It is generally acknowledged that international trade flow is determined by the comparative advantage of relative factor endowments in different countries. The purpose of this paper is to test the factor proportion hypothesis in trade theory on Korea's manufacturing exports and to differentiate these export patterns towards Korea's major trading partners, i.e the U.S., EC, Japan, EFTA, and ASEAN. In addition, this paper will also analyze the role of the EC market in Korea's changing comparative advantage during 1978-1991.
To analyze the structural changes in Korean exports, 81 manufactured commodities classified by the 2-digit level of HS were employed, since Korean exports consist mostly of manufactured goods. Comparative advantage of a given country has been conventionally defined in terms of relative export performance, while neglecting imports which are greatly affected by protectionist policies.
The analysis is based on three testing procedures. First, section Ⅱ of this paper discusses how to measure comparative advantage, and by using the measurement method in this section, describes the changes in Korean export patterns towards its major trading partners. The factor intensities of each export industry are measured within the framework of the factor proportion theory. The structural changes in each trading partner's comparative advantage are estimated in section Ⅲ. Using the same regression method, the role of the EC market in time-variation of Korea's comparative advantage is estimated in section Ⅳ.

Contents

I. Introduction

II. Changes in Comparative Advantage Towards Countries

III. Factor Endowment and Korea's Comparative Advantage

IV. Dynamic Changes in Korea's Comparative Advantage

V. The Role of the EC in Korea's Export Industries

VI. Concluding Remarks

〈References〉