SPECIAL STUDIES
South Korean Grand National Strategy | FDI in Korea | Learning Mistrust
Soft Power, Smart Power, and Grand Strategy in South Korea
Dr. Yong-shik Choo, Deputy Chairman, U.S.-Korea Institute
The purpose of this research is to propose a policy prescription on South Korea’s soft power capabilities. "Soft power," however, has become a widely used expression to describe the discourses on foreign relations in South Korea. Recently, Joseph Nye, during his visit to South Korea, emphasized that soft power will act as a focal point for foreign relations in the 21st century. In addition, he argues that it is necessary for South Korea to implement strategies and policies based on both soft and hard powers.
Lee Myung Bak, current President of South Korea, during his speech commemorating theindependence of Korea, stressed the necessity of upgrading the South Korean national brand image. As a result, the Lee administration announced a plan to fully encompass the essence of the President's vision by organizing a committee dedicated to promoting the national brand image of South Korea under the direction of the presidential office.
Various sectors such as the academic and policy-making communities have presented a variety of innovative ideas and research possibilities on national-branding diplomacy to further advocate the national interests of the South Korea. However, no clear vision or ideas to practice a national-branding diplomacy have been presented. This unclear direction can be attributed to the fact that exact definition of soft power and its related concepts such as nation-branding and public diplomacy have not been evidently characterized.
With the objective of constructing a grand strategy based on soft and smart power (soft power plus economic capability), this research project seeks to answer the following issues:
1. Identify the internal and external sources of South Korea’s soft power
2. Develop a strategic vision and framework for South Korea’s foreign policy
3. Search for a method to strengthen U.S.-Korea alliance
4. Construct foreign policy strategies toward developing nations in Central Asia and Southeast Asia such as Cambodia, Uzbekistan, and Mongolia
The Changing Nature of Foreign Direct Investment in Korea: Challenges to Economic Policy
Dr. Arthur Alexander, former president of the Japan Economic Institute and a noted economist
Foreign direct investment (FDI), defined as sufficient company ownership that provides some degree of managerial control, improves a nation’s productivity and economic growth. Until the 1997 East Asia financial crisis, the Korean government exercised a de facto policy of discouraging inward FDI. However, as part of its acceptance of IMF support to resolve the crisis, the government opened the economy to foreign ownership of domestic business. In the years after the crisis, foreign investment surged. However, despite these changes, Korea still lags other developed and developing countries as a target for FDI. We are investigating the changing nature of FDI into the country, the policy and political responses, and the concerns in the country that may induce a cautious approach by administrators.
In order to understand better the changing nature of Korean inward FDI, we are assembling data broken down by industry, financing method, and type of investor. We will analyze the policy and regulatory implications by considering the domestic industries and companies that may face greater competition; and the government agencies that will be involved together with their regulatory and organizational imperatives. New patterns of FDI create the potential for counterattacks by negatively affected parties. We shall attempt to predict such barriers in advance to alert policymakers and others about possible future problems. We will attempt to understand how the changing nature of FDI into Korea may affect future economic outcomes in ways that may differ from past influences.
The first report in this series examines the long-term economic perspective of FDI in Korea: 
Foreign Direct Investment in Korea: Trends, Implications, Obstacles. (July 2008)
The second report in this series takes an in-depth look at the trends of Mergers and Acquisitions (M&A), Korea's leading source of FDI: Mergers and Acquisitions in Korea: The Leading Edge of Foreign Direct Investment. (NEW)
The third report in this series, Policy Implications of Korea’s Low-Intensity Foreign Direct Investment, is forthcoming in December 2008.
Learning Mistrust: North Korea and Its Allies, 1945-1991
Dr. Kathryn Weathersby
In their efforts to address the political, economic, and military challenges posed by North Korea, the other states of the region are stymied by a lack of common ground with Pyongyang and of confidence that the North Koreans will play by shared rules. While North Korea’s self-imposed isolation and secretiveness place it in a category by itself, for the bulk of its history—from the inception of communist rule in 1945 through the end of the Soviet era in 1991—the DPRK was in fact firmly embedded in the extensive and powerful set of multilateral economic and security structures of the communist world. Because these alliance relationships involved shared commitment to common goals and direct tutelage by the powerful leaders of the communist world, they constituted the school in which the DPRK leadership learned how to protect the country’s interests in the midst of a hostile and constantly changing environment. Drawing on extensive research in the archives of North Korea’s former allies, Dr. Weathersby’s book will analyze the evolution of the DPRK’s alliance relationships during the Soviet era. It will argue that for Pyongyang these essential relationships were experiences of betrayal and threat combined with profound and unwelcomed dependence. Even as North Korea adjusts to radically altered circumstances, the perceptions created by this troubled history will necessarily continue to shape the assumptions it brings to relations with other countries. Understanding these perceptions is thus the necessary first step toward comprehending the reasoning that drives North Korean actions.