Open AccessDoes ASEAN-Korea FTA Reduce Poverty in Laos? The Roles of FDI and Trade Facilitation
Author(s) -
Jeong-Soo Oh
Publication year - 2014
Publication title -
journal of social and development sciences
Language(s) - English
Resource type - Journals
ISSN - 2221-1152
DOI - 10.22610/jsds.v5i2.805
Subject(s) - trade facilitation , poverty , economics , foreign direct investment , welfare , international economics , facilitation , free trade , international trade , investment (military) , macroeconomics , economic growth , political science , market economy , management , politics , law
The objective of this paper is to attempt to quantify the impact of the ASEAN-Korea Free Trade Agreement (AKFTA) on the roles of Foreign Direct Investment (FDI) and the improvement of trade facilitation for the national economy and poverty. The study uses a standard Global Trade Analysis Project (GTAP) model for this analysis. The simulation results show that with consideration to the flow of FDI and the improvement in trade facilitation. Laos has gained significantly from AKFTA. The real GDP, welfare, and household income have increased as well as improvement in Laos’ trade terms and balance. In addition, the income of unskilled labor that affects the poverty level has also increased significantly. Therefore, AKFTA has increased growth and also improved income distribution in Laos.