October 28, 2003 Dr. Eor Myong Keun Research Fellow Agricultural Structure of Korea, China and Japan: Possibilities of Regional Agricultural Cooperation Korea Rural Economic Institute

Contents Korea Rural Economic Institute 1. Introduction 2. Overview of Regional Economy and Agriculture 3. Analysis of Agricultural Structure 4. Analysis of Agricultural Trade Structure 5. Possibilities and Prospect for Regional Agricultural Cooperation

1. Purpose of the Study To provide some measures for mutual development of agriculture in the North East Asia, through the regional competition and cooperation Korea Rural Economic Institute

Overview of the Regional Economy&Agriculture CategoryKoreaChinaJapanTotal GDP($ Billion) - per capita($) - Agricultural GDP (Share, %) , (4.4) 1, (24.4) 4, , (1.6) 5, (6.4) Population (Million) - Rural Population (Share, %) (8.3) (62.3) (8.1) (56) Territorial Area(1,000 ㎢ ) - Rural Area (Share, %) - Area per Household(Ha) (18.9) 1.4 9,597 1,300 (13.5) (12.7) ,075 1,367 (13.6) 0.56 Exports($ Billion) - Agricultural Exports (1.6) (15.5) (2.5) (19.5) Imports($ Billion) - Agricultural Imports (8.5) (9.8) (35.4) (53.6) Trade Balance($ Billion) -Agricultural Trade Balance 9.3 (-6.9) 22.5 (5.7) 54.4 (-33) 86.2 (-34) In 2001 Korea Rural Economic Institute

Analysis of Agricultural Structure ♢ Agricultural production Factor - Labor Density : China 〉 Korea 〉 Japan *NE3 (person/ha) (2.5) (1.12) (0.60) (1.18) - Area/household : Japan 〉 Korea 〉 China *NE3 (ha/household) (1.56) (1.39) (0.53) (1.42) - Capital/Labor : Japan 〉 Korea 〉 China *NE3 (US $/person) (8,685) (8,279) (359) (626) Korea Rural Economic Institute

- 5 - ♢ Agricultural productivity - Land Prod ’ ty : Korea 〉 Japan 〉 China *NE3 (US $) (805.7) (502.7) (217.0) (123.5) - Capital Prod ’ ty : China 〉 Korea 〉 Japan *NE3 (0.98) (0.47) (0.27) (0.74) - Labor Prod ’ ty : Japan 〉 Korea 〉 China *NE3 (US $) (16,781) (7,955) (870) (1,051) 3. Analysis of Agricultural Structure Korea Rural Economic Institute

Analysis of Agricultural Structure ♢ Composition of Agricultural Products : Through the Change in Cultivating Area and Production - Mutually Competitive Products : Rice, Vegetables, Fruits, Beef, Pork - Mutually Complementary Products : Corn, Soybean, Fat & Oil Korea Rural Economic Institute

Analysis of Agricultural Trade Structure ♢ Regional Agricultural Trade Imp Exp KoreaChinaJapan Korea 637 1, China Japan ,412 6,294 US $ Million Korea Rural Economic Institute

Analysis of Agricultural Trade Structure ♢ Regional Agricultural Export Intensity(EI) : The ratio of country i ’ s export market share in country j ’ s against world average market share in country j. If EIij>1, Country i is heavily dependent on country j. China Japan MarketExporter AV. EI (’95 ∼ ’01) Korea China Korea Japan Japan Korea China Korea Rural Economic Institute

♢ Export conflicting Analysis : Export Similarity Index (HS-4) 4. Analysis of Agricultural Trade Structure Trade Partners AV. ESI('96 ∼ 01) Korea - Japan0.157 Korea - China0.178 China - Japan0.008 ESI(KC) 〉 ESI(KJ) 〉 ESI(CJ) (more conflicting) (less conflicting) ESI(KC) 〉 ESI(KJ) 〉 ESI(CJ) (more conflicting) (less conflicting) Korea Rural Economic Institute

♢ Mutual Complementariness Analysis: IIT Index Grubel-Lloyd Index measures the degree of horizontal division of labor. 4. Analysis of Agricultural Trade Structure GL(KJ) 〉 GL(KC) 〉 GL(CJ) (more complementing) (less complementing) GL(KJ) 〉 GL(KC) 〉 GL(CJ) (more complementing) (less complementing) Partners Grubel-Lloyd Index (HS:1/24) '98 '02 Korea - Japan Korea - China China - Japan Korea Rural Economic Institute

♢ Necessity of Agricultural Cooperation in North East Asia - Disadvantage in Agricultural Structure : Small-Scale farming - Differences in Resource Endowment (K/L) : Japan 〉 Korea 〉 China (L/A) : China 〉 Korea 〉 Japan - Factor Productivity (Y/A) : Korea 〉 Japan 〉 China (Y/L) : Japan 〉 Korea 〉 China (Y/K) : China 〉 Korea 〉 Japan 5. Possibility and Prospect of Regional Agricultural Cooperation Korea Rural Economic Institute

♢ Possibilities of Regional Agricultural Cooperation A. Intra-Industry Division of Labor & Regional Trade Diversion - Respective Production and competition (mutually competitive products group) - Region Monopolistic Production and Trade Diversion (mutually complementary products group) B. Regional Trade Creation - Product Differentiation (Income & Taste differences) - Introducing New Products (Functional Food, etc.) 5. Possibility and Prospect of Regional Agricultural Cooperation Korea Rural Economic Institute

♢ Measures to Promote Regional Cooperation - Coordinating Agricultural Policies & Issues - Establishing Mutual Confidence - Pursuing Mutual Agricultural Development - Originating NEA Common Agricultural Policy 5. Possibility and Prospect of Regional Agricultural Cooperation Korea Rural Economic Institute

Thank You ! Korea Rural Economic Institute