A Study on the Effects of FTA and Economic Integration on Throughput of Korea and China

Abstract

Trade relation of Korea and China has been growing explosively since the establishment of diplomatic relations in 1992. Now, China is important to the role of market in Korea. Therefore, it is very important to develop economy and trade relations. So in this study, we analyzed the impacts of FTA and economic integration on trade value using HS 85’s panel data of 45 countries trading with Korea from 1992 until 2013 by gravity model. It can be inferred how many impacts of Korea and China’s FTA on throughput. As a result, GDP and population were accorded with the basic gravity model; there was statistical significance in trade index (export similarity index; ESI, export and import price index) except trade complementarity index (TCI) as trade diversion effects. Finally, we proved trade-generating effect about FTA and economic integration as trade creation effects.