Quantitative estimates of the economic impacts of a korea-united states free trade agreement

Hongshik Lee, S. Backhoon

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

This paper investigates the bilateral trade pattern between South Korea and the United States and examines the economic impact of a Korea-United States (KORUS) free trade agreement (FTA). Three related general equilibrium approaches were used to investigate the effects of a KORUS FTA. The static general equilibrium model estimates the efficiency gains from resource allocation. The capital accumulation general equilibrium model includes the growth bonus from the increased incentives for savings and investment created by the static efficiency gains. The productivity enhancement general equilibrium model augments the capital accumulation model by taking into consideration the dynamic efficiency improvements from competitive effects in the economies over time. The last welfare gain turns out to be the biggest gain from the KORUS FTA, dwarfing the static efficiency gains. The results indicate that Korea could gain an estimated 0.32 to 5.97 percent in GDP from a KORUS FTA. Much of the gains that would accrue to Korea from the FTA with the United States would be productivity gains from increased competition between U.S. producers and domestic Korean producers. Another important area of gain for Korea would be increased efficiency from lower non-tariff barriers. This provides a strong argument for ensuring that an FTA between Korea and the United States is comprehensive and facilitates regulatory cooperation and the reduction of non-tariff barriers.

Original languageEnglish
Pages (from-to)52-73
Number of pages22
JournalAsian Economic Papers
Volume7
Issue number2
DOIs
Publication statusPublished - 2008 Mar 1
Externally publishedYes

Fingerprint

free trade
economic impact
Korea
equilibrium model
efficiency
capital accumulation
producer
productivity
increased efficiency
Economic impact
Free trade agreements
South Korea
savings
welfare
incentive
economy
resources
General equilibrium model
Efficiency gains

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance
  • Political Science and International Relations

Cite this

Quantitative estimates of the economic impacts of a korea-united states free trade agreement. / Lee, Hongshik; Backhoon, S.

In: Asian Economic Papers, Vol. 7, No. 2, 01.03.2008, p. 52-73.

Research output: Contribution to journalArticle

@article{7b814d9d2faf4e2aab1dbbc8aaaaf723,
title = "Quantitative estimates of the economic impacts of a korea-united states free trade agreement",
abstract = "This paper investigates the bilateral trade pattern between South Korea and the United States and examines the economic impact of a Korea-United States (KORUS) free trade agreement (FTA). Three related general equilibrium approaches were used to investigate the effects of a KORUS FTA. The static general equilibrium model estimates the efficiency gains from resource allocation. The capital accumulation general equilibrium model includes the growth bonus from the increased incentives for savings and investment created by the static efficiency gains. The productivity enhancement general equilibrium model augments the capital accumulation model by taking into consideration the dynamic efficiency improvements from competitive effects in the economies over time. The last welfare gain turns out to be the biggest gain from the KORUS FTA, dwarfing the static efficiency gains. The results indicate that Korea could gain an estimated 0.32 to 5.97 percent in GDP from a KORUS FTA. Much of the gains that would accrue to Korea from the FTA with the United States would be productivity gains from increased competition between U.S. producers and domestic Korean producers. Another important area of gain for Korea would be increased efficiency from lower non-tariff barriers. This provides a strong argument for ensuring that an FTA between Korea and the United States is comprehensive and facilitates regulatory cooperation and the reduction of non-tariff barriers.",
author = "Hongshik Lee and S. Backhoon",
year = "2008",
month = "3",
day = "1",
doi = "10.1162/asep.2008.7.2.52",
language = "English",
volume = "7",
pages = "52--73",
journal = "Asian Economic Papers",
issn = "1535-3516",
publisher = "MIT Press Journals",
number = "2",

}

TY - JOUR

T1 - Quantitative estimates of the economic impacts of a korea-united states free trade agreement

AU - Lee, Hongshik

AU - Backhoon, S.

PY - 2008/3/1

Y1 - 2008/3/1

N2 - This paper investigates the bilateral trade pattern between South Korea and the United States and examines the economic impact of a Korea-United States (KORUS) free trade agreement (FTA). Three related general equilibrium approaches were used to investigate the effects of a KORUS FTA. The static general equilibrium model estimates the efficiency gains from resource allocation. The capital accumulation general equilibrium model includes the growth bonus from the increased incentives for savings and investment created by the static efficiency gains. The productivity enhancement general equilibrium model augments the capital accumulation model by taking into consideration the dynamic efficiency improvements from competitive effects in the economies over time. The last welfare gain turns out to be the biggest gain from the KORUS FTA, dwarfing the static efficiency gains. The results indicate that Korea could gain an estimated 0.32 to 5.97 percent in GDP from a KORUS FTA. Much of the gains that would accrue to Korea from the FTA with the United States would be productivity gains from increased competition between U.S. producers and domestic Korean producers. Another important area of gain for Korea would be increased efficiency from lower non-tariff barriers. This provides a strong argument for ensuring that an FTA between Korea and the United States is comprehensive and facilitates regulatory cooperation and the reduction of non-tariff barriers.

AB - This paper investigates the bilateral trade pattern between South Korea and the United States and examines the economic impact of a Korea-United States (KORUS) free trade agreement (FTA). Three related general equilibrium approaches were used to investigate the effects of a KORUS FTA. The static general equilibrium model estimates the efficiency gains from resource allocation. The capital accumulation general equilibrium model includes the growth bonus from the increased incentives for savings and investment created by the static efficiency gains. The productivity enhancement general equilibrium model augments the capital accumulation model by taking into consideration the dynamic efficiency improvements from competitive effects in the economies over time. The last welfare gain turns out to be the biggest gain from the KORUS FTA, dwarfing the static efficiency gains. The results indicate that Korea could gain an estimated 0.32 to 5.97 percent in GDP from a KORUS FTA. Much of the gains that would accrue to Korea from the FTA with the United States would be productivity gains from increased competition between U.S. producers and domestic Korean producers. Another important area of gain for Korea would be increased efficiency from lower non-tariff barriers. This provides a strong argument for ensuring that an FTA between Korea and the United States is comprehensive and facilitates regulatory cooperation and the reduction of non-tariff barriers.

UR - http://www.scopus.com/inward/record.url?scp=70249109421&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=70249109421&partnerID=8YFLogxK

U2 - 10.1162/asep.2008.7.2.52

DO - 10.1162/asep.2008.7.2.52

M3 - Article

VL - 7

SP - 52

EP - 73

JO - Asian Economic Papers

JF - Asian Economic Papers

SN - 1535-3516

IS - 2

ER -