This paper analyzes the border effects between South Korea and North Korea, using international trade models with GeoDist database and EORA Input-Output Table. International trade flows depend on economic-geographical factors such as production levels and consumer tastes of exporting and importing countries, their physical and economic distances, and institutional and historical settings including discriminatory policies and ethical and linguistic identity. The border effect is defined as an asymmetric trade pattern between regions, and is estimated by the gravity trade model with a generalized nonlinear method of moment estimator to take into account an endogeneity problem between trades and economic growth factors. This paper finds that overall elasticity values of distance with respect to exports rapidly decreased in China, Japan and South Korea in 2000-2015 in spite of slightly increasing in the U.S. In addition, the equivalent distances to border effect tend to generally reduce in Northeast Asian Nations, and in particular, that of China to North Korea has substantially decreased from 2000 to 2015. Finally, it would be much cost-saving for South Korea and Japan to export goods to North Korea in a way of roundabout-exporting through China.
About the Speaker:
Prof. Euijune Kim is Professor of Regional Science and Planning in the Department of Agricultural Economics and Rural Development at Seoul National University. Professor Kim holds a PhD in Regional Science from Cornell University, and has expertise in the areas of regional economics, infrastructure policy, and CGE modelling. He has received numerous awards and prizes thanks to his crucial contribution to the regional science field, and his research outcomes have been widely published in the field’s major journals, including Papers in Regional Science, Urban Studies, and Real Estate Economics. Professor Kim was the president of the Korean Regional Science Association in 2014/15 and served as a chief editor for the Annals of Regional Science and the International Journal of Urban Sciences. He also holds visiting research professorships at the University of Hong Kong and the University of Illinois, Urbana-Champaign.
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