World Economy Brief
Fifteen Years of Korea’s FTA: Achievements and Policy Implications
- AuthorMoonhee Cho, Young Gui Kim, Chankwon Bae, Hyeyoon Keum and Jun-Hyun Eom
Since signing the first free trade agreement (FTA) with Chile in 2004, Korea has established 16 FTAs with 57 countries including EFTA, ASEAN, EU, US, etc. In this study we examine whether Korea’s FTAs have achieved their original objectives in the following three aspects: FTA network, product market openness and foreign direct investment (FDI). We find that Korea showed a high level of centrality during 2010-2016, but recently it has weakened slightly. The empirical analysis shows that FTAs have a positive effect on the increase in both exports and imports. We also find that FTAs have a positive effect on FDI. In addition, FTAs increased outbound foreign direct investment (OFDI) to both developed and developing countries, but increased inbound foreign direct investment (IFDI) only from developed countries.
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