Balancing Trade and Security during the US-China Trade War: A Gravity Model Approach to South Korea’s Relations with the United States and China
Researcher ORCID Identifier
Date of Submission
Open Access Senior Thesis
Bachelor of Arts
© 2022 Nathalie Chavez
In analyzing monthly trade and gross domestic product (GDP) data for South Korea, China, and the United States from January 2016 to December 2019, this paper attempts to quantify the effects of the US-China Trade War on Korea’s security and economic considerations. By using a three-country gravity model with both monthly and HS Code (harmonized system) fixed effects, it finds the following. First, increases in both real GDP for the United States and China, as well as real GDP for Korea, are positively associated with increases in Korean exports at statistically significant levels. Thus, the general predictions of the gravity model are true even given the four-year timeframe. Second, the use of fixed effects provides insight on months and HS codes that experienced statistically significant changes in exports, allowing one to better contextualize the data within the general trade war timeline. Finally, using South Korea as the country to analyze this question is particularly insightful due to the country’s geographic location and historic background. While its largest trading partner is also its neighbor (China), South Korea’s military and economic ties to the United States date back to the Korean War and the subsequent decades of reconstruction and development. Thus, while Korea has already had to carefully balance these ties for years, should tensions between the two world powers continue to rise, more countries may find themselves in a similar predicament.
Chavez, Nathalie, "Balancing Trade and Security during the US-China Trade War: A Gravity Model Approach to South Korea’s Relations with the United States and China" (2023). CMC Senior Theses. 3211.