Economic Assessment of Korea-EU FTA using a CGE Model with FDI
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This paper aims to quantify potential economic effects of the Korea‐EU FTA which became effective on 1 July 2011 using a global computable general equilibrium (CGE) model that explicitly takes into account foreign direct investment (FDI) and foreign commercial presence differentiated by the country of location and ownership. To highlight the importance of FDI and foreign commercial presence, a comparison of the impacts of trade liberalization through tariff elimination and the impacts of liberalization of barriers to FDI and foreign affiliate sales is made. The impacts of liberalization of barriers to FDI and foreign affiliate sales on the Korean economy are predicted to be much bigger than those of trade liberalization through tariff elimination. Major findings of this paper are that Korea’s real GDP and welfare are to increase, as a result of liberalization of barriers to FDI and foreign affiliate sales, by 1.5 to 5.76 times and 1.2 to 2.89 times, respectively, as much as in the case of trade liberalization through tariff elimination. Therefore, it is required to take into account not only the effects of tariff elimination but also the effects of liberalization of barriers to FDI and activities of foreign affiliates for any FTA that Korea pursues so as to prevent an underestimation of its potential economic effects.
Abstract
This paper aims to quantify potential economic effects of the Korea‐EU FTA which became effective on 1 July 2011 using a global computable general equilibrium (CGE) model that explicitly takes into account foreign direct investment (FDI) and foreign commercial presence differentiated by the country of location and ownership. To highlight the importance of FDI and foreign commercial presence, a comparison of the impacts of trade liberalization through tariff elimination and the impacts of liberalization of barriers to FDI and foreign affiliate sales is made. The impacts of liberalization of barriers to FDI and foreign affiliate sales on the Korean economy are predicted to be much bigger than those of trade liberalization through tariff elimination. Major findings of this paper are that Korea’s real GDP and welfare are to increase, as a result of liberalization of barriers to FDI and foreign affiliate sales, by 1.5 to 5.76 times and 1.2 to 2.89 times, respectively, as much as in the case of trade liberalization through tariff elimination. Therefore, it is required to take into account not only the effects of tariff elimination but also the effects of liberalization of barriers to FDI and activities of foreign affiliates for any FTA that Korea pursues so as to prevent an underestimation of its potential economic effects.
참고문헌 (33)
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