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Potential economic impacts of the Vietnam-Korea free trade agreement on Vietnam

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Frame of Image the Vietnam-Korea free trade agreement on Vietnam, by using general equilibrium modeling. The results show that Vietnam-Korea FTA will increase aggregate welfare for both countries in the long run. The most important gains accrue from better allocation of resources consequent to trade liberalization. All the sectoral differences and changes are consistent with the trade profiles of the two countries, and the long-run results are more pronounced than those of the short-run. In comparison with other ASEAN countries, the CGE analysis suggests that Vietnam‟s agriculture exports to Korea would especially rise in the long run. However, there will be strong competition in this sector among ASEAN members. Thus, an earlier conclusion of a comprehensive FTA with Korea is expected to be a good strategy for Vietnam, so as to avoid the direct competition with ASEAN members in the future. Keywords: Free Trade Agreement, General Equilibrium, GTAP, Vietnam, Korea, Trade Policy JEL classification: F1, F4, D5
I. INTRODUCTION
Vietnam-Korea relations have developed considerably since the establishment of diplomatic ties in 1992. The relationship has been rapidly deepened in all fields such as the political and economic, social and cultural fields and trade and investment, education and people-to-people exchanges. During the short period of two decades, there has been great progress in bilateral trade relations. Trade
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ⓒ Korea Institute for International Economic Policy
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Title Potential economic impacts of the Vietnam-Korea free trade agreement on Vietnam
Similar Titles
Material Type Articles
Author(English)

Phanm, Thanh Hoan; Jeong, Ji Young

Publisher

[Sejong]:Korea Institute for International Economic Policy

Date 2016-03
Journal Title; Vol./Issue Journal of East Asian Economic Integration:vol. 20(no. 1)
Pages 24
Subject Country South Korea(Asia and Pacific)
Vietnam(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Trade
Holding KIEP; KDI School

Abstract

This paper provides an assessment of the potential economic impacts of the Vietnam-Korea free trade agreement on Vietnam, by using general equilibrium modeling. The results show that Vietnam-Korea FTA will increase aggregate welfare for both countries in the long run. The most important gains accrue from better allocation of resources consequent to trade liberalization. All the sectoral differences and changes are consistent with the trade profiles of the two countries, and the long-run results are more pronounced than those of the short-run. In comparison with other ASEAN countries, the CGE analysis suggests that Vietnam‟s agriculture exports to Korea would especially rise in the long run. However, there will be strong competition in this sector among ASEAN members. Thus, an earlier conclusion of a comprehensive FTA with Korea is expected to be a good strategy for Vietnam, so as to avoid the direct competition with ASEAN members in the future.