How Large Is the Impact of Exports on Economic Growth? New Evidence from the Korean Case

24 Pages Posted: 3 Oct 2019 Last revised: 19 Nov 2019

See all articles by Siwook Lee

Siwook Lee

KDI School of Public Policy and Management

Seungju Kim

Korea Development Institute (KDI)

Date Written: October 2, 2019

Abstract

The positive relationship between trade and economic growth is one of the most fundamental propositions in economics field. However, the existing empirical studies tend to have emphasized statistical significance of the trade-growth nexus, but they have paid less attention to the actual size of trade’s impact on economic growth. Is exports’ impact sufficiently large to justify the widespread pro-trade prescriptions to attain the long-term growth? In this respect, this paper empirically examines the impact of exports on economic growth, for the case of Korea since its economic take-off period in 1960s. We adopt two inter-related GDP decomposition methods to quantify the contributions of export to GDP growth from a historical perspective. We find that export’s contribution to GDP growth has been substantial. Specifically, the average contribution of net exports to growth for the period of 1960-2014 is 30.3 percent, which means that net exports accounts for 2.3 percent point per annum of Korea’s GDP growth. This figure is truly a remarkable one, taken into consideration that the average growth rates of developed and developing countries were 3.17 percent and 3.37 percent over the last five decades, respectively.

Suggested Citation

Lee, Siwook and Kim, Seungju, How Large Is the Impact of Exports on Economic Growth? New Evidence from the Korean Case (October 2, 2019). KDI School of Pub Policy & Management Paper No. 19-14, October 2019, Available at SSRN: https://ssrn.com/abstract=3462990 or http://dx.doi.org/10.2139/ssrn.3462990

Siwook Lee (Contact Author)

KDI School of Public Policy and Management ( email )

P.O. Box 184
Seoul, 130-868
Korea, Republic of (South Korea)

Seungju Kim

Korea Development Institute (KDI)

263 Namsejong-ro
Sejong-si 30149
Korea, Republic of (South Korea)

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