This study aims to estimate Korea’s imports and exports of key commodities. Korea’s trading of commodities has experienced a significant structural change over the past decade. In 1972, light industry products accounted for 2/3 of all exports from Korea, while heavy and chemical industry products represented a little over 20%. Over the course of the past ten years, exports of heavy and chemical industry products grew 29 times, while light industry products grew nine times, based on the current market price. As a result, the heavy and chemical industry accounted for 47% of all exports from Korea, surpassing the 45% represented by the light industry in 1982. During the same time period, imports of industrial raw materials and fuel increased 12 times, while capital goods increased 8.3 times, based on the current market price. This led to the expansion of the former’s importance from 52% to 64% of total imports, and to the contraction of the latter’s importance from 30% to 26%. Considering the rapid change that occurred in the market, any study relating to the understanding of the factors behind the change of the trade structure, the forecasting of its future and a more micro-level study of international trade on individual industries merits an import and export estimation broken down by commodity.
Findings from Korea’s import and export estimation show that the trend entails a high level of income elasticity. With the exception of crude oil, import function variables resulted in a high import elasticity that came close to level 2, while the long-term income elasticity of two export function variables went as high as level 5. Given the fact that the income elasticity of exports in most developed countries is at level 1 and 2, Korean’s number is rather astonishing. Should this trend continue in the future, Korea’s share of exports will continue to grow in the international trade market. This will inevitably be met with resistance from protectionists in many developed countries, which will in turn affect the income elasticity of Korea’s exports.
The estimated income elasticity is significantly higher than the price elasticity that relates to import or export prices. This implies that Korea’s trade balance will be more heavily affected by the real income level rather than by the fluctuation of import and export prices. The estimation shows that price elasticity, too, was higher for exports than for imports, as was the case with income elasticity. Research also showed that the production capacity variable would exert a considerable level of influence on export prices. A 1% expansion of the light industry’s production capacity was estimated to have a stronger effect on overall export growth and on foreign exchange earning than the same level of expansion in the heavy and chemical industry’s production capacity.
상품군별 수출입함수의 추정(Import and export estimation by commodity)
|Journal Title; Vol./Issue||한국개발연구:vol. 6(issue 3)|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Trade|
|Holding||KDI; KDI School|