This research seeks to examine the structural features of the impacts of invisible trade on the flow of Korea’s trade, thereby allowing policy makers to devise improvement plans.
The expansion of invisible trade over recent years is a major factor of the weakening balance of current accounts. Major events that took place throughout the 70s including the American Occupation during 1970-1973, the expansion of overseas construction business in the Middle East during 1977-1978, and the preparation for the Olympics during 1987-1988 all resulted in an invisible trade surplus. Other times, however, saw a deficit in the invisible trade balance. Some of the major reasons regarding this are: a large-scale utilization of foreign capital for economic development, an increase in travelers travelling abroad after overseas travel restrictions were eliminated in 1989, and an increase in charterage and port security expenses.
There are other reasons that can further explain this phenomenon as well. For example, indivisible trade recorded a surplus for a year in 1992, which ended up as only a single year event. The persistent deficit in invisible trade since the 1980s is fast increasing with increased costs in port security and charterage. This is a common phenomenon also faced by Japan and Taiwan, countries that share similar economic conditions. Moreover, a surplus in the invisible trade balance was possible until the 1990s as Korean citizens were restricted from travelling abroad while foreign travelers were attracted into the country. The sudden increase in foreign travelers since the 1988 Seoul Olympics was another contributing factor to the invisible trade’s recording of a surplus. However, the invisible trade balance started falling into a deficit state since 1991 as the number travelers going abroad surged with the elimination of travel restrictions. Aside from the huge influence from people’s travelling, others factors for the deficit include the influence from the gap between industrial investment overseas and foreign investments; the technological support of developed countries in other kinds of goods aside from services, income transaction, and invisible trade; and the decrease of surplus scale due to the increase in operational expenses of Korean companies abroad and commissions for authorized dealers.
In order to address these issues, a countermeasure approaching from both a middle and long-term perspective is in urgent need, containing action plans in various perspectives such as: expansion of technological infrastructure; promotion of local trademarks and brands; development of a regulation policy on cut-throat competition for technology/trademark adoption; active support for the reduction of logistics costs; more efforts to attracting foreign tourists; and the ultimate improvement of the invisible trade balance.
무역외수지의 구조적 특성과 개선방안(Study on the structural features of invisible trade balance and plans for its improvement)
|Series Title; No||정책포럼 / 제49호(9419)|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Trade|
|Holding||KDI; KDI School|