• International Area Studies Review
• /
• v.20 no.1
• /
• pp.53-78
• /
• 2016

This study is to analyze the effects of both the bilateral FTA and a home and its trade partner's FTAs on the trade with 62 country-pair panel data over the period of 2003-2013 using the gravity model and the spatial autoregressive model. First, the study analyzes how the bilateral FTAs affect the trade using the gravity model and the spatial model. Next, the article analyzes how the home and its trade partners' FTAs affect their trade using only the spatial model under controlling the bilateral FTA. The empirical results are summarized as the followings: first, the spatial mode fits well more than the gravity model in analyzing the relationship between the bilateral FTA and trade. It implies that the spatial spillover effect of FTA is important in the international trade with FTA. Second, the bilateral FTA plays a role in expanding the trade between or among the FTA members as proved by the previous studies. Third, the more the home and its trade partners' FTAs, the more the bilateral trade are extended. Fourth, with the bilateral FTAs, as the home and its trade partners enter into more FTAs, the bilateral trade reduces due to trade diversion effects. In conclusion, this study provides a political implication that in order to increase the trade volume, a country enters into as many FTAs as possible because the effects of the bilateral FTAs would decrease.

• International Area Studies Review
• /
• v.14 no.2
• /
• pp.251-272
• /
• 2010

This study was done through Panel Gravity Model to analyze the trade pattern of Korean motor industry and empirical analysis was also performed on the effect of regional economies joining to the Korean trade is to draw out some implications. Compared with per capita pattern regarding the income levels of both the countries, the results indicated that trade of Korean motor industry followed GDP pattern in accordance with the overall market. The results of effect on regional economic integration to Korean motor industry reflected 179% and 198% increase in motor trade industry and motor parts trade, respectively. To expand the trade of Korean motor industry at the international competitiveness level, focus should be made on smaller, smarter and greener car with lesser impact on the environment. Hence, the present investigation suggested that government should not delay in retaining the core technology as well as private sector should also aggressively invest in the market.

• The Journal of Asian Finance, Economics and Business
• /
• v.8 no.5
• /
• pp.345-354
• /
• 2021

With the evolution of containerization and globalization of supply chains, aspects of port functions have made the transition from the sea to the inland region that forms the dry port. To explore the relationship between dry ports and regional economic development, this study uses a gravity model and forecast model to analyze 1,040 observations in 104 cities (22 dry port cities) along the Yangtze River Economic Belt (YREB) from 2008 to 2017. The model includes economic variables, logistics variables, foreign relations variables, and human capital variables. It was found that the dry port is positively correlated with trade volume. Compared with a city without a dry port, the trade volume of a city with a dry port will increase 0.099 times. It can be concluded that a dry port is crucial for the economic development of the YREB. It was also found that per capita GDP as an economic variable, road area and rail number as logistics variables, and foreign relation variables are positively correlated with trade volume, while the human capital variable has no significant effect on trade volume. In addition, governmental policy implications are addressed from the aspects of dry port and industry cluster caused by foreign investment.

• The Journal of Asian Finance, Economics and Business
• /
• v.7 no.12
• /
• pp.657-664
• /
• 2020

We investigate the impact of roads and highways within the provinces on the regional trade of China using the augmented Gravity Model and theory of modeling trade. We take a panel data covering 31 provinces of China over 20 years period (1998-2017) for the estimations. We apply ARMA-OLS model, fixed and random effects, and robust findings by Hausman test. The results imply that road and highway lengths within the provinces have a significantly positive impact on the value of the province-wise exports. The positive impact is due to the fact the increased coverage of roads and highways increase accessibility to resources and mobility of goods and services within the regions. Moreover, employment in the transportation sector, per capita GDP and population of the provinces also illustrate positive and significant influence on regional exports and trade. The impact of China's WTO accession on regional exports has been positive, while the financial crisis has had a negative impact. The year dummies show that, in the years following the financial crisis, China was able to regress from the external shock as trade within the provinces increased. The increase in exports after financial crisis is mainly due to the government policies and support to every province.

• Korea Trade Review
• /
• v.44 no.3
• /
• pp.289-305
• /
• 2019

Recently, each country has been using non-tariff barriers (Non-Tariff Barriers, NTB) as a new protection trade policy. In particular, TBT lies at the center of NTB. In this context, we examine the impact of Technical Barriers to Trade (TBT) on Korea's exports to ASEAN. Using 10-year statistics from 2007 to 2016 that came into effect with the ASEAN FTA, we analyze the impact of TBT on the Korean exports in the electrical machinery industry (HS85), which accounts for more than 30 percent of Korea's total exports to ASEAN. The results of the empirical analysis using a gravity model showed significant and positive effects in the variables of GDP and real effective exchange rate in each ASEAN country on Korea's exports to ASEAN. As expected, the tariff rate has a negative effect. As for TBT, the key variable of this study, the results are as follows. Although many previous studies reported that TBT has negative impacts on exports, this study could not find any significant impact of TBT and found that Korea's exports of electrical machinery to ASEAN countries are not affected by TBT. Various implications of these results are suggested.

• The Journal of Asian Finance, Economics and Business
• /
• v.8 no.3
• /
• pp.771-780
• /
• 2021

The study assesses the impact of tariffs on Vietnam's trade in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Research data was conducted between 2001 and 2018 on the official website of the Uncomtrade and the World Bank. This paper uses the gravity model to estimate the relationship between data series and considers the impact of factors on Vietnam's trade with CPTPP countries. The results have proven that tariff reductions have a positive effect on Vietnam's trade. Besides, the trade openness of Vietnam and CPTPP countries has positive impacts on Vietnam's trade. The study also shows that Real Effective Exchange Rate (REER) between Vietnam's and CPTPP countries' currencies has no strong effect on Vietnam's trade. Based on these findings, the article also suggests a number of policies to promote Vietnam's trade in future. In order to support businesses to better utilize opportunities and promote exports to CPTPP countries, the government of Vietnam should: (1) focus on reducing costs and time to participate in the market for production and business investors; (2) improve business investment environment to mobilize resources for production; and (3) continue to organize information campaigns to raise businesses' awareness of how to take advantage of CPTPP preferences.

• Korea Trade Review
• /
• v.44 no.1
• /
• pp.253-268
• /
• 2019

This paper analyses the characteristics of partner countries when multinational firms of Korea, China, and Japan make greenfield FDI in foreign countries. Particularly, this paper applies the gravity model for greenfield FDI flows for the period 2003-2017. This paper finds that multinational firms of Korea, as compared to those of China and Japan, are very significantly and negatively responsive to political risks of partner countries. In contrast, multinational firms of Korea as well as those of China and Japan tend to make greater amounts of greenfield FDI in financially high-risk countries. This result indicates that multinational firms from these three countries should take financial risks of partner countries into more serious consideration.

• East Asian Economic Review
• /
• v.23 no.3
• /
• pp.311-329
• /
• 2019

Since China's opening to international trade, the rapid growth of the country's export sector has been coupled by an intensification of migratory outflows of ethnic Chinese. The literature has already stressed the beneficial role of migration in enhancing bilateral trade. The present paper applies a gravity model in order to capture the impact of migration on Chinese exports for a relatively long period of time (1995-2017) where significant developments take place. We estimated four regressions, each of them confirming the positive network effects of migration for boosting export growth. Apart from the main finding, it appears that the role of institutional and geographical proximity can prove to be complementary for trade enhancement. The results finally suggest mixed effects due to the countries' import openness, indicating that China's free trade agreements acts as a substitute for smoothing trade competition from third countries.

• Korea Trade Review
• /
• v.43 no.2
• /
• pp.1-22
• /
• 2018

Utilizing OECD-WTO's Trade in Value Added (TiVA) data, this study investigates the effects of economic integration (EI) on TiVA Empirical results obtained from structural gravity specifications reveal that EI increases trade between member countries, irrespective the types of exports in final goods and intermediate goods as well as foreign value added in total exports and domestic value added in total exports. The empirical results also reveal that EI does not decrease the share of domestic value added in total exports.

• Journal of the Economic Geographical Society of Korea
• /
• v.13 no.3
• /
• pp.457-469
• /
• 2010

The study aims to estimate interregional trade coefficient of service industry using the gravity model. The gravity model has been widely used for prediction of the level of human interaction between two regions which is positively related to attraction of them and negatively related to the distance between them. To apply the gravity model for explaining the interregional trade flow of service industry, the choice of proper proxy variables which represent a dependent variable and independent variables is most important. However, the literature shows that there are few studies on this issue. Four models concerned to the choice of proxy variables are considered. Finally, this paper employs the least-squares regression analysis to test the model's goodness-of-fit, and suggests the most appropriate model based on the result from the analysis. The result shows that the interregional trade of service industry in regional input-output table developed by The Bank of Korea is desirable as a dependent variable, the service industry output of export region, the population of import region, and the spatial distance between regions are desirable as independent variables.