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Decrease in the growth of domestic demand in Korea

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Frame of Image crisis. The dampened ripple effects are closely linked to the changed investment behaviors of the Korean large-sized exporting firms since the crisis: they do not invest in their export earnings any more to create new industries; they tend to use more foreign value added contents for their exports and to increase outward direct investment by actively participating in global value chains. The paper also examines a link between the growth of domestic demand and the growth of household disposable income and presents reasons for the decline in the growth of household disposable income since the East Asian financial crisis. Keywords: Domestic Demand, Dampened Ripple Effects, Household Income, Structural Problems, East Asian Financial Crisis JEL classification: E01, E21, F62
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I. INTRODUCTION
This paper investigates why the domestic demand growth in Korea has significantly slowed down after the East Asian financial crisis in 1997. The average growth rate of the Korean real GDP is about 9.4% in 1981-1995 before the East Asian financial crisis but about 3.7% in 2003-2014 after the crisis as
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This paper is developed from Chapter 2 of 2015 KIEP Annual Report, “Why has Korean economic growth and domestic demand slowed down since the Asian financial crisis?”. The author wishes to thank the anonymous referees and the Editor for helpful comments and suggestions which substantially improved our paper. This paper was supported by research funds of Chonbuk National University in 2015.
ⓒ Kore


Full Text
Title Decrease in the growth of domestic demand in Korea
Similar Titles
Material Type Articles
Author(English)

Moon, Seongman

Publisher

[Sejong]:Korea Institute for International Economic Policy

Date 2015-12
Journal Title; Vol./Issue Journal of East Asian Economic Integration:vol. 19(no. 4)
Pages 28
Subject Country Eastern Asia(Asia and Pacific)
South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Trade
Economy < Economic Conditions
Holding Korea Institute for International Economic Policy

Abstract

This paper investigates a link between the significant decline in the growth of domestic demand and the dampened ripple effects from the export sector in Korea since the East Asian financial crisis. The dampened ripple effects are closely linked to the changed investment behaviors of the Korean large-sized exporting firms since the crisis: they do not invest in their export earnings any more to create new industries; they tend to use more foreign value added contents for their exports and to increase outward direct investment by actively participating in global value chains. The paper also examines a link between the growth of domestic demand and the growth of household disposable income and presents reasons for the decline in the growth of household disposable income since the East Asian financial crisis.

User Note

This paper is developed from Chapter 2 of 2015 KIEP Annual Report, “Why has Korean economic growth and domestic demand slowed down since the Asian financial crisis?”. The author wishes to thank the anonymous referees and the Editor for helpful comments and suggestions which substantially improved our paper. This paper was supported by research funds of Chonbuk National University in 2015.