This study aims to compare the machinery industry in Korea and in Japan and gain an understanding of how each country’s comparative advantage has evolved. The machinery industry is a core industry that represents 18.4% (1983) of production value, 20.6% (1983) of added value and 29.5% (1982) of employment to the total manufacturing industry in Korea. The electric machinery sector, in particular, has recorded the fastest growth thanks to aggressive government support, but its importance in the overall machinery industry is still rather minimal. Save for the electric machinery sector, the machinery industry as a whole remained stagnant until the early 1970s, but the government’s policy of promoting the heavy and chemical has brought about an era of leap for the machinery industry. Its growth rate showed signs of slowing down during the economic recession in 1979, but it is now back on the recovery track.
In Japan, the machinery industry represented 20.6% of the total manufacturing industry, a level similar to Korea’s recent reading, in 1050. However, the rapid industrial development that took place in the 1950s and 1960s bumped its contribution level to 41.3% in 1970. As of 1981, the machinery industry contributed 39.1% of production value, 42.6% of added value and 42.4% of employment to the total manufacturing industry in Japan; it is the biggest industry in Japan’s manufacturing sector. Comparative analysis of exports of manufactured goods from Korea and Japan showed that Korea’s RCA index and the relevant rank have changed rather significantly, whereas the only small changes were found in Japan’s. This implies that the international trade structure has more rapidly transformed itself in Korea than in Japan since the mid-1970s, when the development of the heavy and chemical industry was aggressively promoted in the former.
It was found out that both countries held a comparative advantage in the non-physical, capital-intensive (in other words, labor-intensive) machinery industry sector in 1970; Korea’s portfolio was even more heavily skewed in favor of the sector. However, both countries shifted in weight towards the physical, capital-intensive machinery industry sector in 1980, for which the transition occurred much more rapidly in Japan than in Korea. Furthermore, in 1971, both countries held a comparative advantage in the labor-intensive machinery industry sector, but Japan had a relative strength in human capital-intensive sectors which further expanded over the following decade. A regression analysis concluded that, in 1980, exports from Korea’s machinery industry had a comparative advantage in the non-human capital-intensive sector while Japan’s had an advantage in the physical capital-intensive sector.
On one hand, exports of Korea’s machinery industry have shifted more in favor of physical and human capital-intensive products, but they are still relatively heavily dependent on labor-intensive products. On the other hand, exports of Japan’s machinery industry have been even more driven by physical and human capital-intensive products.
기계공업부문에 있어 한&일 양국의 비교우위 분석(Comparative advantage analysis of the machinery industry in Korea and Japan)
|Series Title; No||정책연구시리즈 / 84-02|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Industry and Technology < Manufacturing|
|Holding||KDI; KDI School|