The effect of duty drawback on export promotion: The case of Korea

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Abstract

This paper examines whether or not the duty drawback system has contributed to promoting Korea's exports. The unit root tests show that they can be assumed to be integrated of order one. Banerjee et al.'s [Banerjee, A., Dolado, J. J., & Mestre, R. (May 1998). Error-correction mechanism tests for cointegration in a single-equation framework. Journal of Time Series Analysis, 19(3), 267-283] small sample error correction mechanism (ECM) test shows that there is no evidence of cointegration. The estimation results show that there are strong evidences of the positive effect of export subsidy in terms of duty drawback on export supply. That is, the efficiently managed duty drawback system may contribute to export promotion significantly.

Original languageEnglish
Pages (from-to)967-973
Number of pages7
JournalJournal of Asian Economics
Volume18
Issue number6
DOIs
StatePublished - Dec 2007

Keywords

  • Duty drawback
  • Export supply
  • Korea

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