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Trade openness and vertical integration : Evidence from Korean firm-level data

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  • Trade openness and vertical integration
  • Hyun, Hea-Jung; Hur, Jung
  • KIEP


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Title Trade openness and vertical integration
Similar Titles
Sub Title

Evidence from Korean firm-level data

Material Type Reports
Author(English)

Hyun, Hea-Jung; Hur, Jung

Publisher

Seoul:KIEP

Date 2009
Series Title; No KIEP Working Paper / 09-08
ISBN 978-89-322-4202-6; 978-89-322-4026-8(set)
Pages 50
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Trade
Industry and Technology < Entrepreneurship
Holding KIEP

User Note

Using firm-level data on vertical integration of Korean manufacturers, the paper tests whether trade liberalization is an important determinant of firm's decision on vertical integration. We develop an empirical framework incorporating trade openness into industrial organization models; transaction costs theory and theory of internal costs of management. The empirical results of the paper suggest that trade openness is negatively related with vertical integration. A further analysis on firm's decision among four types of organizational forms in international contexts, however, reveals that trade liberalization has positive impact on cross-border vertical integration while it is negatively correlated with domestic vertical integration.