A Reexamination of Korea’s Trade Flows : What Has Changed and What Explains These Changes?

Author/Editor:

Kevin C Cheng

Publication Date:

August 1, 2004

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper reexamines Korea's trade flows. Using the standard demand-based models, the paper finds that owing to the increasing share of electrical and electronic products (EEPs) in total exports, the income elasticity of the Korean export demand has fallen sharply while its price elasticity has risen dramatically. This is a curious result, which begs the question of why. Accordingly, an alternative supply-based model shows that the sharp increase in exports of EEPs is mainly due to Korea's remarkable ability to make technological improvements in their production. After reestimating the standard import equation, the paper finds estimates similar to those from previous studies. Since most of these imports are industrial inputs, they are jointly determined by consumption, fixed investment, and exports.

Series:

Working Paper No. 04/145

Subject:

English

Publication Date:

August 1, 2004

ISBN/ISSN:

9781451856576/1018-5941

Stock No:

WPIEA1452004

Price:

$15.00 (Academic Rate:$15.00)

Format:

Paper

Pages:

24

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