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Journal of Korea Trade
Journal Prestige (SJR): 0.124

Number of Followers: 1

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ISSN (Print) 1229-828X - ISSN (Online) 1229-828X
Published by Emerald

[362 journals]

Exports and job creation in South Korea: industry-level analysis
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  Authors: Unjung Whang
  Abstract: The Korean manufacturing sector has undergone structural changes in a transition from labor- to capital-intensive industries. These changes seem to be relevant to the weakening of the export effect on employment that began in 1990. In light of the importance of exports in the Korean labor market, the purpose of this paper is to shed light on the primary reasons why export growth does not lead to sufficient job creation as it did in the past. The authors first use the growth accounting approach to show that the weakening of the linkage between exports and employment is closely related to the composition of export products, which has changed toward being more labor-saving. An empirical analysis (i.e. first difference A-B generalized method of moments estimator) on the employment effect of exports confirms that as the capital-intensity of exports increases employment effect decreases. The main findings of the study can be summarized as follows. First, the reduction in the export effect on exports is highly correlated with changes in the composition of export products. Second, an increase in exports leads to an increase in manufacturing jobs, and the export elasticity of employment decreases as capital-intensity increases. Third, the export elasticity of employment tends to be higher when the export proportion of SMEs’ products is larger. Despite the many literatures on the link between exports and employment, there is no consensus on this topic. However, it is generally agreed that the employment effect of exports has been considerably weakened, compared to that of the past, at least in Korea. Nevertheless, few studies attempt to address why this trend has occurred. In this paper, we focus on the structural factors that are the major cause of the weakening of the virtuous cycle between exports and employment. This allows us to provide valuable information to policy makers who are concerned with developing export policies that are related to effective job creation.
  Citation: Journal of Korea Trade
  PubDate: 2019-03-04
  DOI: 10.1108/JKT-05-2018-0042
  Issue No: Vol. 23, No. 1 (2019)
The moderating effect of international trade on outside director system in
Korean firms
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  Authors: Yoonsung Nam, Tae-Joong Kim, Wonyong Choi
  Abstract: The purpose of this paper is to investigate the moderating effect of international trade on outside director system in Korean firms. The authors expected that Korean firms highly depending on international trade would mitigate the resource provision function of outside director system in order to reduce information asymmetry among global business partners. In addition, the authors tried to find out the functions of outside director system: the control function based on agency theory and resource provision function based on resource dependence theory. The authors tested the hypotheses by Poisson regression with 2011 and 2002 Korean-listed manufacturing firms. The dependent variable is the number of excessively appointed outside directors and independent variable is CEO type: family CEO or professional CEO. The moderating variable is the dependency on international trade measured by export proportion out of total sales. The authors found that not control but resource provision function was a main role of outside director system in Korean firms. The authors also found negative moderating effect of dependency on international trade, which means that firms highly depending on global market tended to consider outside director system as control function, namely “global standard.” This paper is the leading study that tries to analyze empirically the relationship between international trade and the function of governance mechanism; outside director system in Korean firms. It also confirms that Korean firms adopted outside director system on the basis of the resource dependence theory.
  Citation: Journal of Korea Trade
  PubDate: 2019-03-04
  DOI: 10.1108/JKT-05-2018-0038
  Issue No: Vol. 23, No. 1 (2019)
Reduction clause in an advance payment guarantee (AP-bond) under an
overseas construction contract
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  Authors: Sang Man Kim
  Abstract: The purpose of this paper is to review characteristics and functions of an advance payment guarantee (AP-Bond), and to analyse some legal and practical issues concerning a “reduction clause” in an AP-Bond under an overseas construction contract. This paper compares relevant provisions of the URDG 758, the UN Convention, the ISP 98, and the FIDIC Silver Book, and also cites relevant case laws of the USA, UK and Korea. This paper also refers many Korean scholars’ views on characteristics of an independent guarantee including an AP-Bond. A demand for payment under an AP-Bond shall not be honoured in the event that an employer wrongfully refuses to issue documents required for reduction of an AP-Bond. A beneficiary shall not be favoured by independence nature of an AP-Bond in case of fraud or abuse of right. This paper originally analyzes a “reduction clause” in an AP-Bond. This paper provides logics that a demand for payment shall not be honoured in the event that a beneficiary wrongfully refuses to issue documents required for reduction of an AP-Bond.
  Citation: Journal of Korea Trade
  PubDate: 2019-03-04
  DOI: 10.1108/JKT-06-2018-0050
  Issue No: Vol. 23, No. 1 (2019)
How does the duration of FTAs and BITs affect FDI attraction'
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  Authors: Backhoon Song, Ahreum Oh
  Abstract: The purpose of this paper is to analyze the effect of the duration of free trade agreement (FTA) and bilateral investment treaty (BIT) on the foreign direct investment (FDI) flows between OECDs and different level of income countries such as upper- and lower-middle-income countries. The authors applied the gravity model by adding more variables of interest such as trade openness, export volume, dummy and cumulative variables of FTA and BIT to find out the proper determinants of FDI attraction. Through Hasuman test, the authors find the fixed model is appropriate methodology. Hence, the authors basically use the fixed models to find the effect of the duration of FTA and BIT on FDI flows between different groups of countries. The main results of the study are briefly summarized briefly as follows. First, the effects of FTA dummy variables and its cumulative variables are greater than those of BIT dummy variables and cumulative variables. If an FTA signifies attracting FDI as well as bilateral trade, and contains an investment agreement provision in it is included in the FTA, it can be seen that the FTA is more effective way of attracting FDI than BIT because FTA is more comprehensive agreement dealing with not only investment issues but also non-investment ones. Second, the BIT effect on FDI is only meaningful when developed countries invest in developing countries. In other words, when a country decides to invest in a developing country with a relatively poor investment environment, whether to enter into a BIT will provide investors with investment stability to gage the investment climate of the host country. Third, the BIT cumulative year effect showed a positive and significant results on FDI inflow and outflow of all cases, unlike the BIT effect. While the fact that BIT cumulative effect has a relatively less positive effect than the BIT dummy effect, implying that BIT effect was evident as time elapsed after fermentation. The main contribution of this study is that we consider the duration of FTA and BIT explicitly in the model. Previous related studies tried to find out the effects of FTA and BIT on FDI by simply applying dummy variables of them. In this paper, by applying both dummy variables and cumulative variables of FTA and BIT that capture the duration effect, we can deeply understand the effects of national agreements dealing with investment clauses on FDI more dynamically.
  Citation: Journal of Korea Trade
  PubDate: 2019-03-04
  DOI: 10.1108/JKT-07-2018-0055
  Issue No: Vol. 23, No. 1 (2019)
Diversification effect of ship investment funds in South Korea
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  Authors: Jae-Boong Lee, Su-Han Woo, Jeong Seok Song, Byeongchan Seong, Keun-Sik Park
  Abstract: The purpose of this paper is to examine the diversification effect of the Korean Ship Investment Fund (KSF) under Markowitz portfolio theory by analyzing short-term and long-term relationships with stocks and bonds. For this purpose, unit root, correlation and cointegration tests are performed. Monthly data from 2004 to 2015 for stocks, bonds and KSFs are obtained for this study. The correlation coefficients indicate that KSFs are uncorrelated with stocks and negatively correlated with bonds, and no long-term equilibrium relationships exist with all three variables by the Johansen and Engle-Granger cointegration tests. This paper makes contribution to the literature as follows: first, whereas the previous literature investigated diversification effect of ship investment using freight indices or freight rates which are not able to represent returns from ship investment, this study is the first study to use actual stock prices of the KSFs to the authors’ best knowledge; and second, diversification effect of ship investment represented by KSFs is empirically verified in the both short term and long term. Policy-makers and managers of shipping companies can have sound ground that the KSFs are alternative and attractive assets to investors. It is also shown that the KSFs have potential to improve risk and return structure of investors on their own regardless of existence of incentives. Therefore, decisions of policy-makers can be made free from expectations for stronger incentives provided by the government. In addition, those countries that do not have such a ship investment platform may consider introducing a similar ship investment fund in order to revitalize the capital markets of the country. This study holds its significance in investigating diversification properties of the KSFs for the first time in Korea since the KSFs were introduced.
  Citation: Journal of Korea Trade
  PubDate: 2019-03-04
  DOI: 10.1108/JKT-06-2018-0051
  Issue No: Vol. 23, No. 1 (2019)

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