A Study On The Promotion Of The Korea-Mongolia FTA

With the rapid pace of change in the global economic environment, nations of the world have propelled market opening and at the same time accelerated the competitive scramble for world market share through multilateral and regional Free Trade Agreement (FTA), under which Korea has also promoted the multilateral FTA strategy to both huge economies and small-sized economies simultaneously.Some results of empirical analyses on FTA data say that FTA has contributed to the promotion of global trade through trade creation effect and trade diversion effects. In the light of this result, Korea-Mongolia FTA is expected to show positive results for both countries although there are many differences in the size of economy between two countries and bilateral trade is not large scaleKorea’s trade policy is to promote expansion of trade, diversification of trading partners and secure energy resources on the basis of presenting three strategic, active, and simultaneous principles of trade policies and widening comprehensive and national consensus, and to enlarge new growth energies of Korea’s economy through trade effect along with the diversification of FTA partners and securing overseas markets and resources through the expansion of trade in order to enhance the competitiveness of Korea’s economy.The recent results of the FTA with EU and U.S,the gigantic economic blocks, have showed positive effects, so the promotion of Korea-Mongolia FTA will surely be a persuasive project.As of2012, Korea has put the FTA with45countries worldwide in practice, including EFTA, the FTA with EU and U.S., so the Korean government is regarded as one of the countries which play a leading role of promoting FTA against overseas. In particular, the promotion of Korea-Mongolia FTA should be treated as one of core economic policies the Korean government intends to carry out to secure resources prospectively.Mongolia is one of six countries, such as South Korea, North Korea, China, Japan, and Far East Russia in Far East Asia, and the country is located at a geographically important place and though its economic scale is so small that it can’t be compared to the Korean economy,the size of its territory is seven times as large as the Korean peninsula and the nation is the eighth in possessing affluent underground resources in the world.When it comes to the previous studies related to the would-be Korea-Mongolia FTA, it is not easy to find out any empirical analyses which show the decisive factors or motivation of the promotion of Korea-Mongolia FTA. Therefore, this study is to provide the possibility of Korea-Mongolia FTA and directions to promote the FTA by the Probit Model, with13explanatory variables, such as economic scale between two countries, mutual trade scale, economic structure, and other additional factors.