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Fifteen Years of Korea's FTA: Achievements and Policy Implications

Author

Listed:
  • Cho, Moonhee

    (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP))

  • Kim, Young Gui

    (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP))

  • Bae, Chankwon

    (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP))

  • Keum, Hyeyoon

    (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP))

  • Eom, Jun-Hyun

    (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP))

Abstract

Since signing the first free trade agreement (FTA) with Chile in 2004, Korea has established 16 FTAs with 57 countries including EFTA, ASEAN, EU, US, etc. In this study we examine whether Korea's FTAs have achieved their original objectives in the following three aspects: FTA network, product market openness and foreign direct investment (FDI). We find that Korea showed a high level of centrality during 2010-2016, but recently it has weakened slightly. The empirical analysis shows that FTAs have a positive effect on the increase in both exports and imports. We also find that FTAs have a positive effect on FDI. In addition, FTAs increased outbound foreign direct investment (OFDI) to both developed and developing countries, but increased inbound foreign direct investment (IFDI) only from developed countries.

Suggested Citation

  • Cho, Moonhee & Kim, Young Gui & Bae, Chankwon & Keum, Hyeyoon & Eom, Jun-Hyun, 2020. "Fifteen Years of Korea's FTA: Achievements and Policy Implications," World Economy Brief 20-38, Korea Institute for International Economic Policy.
    • Handle: RePEc:ris:kiepwe:2020_038
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    Keywords

    Korea; FTA; policy; network; product market; openness; foreign direct investment;
    All these keywords.

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