needs to be encouraged in Africa,

without this, plausible policy regimes will be hard to define.

The EU operates at various levels that link the sub-national, the

national and the supranational with an institutional framework which

32 Ibid.

33 Clyde V Jr Prestowitz, et al., “The last Gasp o f Gattism,” Harvard Business Rene»

Trang 26

includes the European Commission, the European Parliament European

Court o f Justice, The European Council and a whole array o f policies

that are implemented by the member states The coordination of the

European Commission is vital and it plays a leadership role in initiating

new policy initiatives.34 The European Union is a case in the historical

institutionalist approach which presents a complex dynamics at play

presentation multi-levels o f analysis The EU has been a great influence

on the integration process in Africa Africa has followed an institution-

driven approach to regional integration, based on formal regional

agreements and institutions for guiding and monitoring regional

integration efforts.35 With the aim o f creating larger regional markets,

increase the scope for exploiting economies o f scale, continental peace

and security and stimulating domestic and foreign investment, the

Constitutive Act o f the African Union proposes a whole array of

institutions namely; court, parliament, commission, council, economic

and social committee.36 The difference is that unlike the EU these

institutions lack independent decision-making capacities as such are at

the whims and caprices o f political leaders Nevertheless, some

institutions are necessary to encourage the process o f a deepening

integration which may eventually create the neo-functionalist ‘spillover’

effect There is no argument that research is an integral part of

54 Mary Farrell, op dr p 99.

5' Anupam Basu "The Challenges o f Regional Integration in Africa and Policy Options."

Africa emerging market forum 2008 p 8 http://-www.emergingmarketsforum.org papervpdf

2008%20EMF0o20Morocco0o20Basu°o20Regional%201ntcgration.pdf (Search date: 05.

27.2009).

African Union http:/'www.afnca-union.org/root/au/AboutAu/au in_a_nutshell_en.htm

Trang 27

Teke Nicolyn Nyinmaah / Kyu Young Lee

development Policy research will be a potential area that will encourage

development and integration in Africa For instance, not all countries

can develop expensive high quality universities and research centres

There is a major argument for uniting forces across regions and agreeing

to create regional research and training centres In the area o f research,

regional research institutions have emerged as centres o f excellence for

fostering and supporting quality research through a network o f national

research institutions in fields such as economics and agriculture.

Ayittey observes that ‘the absence o f independent central banks means

that monetary policies are subjected to the fiscal whims o f central

government’.37 The advantage o f an independent central bank is

transparency, predictability and accountability in monetary policy This

lends credibility to the economy and insulates monetary policy especially

interest rates, from being manipulated by politicians for short-term gains

Regional development banks with an independent decision making

capacity will be able to implement programmes that will reduce the

shifting nature o f member states central banks This will pose a challenge

arising from informational asymmetries and political, institutional

limitations on establishing certainty regarding commitments but it will

be a functional cooperative effort in a bid to develop regional public

goods With a regional development bank, the RECs economic and trade

policies will be accorded more credibility and encourage both domestic

and foreign investment The African Union- the umbrella organization

o f the African continent evolved from the Organization o f African Unity

37 George N B Ayittey Africa Unchained: the blueprint fo r Africa 's Futun\ i Basingstoke

Palgrave 2005), p 142.

Trang 28

(OAU) The OAU was established in 1963 with the main objectives

inter alia, to rid the continent o f the remaining vestiges o f colonization

and apartheid; to promote unity and solidarity among African States;

to coordinate and intensify cooperation for development; to safeguard

the sovereignty and territorial integrity of member states and to promote

international cooperation within the framework o f the United Nations

Unlike the OAU, the AU’s principal aim is the promotion of accelerated

socio-economic integration o f the continent, which will lead to greater

unity and solidarity between African countries and peoples The AU is

based on the common vision o f a united and strong Africa and on the

need to build a partnership between governments and all segments of

civil society, in particular women, youth and the private sector, in order

to strengthen solidarity and cohesion amongst the peoples of Africa As

a continental organization it focuses on the promotion of peace, security

and stability on the continent as a prerequisite for the implementation

o f the development and integration agenda o f the Union.

3 Conclusions

Regional institutions are important in defining the issues, in mobilizing

resources, in providing differential access, in mediating interests and in

implementing policy.38 Historical institutionalism argues that there are

long-term and pervasive effects o f institutional choices Granted that the

EU provides a good example o f integration, their linear form of

,K Michael Keating and John Loughlin (eds.) The Political Economy o f Regionalism

(London: Frank Cass 1997) p 35.

Trang 29

integration should not be adopted by Africa even though it is an attractiv*

option, it is not necessarily in accord with developmental challenges ii

Africa Institutions in Africa are generally weaken by the fact that the)

do not have independent decision-making capacities and as such fail t<

make an impact in the development and integration efforts At

investment in institutions such as research institutes which cannot b(

easily influenced is a positive step towards supranationalism Regiona

policies should define integration in terms o f the developmenta

challenges and encourage a collective improvement o f life in Africa

State-led integration has been a massive failure in Africa Attempts a

inducing deeper integration by doubling the numbers o f regiona

arrangement has been counter intuitive and has not brought about th<

necessary closeness which encourages trade and deeper integration A1

is not lost Societies over history have been built and strengthen ove

time as attested by historical institutionism In light with this, thi

regionalization dialogue should be opened to other actors in Africa sucl

as the private sector and the civil society This form o f social integratioi

may have a necessary spill-over effect which can bring about positivi

steps towards the creation o f an African Economic Community.

Trang 30

<R eferences>

African Union, http://www.africa-union.org/root/au/AboutAu/au_in_a_

nutshell_en.htm (Search date: 06.23.2009).

Acharya, Amitav “Regionalism and the emerging world order:

Sovereignty, autonomy, identity.” Schaun, Breslin et al (eds)

New Regionalism in the Global Political Economy London:

Routledge, 2002 pp 20-32.

Ayittey, George N.B Africa Unchained: the blueprint fo r Africa’s Future

Basingstoke: Palgrave, 2005.

Balassa B and Stoutjesdijk A “Economic Integration among Developing

Countries.” Journal o f Common Market Studies, Vol 14, No 4,

(1976), pp 37-55.

Basu, Anupam “The Challenges of Regional Integration in Africa and

Policy Options." Africa emerging market forum 2008 p 12

www.emergingmarketsforum.org/papers/pdf/2008%20EMF%20M

orocco%20Basu%20Regional%201ntegration.pdf (Search date: 05

27.2009).

Chang Ha-Joon “Kicking away the ladder-Development Strategy in

Historical Perspective” Post-autistic economic review Sept 4lh

2002 Issue No 15, Art 3, www.btintemet.com/~pae_news/review

/issuel5.htm (Search date: 04.27.2009).

Deacon Bob et al “Regional Social Policy,” UN Department of Economic

and Social Affairs (UNDESA), Working Paper N 37ST/ESA

/2007/DWP/37 (2007), pp 17-20, www.un.org/esa.desa/papers/

2007/wp37_/2007/pdf (Search date: 06.30.2009).

Trang 31

Teke Nicolyn Nyinmaah / Kvv Young Lee

De Melo, Jaime, et al Regional Integration, Old and New World Bank

Policy Research Working Paper No.WPS985 Washington: World

Bank, 1992.

Delvin, Robert and Castro, Lucio "Regional Banks and Regionalism:

a new frontier fo r developing financing, " Prepare for a conference

on Financing for Development: Regional Challenges and the

Regional Development Banks, Institute for International Economics,

Washington DC: February 19, 2002, pp 1-20, www.iie.com (Search

date: 04.05.2009).

Economic Report on Africa (ERA), “African Union Developing African

Agriculture through Regional Value Chains, United Nations

Economic Commission for Africa.” http://www.un.org/regional

commissions/crisis/ecaera09.pdf (Search date: 07.08.2009).

Farrell, Mary et al (eds.) Global Politics o f Regionalism: Theory and

Practice London: Pluto Press, 2005.

Farrell, Mary “From EU Model to Policy? The external promotion of

regional integration,” 2004, http://www.princeton.edu/~smeunier

/Farrell%20Memo.pdf (Search date: 06.30.2009).

Haas, Ernst “The challenges o f Regionalism.” International Organization

Vol 12, No 14 (1968), pp 441-440.

Fawcett, Louise, “Regionalism in Historical Perspective.” Fawcett, L and

Hurrell A (eds.) Regionalism in World Politics: Regional Organtahon

and International Order Oxford: Oxford University Press 1995

pp 9-36.

Keating, Michael and Loughlin, John (eds.) The Political Economy o f

Regionalism London: Frank Cass, 1997.

Trang 32

Lamy, Steven L “Contemporary mainstream approaches: neo-realism and

neo-liberalism.” Baylis, John and Smith, Steve, (eds.) The

Globalization o f World Politics: an Introduction to International

relations 3rd ed Oxford: Oxford university press, 2005, pp

251-268.

Maruping, Mothae “Challenges for Regional Integration in Sub-Saharan

Africa: Macroeconomic Convergence and Monetary Coordination"

in Teunissen, Jan Joost and Akkerman Age (eds.) Diversity in

Development: reconsidering the Washington Consensus, (KJEP:

Seoul 2006), pp 130-151.

Peterson, John and Bomberg, Elizabeth “Common Agricultural Policy.”

Peterson, John and Bomberg, Elizabeth Decision-making in the

European Union New York: St Martins Press, 1999 120-145.

Prestowitz, Clyde V Jr et al “The last Gasp o f Gattism.” Harvard

Business Review, Vol 69, No 2 (1991), pp 130-138.

Qobo, Mzukisi “The challenges o f regional integration in Africa In the

context o f globalization and the prospects for a United States of

Africa,” Institute for Security Studies, ISS Paper 145 (Johannes

burg, June 2007) www.issafrica.org/dynamic/administ-ration/

file_manager/file_links/PAPER145H.PDF?link_id=&slink_id=467

4&link_type=&slink_type=13&tmpl_id=3 (Search date: 03.30

2009).

Shaw, Timothy M and Aluko O (eds.) Africa Projected: From Dependence

to Self-Reliance by the Year 2000 London: Macmillan 1985.

Siri, S “ECC’s brand o f Neo-colonialism.” Economic and Political

Weekly Vol XIV (14) No 2, (1979), p 693.

Trang 33

Yang, Yongzheng and Gupta, Sanjeev “Regional Trade Arrangement in

Africa: Past performance and the way forward,” IMF working

paper 05/36, (Washington DC: IMF 2005) http://www.imf.org/

external/ pubs/cat/longres.cfm?sk=l 7971.0 (Search date: 05 15

2009).

Zartman, William The Politics o f Trade Negotiation between Africa and

the EEC New Jersey: Princeton University Press, 1971.

Trang 34

Impacts of Intellectual Property Right Protection

in Foreign Countries on Korea’s Exports

Nguyen K Doanh*

Yoon Heo**

Nguyen T Gam***

Abstract

This paper investigates the impacts o f IPR protection in foreign

countries on Korea’s total exports and exports by commodity Using

the modified gravity equation with fixed effects and random effects

models for the panel data, our results are summarized as follows First,

reinforced IPR protection in foreign countries has a positive effect

on Korea’s total exports, indicating the dominance of market expansion

effects Second, stronger protection o f IPRs induces Korea's exports

to all foreign countries regardless of their level o f development The

effects are stronger in medium-income and high-income countries,

* Vice-Director o f the International Cooperation Center for Training and Studv-Abroad

Thai Nguyen University o f Economics and Business Administration, Vietnam E-mail:

nkdoanh@yahoo.com.

** Professor, Graduate School o f International Studies Sogang University Korea

E-mail: hurry@sogang.ac.kr.

*** Vice-Director o f the Department o f Training Scientific Research and International

Relations Thai Nguyen University o f Economics and Business Administration Vietnam

E-mail: ntgam@yahoo.com.

Trang 35

followed by low-income countries where the effect is not clear Third,

Korea tends to export more to countries with strong imitative ability

when the 1PR protection in these countries is strengthened, suggesting

the market expansion effects Finally, stronger protection o f IPRs in

foreign countries with weak imitative ability leads to ambiguous

reduction in Korea’s exports, demonstrating no market power effects

Efforts to increase the GDP, improve social infrastructure, accelerate

domestic reforms (openness to trade) and importantly strengthen I PR

protection in foreign countries are suggested as a remedy for obstacles

to Korea’s exports.

Key words' Intellectual Property Right (IPR) protection, Gravity

Model, Impacts o f Korea’s Exports

1 Introduction

Over the past decade, the protection o f intellectual property rights

(IPRs) has become one o f the most important issues Indeed, economists

have recognized that the protection o f Intellectual Property Rights (IPR)

has a significant impact on trade flows (See, e.g., Segerstrom et al.,

1990; Grossman and Helpman 1991; Helpman, 1993) The preliminary

conjecture is that weak IPR protection distorts natural trade patterns and

the ability o f firms to transfer technology abroad Thus, differences in

national norms regarding IPR protection are thought to negatively affect

Trang 36

freer flows o f international trade This could be one o f the reasons why

the regulation o f national regimes o f intellectual property rights has

recently become a contentious issue.

The results o f the Uruguay Round were, however, extremely

controversial foi many WTO member countries.1 From the developed

countries’point o f view, lack o f IPR protection in developing countries

constitutes an unfavorable trade environment that could reduce their

firms’ competitive positions Thus, they called for multilateral rules and

enforcement o f IPR On the other hand, many developing countries tend

to argue in favor o f weak IPR regime According to themnon-protection

o f IPRs on their part had a negligible impact on producers in OECD

countries, and that adoption o f stronger IPRs would increase the

profitability o f foreign firms at the expense o f domestic producers and

thus would be detrimental to their welfare and development prospects

(See Hoekman & Kostecki, 2001).

Theoretically, economic analysis is unable to predict the direction of

the impacts o f IPR protection on bilateral trade flows.- The existence

of such ambiguity is due to the fact that the strengthening of IPRs would

simultaneously create two effects working in opposite directions (see,

e.g., Schwartz, 1991; Taylor 1993; Taylor, 1994; Maskus and Penubarti.

1 As explained in Hoekman and Kostecki (2001), an intellectual property system seeks

to create a balance between the need for a temporary’ monopoly to create incentives

for innovation and the benefits o f free access knowledge.

: Maskus (2000) noted that theoretical models do not clearly predict the impacts o f

variable patent rights on trade volumes Much depends on local market demand, the

efficiency o f imitative production, and the structure o f trade barriers Also important

are the reactions o f imperfectly competitive firms Thus, a clear picture can emerge

only from empirical studies.

Trang 37

1995; Smith, 1999) On the one hand, stronger protection o f IPRs in

the importing countries grants monopoly power to the exporting

countries Also, the level of IPR protection may affect firms to choose

to serve a foreign market by FDI or licensing rather than exporting

(Ferrantino, 1993) For that reason, the imports may decrease if exporters

exercise their enhanced market power by reducing output and charging

higher prices to segments o f their foreign markets On the other hand,

greater protection o f IPRs in the importing country reduces local firms

to imitate foreign technologies This leads to an increase inthe net

demand for the protected products Accordingly, the increase in demand induces the exporting firms to supply more exports in the local market.

Since these two effects are offsetting, no clear prediction can be made regarding the nature and direction o f the impacts o f IPR protection on trade This theoretical ambiguity regarding the impact of IPR protection

on international trade has led to several empirical attempts Recently,

a growing body o f literature on the nature and direction o f the effects

o f IPR protection on international trade flows suggested that the relationship between IPRs and trade cannot be generalized (see Maskus and Penubarti, 1995; Frink and Primo-Braga, 2005; Smith 1999 Rafiquzzaman, 2002; Smith, 2002; Oh and Won, 2005) Results of these studies show that the impact o f stronger protection o f IPRs on tradeis

an empirical issue This has induced us to concentrate on the empirical analysis o f the issue on Korean case.

Trang 38

2 Research objective

This study aims at promoting the understanding of IPR protection and

its impacts on international trade, taking Korea as a case study Therefore,

it is guided by the following specific objectives:

■ To analyze the impacts o f IPR protection in foreign countries on

Korea’s total exports and exports by commodity.

■ To analyze the impacts o f IPR protection in foreign countries

grouped by development levels and imitation abilities on Korea's

total exports and exports by commodity.

■ To derive policy implications based on this study.

The empirical analysis in this paper differs from the previous studies

in several aspects First, this study provides new evidence regarding the

linkage between IPRs and trade with a focus on Korea Little evidence

has ever been documented on the experiences of Korea and in that sense,

this study would provide important insights into Korea and the rest of

the world where level o f economic development and imitation capacity

differs across countries Second, the study is based on the analysis of

the most recent panel data which allow the patent regime to change

over time.3 Third, the impact of IPR is firstly forced to be uniform across

sectors and then is allowed to differ across sectors so that industry-

specific evidences can be documented Since many o f the previous

studies focus on industries at relatively high levels o f aggregation, our

industry-level analysis is particularly advantageous because the effects

o f IPR protection on trade can be washed out at the aggregate level.

Trang 39

Fourth, in order to analyze the impact o f 1PR protection on trade, we

use a set of models, including the fixed effects model and random effects

model Finally, to measure the status of an 1PR regime, the 1PR index

developed by Park and Ginarte is used.4

3 literature review

The linkage between IPR protection and trade has been discussed at

length in the literature There is a growing body of literature in which

the nature and direction o f the effects o f stronger protection of IPR on

trade (See, e.g., Primo Braga and Frink, 1997 Maskus and Penubarti,

1997) Although it is unambiguous that IPR protection can influence

trade flows, the net impact on trade flows o f strengthening protection

o f IPRs remains theoretically ambiguous (See, e.g., Maskus 2000;

Maskus & Penubarti, 1995) Stronger protection o f IPRs in importing

countries allows the foreign exporters to behave more monopolistically

and to choose to serve the exporting market by foreign direct investment

or by licensing its intellectual asset to a foreign firm (Ferrantino 1993;

Lee & Mansfield, 1996; Maskus, 1998; Seyoum, 1996), which is known

as the market pow er effect Simultaneously, a stronger level of IPR

protection in importing countries encourages the foreign exporters to export more to the foreign market due to the shrinkage o f imitative

A number o f studies have attempted to measure IPR cross-nationalIv among them are Rapp and Rozek (1990) Seyoum (1996) and Sherwood (1997) However, the IPR index developed by Park and Ginarte (1997) is the most appropriate in the present context because it has the broadest country coverage Moreover, it allows for a much more fine-tuned ranking o f national IPR system.

Trang 40

activities in importing countries, which is known as the market expansion

effect Naturally, the importance o f these effects is likely to depend on

specific products and market characteristics Certainly, some products

are easier to imitate than thothers, and some products have closer

substitutes than others In addition, the impacts o f IPR protection also

depend on the exporters If the exporter is not an innovator, the imports

from this exporter’s country are less likely to be new technology

intensive So the protection o f IPR is not important for trade in this

case.

The observation that theory indicates the relationship between stronger

IPR protection and trade could have either sign, depending on product

and market characteristics, has led to attempts to resolve this ambiguity

empirically To date, a number o f studies have attempted to estimate

the effects of IPR protection on trade flows (e.g Primo Braga and Frink,

1997 Al-Mawali, 2005 Wen-Hsien & Ya-Chi, 2005) Maskus and

Penubarti (1995) provided the first systematic evidence on the linkage

between IPRs and trade, and demonstrated that national differences in

PRs distort trade flows They found that a stronger protection o f IPRs

increases trade flows - that is the market expansion effect tends to

dominate the market power effect - when all industries are pooled.

A number o f previous studies focused on the imitative abilities, threat

o f imitation and R&D abilities o f the importing countries in analyzing

the impacts o f IPR protection on exports (See Maskus and Penubarti,

1995; Smith, 1999; Smith, 2002; Lui and Lin, 2005) For example

Ferrantino (1993) studied the effect o f IPR regimes on exports Using

the US export data, he found that importing countries’patent regimes

Định dạng
Số trang	202
Dung lượng	41,24 MB