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A Study on the Impact of FTAs on Port Cargo Volume
Report No. 2013-06 Research Manager Chun Chan Young
File


A Study on the Impact of FTAs on Port Cargo Volume


1. Purpose
- Investigate the net effect of FTAs on sea trade volume through empirical analysis on changes in port cargo volume with FTA partners
- Derive an econometric model which is able to predict impacts of FTAs on port cargo volume properly


2. Highlights & Methodologies
1) Highlights
- This basic research is studied for responding preemptively to port demand changes after FTAs came into effect. It analyzes net impacts of FTAs from a perspective of cargo volume and builds a econometrics model which can properly predict cargo volume changes after introduction of FTAs.

2) Methodologies
- Analyze concluded concessions and expected effect of FTAs
- Time series analyses on import/export volume per each item and also the amount of money for these import/export volume
- Econometrics regression on net impacts of the FTAs through using actual data which belong to the
periods before the FTAs came into effect. 
- Estimate the port cargo volume by the CGE Model, the Network Model and the Gravity Model and analyze their effectiveness.


3. Results
1) Summary
- Trade within regional trade agreements are increasing and Korea continues to increase the number of countries with whom it signed FTAs.
- As of November 2013, FTAs with 46 countries came into effect. Five countries, including Chile, Singapore, EFTA, ASEAN and India marks the 3rd year since FTAs with Korea became effective. 
- Since FTAs took effect, there has been significant change in trade volume with FTA partners and trade share per each item. Caused by each different concession agreement, fluctuation of volume per each item is different, respectively.
- As for exports to Chile, heavy products such as cement, chemical industrial products and cars showed increased cargo volume and share. When it comes to import, however, seafood, food & beverages and timbers increased in their cargo volume and share.
- As for trade with Singapore and ASEAN, trade volume and share of petroleum refined products showed increasing trends.
- Although it is too early to analyze full-scale impacts of the EFTA with India, there are some minor changes. According to an analysis, EFTAs creates only small trade volume and drastic yearly deviations. 
- There is statistical significance in changes in volume & amount of import/export caused by FTAs though there are difference among nations.
- When it comes to amount of money, all nations showed ripple effects of FTAs after the agreements became effective. And in case of cargo volume, Chile, ASEAN and Singapore showed statistically significant effect of FTAs.
- According to an analysis on changes in cargo volume after FTAs, the FTA with ASEAN showed the highest impacts, followed by Singapore and Chile. However, the EFTA and India didn’t show meaningful impacts yet, as for cargo volume.
- As for impacts on the annual average cargo volume out of the total trade, ASEAN registered the highest figure (21.0%), followed by Singapore (11.9%) and Chile (9.9%). The rest didn’t show any significant impacts as for cargo volume.
- However, as for the annual average amount of money out of the total trade, all nations showed impacts of FTAs. Chile recorded the highest figure (25.6%), followed by Singapore (10.4%), EFTA (8.8%) and India (4.8%).
- Due to costly items in small size, the effect in terms of amount of money showed higher figure compared to effect in terms of port cargo volume. And due to heavy items such as petrochemicals, steel and machinery, impacts of cargo volume and amount of money didn’t go proportional. 
- The study found the Network Model to be the most significant model for prediction of impacts of FTAs on cargo volume after evaluating the CGE model, the Network Model and the Gravity Model.
- In order to estimate impacts on cargo volume, the Computable General Equilibrium (CGE) Model used a conversion factor which calculates trade volume into cargo volume. However, adequacy or significance of the model has not been verified.
- The Gravity Model controlled effects of FTAs as dummy variables. As a result, the model was useful for an empirical analysis on relative impacts of each nation. However, it had limitations in estimating actual impacts on cargo volume.
- The Network Model reflected impacts of interactions among trade partners. Therefore, compared to an empirical analysis, its results showed relatively low effect level. However, the results were the most adequate overall.
- On balance, the Network Model was considered the most adequate as for easiness to predict explanatory variables, objectiveness, trade substitution effects by FTAs, fineness for regression analysis and comparison on results of empirical analyses on each nation.

2) Policy implications
- Impacts of FTAs can be reflected into the Port Master Plan.
- When the port master plan is scheduled, an empirical analysis can be done to estimate increase or decrease of port cargo volume after FTAs go into effect. The Port Master Plan can reflect such impacts of FTAs. Moreover, the study can compare advantages and disadvantages of each econometrics estimation model.
- Demand prediction of cargo volume is the basis for mid-and long-term supply and demand plan for port facilities. The study can present models which estimate impacts of FTAs with large economies such as the US, China and the EU.
- Development of port business models based on FTA impacts
- Based on estimated impacts on individual items of FTAs which already became effective, business models can be developed to attract companies to port hinterlands.
- After drawing trade partners, promising business types & strategic product items for each port, impacts data of FTAs on each nation can be practically used. 
- Making efficient use of policies through econometrics regressions with various models
-The CGE model, the Network Model, the Gravity Model and other modified models which estimate impacts of FTA can be used during carrying out policies.
-Various measures which improve the existing prediction methods can be used for policy development.

3) Expected benefits
? The study ensures better predictability and estimation of impacts of FTAs on port cargo volume.
- By estimating and verifying impact on port cargo volume by FTAs, impacts of future FTAs can be predicted.  
- The study can be used as the basic study to prepare policies as well as to develop future prediction models.
- Additional prediction models can be developed based on implications and empirical results of this study.
- The study can be used for various purposes, including port demand estimation, port development policy formation, fleet compassion and sea route development between Korea and China and estimation of environmental costs resulted from port cargo volume increase.

Research Project Report 상세보기
A Study on the Impact of FTAs on Port Cargo Volume
Report No. 2013-06 Research Manager Chun Chan Young
File


A Study on the Impact of FTAs on Port Cargo Volume


1. Purpose
- Investigate the net effect of FTAs on sea trade volume through empirical analysis on changes in port cargo volume with FTA partners
- Derive an econometric model which is able to predict impacts of FTAs on port cargo volume properly


2. Highlights & Methodologies
1) Highlights
- This basic research is studied for responding preemptively to port demand changes after FTAs came into effect. It analyzes net impacts of FTAs from a perspective of cargo volume and builds a econometrics model which can properly predict cargo volume changes after introduction of FTAs.

2) Methodologies
- Analyze concluded concessions and expected effect of FTAs
- Time series analyses on import/export volume per each item and also the amount of money for these import/export volume
- Econometrics regression on net impacts of the FTAs through using actual data which belong to the
periods before the FTAs came into effect. 
- Estimate the port cargo volume by the CGE Model, the Network Model and the Gravity Model and analyze their effectiveness.


3. Results
1) Summary
- Trade within regional trade agreements are increasing and Korea continues to increase the number of countries with whom it signed FTAs.
- As of November 2013, FTAs with 46 countries came into effect. Five countries, including Chile, Singapore, EFTA, ASEAN and India marks the 3rd year since FTAs with Korea became effective. 
- Since FTAs took effect, there has been significant change in trade volume with FTA partners and trade share per each item. Caused by each different concession agreement, fluctuation of volume per each item is different, respectively.
- As for exports to Chile, heavy products such as cement, chemical industrial products and cars showed increased cargo volume and share. When it comes to import, however, seafood, food & beverages and timbers increased in their cargo volume and share.
- As for trade with Singapore and ASEAN, trade volume and share of petroleum refined products showed increasing trends.
- Although it is too early to analyze full-scale impacts of the EFTA with India, there are some minor changes. According to an analysis, EFTAs creates only small trade volume and drastic yearly deviations. 
- There is statistical significance in changes in volume & amount of import/export caused by FTAs though there are difference among nations.
- When it comes to amount of money, all nations showed ripple effects of FTAs after the agreements became effective. And in case of cargo volume, Chile, ASEAN and Singapore showed statistically significant effect of FTAs.
- According to an analysis on changes in cargo volume after FTAs, the FTA with ASEAN showed the highest impacts, followed by Singapore and Chile. However, the EFTA and India didn’t show meaningful impacts yet, as for cargo volume.
- As for impacts on the annual average cargo volume out of the total trade, ASEAN registered the highest figure (21.0%), followed by Singapore (11.9%) and Chile (9.9%). The rest didn’t show any significant impacts as for cargo volume.
- However, as for the annual average amount of money out of the total trade, all nations showed impacts of FTAs. Chile recorded the highest figure (25.6%), followed by Singapore (10.4%), EFTA (8.8%) and India (4.8%).
- Due to costly items in small size, the effect in terms of amount of money showed higher figure compared to effect in terms of port cargo volume. And due to heavy items such as petrochemicals, steel and machinery, impacts of cargo volume and amount of money didn’t go proportional. 
- The study found the Network Model to be the most significant model for prediction of impacts of FTAs on cargo volume after evaluating the CGE model, the Network Model and the Gravity Model.
- In order to estimate impacts on cargo volume, the Computable General Equilibrium (CGE) Model used a conversion factor which calculates trade volume into cargo volume. However, adequacy or significance of the model has not been verified.
- The Gravity Model controlled effects of FTAs as dummy variables. As a result, the model was useful for an empirical analysis on relative impacts of each nation. However, it had limitations in estimating actual impacts on cargo volume.
- The Network Model reflected impacts of interactions among trade partners. Therefore, compared to an empirical analysis, its results showed relatively low effect level. However, the results were the most adequate overall.
- On balance, the Network Model was considered the most adequate as for easiness to predict explanatory variables, objectiveness, trade substitution effects by FTAs, fineness for regression analysis and comparison on results of empirical analyses on each nation.

2) Policy implications
- Impacts of FTAs can be reflected into the Port Master Plan.
- When the port master plan is scheduled, an empirical analysis can be done to estimate increase or decrease of port cargo volume after FTAs go into effect. The Port Master Plan can reflect such impacts of FTAs. Moreover, the study can compare advantages and disadvantages of each econometrics estimation model.
- Demand prediction of cargo volume is the basis for mid-and long-term supply and demand plan for port facilities. The study can present models which estimate impacts of FTAs with large economies such as the US, China and the EU.
- Development of port business models based on FTA impacts
- Based on estimated impacts on individual items of FTAs which already became effective, business models can be developed to attract companies to port hinterlands.
- After drawing trade partners, promising business types & strategic product items for each port, impacts data of FTAs on each nation can be practically used. 
- Making efficient use of policies through econometrics regressions with various models
-The CGE model, the Network Model, the Gravity Model and other modified models which estimate impacts of FTA can be used during carrying out policies.
-Various measures which improve the existing prediction methods can be used for policy development.

3) Expected benefits
? The study ensures better predictability and estimation of impacts of FTAs on port cargo volume.
- By estimating and verifying impact on port cargo volume by FTAs, impacts of future FTAs can be predicted.  
- The study can be used as the basic study to prepare policies as well as to develop future prediction models.
- Additional prediction models can be developed based on implications and empirical results of this study.
- The study can be used for various purposes, including port demand estimation, port development policy formation, fleet compassion and sea route development between Korea and China and estimation of environmental costs resulted from port cargo volume increase.

이전글, 다음글 읽기
이전글 A Study on the Problem and Improvement of the Container Stevedoring Market
다음글 The Computable General Equilibrium Model for Shipping and Port Policy Analysis