An Institutional Perspective
Chapter 5: Korea’s Trade Policy in Transition
5. Korea's trade policy in transition 5.1 INTRODUCTION Korea's remarkable economic growth in the second half of the twentieth century has been well documented in the extensive literature. Government policy, especially the targeting of export-led industrialization, paved the way for Korea's economic success. Trade policy during the rapid economic growth period, which played an important role in achieving this economic success, included promotion of exports and restraining imports. This type of trade policy was justified in light of the narrow domestic market, the lack of natural resources, and the infant stage of domestic industries. It worked well under the cooperative international environments which were attributable to Korea's unique strategic position during the Cold War period, and to the open, liberal and rules-based multilateral trading system of the GATT and WTO. As a result of its export-driven development strategy, the Korean economy has come to be heavily reliant on trade, and Korea has been transformed into one of the globe's leading trading nations. Between 1970 and 2007, the trade reliance of the economy, as expressed by the ratio of trade (exports plus imports) to GDP, increased from 34.6 per cent to 75.1 per cent, one of the highest in the world. l Korea's exports in US dollars increased 413-fold, or an annual average of 17.7 per cent growth, while world exports increased by 42.5-fold, or an annual growth of 10.7 per cent (KNSO 2008; WTO 2008). In 2007, Korea's exports accounted for 2.8 per cent of world exports, maintaining its ranking...
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