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Hwang, Young-Soon;Kim, Hong-Youl
- International Commerce and Information Review
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- v.14 no.4
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- pp.517-541
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- 2012
Since the Korea-Chile FTA in 2003, eight FTAs are now in force including Korea-EU and Korea-US FTA. The government anticipate that FTAs increase the GDP of Korea. Government-related research institutes officially reports the positive economic impact in Korea. However, the report does not show that how much Busan economy is affected by the FTAs. For this reason, we study the economic effects of FTAs in Busan. We compare the trade statistics before and after the time each FTA is in force. The resulting figures show that the exports and trades of Busan with the FTA nations increased significantly after the enforcement. For example, the exports to Chile increased by 273% when we compare the three-year average trade. We also construct an econometrics model to estimate the price elasticity. The estimated elasticity of exports for manufactured goods is 1.38 while that of imports is 0.83. Among the manufacturing industry, machinery has the highest price elasticity, 1.8. The average tariff for manufactured goods is 3.9% for FTA nations, while that is 5.8% for Busan. This higher price fall in Busan is offset by the lower price elasticity to make Busan's export increase be greater than Busan's import increase. Busan's export increases by 4.8% while import increases by 3.7%. So, it is expected to be added to the annual trade surplus of approximately $107million.
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Kim, Seong Ki;Kang, Han Gyoun
- International Area Studies Review
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- v.13 no.3
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- pp.759-780
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- 2009
The purpose of this paper is to analyse the effect of Korean FDI(1990-2008) in China by industries on exports and imports between two countries. We use time series regression, Vector Error Correction Model and Impulse Response Function as methodologies. Our findings through empirical tests are as follows. First Korean FDI in China increases Korean exports with China but shows a tendency to decrease due to the local content of China. Second Korean FDI in China increases Korean imports in SITC 8 with China. Finally Korean trade surplus caused by Korean FDI in China shrinks due to the decreasing of exports and increasing of imports in Korea. Korean FDI in China should be oriented host country's market oriented rather than production efficiency oriented because of unfriendly foreign investment environments in China.