Developing Mid-Long Term Forecast Models Using Determinants of Exports in Korea - Approaching by Countries
|Author||Hong Sung-wook, Shin Hyon-soo, Park Sung-keun, Kim Jeong-hyun||Date||2017.12.15||Page|
With export competition intensifying in the global market sparking fears of a decrease in Korean exports, a significant decline in the country’s export growth rate has fueled a debate on the need for export projections and research on factors influencing overseas shipments. Recent stagnation in the global economy, the implementation of currency devaluation policies by a number of countries and falling oil prices have focused policymakers’ attention on the need for studies on the future of Korean exports and how certain factors effect exports, in addition to the development of strategies to maintain export growth.
To address these perceptions and policy demands, this study analyzes changes in the structure of Korean exports, gauged the factors influencing them and used these constantly-changing factors, to develop a model for mid- to long-term projections of Korean exports. Through the development of forecasts reflecting national and economic regional differences in response to changes in the domestic and external economic environments, this study’s ultimate aims are twofold: to provide useful basic information to corporations for the development of export and business strategies and to policymakers for policy formulation.
The results of this mid- and long-term export projection model are expected to serve as a foundation from which both countries and regions assessing factors dampening exports can devise export strategies, especially when selecting potential export partners to expand to overseas markets in the interest of diversification.
The main points of this study are as follows. First, Korea’s export structure and trends are analyzed and factors affecting exports are assessed. In this case, the focus is on the use of quantitative methodology to diagnose the state of exports and identify which determinants have significantly influenced recent export performance and the rise of global competitiveness. Second, the study explores the influences of major export determinants on individual trading partners. What distinguishes this analysis from those of the past is that while most previous research has been limited to one-dimensional analyses of the relationships between exports and their determinants, this study comprises a three-dimensional analysis that reflects changes over time and changes to the determinants themselves. Finally, the study focuses on building mid- to long-term projection models for exports based on the analysis of export determinants. The previous findings of such an analysis are used to create export forecasting models in the simplest terms, with a focus on easing usability at the practical level. The mid-term projection model, in particular, will be developed as a predictive model based on an explanatory model, while the long-term projection model will include only the core explanatory variables to enable suitable predictions that also reflect changing relationships (changes to the model’s coefficient values).