Korea Trade Review (무역학회지)

Korea Trade Research Association (한국무역학회)
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FTA Effects of Secondary Auto-Part Venders in the Daegu Kyungpook Area

대구·경북지역 자동차 2차 부품기업의 FTA활용효과

  • Kim, Heeho (School of Economics and Int'l Trade, Kyungpook National University) ;
  • Cho, Joo-Eun (Department of Sociology, Kyungpook National University)
  • 김희호 (경북대학교 경제통상학부) ;
  • 조주은 (경북대학교 사회학과)
  • Received : 2019.05.13
  • Accepted : 2019.06.24
  • Published : 2019.06.30
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Abstract

This study examines the utilization effect of FTA on the sales and profit of the secondary auto-part suppliers in two aspects: 1) firm-level survey on the utilization of FTA and 2) statistical inference on the FTA effects on their sales and profit. We use the GLS statistical technique, panel and survey data of 130 secondary auto-part suppliers in the Daegu and Kyungpook area in 2007-2016. The evidence shows that the secondary auto-part suppliers struggle to prepare documents for the FTA certificates of origin due to their small firm size, although they utilize the FTA at the relatively high rate of 92 percent. Statistical evidence shows that an increase in the export of the first vender significantly affects the sale of the secondary auto-part vendors, but not their profit. The low profit and high managing cost of utilizing the FTA deteriorate the utilization effect of the FTA of the secondary auto-part vendors, which is a key factor in a global supply chain and for the competitiveness of the automobile industry. Government policies are required for the secondary auto-part suppliers to utilize the FTA more effectively and share the benefits of tariff reduction with first auto-part vendors under FTA transaction.

Keywords

Acknowledgement

This research was supported by Kyungpook National University Research Fund, 2019.

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