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Unlocking Korean Market Value

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Image of Korean currency with banner "Shorenstein APARC Working Paper"

 

This paper examines the “Korea discount,” the chronic undervaluation of South Korean stocks compared to other developed markets. Despite Korea ranking 13th globally in market capitalization, its stock market has grown only 25% over the past decade, while the S&P 500 grew 186%. The author attributes this poor performance to weak corporate governance, particularly the dominance of family-controlled conglomerates (chaebols) that prioritize the interests of founding families over those of minority shareholders. An analysis of successful reforms in Japan, Taiwan, and the United States shows that the Korea discount could be successfully resolved by strengthening corporate disclosure requirements, resolving conflicts of interest among institutional investors, and making South Korea’s voluntary stewardship code more enforceable to encourage active shareholder engagement and improve market valuations. 

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Institutional Investor–Driven Governance Reform and the Resolution of the Korea Discount

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You Jung Lee

The High Cost of Miscalculation: Sean Stein on U.S.-China Trade Fallout

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Heather Rahimi
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Against a backdrop of heightened geopolitical tension and economic uncertainty, Sean Stein, President of the U.S.-China Business Council, delivered a keynote address on May 14 during the second annual China Conference organized by the Stanford Center on China’s Economy and Institutions (SCCEI).

Speaking to an audience of faculty, students, and policy experts, Stein offered a grounded and pragmatic assessment of the evolving U.S.-China relationship, emphasizing the enduring importance of commercial engagement and the need for clear-eyed policymaking in a time of strategic rivalry.

Costly Miscalculations
Stein began by highlighting how U.S. policy makers have misjudged the resilience and retaliatory capacity of the Chinese economy. In particular, he argued that in response to the minimal impact China’s retaliatory efforts had on the U.S. economy during Trump’s first administration, the U.S. underestimated both China’s pain threshold and the pain China can inflict on the U.S. economy, while also overestimating its own leverage. The result, he noted, was an awkward U.S. climbdown on tariffs and significant disruption to the U.S. economy without meaningful strategic gain.

“We’re getting all of the downsides of tariffs and trade wars without getting any of the upside,” Stein remarked. Many U.S.-based companies, faced with soaring costs for component parts sourced from China, were forced to move production to third countries—decisions that are likely irreversible. Stein questioned, “Is some of the damage permanent? Yeah…sometimes, when some manufacturing leaves, it doesn't come back,” which is the exact opposite of what the Trump administration hoped would result from the newly imposed tariffs.

We’re getting all of the downsides of tariffs and trade wars without getting any of the upside.
Sean Stein

Urgent Rethink Needed on U.S-China Trade and Technological Competition
Stein also pushed back against long-held assumptions that the U.S. market alone can dictate global business trends. The notion that “the only market that matters is the U.S. market” no longer holds, noting that Chinese consumers and innovation ecosystems now play a decisive role in shaping product development and global supply chains. He noted that European businesses have expressed a radical shift in strategy, they said, “we've been in China for Asia, in North America, for the Americas…We're now going from that model to what could very well become an, ‘in China for China and the world minus one.’ And the minus one is, of course, the U.S. market.”

On the technology front, he offered a candid evaluation of the U.S.-China competition. Stein reflected on the current state of artificial intelligence in China and the U.S., he said, “ at the end of the day it's not who has the best model; a good enough model is a good enough model, where it really makes a difference is in the application…and I see China racing ahead in the application of AI.” 

At the end of the day it's not who has the best model, where it really makes a difference is in the application. I see China racing ahead in the application of AI.
Sean Stein

Know Your Competitor
Stein concluded with a call for more measured and constructive engagement. He urged both Washington and Beijing to establish clearer rules of the road, maintain open lines of communication, and invest in policy solutions that reduce uncertainty rather than amplify it.

Stein’s keynote offered a business-grounded counterpoint to prevailing narratives of decoupling and confrontation. His insights reinforced the importance of understanding the full complexity of economic interdependence, as well as China’s capacity for global market disruption, and the costs of miscalculation. As part of the broader SCCEI China Conference, his remarks served as a reminder that if America does not properly understand its competitor, efforts to stay ahead may well backfire and erode U.S. strength and global standing. 


A full recording of Sean Stein’s keynote is available on YouTube and below.

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Elizabeth Economy speaks during a Fireside Chat.
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Strategic Shifts: Understanding China’s Global Ambitions and U.S.-China Dynamics with Elizabeth Economy

At the 2025 SCCEI China Conference, Elizabeth Economy, Hargrove Senior Fellow at the Hoover Institution, outlined China’s ambitious bid to reshape the global order—and urged the U.S. to respond with vision, not just rivalry, during a Fireside Chat with Professor Hongbin Li, Senior Fellow and SCCEI Faculty Co-Director.
Strategic Shifts: Understanding China’s Global Ambitions and U.S.-China Dynamics with Elizabeth Economy
Panelists speak during a session at the 2025 SCCEI China Conference.
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Conference Explores China’s Strategic Posture in a Rapidly Changing Global Economy

The second annual SCCEI China Conference, held at Stanford University on May 14, brought together leading scholars and policy experts. Panelists offered a candid, multifaceted view of China's global economic position, exploring its technological prowess, industrial diplomacy, and the increasingly complex global responses to its expanding influence.
Conference Explores China’s Strategic Posture in a Rapidly Changing Global Economy
Craig Allen speaks at SCCEI 2024 conference
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Silicon Showdown: Craig Allen Unpacks the Competition for Technology Leadership between the U.S. and China

Craig Allen, the President of the U.S.-China Business Council, spoke on the evolving dynamics of technological leadership between the U.S. and China and their implications for the rest of the world.
Silicon Showdown: Craig Allen Unpacks the Competition for Technology Leadership between the U.S. and China
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Sean Stein addresses the audience during a keynote speech with Scott Rozelle seated at a table as moderator.
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In a keynote address during the 2025 SCCEI China Conference, U.S.-China Business Council President Sean Stein cautioned that strategic miscalculations and trade tensions have left the U.S. economy with lasting setbacks—and few clear gains.

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The Four Talent Giants

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Cover of the book "The Four Talent Giants"

The Asia-Pacific region has seen extraordinary economic achievements. Japan's post-World War II transformation into an economic powerhouse challenging US dominance by the late 1980s was miraculous. China's rise as the world's second-largest economy is one of the 21st century's most stunning stories. India, now a top-five economy by GDP, is rapidly ascending. Despite its small population, Australia ranked among the top ten GDP nations in 1960 and has remained resilient. While cultivating, attracting, and leveraging talent has been crucial to growth in these countries, their approaches have varied widely, reflecting significant cultural, historical, and institutional differences.

In this sweeping analysis of talent development strategies, Gi-Wook Shin investigates how these four "talent giants'' achieved economic power and sustained momentum by responding to risks and challenges such as demographic crises, brain drain, and geopolitical tensions. This book offers invaluable insights for policymakers and is essential for scholars, students, and readers interested in understanding the dynamics of talent and economic growth in the Asia-Pacific region and beyond.

See also:

Sociologist Gi-Wook Shin Illuminates How Strategic Human Resource Development Helped Build Asia-Pacific Economic Giants
APARC website,  June 26, 2025

In the Media

Stanford Scholar Reveals How Talent Development Strategies Shape National Futures
The Korean Daily, July 13, 2025 (interview)
- English version
- Korean version

 

Reviews of The Four Talent Giants

 

Review by Celia Lee, Nanyang Technological University, Singapore
Published in Pacific Affairs, July 15, 2026

“The Four Talent Giants represents a valuable addition to comparative policy literature. It highlights talent as an emerging determinant of power and encourages a re-examination of traditional indicators of economic achievement.”

Review by Barry Eichengreen, University of California, Berkeley 
Published in Foreign Affairs, December 16, 2025

"Scholars have offered multiple hypotheses, mostly emphasizing culture, history, and institutions, to explain the economic rise of countries in Asia. Shin focuses on human capital, analyzing the different ways Asian economies have developed their workforces. The four countries whose economies he focuses on—Australia, China, India, and Japan—have taken distinctive approaches to acquiring what he calls “talent portfolios.” Japan nurtured homegrown talent, while Australia attracted skilled immigrants. China sent students abroad, while India relied on its foreign diaspora and its advanced institutes of technology to train workers and impart needed skills. Although the approaches differ, each country successfully developed scientific, technical, and managerial talent in the quest for economic growth. Shin’s focus on talent competition is especially timely given the rapid increase in the number of students in China studying STEM subjects—science, technology, engineering, and math—and political attacks on higher education in the United States. Together, these trends raise questions about the ability of the United States to keep pace with China."

Review By Steven A. Mejia, Washington State University
Published in Social Forces, August 23, 2025

"The determinants of nation-state development is one of the most central questions in the comparative international social sciences. In The Four Talent Giants: National Strategies for Human Resource Development Across Japan, Australia, China, and India, Gi-Wook Shin joins these longstanding conversations in an ambitious work that may become a classic study. [...]

"There is much to praise about The Four Talent Giants. It makes sound theoretical inferences from analysis of expansive historical and quantitative data on major successes in the modern world economy, helping advance scientific understanding of the factors shaping development. These scholarly insights will also be crucial for policy makers at national, regional, and international levels. For example, countries seeking to foster their own development may invest in the forms of human and social capital emphasized in The Four Talent Giants. [...]

"Overall, The Four Talent Giants provides a groundbreaking theoretical innovation to help explain key empirical problems central to decades of comparative international social scientific work. This may in turn shape development policy that can then improve the quality of life for millions around the world. The Four Talent Giants will move comparative international social scientific conversations on development in important new directions."

Read the complete review via Social Forces.

Review by Anthony P. D'Costa, University of Melbourne
Published in The Developing Economies, November 2025

"Gi-Wook Shin has written an excellent book on talent development strategies [...] Shin's book is noteworthy for three key reasons: First, he has developed a novel framework to analyze the development and the international movement of talent and their mobilization by governments for national economic and technological development. Second, he covers an important region of the world that has significant players in talent portfolios and offers wide-ranging experiences for talent strategy. And third, it is a timely publication when anti-immigrant sentiments are running high. He has skillfully marshaled a wealth of data, including field interviews in these countries, to produce a coherent narrative of global talent [...]

"Gi-Wook Shin's skillfully argued book will inspire students and scholars to rethink talent migration, education inequality, and the future of Asian economic development."

Read the complete review via The Developing Economies.


Advance praise for The Four Talent Giants:

"The Four Talent Giants is a wonderful book, full of new ideas and, especially, comparative empirical research. Gi-Wook Shin's ambitious treatment of the topic of human capital, or 'talent,' in the context of a globalized economy is very important and reading it will be a rewarding exercise for scholars, politicians, corporate leaders, and many others."
—Nirvikar Singh, University of California, Santa Cruz

"The current scholarly literature offers multiple country-specific talent formation studies, including those on the transformative role of skilled migration. However, few authors have dared to attempt a thorough cross-national analysis, comparing the nature and impact of policies across highly variable geopolitical contexts. The Four Talent Giants achieves this goal triumphantly, and accessibly, assessing the global implications of national experimentation for effective talent portfolio management."
—Lesleyanne Hawthorne, University of Melbourne
 

Related Research

Talent Flows and Development

APARC's Monographs Series with Stanford University Press

Studies of the Walter H. Shorenstein Asia-Pacific Research Center

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Toward a Portfolio Theory of Talent Development

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Toward a Portfolio Theory of Talent Development
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August 2024

Racism “Denial” in Asia: Critical Discourse Analysis of UN CERD State Reports, 1978–2023

Author(s)
Racism “Denial” in Asia: Critical Discourse Analysis of UN CERD State Reports, 1978–2023
Journal Articles
June 2025

Assessing Japan’s Innovation Policy Landscape

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Assessing Japan’s Innovation Policy Landscape
Working Papers
February 2025
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National Strategies for Human Resource Development Across Japan, Australia, China, and India

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Gi-Wook Shin
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Stanford University Press
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Estimating the Impact of Rural Hukou Status on Earnings for College Graduates in China

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A growing body of literature explores the effect of higher education on the urban–rural divide in China. Despite an increasing number of rural students gaining access to college, little is known about their performance in college or their job prospects after graduation. Using nationally representative data from over 40,000 urban and rural college students, we examine rural students’ college performance and estimate the impact of rural status on students’ first job wages in comparison to their urban peers. Our results indicate that once accepted into college, rural students perform equally as well, if not better, than their urban counterparts. Additionally, we discovered that rural students earn a 6.2 per cent wage premium compared to their urban counterparts in their first job after graduation. Our findings suggest the importance of expanding access to higher education for rural students, as it appears to serve as an equalizer between urban and rural students despite their significantly different backgrounds.

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The China Quarterly
Authors
Huan Wang
Claire Cousineau
Matthew Boswell
Hongbin Li

Does Having a Cadre Parent Pay? Evidence from the First Job Offers of Chinese College Graduates

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We estimate the wage premium associated with having a cadre parent in China using a recent survey of college graduates carried out by the authors. The wage premium of having a cadre parent is 15%, and this premium cannot be explained by other observables such as college entrance exam scores, quality of colleges and majors, a full set of college human capital attributes, and job characteristics. These results suggest that the remaining premium could be the true wage premium of having a cadre parent.

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Journal of Development Economics
Authors
Hongbin Li
Lingsheng Meng

Skill Biased Tax Policy Change: Labor Market Effects of China's VAT Reform

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This paper empirically investigates the labor market effects of China’s 2007 VAT reform, which significantly reduced the tax cost of capital investment. Employing city-by-year variation in the reform, we demonstrate that the tax cuts increased the earnings of skilled workers and left the earnings of the unskilled workers unaffected. Moreover, we find limited impacts of the reform on employment for both skill groups. These results suggest that the tax incentives increased the relative demand for skills, thus resulting in a higher income inequality between skilled and unskilled workers.

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Labour Economics
Authors
Hongbin Li
Lingsheng Meng

Labor Market Experience and Returns to College Education in Fast Growing Economies

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China’s college admission increased by five times between 1998 and 2009. While the college premium for young workers declined, that for senior workers increased in this period. In our general equilibrium model, a rising demand for skills (education and experience) explains both trends. A demand shock leads to an expansion in the elastic college enrollment, depressing the college premium for young workers. With an inelastic supply, experienced college graduates continue to enjoy a rising premium. Despite the low immediate premium, young individuals continue to flood into colleges because they foresee high lifetime returns. Simulations match empirical results well.

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The Journal of Human Resources
Authors
Hongbin Li

Job Preferences and Outcomes for China's College Graduates

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Despite private enterprises dominating China's labour market, college-educated workers are still highly concentrated in the state sector. Using data from the Chinese College Student Survey, we find that 64 per cent of students in the sample expressed a strong preference for state sector employment. We also identify several factors associated with receiving job offers from the state sector, including being male, holding urban hukou status, being a member of the CCP, performing well on standardized tests, attending elite universities and having higher household income or high-status parental backgrounds. These findings suggest that despite China's economic transition, the private sector may still struggle to attract highly educated workers.

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The China Quarterly
Authors
Hongbin Li
Lingsheng Meng

The International Empirics of Management

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A country’s national income broadly depends on the quantity and quality of workers and capital. But how well these factors are managed within and between firms may be a key determinant of a country’s productivity and its GDP. Although social scientists have long studied the role of management practices in shaping business performance, their primary tool has been individual case studies. While useful for theory-building, such qualitative work is hard to scale and quantify. We present a large, scalable dataset measuring structured management practices at the business level across multiple countries. We measure practices related to performance monitoring, target-setting, and human resources. We document a set of key stylized facts, which we label “the international empirics of management”. In all countries, firms with more structured practices tend to also have superior economic performance: they are larger in scale, are more profitable, have higher labor productivity and are more likely to export. This consistency was not obvious ex-ante, and being able to quantify these relationships is valuable. We also document significant variation in practices across and within countries, which is important in explaining differences in the wealth of nations. The positive relationship between firm size and structured management practices is stronger in countries with more open and free markets, suggesting that stronger competition may allow firms with more structured management practices to grow larger, thereby potentially raising aggregate national income.

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PNAS
Authors
Hongbin Li

Stanford Launches New Program on Capitalism and Democracy

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On April 1, Stanford University formally launched a new Program on Capitalism and Democracy (CAD), a collaboration between the Corporations and Society Initiative (CASI) at the Stanford Graduate School of Business and the Center on Democracy, Development and the Rule of Law (CDDRL) under the Freeman Spogli Institute for International Studies (FSI).

The program was unveiled by Jon Levin, the recently appointed incoming President of Stanford University who currently serves as Dean of the Graduate School of Business, alongside Kathryn Stoner, the Mosbacher Director of CDDRL. In his remarks, Dean Levin highlighted that CAD will "be centered exactly at the intersection of business decision-making, policymaking, and the foundations of democratic institutions." He commended the work of CASI and its founder, Anat Admati, for rigorously pursuing research on "inconvenient issues that we have often chosen to avoid or ignore" related to the role of corporations in society.

Kathryn Stoner further elaborated that "the program on Capitalism and Democracy will explore the complex interactions between democratic institutions, markets, and private sector participants." She indicated the initiative will examine a broad range of topics, noting that "sometimes corporations are causes for good and sometimes corporations may undermine the resilience and quality of democracy."

To mark the launch, CAD convened a discussion involving Professor Larry Diamond, the Mosbacher Senior Fellow in Global Democracy at FSI, Anat Admati, Professor of Finance and Economics at the GSB, and Global Witness Co-Founder Patrick Alley. Together, they focused on how the dynamics of capitalism don’t always align well with the principles of democracy. In their remarks, they addressed critical concerns such as the erosion of global democratic norms, a lack of good governance, rampant corruption, and “predatory capitalism.” They offered their insights into the challenges involved when both economic and political frameworks are of first-order importance but must be addressed in an environment of declining trust in institutions.

Admati opened by rejecting “false dichotomies” that frame the issues as stark choices between “capitalism and socialism” or “free markets and regulation.” She observed that capitalism can be thought of as “a set of markets that have institutions that are private sector based” but emphasized that “the private sector needs the government to protect its rights and to enforce its contracts. When you have markets at scale with people who don't know each other, you need institutions. You need contracts and contract enforcement.”

Larry Diamond, who has done extensive research on democratic trends and conditions around the world, brought up the paradox of the “resource curse,” the phenomenon by which developing nations with valuable natural resources often experience declines in democratic institutions as the proceeds from selling the resources get caught up in webs of corruption rather than being justly distributed for the benefit of the wider population. He claimed that “corruption and kleptocracy are at the core of underdevelopment in the world.”

Patrick Alley’s experiences at Global Witness made him very aware of corrupt politicians taking bribes from multinational oil companies. He recounted how “the politician takes money, and now their allegiance is inevitably shifting away from the electorate to their new money suppliers… so they'll start building a heavy mob around them, put big walls on the palace … and retreat into that. They don't want to lose the next election because this is going very nicely for them.” Alley summed up the cycle of corruption and concluded that “the democratic process is going to be screwed from within -- and you end up with autocracy.”

The discussion turned to exposing the role of enablers play in the persistence of systemic corruption. Enablers of corruption are not those who directly participate in illicit activities but rather are members of a “pinstripe army” (in Alley’s parlance) composed of platoons of bankers, lawyers, and accountants in global financial centers who facilitate illicit flows of money around the world. He observed that “corruption is a global industry.”

Acknowledging that corporations can be instrumental in driving economic prosperity and innovation, Admati reflected on her experience exposing the inadequacy of laws and regulatory tools that should place limits on the “pinstripe army,” She drew a sharp distinction between the private sector as “the engine of growth and the engine of innovation” and “financialized capitalism … the capitalism that is undermining democracy, the type we want to push back against. Once democracy asserts itself properly then we will be able to get the gains of capitalism.”

Diamond closed the conference by endorsing “individual enterprise and initiative—honestly earned, transparently conducted, rule-of-law-minded, with concern for the community. It's predatory capitalism that runs amok and breaks free of transparency and democratic regulation, that threatens fairness, human well-being, and democracy itself.”

CAD will be led by Prof. Anat Admati, with the support of Prof. Larry Diamond, Dr. Didi Kuo, Center Fellow at FSI, and Dr. Francis Fukuyama, Oliver Nomellini Senior Fellow at FSI.

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Examining the Dynamics of Corporate Power: CDDRL Launches New Program on Capitalism and Democracy

Led by Professor Anat Admati, the program explores how capitalism interacts with democratic institutions and how a better balance between them might be achieved.
Examining the Dynamics of Corporate Power: CDDRL Launches New Program on Capitalism and Democracy
Anat Admati
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How Banking Undermines Democracy

In a recent CDDRL research seminar, Anat Admati shared findings from her research on how banking practices can undermine democracy, which are highlighted in the new and expanded edition of her book, "The Bankers’ New Clothes: What is Wrong with Banking and What to Do About It" (Princeton University Press, 2024).
How Banking Undermines Democracy
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Larry Diamond, Patrick Alley, and Anat Admati
Patrick Alley (center) speaks on a panel with Larry Diamond (L) and Anat Admati (R) to launch the new Program on Capitalism and Democracy. | Saul Bromberger
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The Corporations and Society Initiative (CASI) at the Stanford Graduate School of Business and the Center on Democracy, Development and the Rule of Law at FSI collaborate to address democratic recession.

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