Working Papers

2016-01 「Vertical Specialization in the Korean Manufacturing Sector」, Chang-Soo Lee · Backhoon Song

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Date
2016-09-09 13:19
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「Vertical Specialization in the Korean Manufacturing Sector」

Chang-Soo Lee · Backhoon Song (2016), Journal of Korea Trade, Vol. 20 No. 2, pp. 134-148


* Abstract

This paper performed industry-level calculation of the vertical specialization indices, VS and VS1, separately, and quantified that VS and VS1 of each Korean manufacturing industry have showed changing trends in opposite directions in the 1995-2011 period. This paper also calculates industry-level VS and VS1 in trade with major trading partner countries such as China, Japan and the U.S. to identify different GVC locations even in the same industry. The main findings are as follows. First, VS1 is a dominant type of vertical specialization in Korea, particularly in the key exporting industries such as electronics, transport vehicles, metals and chemicals. This leads to the argument that Korea’s vertical specialization differs from that of China and Mexico in the sense that Korea is oriented toward VS1 rather than VS. Second, the values of net vertical trade (VS1-VS) in the key exporting industries increased in the period of 1995-2011, and verifies upward trends in the locations of slicing up the value chain in these industries. Finally, this paper claims that net vertical trade is an important indicator of the location of slicing up the value chain.