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Edited by Ka Zeng
Progress Under Pressure
Evolving Disputes, Expanding Options
Edited by Truong T. Tran, John B. Welfield and Thuy T. Le
John B. Welfield and Le Thuy Trang
Interstate conflict, in the view of one-third of the global decision-makers and experts assembled to compile the World Economic Forum 2015 Global Risks Report, was the most probable serious danger facing the East Asia-Pacific region over the coming decade.1 A Pew Research Center global opinion poll conducted in the spring of 2014 found that people in eight of the 11 Asian countries surveyed expressed fears about possible military conflict over territorial disputes involving the People’s Republic of China and its neighbors. In China itself, more than six in every ten citizens expressed similar concerns. Two-thirds of Americans in 2014 also feared that intensifying territorial disputes between China and its neighbors could spark an armed conflict.2 Although the World Economic Forum 2017 Global Risks Report considered such conflict as a decreasing risk in terms of likelihood and impact,3 majorities in China, Japan and several other East Asian nations remained concerned about territorial tensions and the strategic drama being played out between the United States and China on land and at sea across the region had begun to fuel fears that the “Pacific century” might be shattered by a new Pacific war.4 For better or for worse, Southeast Asia, the region which has given birth to the most vigorous efforts to construct a regional security architecture designed to ensure long-term peace and stability in Asia and the wider Pacific Basin, is today confronted by a series of intractable problems that may well constitute the greatest tests it has faced since the end of the Cold War. Much has been said about the significance of the South China Sea for the security and development of the Indo-Pacific. This sea offers the shortest route from the Pacific Ocean to the Indian Ocean. About half of the world’s commerce, half of global liquefied natural gas and a third of global crude oil transit through this body of water each year.5 Two-fifths of the world’s tuna are born in the South China Sea, contributing to a multibillion-dollar fisheries industry.6 These statistics, oft-cited, are just a few indicators of the South China Sea’s importance to the region and the world at large. A durable regional security system that can deliver lasting stability and prosperity for the Indo-Pacific cannot be constructed in the absence of a smoothly functioning regional maritime order in this critical area. Yet this body of water, blessed with so many valuable resources and crisscrossed by a network of vital sea-lanes, has become the home to some of the most intractable territorial disputes in Asia and a stage for intensifying great power strategic competition. The longstanding territorial and maritime disputes simmering in the South China Sea and the machinations of great powers have been slowing down the momentum for regional cooperation and frustrating attempts to forge a robust and mutually beneficial security architecture. There is also another troubling dimension of very great significance. While the tempo of regional cooperation has slackened, the rate at which the South China Sea marine environment is deteriorating has accelerated. Forty percent of the South China Sea’s fish stocks have already been exhausted and, according to the United Nations Food and Agriculture Organization, most fish resources in the western part of the South China Sea have been exploited or overexploited.7 Meanwhile, 70 percent of the South China Sea’s coral reefs are reported to be in poor or only fair condition.8 Put simply, while the challenges to the South China Sea marine environment are growing, the capacity of regional mechanisms to effectively address those challenges has been undermined or severely constrained.
Government vs Market
Ju-Ho Lee, Hyeok Jeong and Song Chang Hong
Over the last half century, Korea successfully escaped from poverty and socio-economic instability to achieve remarkable economic growth and democracy. An average Korean lived on 2.3 dollars per day in the 1950s; she now earns about 60 dollars per day. Since 1960, the Korean economy has maintained a 6 percent annual growth rate of real GDP per capita, becoming the 13th largest economy in the world (Maddison Project, 2013). This achievement is regarded as a historic case of sustainable growth. While several factors contributed to this outstanding growth, there is emerging consensus that Korea’s achievement of both sustained economic development and democracy is mainly due to its investment in people. At its initial stage of development, Korea faced problems similar to most other developing countries. To escape from a vicious cycle of poverty, Korea had to overcome a legacy of antiquated traditions in education and training. Koreans had traditionally neglected vocational and technical training, owing partly to Confucianism, which praises scholars of the humanities and farmers while disregards professions in manufacturing and trade. Because parents encouraged their children to pursue academic education in colleges and hold white-collar jobs, industries lagged behind with few technicians, skilled workers, and blue-collar workers. To make matters worse, Japanese colonial rule prohibited Koreans from accumulating both physical and human capital for entrepreneurship in industrial sectors. The three years of the Korean War with the division of the Korean peninsula also devastated the economic and social infrastructure and fundamentals for economic growth.
Ju-Ho Lee, Hyeok Jeong and Song Chang Hong
It is well-known that Korean students’ performance belongs to the top group in international competence tests such as OECD’s PISA (Programme for International Student Assessment), which have been testing fifteen-yearold students from the OECD member countries in reading, mathematics and science every three years since 2000. Recently, the OECD implemented a similar test for adults during the period from 2011 to 2012, called PIAAC (Programme for the International Assessment of Adult Competencies), where the competence or skill levels of 16_65-year-old adults are measured in the three areas of literacy, numeracy and problem solving in technologyrich environment skills. Surprisingly, the performance of Korea’s adult population in the PIAAC test was quite disappointing. In contrast to the stellar performance of the Korean youth in PISA, Korean adults’ skill levels turned out to be slightly lower than the OECD averages. Furthermore, the gap between Korean skill level and the OECD average widens as the population gets older. We are motivated by this puzzling fact and attempt to explore the features of Korean adult skill levels from the PIAAC data. In particular, we focus on establishing empirical patterns of age–skill profile after controlling for a rich set of confounding factors rather than establishing the causal relationship. However, we will provide a benchmark study so as to infer that weak life-long learning is the key fundamental problem for the Korean education system and labor market. It would be difficult to establish a solid causal inference about the relationship between skill levels and age simply from observing that the skill level decreases in age from PIAAC. Such observation may indicate that the skill level deteriorates as people get older, which can be interpreted as a ‘depreciation’ of human capital stock with age for some reasons. However, this may also indicate that younger generations are more skilled than older generations. That is, it might indicate that there has been improvement in skill across cohorts during Korea’s development process. To distinguish between the two possible interpretations, we need to use panel data. PIAAC, however, provides a cross-sectional data at the moment so that the empirical pattern about the cross-sectional age–skill profile from PIAAC does not clearly tell us about the precise interpretation.