Simulation for Japan-Korea FTA and Its economic impacts on agriculture: A CGE approach

Jong Hwan Ko, Shoichi Ito

Research output: Contribution to journalArticlepeer-review

Abstract

This study aims at conducting a quantitative assessment of the potential economic effects of a Japan- Korea free trade agreement (FTA) on agriculture in both countries at the macroeconomic and microeconomic levels using a multi-region and multi-sector computable general equilibrium model. The GTAP model and GTAP database version 9 released in May 2015 are used for this study. There are three scenarios assumed for the Japan-Korea FTA: A 50% cut of tariffs on all imports between Japan and Korea, a 75% cut of tariffs and a 100% cut of tariffs. In addition, it is assumed that for each of the three scenarios total factor productivity (TFP) of Japan and Korea increases by 0.15%, as trade openness defined as a ratio of a sum of exports and imports to GDP rises by 1% as a result of the FTA and that labor supply increases by 0.8%, as real wage rises by 1%. Japan and Korea are predicted to get additional gains in terms of real GDP, welfare, exports and imports from the FTA. A higher degree of trade liberalization between Japan and Korea leads to bigger mac-roeconomic effects for both of them. However, its impact on their production and value-Added by sector varies.

Original languageEnglish
Pages (from-to)283-294
Number of pages12
JournalJournal of the Faculty of Agriculture, Kyushu University
Volume62
Issue number1
Publication statusPublished - Feb 2017

All Science Journal Classification (ASJC) codes

  • Biotechnology
  • Agronomy and Crop Science

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