Preface Executive Summary Acknowledgements GDI: Research Team and Advisors Chapter 1. Project Introduction and Purpose Chapter 2. The Nature of Scenario Analyses and Its Use Why Scenario Analysis? The Methodology Underlying Scenario Analysis Use of Scenario Analysis in This Report Chapter 3. The Gamut of Economic Risks Facing Korea Today The Idea of a Risk Profile Korea’s Risk Profile in Brief Medium Term Risks Facing the Korean Economy Conclusions Chapter 4. Mega-trends Influencing Medium-Term Scenarios An Overview Mega-trend 1: The Trend Towards De-globalization Introduction The global trade slowdown Corporate retrenchment away from the Global Production Model Globalization failures magnified by policy myopia Conclusion Mega-trend 2: Disruptive Technologies and Impacts An overview Disruptive technologies The impact of disruptive technologies on jobs Impact of disruptive technologies on trade Impact of disruptive technologies on global value chains Conclusions Mega-trend 3: Persistent Global Uncertainty An overview Post crisis trends that prompt greater uncertainty Does uncertainty drag down growth? Uncertainty and the economy Black swans Concluding observations Chapter 5. A Trade War Scenario Introduction A Historical Perspective Why a U.S. Trade War with China? Starting a Trade War is Easy, Controlling it Less So The Impact on Korea Chapter 6. A Troubled China Scenario Introduction to the Current Baseline Scenario The Troubled China Scenario The Case of a China Slowdown The Case of a Financial Crisis The Case of Dramatic Rebalancing Combined Troubled China scenario and its Implications Chapter 7. A Global Meltdown Scenario Introduction A Global Meltdown Scenario The Major Economies The Trade Story Dominates Financial Stagnation and Protectionism Global Inaction Increases Risks Chapter 8. Risk Assessment and Analysis: Vulnerabilities and Resilience Introduction The Chinese Challenge Rapid Development of Technological Capability Competition in Exports Ambitious innovation plans Managing Risks Improving Efficiency and Flexibility in the Economy Overall competitiveness and the institutional and market regime Labor market efficiency Financial market development Social protection systems Strengthening Innovation Capacity Innovation capacity indicators Skills of the labor force Entrepreneurial skills and entrepreneurial ecosystem Conclusions on strengthening innovation Increasing Trade Diversification The Asian Region and RCEP Potential for increasing trade with India Conclusions and Key Recommendations Improving Efficiency and Flexibility of the Economy Strengthening Innovation Increasing Trade Diversification Final Thoughts Annex Background Notes A. The Economic Relationship between China and the U.S. B. U.S. Trade Policy toward China C. Implications of Disruptive Technology for Korea D. The Economic Relationship between Korea and the U.S. E. Levels of Economic Integration between Korea and China References