A Study on the Economic Impacts of the Korea-Australia Free Trade Agreement
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In the situation that negotiations for the conclusion of Korea-Australia free trade agreement(FTA) are underway, this study investigated the justification to support the FTA between the two countries. In order to examine the justification of the FTA, firstly, the author used revealed comparative advantage(RCA) and trade specialization index(TSI) methodology, which confirmed a significant, highly complementary trade and industrial structure between the two economies. In the same context, it turned out that bilateral liberalization of trade and investment between Australia and Korea will bring about increased GDP growth and welfare through the combined impacts of improved allocative efficiency, improved productivity growth, enhanced investment flows, and closer economic integration. Thus, although some political perspectives such as agricultural issues operate as an obstacle, it seems desirable for the Korean government to pursue FTA with Australia in an active manner. Moreover, the Korean economy may have to pay high opportunity cost if she neglects pushing forward the FTA with Australia because Australia's conclusion of FTA with other competing countries such as China and Japan may bring about losing the opportunities of market access and stable source of natural resources to the Korean economy.
Abstract
In the situation that negotiations for the conclusion of Korea-Australia free trade agreement(FTA) are underway, this study investigated the justification to support the FTA between the two countries. In order to examine the justification of the FTA, firstly, the author used revealed comparative advantage(RCA) and trade specialization index(TSI) methodology, which confirmed a significant, highly complementary trade and industrial structure between the two economies. In the same context, it turned out that bilateral liberalization of trade and investment between Australia and Korea will bring about increased GDP growth and welfare through the combined impacts of improved allocative efficiency, improved productivity growth, enhanced investment flows, and closer economic integration. Thus, although some political perspectives such as agricultural issues operate as an obstacle, it seems desirable for the Korean government to pursue FTA with Australia in an active manner. Moreover, the Korean economy may have to pay high opportunity cost if she neglects pushing forward the FTA with Australia because Australia's conclusion of FTA with other competing countries such as China and Japan may bring about losing the opportunities of market access and stable source of natural resources to the Korean economy.
참고문헌 (22)
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