Changes in Trade Intensity Between Korea and the Major EU Countries in the Manufacturing Sector
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This paper aims to analyze how Korea's trade intensity with the major EU countries (i.e., the U.K., France, Germany, Italy, and Spain) changed over time for the period of 2000-2005. For this purpose, we measured the trade intensity index, the trade complementarity index, and the special country bias index between Korea and her major trading EU countries through the trade intensity index model which was developed by Yamazawa (1970). The OECD trade matrix was used as data. According to the trade intensity index model, the trade intensity index can be decomposed into trade complementarity index and special country bias index. Here, the trade intensity index measures the degree of trade intensity which actually can exist between two countries. The trade complementarity is an expected intensity of trade given that the trade structures are principally determined by the comparative advantage theory under the conditions that there are no trade barriers, no transportation costs and no mutually favorable trade agreement like FTA. On the other hand, the divergence between the expected and the actual value of trade intensity defines the degree of special country bias. We found that Korea’ trade intensity with France, Germany, Italy, and Spain increased for the period of 2000-2005 due to (a) a considerably increase in Korea's special country bias with these countries except Spain and (b) a more or less increase in Korea's trade complementarity with these countries. Therefore Korea's special country bias with these countries should be enhanced further by increasing capital movements and reducing discriminatory tariffs and other import restrictions between Korea and these EU countries. It was also found that Korea's trade intensity with the U.K. during the period decreased from 1.02 to 0.79 mainly due to decrease in special country bias between Korea and the U.K.
Abstract
This paper aims to analyze how Korea's trade intensity with the major EU countries (i.e., the U.K., France, Germany, Italy, and Spain) changed over time for the period of 2000-2005. For this purpose, we measured the trade intensity index, the trade complementarity index, and the special country bias index between Korea and her major trading EU countries through the trade intensity index model which was developed by Yamazawa (1970). The OECD trade matrix was used as data. According to the trade intensity index model, the trade intensity index can be decomposed into trade complementarity index and special country bias index. Here, the trade intensity index measures the degree of trade intensity which actually can exist between two countries. The trade complementarity is an expected intensity of trade given that the trade structures are principally determined by the comparative advantage theory under the conditions that there are no trade barriers, no transportation costs and no mutually favorable trade agreement like FTA. On the other hand, the divergence between the expected and the actual value of trade intensity defines the degree of special country bias. We found that Korea’ trade intensity with France, Germany, Italy, and Spain increased for the period of 2000-2005 due to (a) a considerably increase in Korea's special country bias with these countries except Spain and (b) a more or less increase in Korea's trade complementarity with these countries. Therefore Korea's special country bias with these countries should be enhanced further by increasing capital movements and reducing discriminatory tariffs and other import restrictions between Korea and these EU countries. It was also found that Korea's trade intensity with the U.K. during the period decreased from 1.02 to 0.79 mainly due to decrease in special country bias between Korea and the U.K.
참고문헌 (14)
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