A Decade of Transformation: Changes in Bilateral Trade Structure and Evaluation of the Korea-China FTA
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Amidst the pervasive expansion of global uncertainty, trade and the associated division of labor between Korea and China are undergoing significant structural transformations. To accurately estimate the Korea-China Free Trade Agreement's effect, this study controlled for these various confounding factors to isolate the specific impact of the agreement on bilateral trade. We employed a multifaceted methodological approach, incorporating techniques such as Two-Way Fixed Effects (TWFE), the Staggered Difference-in-Differences (Staggered DiD) framework, and event study analysis. Furthermore, the scope of the investigation was delineated by analyzing both aggregate trade flows and trade disaggregated by end-use. The findings confirm that even when juxtaposed against underlying structural changes in both economies and the prevailing uncertainty in the global trade landscape, the Korea-China Free Trade Agreement successfully acted as a stimulant for bilateral trade.
Abstract
Amidst the pervasive expansion of global uncertainty, trade and the associated division of labor between Korea and China are undergoing significant structural transformations. To accurately estimate the Korea-China Free Trade Agreement's effect, this study controlled for these various confounding factors to isolate the specific impact of the agreement on bilateral trade. We employed a multifaceted methodological approach, incorporating techniques such as Two-Way Fixed Effects (TWFE), the Staggered Difference-in-Differences (Staggered DiD) framework, and event study analysis. Furthermore, the scope of the investigation was delineated by analyzing both aggregate trade flows and trade disaggregated by end-use. The findings confirm that even when juxtaposed against underlying structural changes in both economies and the prevailing uncertainty in the global trade landscape, the Korea-China Free Trade Agreement successfully acted as a stimulant for bilateral trade.