• Title/Summary/Keyword: CGE analysis

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The Impact of the Canada-Korea Free Trade Agreement as Negotiated

  • Ciuriak, Dan;Xiao, Jingliang
    • East Asian Economic Review
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    • v.18 no.4
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    • pp.425-461
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    • 2014
  • This paper analyzes the impact of the Canada-Korea Free Trade Agreement on the basis of the published text and agreed schedule of commitments. We find that the Agreement reinforces existing patterns of comparative advantage between Canada (agriculture and resource-based sectors) and Korea (autos and other industries). The sensitive sectors that held up the deal for years - autos into Canada and beef into Korea - witness major trade gains, but are not unduly disrupted. In both economies, the major output gains otherwise come in non-traded services sectors, driven by income effects. We find that trade diversion effects are quite significant; this lends support for the domino theory of major free trade agreements - since the Korea-EU agreement broke the ice, the pressure has intensified on third parties to re-level playing fields by striking their own deals. The study breaks new ground in modelling services trade by developing policy impacts based on the extent to which the text of the Agreement modifies Korea's and Canada's scores on the OECD's Services Trade Restrictiveness Index and by providing estimates of Mode 3 Services trade impacts. The analysis of the Agreement as negotiated, the present study, in our view, is a step forward in understanding the impact of modern free trade agreements.

Economic Impacts of Agricultural Water Shortages in Korea - A Combined Top-down and Bottom-up Model Analysis - (상·하향 통합모형을 활용한 농업 수자원 부족의 경제적 효과 분석)

  • Lee, Seoung-Ho;Kwon, Oh-Sang;Kang, Sung-Won
    • Journal of Korean Society of Rural Planning
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    • v.23 no.4
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    • pp.111-126
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    • 2017
  • This study analyzes the impacts of agricultural water shortages in Korea using a combined top-down and bottom-up model. A multi-region multi-output agricultural sector model with detailed descriptions of production technologies and water and land resource constraints has been combined with a standard CGE model. The impacts of four different water shortage scenarios were simulated. It is shown that an active adaptation of crop choices occurs in even the regions with relatively abundant water resources in order to respond to the change in relative output prices caused by water shortages. We found that although the losses in production values are not quite large despite water shortages due to the price feedbacks, the loss in GDP is substantial. We show that our combined approach has advantages in deriving region and product specific production effects as well as the overall GDP loss effect of water shortages.

The Economic Impact of Changing the Status of Korea to a Developed Country in WTO Negotiation (한국의 WTO 선진국 지위 전환에 따른 경제적 효과)

  • Song, Backhoon
    • Korea Trade Review
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    • v.44 no.5
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    • pp.29-43
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    • 2019
  • This study aims to estimate the economic effect of Korea's transition to a developed country in WTO negotiations. If Korea develops into an advanced country, it must give up many advantages in the agricultural sector. In particular, limiting the scope of sensitive items, giving up the selection of special items, and drastic tariff reductions are expected to have greater negative effects on the agricultural sector. According to research results, Korea's GDP rose slightly from 0.2 to 0.8 percent following the DDA settlement. Especially when China is classified as an advanced country along with Korea, Korea's GDP appears to be growing even more. On the other hand, damage is expected in most areas of agriculture. The trade deficit in the agriculture sector is expected to widen as output in the agricultural sector decreases, and import growth exceeds export growth. In the non-agricultural sector, there are no significant differences in the change in WTO status. However, if China is grouped together as an advanced country, the export growth rate of the Korean manufacturing industry appears greater.

Re-Evaluation of Free Trade Agreement: Changes in Global Value Chain and Regional Value Contents

  • Lim, Byeong-Ho;Ji, Seong-Tae;Yoo, Jeong-Ho
    • Journal of Korea Trade
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    • v.26 no.2
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    • pp.65-83
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    • 2022
  • Purpose - The purpose of this study is to evaluate the economic effects of FTAs using the concept of value-added exports. So far, the economic effects of FTAs have been dependent on decrease in import prices due to tariff cuts in importing countries, but the actual tariff reduction need to consider the value added of the exporting countries. Design/methodology - Value-added export refers to the added value created in the exporting country out of total exports. Among value-added exports, direct value-added export is interpreted as the Regional Value Contents (RVC), from which the economic effect of the FTA can be analyzed. A modified GTAP-VA model takes into account RVC in order to estimate accurate effects of FTAs. Findings - By the re-evaluation of the FTA based on the RVC, this paper makes it clear that the economic effects of the existing FTA methodology have the possibility of overestimation. In addition, as a new FTA with a strengthened Rules of Origin (ROO) is being initiated, a negative impact on international trade and GVC utilization may occur. Originality/value - This study introduces the concept of value-added export in analyzing the effects of FTAs. The new analysis methodology of this paper emphasizes the importance of value-added exports. Re-organization of GVCs would change regional trade agreements and empower ROO by weakening existing GVCs and transforming the value chain from global into regional scope.

The effect of international linkage of emissions trading markets on Korean industries (배출권거래제의 국제적 적용이 한국산업과 무역에 미치는 효과)

  • Kyungsoo Oh
    • Korea Trade Review
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    • v.47 no.1
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    • pp.115-130
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    • 2022
  • In this study, I focus on analyzing how the effects of implementing ETS are different depending on whether Korean ETS linking with carbon markets in other countries. The global computable general equilibrium (CGE) model built in this study analyzes the chages in the production and trade of industrial sectors according to the international linkage of ETS compared to the reference scenario of emissions reduction targets and implementation of ETS. From the analysis of internatioanl linkage of carbon markets scenarios, Annex B countries-South Korea carbon market linkage with individual ETS in China worse the economic outcomes in South Korea the most. This means South Korea lose the international competitiveness compared to China in this scenario. On the other hand, Annex B-China carbon market linkage with Korean individual ETS implementation reduce the decreases in production and trading. The most effective way is to join a global emissions trading market with China. The results are consistent in most industries of South Korea. These results are caused by that the supply of emission allowance is increased and the price of emissions allowances is dropped by China's participation to the carbon market, which can be understood to reduce the carbon reduction cost for industrial sectors. In addition, it can be also concluded that the determinant of the negative impact of ETS on changes in production and trade is more sensitive to the price of emissions allowances than to the characteristics of production and trade structure.

Optimization of microwave-assisted extraction process for blue honeysuckle (Lonicera coerulea L.) using response surface methodology (반응표면분석법을 이용한 댕댕이 기능성성분의 마이크로웨이브추출조건 최적화)

  • Park, Daehee;Lee, Jae-Jun;Park, Jongjin;Park, Sanghwan;Lee, Wonyoung
    • Food Science and Preservation
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    • v.24 no.5
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    • pp.623-630
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    • 2017
  • Functional compounds including flavonoids, anthocyanins, polyphneols and antioxidants were extracted from blue honeysuckle (Lonicera caerulea L.) using highly efficient microwave-assisted extraction. And extraction process was modeled and optimized according to response surface methodology (RSM). The independent variables ($X_n$) were ethanol concentration ($X_1$: 0, 25, 50, 75, 100%), irradiation time ($X_2$: 1, 3, 5, 7, 9 min), and microwave power ($X_3$: 60, 120, 180, 240, 300 W). Dependent variables ($Y_n$) were total flavonoid contents ($Y_1$), total anthocyanin contents ($Y_2$), total polyphenol contents ($Y_3$) and antioxidant activity ($Y_4$). Four-dimensional response surface plots were generated based on the fitted second-order polynomial models to get optimal conditions. Estimated optimal conditions for 4 responses were ethanol concentration of 54-72%, irradiation time of 7.1-7.6 min, and microwave power of 243-251 W. Ridge analysis predicted the maximal responses of total flavonoid content, total anthocyanin content, total polyphenol content and antioxidant activity were 38.00 mg RE/g, 6.80 mg CGE/g, 14.90 mg GAE/g, 89.10%, respectively. Verification experiment was carried out at predicted optimal conditions and experimental values for total flavonoid content, total anthocyanin content, total polyphenol content and antioxidant activity were 38.10 mg RE/g, 6.72 mg CGE/g, 14.91 mg GAE/g and 89.13%, respectively. No significant difference was observed between predicted and experimental values, indicating good fitness of fitted model and successful application of RSM.

Economic Effects of FTA Logistics Hub Utilizing Direct Transportation Rules of Origin in RCEP (RCEP 직접운송원칙을 활용한 우리나라의 FTA 물류 허브 가능성과 경제적 효과)

  • Byeong-Ho Lim
    • Korea Trade Review
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    • v.46 no.3
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    • pp.135-149
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    • 2021
  • This study analyzes the economic effect through the use of the RCEP direct transport rules, and suggests the necessacity of logistics efficiency and policy alternatives. The advantage of the hub network has been widely applied to the international logistics system, but there is a limit in the FTA logistics system in which goods must be directly transported between two contracting parties. Therefore, based on the new RCEP direct transport rules and the theoretical review on the possibility of an FTA logistics hub, FTA logistics efficiency improvement is estimated. This study quantitatively estimated the economic effect of direct transportation, unlike the previous studies, which were limited to the analysis of judicial precedents or surveys. GTAP model was used through five scenarios according to the impact of the RCEP tariff cut and the FTA logistics hub establishment in Singapore or Korea. As a result of the analysis, Korea's trade volume increased by 0.38% of exports and 1.63% of imports, and RCEP would increase exports by 0.27% and imports by 0.42%. In particular, the establishment of an FTA logistics hub (0.71%) was found to have a greater effect on the improvement of terms of trade than a tariff cut (0.12%), confirming the necessity of establishing an FTA logistics hub in RCEP. As a policy proposal, the institutional support of the customs authorities for the use of RCEP, the expansion of the free trade area where BWT traded cargo can be stored, and the establishment of a system for issuing back-to-back certificates of origin with approved exporters.

Voluntary Agreements on Energy Conservation and Emission Reduction -Economic Analysis Using a Dynamic CGE Model- (자발적 협약의 에너지 절감과 온실가스 감축효과 -동태적 연산일반균형모형을 이용한 경제적 분석-)

  • Jo, Sunghan;Lim, Jaekyu
    • Environmental and Resource Economics Review
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    • v.15 no.1
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    • pp.95-133
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    • 2006
  • This research first reviewed and analysed the current domestic situation of the voluntary agreement implementation and then it developed the policy implementation scenarios which will be applied to the model, KORTEM_ V.2. The model, consisted with 83 industries and commodities, examined the economic and environmental impacts of this policy instrument. Depending on the efforts of participating sectors and agents for fuel substitution and energy efficiency improvement, it has been evaluated that the voluntary agreement could be the "no-regret" policy. In other words, if the participating sectors and agents can achieve the voluntary energy conservation and emission reduction target without the negative impact on output level, the reduction of national emission will be achieved by creating the economic benefit, simultaneously. Therefore, for the successful implementation of voluntary agreement, this study emphasized the importance of expansion and strengthening of the current financial and institutional support for participating sectors and agents.

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The Effect of a Change in Natural Gas Price on Korean Economy (천연가스가격 변화의 경제적 효과)

  • Shin, Dong-Cheon
    • Environmental and Resource Economics Review
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    • v.17 no.2
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    • pp.313-326
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    • 2008
  • This paper is concerned with the effect of an increase in the import price of LNG on the Korean economy and industries. A computable general equilibrium analysis is applied to compute the comparative-statical effect of 10% rise of LNG price. The price increase places relatively heavy burden on the city gas, oil products and thermal power, decreasing their outputs and domestic sales by relatively larger percentages than other industries. The 10% increase in the LNG price reduces GDP by 0.4% and raises the general price level by 0.08%. The increase in oil price resulting in the same decreasing rate of GDP caused by the 10% LNG price rise turns out to raise the general price level and reduce the consumer's welfare in terms of equivalent variation by less percentage than the increase in LNG price.

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Analysis of the Impacts of Carbon and Energy Taxes on Energy on Energy System in Korea (META·Net모형을 이용한 탄소세와 에너지세의 정책효과 비교분석)

  • Shin, Eui Soon;Kim, Ho Seok
    • Environmental and Resource Economics Review
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    • v.12 no.2
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    • pp.275-298
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    • 2003
  • This paper compares the economic effects of climate policy options in Korea. The impacts and implications of carbon and Btu tax schemes are analyzed using the META Net modeling system, which was developed at the Lawrence Livermore National Laboratory (LLNL). Findings indicate that carbon tax is more cost effective compared to Btu tax, but this does not necessarily mean the former is more desirable than the latter. Energy market stability and national energy security is equally important in choosing policy options. Moreover Btu tax is more effective in reducing energy consumption in general. It reduces not only carbon intensive energy sources, but non-fossil fuel like electricity. Korean economy consumes too much energy and energy efficiency is very low compared to other OECD countries. So the reduction of energy demand growth should be the first priority of the national energy policy in Korea.

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