20 - TRADE POLICIES IN KOREA

Abstract

This chapter describes the trade policies in Korea. The extensive quantitative restriction (QR) and tariff protection (TP) systems that Korea had maintained throughout 1967–1979 did not prevent it from achieving high rates of growth in gross national product (GNP) and export expansion. Real GNP grew at about 9% per annum during 1962–1984, and domestic savings expanded from about 4% of GNP in 1953–1961 to about 25% of it in 1976–1984. Government saving was negative prior to 1964 and negligible in 1964–1966. It is found that on average it amounted to about 5.5% of GNP during 1967–1984, and about 40% of it may be regarded to have been financed by tariff revenues even though the actual rate of tariff was reduced from about 9.6% in 1967–1970 to about 6.7% in 1971–1984. It is observed that since the Korean government has been directly involved with various productive investment activities, the static negative effect of TP system has to be balanced by its positive contribution in reducing consumption and enhancing domestic savings.