International Organizations and Economic Openness in South Korea: An Empirical Analysis

Are international organizations (IOs) an effective facilitator of economic openness? Policymakers have assumed that joining regional IOs helps enhance exposure to international export and financial markets and thereby promote economic development. As a result, these organizations have been used as a tool to expand openness, and the number of IOs has grown substantially over the past decades. However, while the literature presents different theoretical perspectives about why these organizations are created and how they operate, relatively little research has empirically tested their efficacy in promoting economic openness. This study provides a multivariate analysis of the impact of regional IOs on trade and financial liberalization of South Korea over the 1971-2005 period. Using different measures of openness and estimation techniques, no evidence is found that joining regional IOs leads to increases in trade and financial openness. I conclude with a discussion of policy implications.