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World income and Korea's exports

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World Income and Korea's Exports
variety terms. For the years 1994 to 2004, the income elasticity for all products classified by the 4-digit SITC Revision 3 is around 0.39, which implies that a 10 percent increase in destination incomes is associated with a 3.9 percent increase in export quantity. The estimated elasticities show some variation across industries and destinations. This paper will be of interest to policy makers for predicting the evolution of international trade for the long term, and for analyzing the impact of trade reform and interventions.
1. Introduction
The importance of income elasticity on trade and growth cannot be exaggerated. Basically, the trade performance depends critically on the income elasticity of demand for each country s imports and exports. Since many papers have related trade flows to the importer s income and prices, many empirical economists have tried to obtain these valuable estimates of income elasticity. This principle was first examined in Houthakker and Magge s study (1969), which found that income and price elasticities differ substantially
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KIET Industrial Economic Review
across countries. Both this and other studies1) derived and estimated equations relating trade flows to the relative prices and incomes of importers. However, these studies have presented their findings under the assumption that each country produces one type or group of similar goods, which is referred to as the Armington assumpt


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Title World income and Korea's exports
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Material Type Reports
Author(English)

Kang, Kichun

Publisher

[Seoul]:Korea Institute for Industrial Economics & Trade

Date 2006
Journal Title; Vol./Issue KIET Industrial Economic Review:vol. 11(no. 5)
Pages 9
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Trade
Holding KIET; KDI School

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