Chapter 4: Trade Pattern in the Early Phase of Catch-Up
4. Trade patterns in the early phase of catch-up 1. INTRODUCTION According to a survey of the economically active population, the total number of employed persons in Korea increased by 5 percent per annum on average during 1963–69, 4 percent per annum in the 1970s, 2.5 percent per annum in the 1980s, and 1.7 percent per annum in the 1990s. On the other hand, according to Pyo (2001), although total net physical capital stock in Korea increased by only about 5 percent per annum on average in the 1950s, it increased by as much as 13 percent per annum in the 1960s and 16 percent per annum in the 1970s. It kept increasing by 11 percent in the 1980s and about 10 percent per annum on average in the 1990s. Such rapid changes in the aggregate capital–labor ratio of an economy cannot but signiﬁcantly change the factor intensities of its production and trade.1 This chapter examines the shifting pattern of trade in Korea during the early phase of its catch-up. Section 2 investigates the shifts in factor intensities of Korea’s export activities as well as those of competitive import replacement during the period 1960–85. It ﬁnds signiﬁcantly increasing capital intensities of these activities over the period 1966–85. The results are consistent with what we may expect from the comparative static version of Heckscher–Ohlin theory of factor proportions (see Hong 1969, 1970, 1987a). In order to provide a global perspective, this chapter also examines...
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