Abstract
Since the 2000s, the economic division of labor between Korea and Japan has shifted from the vertical division of labor into a horizontal division of labor. The background of this transformation was the expansion of the global value chain and the modularization of the industrial architecture. In response to these new environmental changes, Korea has a comparative advantage in finished goods and Japan in parts and materials.<BR>This relationship is similar in appearance to the vertical division of labor between Japan and Korea that went on until the 1990s. However, this is a new division of labor in that Korea’s finished goods companies have more bargaining power than Japanese materials and parts companies. This division of labor is a new equilibrium that creates benefits for both companies.<BR>But this equilibrium presupposes the free movement of capital and raw materials. If there is a problem with the supply chain, there is a risk of serious damage. The current Japanese export restrictions on Korea can be said to be the actual risk. However, this export restriction is expected to be difficult to sustain for a long time because it is an anachronistic policy that counters global trends and is an inefficient policy that will ultimately cause more damage to Japan.
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