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A Study on the Dynamics and Competitiveness of Export Structure in Korea

Author Park, Moonsoo et al. Date 2018.12.05 Page

This study focuses on the hypothesis that the economic growth of a country can be achieved through the expansion of exports with the improvement of the quality levels of existing export products. In addition to that, this study also focuses on the hypothesis that the economic growth of a country can be achieved through the increased exports of new products with the high level of ‘product relatedness’ to major export products and(or) ‘product complexity’.


Considering these, this study examines the quantitative effects of dynamic changes in the product relatedness among export products and the export structure on the nation-level export competitiveness. The purpose of this study can be summarized in three ways as follows: first, we attempt to identify the level of competitiveness of major export goods of five major countries, and identifies future growth industries of Korea. To achieve this goal, we analyze dynamic changes in the level of product relatedness and export structure sophistication by employing various methods. Second, we empirically analyze how the dynamic changes in the industrial structure affect the growth and competitiveness of the nation's exports. Finally, based on the analysis results, we provide policy implications for the growth of relevant industries and the industrial structure sophistication in Korea.


This study is organized as follows: in chapter 2, we compare the levels of export structure sophistication and product competitiveness of five major countries including Korea, in terms of the competitiveness index based on the revealed comparative advantage(RCA). We also compare and examine the levels of product relatedness among five major countries, based on the product space model proposed by Hidalgo et al.(2007).


In chapter 3, in order to examine the overall dynamics of the export structure and competitive advantage patterns of Korea, as in chapter 2, we examine the dynamic process of the industrial structure in Korea with regard to RCA index, ‘product relatedness’ and ‘pure density’ identified through the product space model. By doing this, we examine the competitiveness of our industries and identify what could be the next promising industries that can promote further export growth.


In chapter 4, we analyze the effect of the changes of the network structure in the product space on exports, using the ‘gravity model based on product space’. The ‘gravity model based on product space’ includes ‘product relatedness’ and ‘pure density’ that represent network relationships in the product space, as the distance between industries(or products). Additionally, in order to examine the dynamic effects of product network variables on the export competitiveness, by introducing the concept of ‘jump’ in export competitiveness, we analyze the determinants of the dynamics of the export competitiveness based on product specialization patterns, using the probit model.


Finally, in chapter 5, we summarize the results of various analysis and provide policy implications for industrial and economic development in Korea. In particular, we examine desirable policy measures that can improve the competitiveness of export goods by expanding inter-industry linkages(or relatedness), and propose policy directions for Korea’s economic growth over the medium to long term.?