The Impact of South Korea's FTAs on Taiwan's Exports: an Application of Gravity Model
Date Issued
2016
Date
2016
Author(s)
Liu, Pei-Wen
Abstract
This study applies the gravity model as the theoretical framework to analyze the South Korean free trade agreements’s (FTAs) impact on Taiwan’s export. In this paper, South Korea is set as a signing number of FTAs within experimental group, while Taiwan is positioned in the control group with no FTA signed. By utilizing the macroeconomic data of South Korea and Taiwan from 2001 to 2015 , this paper will firstly reveal how the differences in exports multiplier between two countries are affected by these signed nine FTAs and then assess the trade diversion effect caused accordingly. The empirical results indicate that in the long-term these agreements lead to a 44.77% difference in export multiplier between South Korea and Taiwan. This proves the existence of the trade diversion effect for Taiwan. Based on the result, we can conclude that by signing FTAs with the advanced economies, it will not only mitigate the impact caused by trade diversion effect from South Korea but also boost Taiwan''s export.
Subjects
Taiwan
South Korea
Free Trade Agreement
The Gravity Model
Trade Transfer Effect
Type
thesis