This study investigates how a Free Trade Agreement (FTA) among Korea, China and Japan contributes to the economic growth of each country. We first estimate the trade enhancing effect of the FTA of the three countries, and then estimate how this increased trade advances the economic growth. In addition, we explore how the FTA alters the industry structure of trade in each country and thereby influences the growth impact of the FTA.
In contrast to other studies on the economic effects of an FTA, our study relies on the actual data of the past experiences of the existing FTAs. In addition, by paying special attention to the three countries' close geographical location, we develop a new methodology that gives us a more realistic estimate of the trade creation effect of the three-country FTA.
The main body of the study consists of three chapters. In Chapter 2, we use the gravity model to estimate trade creation and trade diversion effects of the FTA or a regional trade agreement (RTA) in general. We included 19 multilateral RTAs such as the European Union (EU), the North America Free Trade Agreement (NAFTA), MERCOUSUR and ASEAN Free Trade Agreement (AFTA), and 49 bilateral RTAs. We extend the conventional gravity model so that we can capture different impacts of the RTA depending on geographical closeness between countries joining the RTA.
We find that an RTA in general enhances trade between members by 51.6∼67.4%. Trade creation is even higher by 35% between countries in close geographical positions. This indicates that the RTA among Korea, China and Japan would create trade even further between members than the general RTA does. We also find that trade between a member and a nonmember also increases by 6.5∼8.9%, indicating that the RTA does not divert trade from nonmembers.
In Chapter 3, we analyze how much the RTA increases GDP, by enhancing trade between members and trade between members and nonmembers. We first survey the previous studies in the literature that theoretically and empirically investigated the effects of the RTA on growth. Relying on the study by Frankel and Rose (2002), we estimate how openness (the ratio of trade to GDP) affects the growth rate of GDP. By adopting an instrumental variable, we avoid the bias that may be caused by the endogeneity of openness. We find that openness significantly enhances the growth rate of GDP.
Our estimates indicate that the FTA enhances the total trade volume for Korea, China and Japan by 85.75∼93.81%, by 49.71∼55.20% and by 23.19∼26.00% respectively. Trade creation for Korea is especially large because trade intensity of Korea with China and Japan is the largest. The increases in trade volume are estimated to raise the GDP of Korea, China and Japan by 5.2%, 3.1% and 1.4% respectively for over 25 years. In annual terms, the growth rates of Korea, China and Japan rise by 0.2%, 0.12% and by 0.06% respectively. Our analyses show that Korea is the largest beneficiary of the FTA in terms of income growth.
The growth impact of the RTA derived in the previous chapters is solely based on the magnitude of the total trade increased by the FTA. However, we also expect that the trade structure is affected as the FTA is formed among the three countries. In Chapter 5, we also consider how the changed trade structure influences the growth rate of each country. Traditionally inter-industry trade was the major venue among the three countries. More recently, however, the share of intra-industry trade (IIT), especially of the vertical rather than of the horizontal IIT, has been continuously increasing. We expect that the IIT will accelerate as the FTA is formed among the three countries. We also expect that the increase in IIT positively contributes to the growth perspective of the three countries.
Our analyses show that the FTA among Korea, China and Japan will promote growth for all three countries. The impact on Korea would be the largest. In addition to the growth effects due to increased trade, we also expect that the FTA among the three countries will accelerate the integration of the economies in East Asia, thereby generating further welfare enhancing effects in the area. However, the beneficial effects of the FTA will be obtained only when the elevated competition due to the enlarged market forces the economies to become more efficient. We expect that accumulation of human capital, R&D investments and macroeconomic stability will be essential for this purpose.

Ⅰ. 서론

II. 국가별 특징을 고려한 지역무역협정이 무역에 미치는 효과 분석 :
중력모형을 중심으로
1. 연구 방법과 자료
2. 기본모형의 추정결과
3. 자연적 무역상대국 간의 지역무역협정의 효과

III. 무역의 증가가 소득에 미치는 효과 분석
1. 무역과 성장에 관한 이론적 분석
2. 기존의 실증분석 연구
3. 무역 개방도가 소득에 미치는 영향 추정

IV. 한중일 간의 자유무역협정이 경제성장에 미치는 효과 분석
1. 한중일 자유무역협정이 무역에 미치는 영향
2. 한중일 자유무역협정 체결에 따른 개방도 변화가 소득에 미치는
영향
3. 기존 추정 결과와의 비교

V. 한중일간의 자유무역협정에 따른 무역구조 변화가 경제성장에 미치는 효과분석
1. 무역구조와 경제성장
2. 실증적 분석
3. 한중일 자유무역협정에의 시사점

VI. 결론