The Effect of Free Trade Agreement (FTA) on Small Open Economics: Implications for the Korea - US (KORUS) FTA

Abstract

Given that the KORUS / Korea-EU agreement has not been long put into effect and Korea-China agreement is not ratified, in order to extrapolate the effect of the KORUS FTA on Korea, the study explores simulation of economic effects of free trade agreements between Korea and advanced economies in the recent past. Combining results from previous research, the study draws economic effects and implications of KORUS FTA on Korea. In general, the Korean economy will achieve a quantitative economic expansion to a greater or lesser degree through KORUS FTA. We can find similar results on the research of KOREU and Korean-China FTA. FTA between a relative smaller open economy and a bigger market economy will give a driving force of economic growth on the functioning of the relatively small and open economies.