FTA is a bilateral and regional preferential trade system that is against the WTO rules(i.e. Most-Favoured-Nation Treatment and multilateralism). With starting FTA with Chile on the 1st April 2004, Korea pushes FTA with other countries like Singapore, Mexico. In particular, we can expect that FTA wi...
FTA is a bilateral and regional preferential trade system that is against the WTO rules(i.e. Most-Favoured-Nation Treatment and multilateralism). With starting FTA with Chile on the 1st April 2004, Korea pushes FTA with other countries like Singapore, Mexico. In particular, we can expect that FTA with Japan affects Korea overall economy, therefore now it is necessary for Korea to analyze on economic effects of Korea-Japan FTA. The purposes of this paper can be explained as followings. First, we analyze on changes of Korean manufacture productivities, employments and wages by trade creation effects. Second, we analyze on changes of Korean consumption and saving patterns by trade creation and diversion effects. Third, we estimate changes of total foreign direct investment and Japanese investment amounts against Korea by dynamic ffects. For these analyses, we examine theoretical analyses and models of Richard E. Baldwin and Frederic Robert-Nicoud(2000), James Brox(2003) and Ethier(1998). These studies show that variables connected with production, consumption and investment sectors could be affected by proxy of FTA or import price index of manufacturing industry products. Mutual influences or significance levels of those variables could be specified in long-term through forecasting error decompositions and the orthogonal impulse responses. A quarterly data from 1971 to 2003 was used for empirical purposes. The results of empirical analysis through impulse responses function can be summarized as follows. First, import price index(IPI) shock doesn't affect negatively manufacturing GDP, employment and wage in short-term production sector, but as time goes by, responses of manufacturing GDP and wage excluding employment tend downward. Second, while IPI shock affects positively consumption expenditures of private households, the response of total saving maintains almost regular level against IPI shock in consumption sector. Third, contrary to our expectations, both total foreign direct investment and Japanese investment amounts against Korea are on the decrease by IPI shock in investment sector. Next, the results of empirical analysis through variance decompositions can be summarized as follows. First, IPI shock is an important factor not for shift of employment and wage, but for manufacturing GDP all over period in production sector. Second, IPI shock in consumption sector turns out to be important for Korean consumption pattern in comparision with total saving pattern. Third, IPI shock is an unimportant factor for both increasing total foreign direct investment and Japanese investment amounts against Korea.
FTA is a bilateral and regional preferential trade system that is against the WTO rules(i.e. Most-Favoured-Nation Treatment and multilateralism). With starting FTA with Chile on the 1st April 2004, Korea pushes FTA with other countries like Singapore, Mexico. In particular, we can expect that FTA with Japan affects Korea overall economy, therefore now it is necessary for Korea to analyze on economic effects of Korea-Japan FTA. The purposes of this paper can be explained as followings. First, we analyze on changes of Korean manufacture productivities, employments and wages by trade creation effects. Second, we analyze on changes of Korean consumption and saving patterns by trade creation and diversion effects. Third, we estimate changes of total foreign direct investment and Japanese investment amounts against Korea by dynamic ffects. For these analyses, we examine theoretical analyses and models of Richard E. Baldwin and Frederic Robert-Nicoud(2000), James Brox(2003) and Ethier(1998). These studies show that variables connected with production, consumption and investment sectors could be affected by proxy of FTA or import price index of manufacturing industry products. Mutual influences or significance levels of those variables could be specified in long-term through forecasting error decompositions and the orthogonal impulse responses. A quarterly data from 1971 to 2003 was used for empirical purposes. The results of empirical analysis through impulse responses function can be summarized as follows. First, import price index(IPI) shock doesn't affect negatively manufacturing GDP, employment and wage in short-term production sector, but as time goes by, responses of manufacturing GDP and wage excluding employment tend downward. Second, while IPI shock affects positively consumption expenditures of private households, the response of total saving maintains almost regular level against IPI shock in consumption sector. Third, contrary to our expectations, both total foreign direct investment and Japanese investment amounts against Korea are on the decrease by IPI shock in investment sector. Next, the results of empirical analysis through variance decompositions can be summarized as follows. First, IPI shock is an important factor not for shift of employment and wage, but for manufacturing GDP all over period in production sector. Second, IPI shock in consumption sector turns out to be important for Korean consumption pattern in comparision with total saving pattern. Third, IPI shock is an unimportant factor for both increasing total foreign direct investment and Japanese investment amounts against Korea.
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#한·일 FTA
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