An Empirical Study On South Korean Cosmetics Trade

With the increase of women's economic population,the diversification of consumer demand,the expansion of consumer class,the development of online and offline sharing platforms and the arrival of the era of population aging,the domestic cosmetics industry in Korea develops correspondingly.In 2015,the proportion of cosmetics industry accounted for 0.69%of GDP and 2.57%of gross manufacturing output respectively.The market scale of Korean cosmetic industry reached 900,355 billion won in 2015,calculated by the value of cosmetics production,import and export statistics.In addition,the total value of South Korea's cosmetics export keeps a high growth rate in recent years,in 2015,the total value of that amounted to 29281 billion won.China,Hong Kong and the United States are the main cosmetics trade partners.Since the cosmetics industry plays an important role in South Korea's economy,it is of great significance to study South Korea's international cosmetics trade.This study extends the trade gravity model by adding demographic distance,GDP,per capita GDP and FTA dummy variable to conduct the empirical analysis base on cosmetics trade data from 22 trade partners from the year of 1988 to 2016.The data are from the IMF database,the World Bank database,the CEPII and the Korean Trade Statistics website(K-stats).This study finds that the geographical distance between South Korea to other countries hinders the cosmetics trade.Also,GDP,per capita GDP and the country's population have a positive influence on Korea's cosmetics international trade.This conclusion still holds after adding the FTA dummy variable.However,this paper attempts to replace the geographical distance variable by the cultural distance calculated by the five-dimension national cultural scores of Hofstede,but gets the opposite result from the above conclusion.