A Korea-Kenya Free Trade Agreement and Its Economic Impact: A Computable General Equilibrium Approach

Geoffrey Musyoki Kitetu(Geoffrey Musyoki Kitetu ),Jong-Hwan Ko(Jong-Hwan Ko),Esambe Sone(Esambe Sone) 한국무역연구원 2023 무역연구 Vol.19 No.1

Purpose – This study assesses the impact of a potential Korea-Kenya FTA on the global economy, which includes the US, EU, UK, China, and Japan, using the Global Trade Analysis Project (GTAP) model. Design/Methodology/Approach – The study employs a static global multi-sector CGE model using the GTAP database version 10 with the base year of 2014. For this study, we aggregate the 141 regions and 65 sectors of the GTAP database into 16 regions and 57 sectors. Four policy simulations were implemented based on tariffs and ad valorem equivalents (AVEs) of non-tariff measures (NTMs) estimated by Kitetu and Ko Jong-Hwan (2021). Findings – Simulation results suggest that the real GDP of Korea will likely increase by 0.001% to 0.002%, with welfare increasing by US$1.8 million to US$74.7 million. In comparison, the real GDP of Kenya will likely rise by 0.003% to 0.045%, while welfare will rise by US$1.8 million to US$ 75.3 million. Imports by both countries will rise at a higher rate than exports. For Kenya, domestic output increases in agriculture, extraction, and service sectors, and for Korea, output goes up in processed food and light and heavy manufacturing sectors. Research Implications – The novelty of this paper is in the first empirical quantification of the economic impact of a Korea-Kenya FTA on not only its members but also its trading partners, such as the US, EU, UK, China, and Japan. Moreover, this study provides a comprehensive overview of the impact of a potential FTA between Korea and Kenya by reducing and eliminating tariffs and AVEs of NTMs.

U.S. Re-entry into the 2015 Paris Climate Agreement and Implications for the EU, Korea, China, and Japan: A CGE Approach

Geoffrey Musyoki Kitetu(Geoffrey Musyoki Kitetu ),Jong-Hwan Ko(Jong-Hwan Ko) The International Academy of Global Business and T 2023 The International Academy of Global Business and T Vol.19 No.3

Purpose - With renewed greenhouse gas (GHG) emissions, abatement commitments and the rejoining of the Paris Climate Agreement of 2015 by the U.S., this study assesses the impact of carbon dioxide (CO₂) emissions reduction, and the opportunity cost of the U.S. in implementing its nationally determined commitments (NDCs). Design/Methodology/Approach - The study employs the GTAP-E model, an extension of the static GTAP model with CO₂ emissions trading, and GTAP DB version 10A with a base year of 2014. Model implementation includes a baseline scenario that projects the global economy from 2014 to 2030, and four policy scenarios representing the implementation of U.S. NDC targets without and with emissions trading. Findings - Simulation results suggest that CO₂ emissions reduction with trading significantly lowers the emissions abatement cost compared to CO₂ emissions reduction with no trading. Furthermore, the study finds that CO₂ emissions reduction leads to a drop in industry output by all energy and most non-energy sectors. Simulation results illustrate that CO₂ emissions reduction by the U.S. significantly affects most of its trading partners’ real GDPs, welfare, export and import flows, and industry outputs. Research Implications - The study provides a comprehensive impact assessment of global CO₂ emissions reduction, including U.S. contributions to addressing climate change. Moreover, the study has quantified the opportunity cost the U.S. will likely pay for meeting its NDC targets, and the likely impact of CO₂ emissions reduction by the U.S. on its major trading partners, especially the EU, Korea, Japan, and China.

Climate Change on Agriculture in 2050: A CGE Approach

KITETU GEOFFREY MUSYOKI,고종환 한국무역연구원 2020 무역연구 Vol.16 No.4

Purpose Agriculture plays a very critical role in terms of global food security and provides livelihood to over 30 percent of the world population. This study investigates the economic impact of climate change on agriculture in 2050. Design/Methodology/Approach We employ the global, multi-sector computable general equilibrium (CGE) approach. Using the GTAP Version 10 database whose base year is 2014, we project the global economy to 2050 relative to 2014. The main focus is on the role of economic players’ adaptation response to climate change, and the possible changes in production quantities and market prices. We implement a baseline growth path simulation that does not account for climate change effects, and two counter-factual policy simulations, which account for the impacts of climate change. Findings Simulation results reveal that extreme climate change will negatively affect the market prices of agricultural commodities, private household consumption, trade balance, GDP, and welfare for most of the regions in this study. Further, developing economies are found to be affected more by climate change compared to developed nations. Research Implications The study suggests that climate change adaptation and mitigation policies be specific to every stage in the farm value chain (FVC) with more emphasis on production and market integration segments.

A Comparative Study on the Export Determinants of Kenya and Korea: A Gravity Approach

Geoffrey Musyoki Kitetu,고종환 한국무역연구원 2015 무역연구 Vol.11 No.6

This paper aims to empirically analyze Kenya’s and Korea’s export determinants and export performance by using an augmented gravity model. The augmented gravity model for Kenya and Korea was estimated for three different country groups: the 70, 50 and 30 country data sets. The major findings of this study are as follows. A product of exporter’s GDP and her trading partners’ GDP had a significant and positive effect on the export flows of both Kenya and Korea. For Kenya, the border also had a positive impact on her exports. For Korea, labor productivity had a significant and positive impact on her exports for the three data sets of country groups, while free trade agreements (FTAs) had a significant and positive impact on her exports only for the data set of 30 countries. For Kenya, GDP per capita and her trading partners’ GDP per capita had a significant and negative effect on her exports only for the 50 country data set. The exchange rate for Kenya had a significant and negative impact on her exports for all three country data sets, because of Kenya’s peculiar composition of exported goods such as raw coffee, tea, horticultural crops and raw minerals. For Korea, distance had a significant and negative effect on her export flows. For Korea, GDP per capita and her trading partners’ GDP per capita had a significant and negative impact on her exports for all three data sets of country groups. The exchange rate for Korea had mixed effects with the 70 country data set showing significan and positive effects, while the 50 and 30 country data set had a significant and negative effect on her export flows, which implies that exchange rate depreciation for Korea encouraged export with 70 countries, while it slowed export growth with 50 and 30 countries.

A Comparative Analysis of the International Trade Competitiveness of Kenya and Korea

Geoffrey Musyoki Kitetu,고종환 부경대학교 인문사회과학연구소 2018 인문사회과학연구 Vol.19 No.1

본 논문에서는 현시선호비교우위 (RCA)지수, 무역보완지수 (TCI) 및 무역강도지수 (TII)를 이용하여 26개 산업 부문에서 케냐와 한국의 국제 무역 경쟁력을 정량적으로 분석하였다. 실증 분석 결과를 보면 케냐는 6개 부문에서 그리고 한국은 12개 부문에서 상당한 국제 무역 경쟁력을 가지고 있는 것으로 분석되었다. 또한 케냐가 비교 우위를 가지고 있는 부문에서는 한국은 비교열위를 가지고 있는 것으로 나타났으며, 케나가 비교열위를 가지고 있는 부문에서는 한국은 비교우위를 가지고 있는 것으로 분석되었다. 무역보완지수를 이용한 분석 결과를 보면 케냐는 7개 부문에서 그리고 한국은 11 개 부문에서 상호보완성이 매우 큰 것으로 분석되었다. 또한 케냐의 수출품이 한국 시장에 침투하는 속도는 한국의 수출품이 케냐 시장에 진입하는 것보다 매우 낮은 것으로 분석되었다. 경제 통합이 심화되면 케냐는 제조업 부문에서 부정적인 영향을 받을 것으로 전망되며, 한편 한국은 농업 부문에서 부정적인 영향을 받을 것으로 전망된다. 케냐는 노동 집약적이면서 자원집약적인 부문에 비교적 특화되어있고, 반면 한국은 제조업 및 자본 집약적 부문에서 경쟁력이 뛰어난 것으로 분석되었다. 이러한 분석 결과를 바탕으로 실용적 정책적 제안을 제시하였다. This paper aims to measure the trends of international trade competitiveness of Kenya and Korea by applying the Revealed Comparative Advantage (RCA) Index, the Trade Complementarity Index (TCI), and Trade Intensity Index (TII). This study has applied five alternative RCA indices. RCA and TC indices have been calculated on sectoral level while TI index has been calculated based on total exports and imports. The empirical findings from the five RCAs show that 6 sectors of Kenya and 12 sectors of Korea have significant international trade competitiveness. Strikingly, Korea has revealed comparative disadvantage in sectors in which Kenya has revealed comparative advantage and vice versa. The empirical findings using the trade complementarity index identify 7 sectors in which Kenya has a strong complementarity, whereas Korea shows a strong complementarity in 11 sectors. The empirical results using the TI index illustrate that Korea’s imports from Kenya are below her world import potential. However, the actual exports to Kenya are more than her relative share in world exports. Moreover, the same empirical results using the TII show that Kenya’s actual exports to and imports from Korea are below Kenya’s export and import potentials relative to her world shares. Thus, there is a tangible potential for enhancing bilateral trade between them. The empirical results of this study have consistently shown that Kenya has an international trade competitiveness in labor-intensive and resource-intensive sectors, while Korea is more specialized in the manufacturing and capital-intensive sectors. In consideration of the study’s outcomes, pragmatic policy implications are drawn.

Revealed Trade Competitiveness between Korea and Japan. Is It Viable to Deepen Economic Integration?

Geoffrey Musyoki Kitetu,Appolinaire Roland Mbante II,Jong-Hwan Ko 한국무역연구원 2021 The International Academy of Global Business and T Vol.17 No.2

Purpose – This study examines the trade competitiveness and complementarity of the economic structures of Korea and Japan. We focus on the sectors likely to be directly affected if the export control measures introduced by Japan on its exports of semiconductor machinery and raw materials to Korea in July 2019 are prolonged. Design/Methodology/Approach – The analysis applies Balassa’s Revealed Comparative Advantage (RCA), the Normalized Revealed Comparative Advantage (NRCA), the Bilateral Revealed Comparative Advantage (BRCA), the Relative Trade Advantage (RTA), and the Trade Complementarity indices to examine Korea’s and Japan’s trade competitiveness, bilaterally and globally. The empirical analysis focuses on forty-six major traded sectors and five Electronic integrated circuit-related industries, based on two-digit and six-digit data, respectively. Data applied is from the UNComtrade database. Findings – Expectantly, where Korea has bilateral trade competitiveness, Japan has a disadvantage, and vice versa. A sharp decline in the calculated results for sector HS854232 (Electric, integrated circuit sector) of Korea in 2019 in all indices compared to other periods is identified. Additionally, empirical results indicate that the export control measures by Japan have an immediate impact on Korea’s trade competitiveness, especially the Electronic integrated circuits and memory sector. Research Implications – This study provides an impact assessment of the export control measures imposed by Japan on its exports of semiconductor raw materials and machinery to Korea on the trade competitiveness of Korea, focusing on the Electric, integrated circuit sector at six-digit HS product classification. To the best of the authors’ knowledge, this is the first study to empirically analyze the impact of the export control measures by Japan on its exports of semiconductor raw materials on the trade competitiveness of Korea at the six-digit HS product code.

Estimating the Ad Valorem Equivalents of the Non-tariff Measures: Focusing on Cross-Border Trade in Goods and Services

Geoffrey Musyoki Kitetu,Jong-Hwan Ko 한국무역연구원 2021 무역연구 Vol.17 No.1

(NTMs) in cross-border trade in 57 globally traded goods and services. We focus on estimating the AVEs of NTM between Kenya and Korea and the rest of the world economies aggregated into 14 regions. Design/Methodology/Approach Bilateral trade data is from the Global Trade Analysis Project database version 9;with a base year of 2011. Using the quantity-based border approach (McCallum;1995);we apply the gravity model by Anderson and van WinCoop (2003/2004);in which bilateral prices of commodities are endogenized. To estimate the country-specific bilateral tariff equivalents;we aggregate the 57 GTAP sectors into one sector. We quantify sector-specific AVEs of NTMs on 42 goods and 14 services sectors. Calculating AVEs of NTMs;we utilize the export trade border coefficients and the elasticity of substitution between traded goods. Findings Empirical evidence confirms that agricultural sectors show higher AVEs of NTMs when compared to the manufacturing and services sectors;while trading blocs have relatively lower trade barriers. Furthermore;the study finds no correlation between the level of economic development and NTMs imposed. Additionally;the supply-pull has a higher effect on sectoral trade than the demand-pull. Research Implications Our contribution to the literature on the estimation of non-tariff measures is in the form of a new dataset that is comprehensive in terms of the variables applied;sectors analyzed;and regions covered. According to the authors’ knowledge;this is the first study to calculate tariff equivalents between Kenya and Korea. Ad Valorem Tariff Equivalents;Kenya;Korea;Multilateral Resistance Terms;Non-Tariff Measures

Estimation of the Ad Valorem Tariff Equivalents of Non-Tariff Measures in Cross-Border Trade in Goods

Geoffrey Musyoki Kitetu,Jong-Hwan Ko 한국무역학회 2019 한국무역학회 국제학술대회 Vol.2019 No.08