This study aims to analyze factors leading to Korea’s increased export, and then make a forecast on ways of improving the export industry’s structure and export structure according to regions overseas in order to establish a comparative advantage in export markets and industries, thereby making a long-term prediction of Korea’s export products.
The first factor to Korea’s increased export is export countries’ income elasticity on real export due to unstable economies of export countries to be around 2.4%. From a perspective of real effective exchange rate, a 16~17% level of increase in real exports for the last 8 years can be understood as Korea’s export to have grown in terms of supply and not being affected by foreign economies or real effective exchange rates. After 1974 however, a decreased amount in export support due to a downturn in foreign business brought a 0.8% decrease in the increase rate in real exports, but the level of contribution in developing foreign markets managed to stay at about 16%.
Based on these factors, the export amount in 1975 is expected to increase by about 20%. An increase of 6% in export price is expected to bring an increase of $6 billion in real export, while an increase of 4% is expected in 1976 due to the growth in GNP and real effect exchange rate. Contribution levels in market opening and other factors are expected to increase by 14%, and real export by a 24% increase. In particular, visible export is forecast to increase by $10 billion in 1977, and $20 billion in 1981. Exports in industrial products are forecast to increase by $6 billion in 1977, $8.3 billion in 1981, while the real annual growth rate is seen to increase by 16%, nominal growth rate by 23%. In accordance to the given figures, the export ratio of the primary and light industry goods will decrease by more than half in 1981 as a result of the government’s heavy emphasis on high and chemical industries - including shipping, steel, and electronic industries. Between 1973 and 1981, GDP per capita will increase by more than 8% annually .for every population increase in an annual rate of 1.6~1.5%, Converting the trade volume into the current prices will bring a growth rate of 197.6 in 1977, and 240.2 in 1981. As countries with low resources need export growth while countries with a big domestic market are able to increase their capital levels, a low level of trade will be required. The overall export market according to the government’s export scheme on ships, steel, and electronics will have to establish a long-term export on a deferred payment basis by expanding its Export-Import Bank to achieve an export volume of 3 million G/T in 1981. It will also have to decrease its excessive import on raw materials, expand its Pohang Iron and Steel Company to be able to export about 5 million steel products, and establish a second major steel company. Furthermore, there is a need to decrease the excessive import dependence on electronic products. The annual export growth on textile and apparel industries from 1973 to 1978 is set at 16%. Taking the employment effect maintaining the textile industry’s growth into consideration, a continuous growth is required. But textile and apparel exports can work as a factor weakening export competitiveness in 1977. The total amount of direct capital investment from 1974 to 1981 is about $2.4 billion, while the direct input amount of labor is about 800 thousand people. While the export volume on raw materials shows a total capital requirement of $3.6 billion to meet the import demand of more than 50% in 1981, the total volume of labor is expected to reach a level of 1.21 million people - $6.6 billion for capital requirement and 1.9 million people for labor input if indirect inputs are included. Furthermore, as the relative importance of exporting primary commodities stands at 9%, the export goal of electronic products in 1975 are $780 million, the trade volume of 1976 is expected to stand between $1 to $11 billion. There seems to be a need to modify the export goal of electronics in 1977 to $1.4 billion. Exports of heavy and chemical industry products held 40% more than light industry products in 1974. The export ratio between light industry, and heavy and chemical industry in 1977, was 55 over 45, and 49 over 51, in 1981. From the 60s, Korea was able to maintain economic stability through a persistent comparative advantage and high dependence on foreign trade. At this time, trade was focused on the US and Japan, while export dependency stood at a level of 64%. A concentrated development of the foreign markets on heavy and chemical products following the industrial reforms of the 70s seems inevitable, as trade growth of $2 billion is possible if an annual export growth rate of 23% is maintained. At the same time, the share on major world markets must increase to more than 1.68%, while an annual export growth of 19.7% is necessary in the American market. Under these conditions, trade volume will surpass $5.5 after the 80s, export dependence on the US estimated at 27.6%, and the share in the American market at about 3.8%. An annual export growth rate of 3% is expected in Europe, and the market share after the 80s is predicted at about 1.48%. At the same time, export is expected to increase by more than 3.28% in the Southeast Asian region, 11.1% for the Latin American and Canadian continents, showing an increase in the Middle East and Africa likewise.
In the 60s, much focus was put on developing an export market based on light industrial products in the US, Japan, and Southeast Asia. But with the change in Korea’s comparative advantage in the 70s, it is difficult to rely solely on increasing exports on heavy and chemical products and export growth rates from the expansion of the current market. The government has estimated a growth in export between 1973 to 81 at about 32%, this is expected to increase by 9.5% after the 80s. Korea will also have to maintain a market share of 1% in its trade countries to be able to export more than $20 billion after the 80s. To achieve this, there is a need for a wide variety of policy support, including the following: fostering local experts, increasing imports and economic cooperation with new markets, adopting taxation and strengthened financial support plans for companies’ market expansion overseas, adopting financial support on deferred payment export schemes to increase imports on heavy and chemical products, setting compensation plans for companies in new markets.
우리나라 상품수출의 장기전망(Long-term perspectives on Korean export products)
|Series Title; No||연구보고서 / 제75-04권|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Trade|
|Holding||KDI; KDI School|