There is a positive relationship between the Free Trade Agreement between the United States and the high level of economic and social well-being of the South Korean citizen. The objective of this study is to verify the economic impacts of the US-South Korea Free Trade Agreement.
R ESEARCH B ACKGROUND
FTA
The Free Trade Agreement (FTA) is defined as a form of alliance between two or more countries. Today, most countries have signed free trade agreements with the aim of building conglomerates through which they can cope with global economic changes.
E XPECTED BENEFITS FROM FTA S
U.S.-K OREA T RADE F ACTS
O BJECTIVE OF THE S TUDY
S TRUCTURE OF THE S TUDY
P ROBLEM OF THE S TUDY
H YPOTHESES OF THE S TUDY
M ETHODOLOGY OF THE S TUDY
L IMITS OF THE S TUDY
The period of the old agreement and the amendment, which took place during the time of President Trump.
L ITERATURE R EVIEW
Study of Cheong (1999) analysis of the economic effects of a Korea-Japan FTA using a CGE model. The use of numerical or computational methods to determine non-cooperative Nash tariffs has since been part of the trade conflict literature.
H ISTORICAL B ACKGROUND OF FTA
2 The reform and the need for a more effective approach to the development of the United Nations is a major challenge. There are many concepts about the balance of trade as a whole of trade.
E CONOMIC E FFECT OF FTA
28Choi, M., (2007), KORUS FTA: What is the truly desirable direction of resolution? Presentation at a session of the FTA Research Center. I will examine some of the economic implications of the free trade agreement between the two countries and look at how it was reflected economically in the United States of America:
T RENDS IN E CONOMIC W ELFARE A NALYSIS
Therefore, the focal point of welfare is the standard of living, which must ensure that happiness for the self and society is achieved in the process of distributing a standard of income. It stipulates that the right to be at the level of the people who are benefited from change, the greatest risk of decline in the standard of care for individuals may be affected by change. In the optimal illustration of the use of the edge, the distribution of income on care can be achieved through a mean increase.
The optimal level of welfare and one in the case of the correct distribution of the total is when each entry goes to only one unit at each welfare level. From this portal, we will see the impact of the South Korea-United States Free Trade Agreement on the economic and social well-being of South Korean society.
R EASONS FOR EXPANSION OF FTA
Instead, the U.S. and Korean goals are to revise specific commitments using existing amendment procedures in the KORUS FTA. US trade with Korea is substantially in balance with the notable exception of the auto sector. We see here that one of the main reasons for the new agreement is the recognition by Korean officials that the U.S.
ISDS provisions have been a key concern of Korean critics of the KORUS-FLO, although the opposition has not derailed ratification of the trade treaty by the National Assembly. Meanwhile, US officials are trying to scrap that provision as part of the NAFTA overhaul.
T HE T REND OF FTA IN THE W ORLD E CONOMY
I NTERNATIONAL TRADE TRENDS
Economist Adam Smith establishes the first trend where the fragmentation of business at the global level leads to the specialization of countries in the provision of certain products. The second direction is that the economist Ricardo founded it because he thought that the absolute expenditure direction can only be applied to domestic trade and cannot be used in interpreting the structure of international trade. Modern resources, such as human resources, capital, technology, etc., and accordingly determines the international trade of agriculture based on the nature of the state's specialization in the production and export of products based on the acquired characteristics, classifying imports of natural resources. that the state cannot.
After years of discussions, 15 countries, with the exception of India, agreed to the terms of the trade agreement." 56. 57Whalley J., (2014), Korea and the Trans-Pacific Partnership: A Numerical Simulation Assessment of the Effects Involved, The World Economy.
T HE C ONTENTS OF FTA BETWEEN S OUTH K OREA AND USA
B EFORE FTA
Strategic factors have become issues on the bilateral economic front between the United States and South Korea. Since 2000, South Korea has become the seventh largest trading partner of the United States ahead of Western European countries such as France and Italy. South Korea was the seventh largest export market to the United States and the seventh largest exporter of imports.
South Korea is among the largest markets for agricultural products and beef in the United States. Below is a brief description of some of the major sector-specific conflicts between the United States and South Korea.
A FTER FTA
- T ARIFFS
- S OUTH K OREA ' S GDP
- S OUTH K OREA ' S GROSS N ATIONAL P RODUCT
- A TTRACTING INVESTMENT
- T RADE BALANCE (E XPORTS + I MPORTS )
South Korea GDP - data, historical chart and release calendar was last updated in February 2020 from its official source81. South Korea's Gross National Income - data, historical chart and release calendar and was last updated on February 2020 from its official source85. All these investment policies came after the amendment of the Free Trade Agreement between South Korea and the United States, which provides for the promotion of investments in both countries91.
Free Trade Agreement (FTA) shows that South Korea's trade surplus with the United States has decreased by nearly 6.8 percent since the amended free trade agreement between the two countries took effect.95. A preliminary estimate shows that South Korea's trade surplus increased to $4.1 billion in February 2020 from $2.8 billion in the same month of the previous year.
E STIMATION M ODEL
D ATA S OURCES
T HE R ESULTS OF E STIMATION AND THE I NTERPRETATION OF THE R ESULTS
GDP ANALYSIS
With the rate of change between pre-agreement at a GDP rate of 1.48, the percentage change in per capita income increased by an amount of 1.43, which is a positive indicator of the prosperity of Korean society. On the other hand, analyzes show that the annual growth rate of income per capital before the agreement in the period 2005-2010 was 3.6, according to the agreement. This shows that the agreement between Korea and the United States did not play a significant role in improving and raising the income per capital, and this is due to other economic and social reasons, although in our country it was found in the previous table that the GDP increased.
The findings of the research, that there is an increase in the gross national income, compared to the base year 2010, showing that there is a continuous increase in the annual growth rate (2.76), and we find that the GNI per capital has increased after signing the trade cheap, as it reached a growth rate of (2.41). Likewise, the purchasing power parity of the gross national product per capital increased in 2010 from (30400) to (39630), which shows that the indicators of the gross national income after the agreement were positive indicators, which was reflected in the economic economy . welfare of the Korean citizen.
E XPORT - I MPORT (T RADE B ALANCE ) ANALYSIS
The free trade agreement changed the balance of trade in favor of South Korea, so that exports to the United States became more than imports, and this is what the figures in the table above show, and therefore it is reflected in the level of Korean individual income. We note that industrial supplies and materials led imports from the US, accounting for 32.1% of Korean imports from the US. Motor vehicles, parts and engines led exports, accounting for 27.7% of Korean exports to the US.
Motor vehicles, parts and engines led industrial supplies and materials exports accounting for 32.1% of US. We find in the data of table 4-13 real indications of low customs tariff values for goods and services studied in the table (classification of goods).
E XPENDITURES
Expenditure Per capita, at constant prices (2010) and constant PPPs (2010), in US dollars As a percentage of gross domestic product As a percentage of total government. The government (different levels of government and social security funds, as social security and social assistance payments check social expenditure with financial flows. Total net social expenditure includes public and private social expenditure, and includes the effect of direct taxes (income tax and social security contributions) , indirect consumption tax on benefits and tax benefits for social purposes.
Public expenditure per per capita at constant prices (2010) and constant PPPs (2010), in US$ as a percentage of gross national income. Public expenditure per per capita at constant prices (2010) and constant PPPs (2010), in US$ as a percentage of gross national income.
S AVINGS AND I NVESTMENT
Likewise, the table shows the effects of the provisions of the free trade agreement between the two countries for investment to the high rate of investment, as shown in the following table no. Due to the suspension of work in the 2017 agreement due to US President Trump's request for this agreement, the percentage of US investment cases in Korea decreased from (2.1) in 2017 to (-11.2) in 2018. As a result of negotiations to amend the provisions of the trade agreement between the two countries which have not yet been approved.
This has led to an increase in Korean gross domestic product, which has led to an increase in the country's economic welfare. This was due to an increase due to the change in the terms of the agreement between them, because the provisions regarding investments in the United States allowed Korea to increase its investments in America.
G INI C OEFFICIENT
C ONSUMPTIONS
General public services Public order and safety Environmental protection Housing and community environments Health education Social protection Total. General public services Public order and safety Environmental protection Housing and community amenities Health education Social protection Total.
R ESEARCH F INDINGS
- G ROSS NATIONAL PRODUCT AND TARIFF
- T ARIFF AND T RADE B ALANCE
- I NVESTMENT
- E XPENDITURE : G OVERNMENT SPENDING
- C ONSUMPTIONS : G ENERAL CONSUMPTION AND CONSUMER SPENDING
- G INI C OEFFICIENT
There is a strong correlation between investment and gross domestic product, and the regression coefficient reached (903). The Durban Watson coefficient = 1.543, and this indicates that there is a positive relationship between gross national product and overall consumer spending. I also examined the relationship of the savings rate for individuals in the country with the Gini coefficient to reveal the level of economic well-being.
There is an intermediate correlation between the Gini coefficient and savings, and the regression coefficient according to the table below is = 57.7%. Durban Watson = 1.374, and this indicates that there is a positive relationship between the Gini coefficient and savings.
C ONCLUSIONS
There is an average negative correlation between tariffs and trade balance, where it has been proven that the lower the tariff, the higher the trade balance, which in turn is reflected in South Korea's economic well-being. There is a strong correlation between investment and GDP, and the regression factor (903) found that there is a direct correlation between investment and GDP to a large extent. The strength of the relationship is about 90.3%, and the coefficient of the relationship between investment and GDP (1397) has led to an increase in GDP, which in turn has been reflected in the economic well-being of South Korea.
There is a strong direct relationship between GDP and government spending, which has been shown that the higher the GDP, the higher the government spending, which in turn is reflected in South Korea's economic prosperity. There is a strong correlation between the Gini coefficient and public social spending that has been shown that lower public spending, i.e.
R ECOMMENDATIONS
Park, Y.S., (2011), The Impact of the US-Korea Free Trade Agreement on Both Economies, George Washington University. The USTR Archives, (2007), The Korea-US Free Trade Agreement: A Summary Assessment, Office of the United States Trade Representative. Wei, D., (2018), Estimating the Economic Impact of the US-South Korea Free Trade Agreement, University of Southern California.
Whalley J., (2014), Korea and the Trans-Pacific Partnership: A Numerical Simulation Assessment of Involved Effects, World Econ. AL., (2014), US-South Korea Free Trade Agreement KORUS FTA, CRS Report to Congress. 2012), Trans-Pacific Partnership (TPP) Countries: Comparative Trade and Economic Analysis.
