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Could Imports be Beneficial for Economic Growth? Some Evidence from Republic of Korea

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  • Could Imports be Beneficial for Economic Growth? Some Evidence from Republic of Korea
  • Asian Development Bank (ADB)
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Title Could Imports be Beneficial for Economic Growth? Some Evidence from Republic of Korea
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Material Type Reports
Publisher

Asian Development Bank (ADB)

Date 2007
Series Title; No Economics Working Papers
Language English
File Type Link
Subject Economy < Trade

Abstract

The Republic of Korea is widely seen as a classical example of East Asia's export-driven economic growth. The focus in the literature on exports in the economy's growth has led to an almost complete neglect of the role of imports. This study investigates the relationship between exports, imports, and economic growth using quarterly data from 1980 to 2003. Results indicate that imports have a significant positive effect on productivity growth but exports do not. Furthermore, the evidence reveals that the productivity-enhancing impact of imports is due to competitive pressures arising from consumer good imports and technological transfers embodied in capital good imports from developed countries. Most of the study's results still hold using gross domestic product growth rather than productivity growth as the measure of economic growth. The evidence implies that under certain circumstances, import liberalization can make a positive and significant contribution to growth and development.