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The Reduced Impact of Exports on Korea’s Economic Growth : A Demand-side Approach

Author

Listed:
  • Oh, Jong-seok

    (Korea Institute for Industrial Economics and Trade)

  • Hong, Sung Wook

    (Korea Institute for Industrial Economics and Trade)

  • Kang, Duyong

    (Korea Institute for Industrial Economics and Trade)

Abstract

After the global financial crisis, both export growth and economic growth have trended downward, while exports’ contributions to percentage change in GDP fell off markedly after 2011. For this study, we adopted an export multiplier approach by which exports’ indirect effects on the domestic economy via other elements of GDP, such as consumption, investments, and imports, can also be considered. The results of this study suggest that the importance of export-driven growth is declining, and that the trickle-down effect long regarded as the crucial mechanism powering Korean economic growth is currently malfunctioning. On top of that, due to external conditions, such as emerging global protectionism and the slowdown of the Chinese economy, many economists are warning that it is likely that the Korean economy will face unfavorable conditions and expect a slowdown in export performance. In this new, alien economic environment, the kinds of policies that once buttressed the export-led growth strategy of the halcyon days require immediate revision.

Suggested Citation

  • Oh, Jong-seok & Hong, Sung Wook & Kang, Duyong, 2018. "The Reduced Impact of Exports on Korea’s Economic Growth : A Demand-side Approach," Occasional Papers 18/2, Korea Institute for Industrial Economics and Trade.
    • Handle: RePEc:ris:kietop:2018_002
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    More about this item

    Keywords

    exports; export growth; export policy; trickle-down effect; trade policy; industrial policy; industrial strategy; income-led growth; income inequality; demand-driven growth; growth policy; consumption; export multiplier; growth strategy;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • F01 - International Economics - - General - - - Global Outlook
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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