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The growth and determinants of vertical trade in Korea

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Young Kyung Suh*
The views expressed herein are those of the author and do not necessarily reflect the official views of the Bank of Korea, When reporting or citing it, the author’s name should always be explicitly stated.
________________________
* Economist, International Economics Team, Institute for Monetary and Economic Research, Bank of Korea (+82-2-759-5425, yksuh@bok.or.kr)
I would like to thank Ouk Heon Song, Seung Je Hong, Bong Geul Chun and Hyejoon Im and seminar participants at the Bank of Korea for their helpful comments. Any errors appearing here are mine.
Contents
I. Introduction ---------------------------------------------------------------------II. Vertical Trade in Korea -----------------------------------------------------2.1 Measurement of Vertical Trade 2.2 Vertical Specialization in Korea’s Trade III. The Determinants of Vertical Trade ---------------------------------------------3.1 An Overview of the Literature 3.2 Theoretical Model 3.3 Empirical Estimation
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IV. Conclusion ---------------------------------------------------------------------References --------------------------------------------------------------------------Appendixes -------------------------------------------------------------------------<Abstract in Korean>-------------------------------------------------------------
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The Growth and Determinants of Vertical Trade in Korea
This paper measures the volume of vertical trade in Korea and investigates its determinan


Full Text
Title The growth and determinants of vertical trade in Korea
Similar Titles
Material Type Reports
Author(English)

Suh, Young Kyung

Publisher

[Seoul]:The Bank of Korea(Institute for Monetary and Economic Research)

Date 2008-03
Series Title; No Working Paper / no. 327
Pages 42
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Trade
Holding The Bank of Korea; KDI School

Abstract

This paper measures the volume of vertical trade in Korea and investigates its
determinants. The contributions of this paper are as follow. First, the measurement method
in this paper is related to Hummels et al. (2001), but it improves upon their method in that it
uses information on intermediate goods trade as well as the input-output tables of trading
countries. Second, this paper derives a functional form for the determinants of vertical
trade from a monopolistic competition model of trade and multinational production.
The empirical results show that Korea’s trade has been becoming more vertically
specialized over last ten years. In particular, vertical exports to China have grown rapidly
since the early 2000’s, and thus the surplus on vertical trade has widened dramatically in
recent years. (The rest omitted)