Effect of Export Insurance on Export Promotion in Korea: Comparing the Short-term Types and the Medium and Long-term Types

Effect of Export Insurance on Export Promotion in Korea: Comparing the Short-term Types and the Medium and Long-term Types

This paper examines whether or not export insurance has contributed to export promotion in Korea. In particular, this study analyzes the effects of short-term, medium-term, and long-term types of export insurance. The study began with tests of the stationarity of the concerned variables. The unit root tests showed that all concerned variables were non-stationary. Accordingly, the result of cointegration test showed that the short-term types and concerned variables were cointegrated. The empirical evidence using the Vector Error Correction Model (VECM) showed that the short-term export insurance types did not have a significant effect on increasing Korean exports. It was shown that the medium-term and long-term types of export insurance and the concerned variables were not cointegrated. Thus, the medium and long-term types of export insurance estimated OLS (Ordinary Least Square Method) based on the first differenced data. The empirical evidence shows that the medium-term and long-term types of export insurance did not have a significant effect on Korean exports.