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Implications of the Global Financial Crisis on Korea's Trade

Author

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  • Sangyeon Hwang

    (Gyeonggi Research Institute, 179 Pajang-dong, Jangan-gu, Suwon 440-290, South Korea.)

  • Hyejoon Im

    (School of Economics and Finance, Yeungnam University, Kyungsan 712-749, South Korea.)

Abstract

In this paper, we examine the channels through which the current global crisis affects Korea's trade and assess the implications thereof. These five important channels under investigation are: (1) world demand, (2) domestic demand, (3) exchange rate, (4) credit markets, and (5) protectionism. We conclude that the world demand channel is the most important factor for the recovery of Korea's exports. We expect that depreciation followed by the crisis should generate only small positive effects on a trade balance in the short run. However, depreciation can erode the long-term competitiveness of domestic firms because it can deteriorate not only firms' balance sheets but also banks' balance sheets. (c) 2009 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.

Suggested Citation

  • Sangyeon Hwang & Hyejoon Im, 2009. "Implications of the Global Financial Crisis on Korea's Trade," Asian Economic Papers, MIT Press, vol. 8(3), pages 46-81, Fall.
    • Handle: RePEc:tpr:asiaec:v:8:y:2009:i:3:p:46-81
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    Cited by:

    1. Miao Han, 2012. "The People's Bank of China during the global financial crisis: policy responses and beyond," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 10(4), pages 361-390, August.
    2. Francesca Giambona & Erasmo Vassallo, 2013. "Composite Indicator of Financial Development in a Benefit-of-Doubt Approach," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 42(2), pages 171-202, July.
    3. Dirk WILLENBOCKEL & Sherman ROBINSON, "undated". "The Global Financial Crisis, LDC Exports and Welfare: Analysis with a World Trade Model," EcoMod2009 21500092, EcoMod.
    4. Karov, Vuko & Roberts, Donna & Grant, Jason H. & Peterson, Everett, 2009. "An Empirical Assessment of Phytosanitary Regulations on US Fresh Fruit and Vegetable Imports," Conference papers 331832, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Mai, Nhat Chi, 2015. "Efficiency of the banking system in Vietnam under financial liberalization," OSF Preprints qsf6d, Center for Open Science.
    6. Nuruzzaman Mohammed, 2009. "Globalization and Resistance Movements in the Periphery: An Alternative Theoretical Approach," New Global Studies, De Gruyter, vol. 3(2), pages 1-31, November.
    7. Arjan de Haan, 2010. "The Financial Crisis and China’s “Harmonious Societyâ€," Journal of Current Chinese Affairs - China aktuell, Institute of Asian Studies, GIGA German Institute of Global and Area Studies, Hamburg, vol. 39(2), pages 69-99.
    8. repec:pra:mprapa:15377 is not listed on IDEAS

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