Benefits and Costs of Agricultural Protection in Korea

Abstract

By connecting the agricultural sector and other sectors of the economy general equilibrium model simulation calculation, results show that the protection policy in the agricultural sector is not only a burden on household spending, but also can reduce national income. If we lower the level of agricultural protection to the half of current level, the real income of Korea will increase 0.3 percentage points and South Korean household expenditures in the actual consumption will increase by 1 percentage point. Agricultural protection policy makes export-oriented manufacturing shrinking. If we ease or withdraw the policy of suppression farm income we can increase the export point to the type of international competitiveness of the manufacturing sector, thereby increasing the manufacturing sector, production, raise incomes and increase employment opportunities GATP model simulation results show that if Korea abandons agricultural protection, there will not be so much effect on its major trading partner-America and Australia. On the hand it will increase the national income and consumption, that will of course result in the expansion the Korean economy.