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ABSTRACTThis paper investigates investment decisions of Korean firms in view of Tobin’s q, and examines whether the adjustment costs of investment in group firms are lower than those in independent firms. We use firm-level data for 1,106 Korean manufacturing firms over the period 1982 to 2015. The results are as follows. First, group firms are much larger than independent firms, and investment rates are higher in group firms than in independent firms. Second, Tobin’s qis a significant determinant of investment, and the adjustment costs of investment are smaller in group firms than in independent firms. Third, the adjustment-cost advantage of group firms is greater before the financial crisis of 1997. Fourth, a firm’s cash holdings and foreign ownership contribute to increasing investment. This study suggests that group firms invest more than independent firms due to lower adjustment costs, and consequently contribute to economic growth through investment expansion.

This paper shows how to measure the welfare effects of intellectual property rights (IPR) changes under the Korea–US Free Trade Agreement (FTA) on the Korean economy. After the FTA, patent lifetimes are expected to be extended. During such extension periods, Korean generic drug makers will not be able to sell their drugs, and consumers will have to pay more because of higher prices. The new concepts of effective patent term and price-change mechanism were employed, and patent data for the Korean pharmaceutical industry were used to estimate the parameters needed to measure the welfare effects. The empirical results indicate that the welfare effect will be much smaller than suggested by previous studies. These methods to evaluate the welfare effects can be applied to the cases of other recent FTAs and other kinds of IPR negotiations in international economics.

The purpose of this paper is to investigate the structure and determinants of intra- industry trade (IIT) in Korea. The results conform to what may be expected under the theory of IIT. In particular, it shows that as capital stock increased more rapidly than labor, Korea's IIT shifted towards more capital intensive sectors. It also supports the theoretical proposition that the determinants of IIT for final goods are not different from those for intermediate goods. [F12]