Republic of Korea

Abstract

Korea's spectacular export growth — from $50 million worth of goods in 1962 to $25 billion in 1982 — is a well-known, well-documented success story. Less well known is the recent surge in Korea's exports of capital goods and related services. These exports include those directly related to overseas projects to establish and operate productive systems. They also include non-project-related exports of capital goods, such as most kinds of transportation equipment or machinery sold to trading firms for resale. The project-related exports comprise overseas construction, exports of capital goods procured in connection with specific projects, and various flows of technological information and technical and managerial services. The value of such exports from Korea was small until 1977, when the annual value nearly surpassed the cumulative value for the preceding 15 years. For the five years from 1977 to 1981, contracts for these exports amounted to more than $40 billion. During the same period non-project-related capital goods exports were worth roughly $8 billion. This paper examines Korea's exports of capital goods and related services, their role in Korea's development strategy, and the way they conform to Korea's dynamic comparative advantage.