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Does the Gravity Model Explain South Korea’s Trade Flows?

Does the Gravity Model Explain South Korea’s Trade Flows? Abstract This paper applies the gravity model to explain South Korea’s bilateral trade flows and to extract practical trade policy applications. A trade structure and an Asian-Pacific trade network are included in the gravity equation to characterize the peculiarity of South Korea’s trade patterns. The empirical result shows that South Korea’s trade follows a Heckscher-Ohlin model more than an increasing returns or a product differentiation model. South Korea has large unrealized trade potentials with Japan and China, suggesting that they are desirable partners for an FTA. North-South Korean trade will expand markedly if bilateral relation normalizes and North Korea participates in APEC. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Japanese Economic Review Springer Journals

Does the Gravity Model Explain South Korea’s Trade Flows?

Sohn, Chan-Hyun
The Japanese Economic Review , Volume 56 (4): 14 – Dec 1, 2005
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References (34)

Publisher
Springer Journals
Copyright
2005 Japanese Economic Association
ISSN
1352-4739
eISSN
1468-5876
DOI
10.1111/j.1468-5876.2005.00338.x
Publisher site
See Article on Publisher Site

Abstract

Abstract This paper applies the gravity model to explain South Korea’s bilateral trade flows and to extract practical trade policy applications. A trade structure and an Asian-Pacific trade network are included in the gravity equation to characterize the peculiarity of South Korea’s trade patterns. The empirical result shows that South Korea’s trade follows a Heckscher-Ohlin model more than an increasing returns or a product differentiation model. South Korea has large unrealized trade potentials with Japan and China, suggesting that they are desirable partners for an FTA. North-South Korean trade will expand markedly if bilateral relation normalizes and North Korea participates in APEC.

Journal

The Japanese Economic Review – Springer Journals

Published: Dec 1, 2005

Keywords: economics, general; microeconomics; macroeconomics/monetary economics//financial economics; econometrics; development economics; economic history

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