Trade, Reform, and Structural Transformation in South Korea

Caroline Betts, Rahul Giri and Rubina Verma ()
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Rubina Verma: Instituto Tecnológico Autónomo de México

IMF Economic Review, 2017, vol. 65, issue 4, No 3, 745-791

Abstract: Abstract We develop a two-country, three-sector model to quantify the effects of Korean trade policies for structural change from 1963 through 2000. The model features non-homothetic preferences, Armington trade, proportional import tariffs and export subsidies, and is calibrated to match sectoral value added data on Korean production and trade. Korea’s tariff liberalization increased imports and trade, especially agricultural imports, accelerating de-agriculturalization and intensifying industrialization. Korean subsidy liberalization lowered exports and trade, especially industrial exports, attenuating industrialization. Thus, while individually powerful agents for structural change, Korea’s tariff and subsidy reforms offset each other. Subsidy reform dominated quantitatively; lower trade, higher agricultural and lower industrial employment shares, and slower industrialization were observed than in a counterfactual economy with no post-1963 policy reform.

Keywords: F13; F14; F43; O14; O41 (search for similar items in EconPapers)
Date: 2017
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Working Paper: Trade, Reform, and Structural Transformation in South Korea (2017)
Working Paper: Trade, Reform, And Structural Transformation in South Korea (2013)
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DOI: 10.1057/s41308-017-0031-7

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