Korea's export niche: Origins and prospects

Abstract

Korea has achieved significant global market shares in variety of labor-intensive, intermediate, as well as sophisticated consumer products. Its revealed comparative advantage is quite similar to Japan's (particularly when evaluated with a 15-year lag). Korean and Japanese export baskets are more closely correlated than those of Japan and other East Asian NICs. Circumstantial evidence suggests that this similarly is the result of Korea's “following” a Japanese development model—through the adoption of Japanese technologies, policies, and commercial institutions, and the exploitation of externalities generated by Japanese penetration of global markets. Partly for these reasons, Korean exports are heavily concentrated in the US market and tend to consist of relatively protection-prone commodities. Consequently, issues of trade management and diplomacy will play an increasingly important role in determining the volume and composition of future exports.