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Brief Reports

Report that suggests the national future strategies based on the analysis of major future issues by the research team
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47

[National Future Strategic Insight] Mid- to Long-Term Development in Energy Demand Management (No. 30)

Dr. Cho Hae-in (Associate Research Fellow) has made a statement that it is necessary to build up a monitoring/verification system and to prepare a financial compensation plan for ensuring demand management with mid- or long-term energy efficiency improvements, in relation to the “Energy Efficiency Resource Standard (EERS)”. The conventional energy transition policies are mainly focusing on how to increase energy to meet the demand, however, a paradigm is shifted to initiate a new energy consumption structure: low consumption and high efficiency. Korea has been implemented the EERS as a pilot project since 2018. Conducting a survey and interviews with energy providers with EERS compliance and supervisor agencies responsible for overall management, Dr. Cho analyzed the performance and practical problems of the pilot project. It was found that efficient EERS operation is difficult for both energy providers and supervisor agencies due to the absence of monitoring/verification systems and financial compensation. Consequently, she proposed a framework for monitoring and verification and a financial compensation plan including incentives or investment return facilities. “We need efforts to find a suitable strategy that can maximize the effectiveness of the current EERS business model by in-depth analysis and benchmarking of overseas successful cases,” explains Dr. Cho. “If energy providers are guaranteed a return on their investment and receive incentives based on performance, and also end consumers directly control and experience energy consumption, there will be a huge synergy effect in the implementation of the EERS project.”

P.I : Cho Hae-in

Date : 2021-11-04

[National Future Strategic Insight] Cryptocurrency and Changes in Financial System (No. 29)

Dr. Park, Sung Jun (Associate Research Fellow) has alleged that cryptocurrency is a form of asset, not a “currency”, thus it needs customized control and supervision accordingly, as well as interest in international implications of central bank digital currency (CBDC). With the rapid digital transformation of the economy, the proportion of e-payments has drastically elevated and innovation has taken place, with the advent of distributed leger, blockchain, and of course, cryptocurrencies. Among cryptos, stablecoins attempt to offer price stability and are backed by a reserve asset, which thus might be used in regular payment system. Recently, lots of studies on the CBDC have been positively performed and published. Based on these current trends and potential changes in a financial system, Dr. Park analyzed digital currencies and suggested policy directions our society should take in a place. According to his opinion, first, cryptocurrencies are in a form of asset, not “currencies”, thus they needs customized control and supervision accordingly, because that strong anonymity that most cryptocurrencies offer can serve as a simpler tool for crimes, such as money laundering, while international cooperation is widely believed to be essential for fights against money laundering and terrorist financing. Second, although it does not draw any attention in Korea yet, the stablecoins have no guarantees that they will work as designed but relatively higher risks of “runs”, whereby it is necessary to monitor stablecoins and relevant policies made by central banks in major counties and international organizations. Last but not least, he calls for attention to the international implication of the CBDC, because the CBDC has potential of leading to an innovative cross-border payment service, which requires attention from policy makers as there are many discussions about the impact of China’s digital yuan on the current dollar-centered international financial system. “Economy has demonstrated sharply rapid digital transformation while the demand for cash continues to decline,” said Dr. Park. “This report covers cryptocurrencies, central bank digital currency and changes in the international financial system.”

P.I : Park, Sung Jun

Date : 2021-10-21

[International Strategic Foresight] Cooperation for Disaster Risk Reduction for Post-Pandemic Peace on the Korean Peninsula (No. 4)

Dr. Kim Tae-kyung (Associate Research Fellow) had made a statement that South Korea can contribute to establishing multilateral cooperation for peace process on the Korean Peninsula with disaster risk reduction (DRR) arrangement in Northeast Asia in the current global situation where non-conventional security risks has been rising after the COVID-19 pandemic. This report is intended to identify changes in DRR-related perception and governance of North Korea under Kim Jong-Un, and to draw policy alternatives by envisioning the DRR collaboration for peace process on the Korean Peninsula. According to Dr. Kim’s study, two notable points were identified – first, North Korea is showing relatively high affinity for interaction with international organizations and multilateral mechanisms, as well as for adaptation of universal norms in the process of DRR governance, thanks to constant activities of international organizations and humanitarian networks in the late 1990s. Second, North Korea is showing activeness in establishing domestic and overseas DDR governance as preventive response to non-conventional security risks such as pandemic, climate change and natural disasters by reorganizing its own legal system. Consequently, it is Dr. Kim’s allegation that establishing a joint response within a multilateral framework via the UN agencies resident in North Korea will be worth considering in future DDR cooperation on the Korean Peninsula; for example, a multilateral DDR council owning to United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), or alternatively, discovery and support of an inter-regional emergency response across the Korean Peninsula and other regions with the aid of International Federation of Red Cross (IFRC), playing a critical role in DDR activities in North Korea. In his opinion, if DDR cooperation arrangement for the Korean Peninsula is made within the “Sendai Framework for Disaster Risk Reduction” which was adopted in 2015 Third UN World Conference on Disaster Risk Reduction, it may serve as a new driving force to overcome obstacles in the peace process and inter-Korean relations under the “emerging security” agenda. “Korea should make various efforts to cooperate with East Asian countries while supporting increased roles of civil society, academia, and professional groups to enhance knowledge and attention to DRR, as well as regional communication and cooperation,” insists Dr. Kim. “Based on the development of a multi-layered network that includes the private sector, we can implement the vision for joint DRR on the Korean Peninsula.”

P.I : Kim Tae-kyung

Date : 2021-10-14

[National Future Strategic Insight] Future Policies and the National Assembly in the Viewpoint of Chief Advisors (No. 28)

Research Fellow Park Hyeon-Seok conducted a survey for chief advisors of the 21st National Assembly on their opinions for future policies and the role of the National Assembly; they answered that the most urgent tasks are inequality and polarization and it is difficult to pay attention to mid- to long-term issues requiring a bipartisan agreement but compromised by political polarization. NAFI’s survey was performed with 373 staffs working in the National Assembly Office as respondents to investigate their recognition of future policies and the role of the National Assembly. Among the various agendas, most of chief advisors shared the recognition that inequality and polarization are the most urgent agendas, regardless of party, position, age and tenure. The answer ranked first (selected by 137 persons out of 368 respondents) was “resolving economic inequality and political/social polarization”, followed by “addressing aged society and low birth rate” selected by 46 staffs. As the reason why it is difficult to deal with long-term issues, 147 of the total respondents answered that “it is hard to pay attention to mid- to long-term issues requiring a bipartisan agreement but compromised by political polarization”; 115 staffs answered that “both nomination evaluation and assessment by media and civic organizations are mainly based on quantitative metrics centering on short-term legislative performance, thus it is difficult to approach the issues from a long-term perspective”. According to this report, the political polarization in the National Assembly led to lack of conversation between ruling and opposition parties and accordingly, they have lost the capacity to handle mid- to long-term agendas requiring bipartisan cooperation. Calls for “Working National Assembly” contributed to getting rid of so-called “plutocracy” and making a productive, practice-oriented National Assembly; on the other hand, the political environment has been built up in which it is difficult to deal with mid- to long-term agendas from a long-term perspective because most of them focus on short-term accomplishments only. “It shows that the National Assembly needs to be changed to ensure active approach to the mid- to long-term issues of the country,” said Dr. Park. “We need to find a new framework for evaluating the performance of the National Assembly so as to ensure fair evaluation for the efforts of lawmakers to resolve mid- to long-term issues with conflicts and the arduous negotiation between the ruling and opposition parties.”

P.I : Park Hyeon-Seok

Date : 2021-10-07

[Futures Brief] Economic Growth as Secular Religion and GDP as Magical Number: Seeking Alternatives (No. 3)

Dr. Lee Sang-jic (Associate Research Fellow) has asked why many people feel vaguely uncomfortable about “economic growth”, which yet maintains the absolute value in the Korean society. In this report, Dr. Lee (1) defined the meaning of “economic growth” with a numerical value, i.e. gross domestic product (GDP); (2) identified various attempts at home and abroad to compensate for the limitation of the term “GDP”; and (3) explored social conditions forcing economic growth and what is required to solve those conditions. He pointed out that although it is hard to explain a relationship between quality of life and economic growth measurable by GPD increase, many people still believe the GPD increase is the top priority in our society, while alternative indicators tried at home and abroad since 1970s did not exclude economic growth itself. This limitation is fundamentally due to modern monetary system where most of the money supply is created by private banks in the form of depts – in Dr. Lee’s opinion. The report proposed three alternatives: (1) the meaning of GDP and economic growth need to be considered more deeply; (2) alternative indicators should clearly reveal the tension between various values; and (3) we need to think how to get out of the dilemma of growth, accompanying with fundamental transformation of the modern monetary system. “In order for the Korean society to escape from the ‘growth dilemma’ that nobody can continue or stop, a fundamental shift in paradigm and systemic transformation are required,” emphasized Dr. Lee

P.I : Lee Sang-jic

Date : 2021-09-30

[National Future Strategic Insight] Domestic Industry and Countermeasures upon Introduction of the Carbon Border Adjustment Mechanism (No. 27)

According to Yeo Yeong-jun (Associate Research Fellow), Cho Hae-in (Associate Research Fellow) and Jeong Hoon (Research Fellow), the total burden of domestic industry in 2030 is projected to be about KRW 8,245.6B as the Carbon Border Adjustment Mechanism (CBAM) will be fully operational in the European Commission, which is expected to decrease by about 11.7% to 15.0% in policy scenarios assuming technological development and efficient energy transition following the implementation of carbon neutral policies. Their proposal also includes potential CBAM responses including: (1) establishing a monitoring framework and relevant governance for overseas tread such as international CBAM; (2) protection and support for carbon-intensive industries expected to be most affected by the CBAM; (3) improving energy efficiency by encouraging alternative cleaner production processes; (4) expanding renewable energy access; and (5) investment in promising low- and zero-carbon technologies (LZCs) and expansion of technological innovation. They have also emphasized that the CBAM is not a trade restriction; it is a momentum for more effective implementation of the domestic responses in terms of industrial structure and energy system in the global trends of carbon neutrality. Emerging the carbon neutrality declarations and relevant policies around the world, in July 2021, the European Commission adopted a proposal for a new Carbon Border Adjustment Mechanism (CBAM) ensuring that production of carbon-intensive goods does not shift to countries outside the EU to take advantage of less stringent climate policies while preventing loss of competitiveness of their domestic industries. In this report, the amount of CBAM burden in 2030 when the CBAM will be fully in place is projected by sectors using an environmentally extended input-output table (EEIO) model, in consideration of variances caused by Korea’s carbon neutral policies, thereby suggesting takeaways upon the establishment of mid- to long-term strategies in response to the EU CBAM. “The domestic industries expected to be most affected by the CBAM are backbones of South Korea; thus we must keep monitoring global policy trends, considering potentials of scaling up the CBAM, and establish pan-industry responses and decarbonization strategies for each industry against the CBAM,” said researchers. “It is necessary to actively respond to the global trend of carbon neutrality, and provide opportunities to discover new growth engines and to enhance industrial competitiveness, based on the comprehensive and structural CBMA strategies established and implemented.”

P.I : Yeo Yeong-jun,Cho Hae-in,Jeong Hoon

Date : 2021-09-16

[National Future Strategic Insight] Major Issues and Suggestions of Job Change Support Service for Aging Society (No. 26)

Associate Research Fellow Sung Moon-ju has proposed the policy direction based on issues derived from a support service framework for employment and lifelong learning, out of the mid- to long-term government plans for responding to the aging society, and outcomes obtained from metal-evaluation for such plans. Key policy issues in this report include: (1) levels of new jobs (quality, diversity and sustainability); (2) lack of interconnection between policies and policy governance; (3) effectiveness of the job change support service; (4) accessibility gap between the metropolitan area and the provinces for the job change support service. Based on those issues, she proposed four policy directions. First, “policies designed to increase decent jobs”: when establishing mid- to long-term strategies, labor market projection should be included, and policies should be designed on the basis of analyzed causes of problems in the job change support service and problem-generating mechanism. Second, “systemically-improved frameworks built up by interconnection between policies”: governance should be reorganized to enable comprehensive control and fine adjustment for improving quality of life and for developing new career and new talent of middle-aged population. Third, “appropriate policy goals and indices”: the government’s mid- and long-term plans for the job change support service should be linked with national vision, major policy goals of response to the aging society, deriving proper performance indicators. Last, “enhancing employment and job change support programs”: metrics should be found, such as a link between employment services and career development program, local service accessibility, and effectiveness of the job change support service. “Our country officially became an aged society in 2017, and is expected to be a super-aged society by 2025,” explains Seong. “Although the government is establishing mid- to long-term plans to respond to the aging society, but monitoring and feedback are needed to identify progressing and drawbacks of those policies.” * “National Future Strategic Insight” is a brief report which is issued every two weeks to provide strategic insights for our future based on in-depth analysis of major issues made by professional researchers at the National Assembly Futures Institute (NAFI).

P.I : Sung Moon-ju

Date : 2021-09-02

[Futures Brief] Discussion on Progressing National SDGs Implementation: Transition from Segmentation to Integration (No.2)

Associate Research Fellow Cho Hae-in has alleged based on comparison of SDGs (sustainable development goals) implementation between advanced countries and South Korea. She has also asserted, in order for Korea to achieve inclusive growth and implement its global agenda, our society shall (1) identify a number of specific target for each goal, and (2) develop policies and institutions to ensure comprehensive control of economic, social and environmental values. According to this report, “development” in South Korea was equal to “economic growth” accompanying with income increase from the 1980s to the early 2000s. Even today, attention is still focused on economic growth-oriented development, which is exacerbating inequality, polarization, competition, and environmental problems. It is time to find the direction of “development” that we should pursue in order to improve the quality of life of the present and also future generations. She has conducted comparative study on trends and strategies for SGDs implementation and benchmarking cases referring to Voluntary National Review (VNR) reports of the G8 countries and South Korea. Consequently, Cho found that Korea was focused on “economy”, “society” and “environment” and a very weak link connecting those three sectors, while the advanced countries showed SDGs implementation across the various specific and detailed targets well-balanced and interconnected, rather than focusing on a few specific subjects. For example, “environment” has a high value in Korea, while “energy”, “climate”, “water resource” and “biodiversity” were found as high-value keywords in other countries, with which lower-ranked words such as “environment” and “economy” were associated; they were also related to “protection” and scaled up to “society”. “See, for example, SDG9 (Industry, Innovation and Infrastructure); Korea has high-level infrastructure and excellent R&D performance in a science and technology sector, but lack of inclusiveness is such a big challenge,” explains Cho. “If the domestic science and technology development infrastructure is connected with specific targets and other SDGs, such as gender equality and reduce inequality, we can get closer to realizing the global agenda of inclusive innovation.”

P.I : Cho Hae-in

Date : 2021-08-26

[National Future Strategic Insight] Happiness Depending on Where You Live (No. 25)

Min Bo-gyeong, the Head of Quality of Life Group, has concluded that it is necessary to prepare regional-centered strategies for enhancing people’s well-being in her study, because among “living conditions”, “health” and “leisure” were major factors positively affecting the quality of life (happiness) in urban areas, while “financial security” was in non-urban areas. With satisfaction (5-point scale) for living conditions of the residence for all respondents by sector, the “health” (3.70) was ranked #1, followed by safety (3.50), environment (3.44), social relationship (3.43), education (3.43), leisure (3.40), and financial security (3.31) in this order. Political takeaways considering the difference between urban and non-urban areas include (1) the need for strategies to enhance people’s well-being in response to the increasing population risk; (2) the need for region-oriented strategies reflecting regional characteristics; (3) the need for continuous studies on happiness from a regional point of view. “Region is a critical variable closely associated with people’s actual lives. When local extinction is concerned, in-depth studies regarding influence of local residency conditions and satisfaction on happiness are required,” explains Min. “Region-oriented strategies reflecting regional characteristics and policy demands may be useful solutions.” In this study, the nationwide satisfaction of living conditions was referred; difference in happiness factors between urban and non-urban areas was sought based on NAFI’s 2020 Korean Happiness Survey (respondents: males and females aged ≥ 15, n = 13,824); and residential regions of respondents were classified into urban and non-urban areas according to administrative districts defined by the Statistics Korea for finding out difference by region. * “National Future Strategic Insight” is a brief report which is issued every two weeks to provide strategic insights for our future based on in-depth analysis of major issues made by professional researchers at the National Assembly Futures Institute (NAFI)

P.I : Min Bo-gyeong

Date : 2021-08-19

[International Strategic Foresight] U.S.-China Technological Hegemony & China’s National Strategies (No. 3)

Dr. Cha Jung-mi (Associate Research Fellow) has categorized China’s strategies to survive and overpower the rival in the era of the U.S-China tech war into two aspects, “technological innovation” and “technological solidarity”. She emphasized that Korea needs to seek independent strategies for innovation and solidarity since nowadays the U.S.-China conflict is not limited to technological innovation but expanded to technological alliance to build their own technology network. According to Dr. Cha’s opinion, China defines this era as the era of “Great Revolution of the Century (世界百年未有之大变局)” in which scientific and technological transformations take place at the same time; they see a prominent strategic opportunity to rise and are actively engaging in “technological innovation” and “technological solidarity”. In fact, the rise and fall of great powers in the history of mankind have always been linked with emerging and decline of new technology; it is why China is focusing on innovation and solidarity, believing that the rise of novel technologies gives it an opportunity to take the global leadership. China has been fostering especially artificial intelligence, space science, and quantum information as strategic nation-critical science and technology projects, while expanding its global network with initiatives such as “Digital Silk Road (数字丝绸之路)” and “Alliance of International Science Organizations (国际科学组织联盟). “The significant characteristic of this era is that the rise of new high-tech technologies and fierce competition to take the lead – this is an important transitional period for Korea to determine the economic and strategic status of Korea in the future of technological revolution,” said Dr. Cha. “Beyond merely forecasting and analyzing the future of the U.S.-China tech hegemony, we should address the very important task of the mid- to long-term strategy to seek the governance of integrated communication and cooperation among the governance, industry, academia and laboratory for establishing Korea’s strategies in the innovation and solidarity that will help us take a lead in the era of Industry 4.0.” Meanwhile, NAFI’s Center for International Strategy is conducting two projects under the 2021 agenda “the future of U.S.-China technological hegemony”: the “Global Collaboration Research” project together with scholars from 13 countries, which is a comparative study on perceptions and forecast strategies of major countries for U.S.-China tech war; and a project in cooperation with about 10 domestic scholars to determine Korea’s best diplomatic strategies and tasks under this hegemony.

P.I : Cha Jung-mi

Date : 2021-08-12