IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/2004-145.html
   My bibliography  Save this paper

A Reexamination of Korea’s Trade Flows: What Has Changed and What Explains These Changes?

Author

Listed:
  • Mr. Kevin C Cheng

Abstract

This paper reexamines Korea's trade flows. Using the standard demand-based models, the paper finds that owing to the increasing share of electrical and electronic products (EEPs) in total exports, the income elasticity of the Korean export demand has fallen sharply while its price elasticity has risen dramatically. This is a curious result, which begs the question of why. Accordingly, an alternative supply-based model shows that the sharp increase in exports of EEPs is mainly due to Korea's remarkable ability to make technological improvements in their production. After reestimating the standard import equation, the paper finds estimates similar to those from previous studies. Since most of these imports are industrial inputs, they are jointly determined by consumption, fixed investment, and exports.

Suggested Citation

  • Mr. Kevin C Cheng, 2004. "A Reexamination of Korea’s Trade Flows: What Has Changed and What Explains These Changes?," IMF Working Papers 2004/145, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2004/145
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=17447
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Muscatelli, Vito Antonio & Stevenson, Andrew A & Montagna, Catia, 1995. "Modeling Aggregate Manufactured Exports for Some Asian Newly Industrialized Economies," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 147-155, February.
    2. Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July.
    3. Takatoshi Ito & Mr. Tamim Bayoumi & Mr. Peter Isard & Mr. Steven A. Symansky, 1996. "Exchange Rate Movements and Their Impact on Trade and Investment in the APEC Region," IMF Occasional Papers 1996/011, International Monetary Fund.
    4. Krugman, Paul, 1989. "Differences in income elasticities and trends in real exchange rates," European Economic Review, Elsevier, vol. 33(5), pages 1031-1046, May.
    5. Lawrence, Denis, 1990. "An adjustment-costs model of export supply and import demand," Journal of Econometrics, Elsevier, vol. 46(3), pages 381-398, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Liu, Yi Yun & Gan, Christopher & Ward, Bert D., 2006. "The Impact of the Euro on New Zealand’s Bilateral Trade with the European Union," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 59(3), pages 329-354.
    2. Lin, Songhua & Ma, Alyson C., 2012. "Outsourcing and productivity: Evidence from Korean data," Journal of Asian Economics, Elsevier, vol. 23(1), pages 39-49.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David Norman, 2006. "Modelling Manufactured Exports: Evidence from Australian States," RBA Research Discussion Papers rdp2006-01, Reserve Bank of Australia.
    2. Mr. Gian M Milesi-Ferretti & Mr. Lorenzo Giorgianni, 1997. "Determinants of Korean Trade Flows and their Geographical Destination," IMF Working Papers 1997/054, International Monetary Fund.
    3. Chinn, Menzie D, 1999. "On the Won and Other East Asian Currencies," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 4(2), pages 113-127, April.
    4. Mariam Camarero & Cecilio Tamarit, 2003. "Estimating exports and imports demand for Manufactured goods: The role of FDI," European Economy Group Working Papers 22, European Economy Group.
    5. Bernardina Algieri, 2014. "Drivers of Export Demand: A Focus on the GIIPS Countries," The World Economy, Wiley Blackwell, vol. 37(10), pages 1454-1482, October.
    6. Funke, Michael & Ruhwedel, Ralf, 2001. "Export variety and export performance: empirical evidence from East Asia," Journal of Asian Economics, Elsevier, vol. 12(4), pages 493-505.
    7. Jakob Madsen, 2008. "Semi-endogenous versus Schumpeterian growth models: testing the knowledge production function using international data," Journal of Economic Growth, Springer, vol. 13(1), pages 1-26, March.
    8. Chinn, Menzie D., 2000. "Before the fall: were East Asian currencies overvalued?," Emerging Markets Review, Elsevier, vol. 1(2), pages 101-126, September.
    9. Ronald MacDonald, 2000. "The role of the exchange rate in economic growth: a euro-zone perspective," Working Paper Research 09, National Bank of Belgium.
    10. Yi Wu, 2008. "Growth, Expansion of Markets, and Income Elasticities in World Trade," Review of International Economics, Wiley Blackwell, vol. 16(4), pages 654-671, September.
    11. Athanasoglou, Panayiotis P. & Bardaka, Ioanna C., 2010. "New trade theory, non-price competitiveness and export performance," Economic Modelling, Elsevier, vol. 27(1), pages 217-228, January.
    12. Lilas Demmou, 2007. "Technical progress in North and welfare gains in South under nonhomothetic preferences," Working Papers halshs-00588310, HAL.
    13. Jonathan Perraton, 2003. "Balance of Payments Constrained Growth and Developing Countries: An examination of Thirlwall's hypothesis," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(1), pages 1-22.
    14. Ms. Sweta Chaman Saxena & Ms. Valerie Cerra, 2002. "An Empirical Analysis of China's Export Behavior," IMF Working Papers 2002/200, International Monetary Fund.
    15. Wim Naudé & Martin Cameron, 2021. "Export-Led Growth after COVID-19: The Case of Portugal," Notas Económicas, Faculty of Economics, University of Coimbra, issue 52, pages 7-53, July.
    16. Abdelaziz Rouabah, 2005. "Les déterminants du solde de la balance des transactions courantes au Luxembourg," BCL working papers 13, Central Bank of Luxembourg.
    17. Florian Verheyen, 2015. "The role of non-price determinants for export demand," International Economics and Economic Policy, Springer, vol. 12(1), pages 107-125, March.
    18. Matthew Higgins & Thomas Klitgaard, 2000. "Asia's trade performance after the currency crisis," Economic Policy Review, Federal Reserve Bank of New York, issue Sep, pages 37-49.
    19. Panayiotis P. Athanasoglou & Ioanna C. Bardaka, 2008. "Price and Non - Price Competitiveness of Exports of Manufactures," Working Papers 69, Bank of Greece.
    20. Cerra, Valerie & Saxena, Sweta Chaman, 2003. "How responsive is Chinese export supply to market signals?," China Economic Review, Elsevier, vol. 14(3), pages 350-370.

    More about this item

    Keywords

    WP; increasing returns to scale;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:2004/145. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Akshay Modi (email available below). General contact details of provider: https://edirc.repec.org/data/imfffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.