1. 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

2. Contents - 1 - 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

3. 1. Purpose of the Study - 2 - To provide some measures for mutual development of agriculture in the North East Asia, through the regional competition and cooperation Korea Rural Economic Institute

4. - 3 - 2. Overview of the Regional Economy&Agriculture CategoryKoreaChinaJapanTotal GDP($ Billion) - per capita($) - Agricultural GDP (Share, %) 457.4 8,918 20 (4.4) 1,158.6 908 282 (24.4) 4,176.0 32,524 67 (1.6) 5,800 370 (6.4) Population (Million) - Rural Population (Share, %) 4.7 3.9 (8.3) 127.6 795.6 (62.3) 12.7 10.2 (8.1) 145.1 810 (56) Territorial Area(1,000 ㎢ ) - Rural Area (Share, %) - Area per Household(Ha) 99.5 18.8 (18.9) 1.4 9,597 1,300 (13.5) 0.53 378 48 (12.7) 1.6 10,075 1,367 (13.6) 0.56 Exports($ Billion) - Agricultural Exports 150.4 (1.6) 266.0 (15.5) 403.5 (2.5) 820.0 (19.5) Imports($ Billion) - Agricultural Imports 141.1 (8.5) 243.5 (9.8) 349.1 (35.4) 733.7 (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

5. - 4 - 3. 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

6. - 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

7. - 4 - - 6 - 3. 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

8. - 4 - - 7 - 4. Analysis of Agricultural Trade Structure ♢ Regional Agricultural Trade Imp Exp KoreaChinaJapan 1995 2001 Korea 637 1,111293 207 China95 109 142 227 Japan845 6385,412 6,294 US $ Million Korea Rural Economic Institute

9. - 4 - - 8 - 4. 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 5.0 5.8 China Korea Japan 1.9 2.8 Japan Korea China 6.1 5.0 Korea Rural Economic Institute

10. - 4 - - 9 - ♢ 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

11. - 4 - - 10 - ♢ 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 - Japan0.17 0.39 Korea - China0.13 0.15 China - Japan0.03 0.04 Korea Rural Economic Institute

12. - 4 - - 11 - ♢ 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

13. - 4 - - 12 - ♢ 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

14. - 4 - - 13 - ♢ 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

15. Thank You ! Korea Rural Economic Institute http://www.krei.re.kr myongeor@krei.re.kr http://www.krei.re.kr