Korea's IT Trade with Major Partners (US, Japan, China) and its Impacts on Domestic Industry

우리나라 주요국(미국, 일본, 중국)과의 IT 무역과 국내 IT 산업으로의 파급효과

Information Technology (IT) has been working as an engine of growth in Korea since early 1990's. For the next leap of Korean economy and to overcome worldwide financial crisis, Korea's IT industry needs to find a new breakthrough. In this viewpoint, we tried to empirically analyze the impact of Korea's IT trade on domestic industry. Since Korean government is trying to set up a few free trade agreements (FTA) with major trade partners, more accurate understanding of the impact of FTA is required to find the correct way to promote Korea's IT industry. We first looked at the current status of Korea's IT trade with major partners such as the US, Japan, and China to understand the competitiveness of Korea's IT industry. Having done this, we measured the impact of IT trade on domestic industry using Granger causality test. The results showed that the positive impact of trade is bigger on IT industry than on whole industry. Also, the impact of import turned out to be bigger than that of export. Among the major trade partner countries, the US’s and China's impacts are bigger than Japan's impact. Another notable thing is that IT product import from the US has especially big impact on domestic IT industry. Our findings may have certain implications to the FTA related policy.