The Impact of FTA on ICT Industries: The Case of the Korea-US FTA

Abstract

In this paper, we study the impact of the Korea-US FTA on information and communications technologies (ICT) industries, which have led Korea`s economic growth during the last decade. We first compare the competitive edge of two countries in ICT markets. Then we estimate the export and import demand elasticities. Empirical results show that the expected reduction of the trade surplus after the Korea-US FTA is $30.4 million, which is about 0.06% of the ICT trade surplus in 2005. Therefore, we can conclude that the FTA would not affect the current trade structure too seriously, at least in the short run. We also estimate induced production and value-added effects using input output analysis.