Analysis on the Effectiveness of the Korea's Preferential Tariff Scheme for Least Developed Countries

Abstract

Korea has implemented the Preferential Tariff Scheme for LDCs since 2000 in accordance with the efforts of the International Society to promote trade in LDCs. This study aims to examine the effectiveness of the Korean Scheme which little attention has been devoted to so far.

Since the initiation of the Scheme, Koreas import from LDCs has been increasing but LDCs share in Koreas import is still very limited. To take a closer look at the effectiveness, intensive margin and extensive margin are analyzed in the descriptive analysis together with utilization rates, utility rates and application rates. In the econometric analysis, drawing upon the Triple Difference Model, the study finds out that the Scheme had positive impacts on the imports from LDCs, especially from Asian LDCs.

Based on those descriptive and econometric analyses, the study provides insight into the ways to enhance the effectiveness. Especially, recommendations on the product coverage, rules of origin and administrative regulations are underlined to make the Scheme more effective.