The Rise of China and Structural Changes in Korea and Asia
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The Rise of China and Structural Changes in Korea and Asia

Edited by Takatoshi Ito and Chin Hee Hahn

This book brings together studies conducted by researchers in East Asian countries who seek to better understand the impact of China’s rise and the consequent policy challenges.
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Chapter 8: The Rise of the Chinese Economy and Korea’s Job Growth

Dae Il Kim


* Dae Il Kim INTRODUCTION 8.1 The Korean economy has heavily relied on international trade since the 1960s when the economy commenced fast growth. As of 2004, the ratio of international trade to gross domestic product (GDP) was 0.64 in Korea, much higher than that of the US or Japan.1 Such a high ratio implies that the labor demands and job growth potentials in Korea are more strongly affected by the changes in trade patterns and volumes.2 In particular, the ratio to the GDP of trade with China alone is as high as 0.14 as the trade with China accounts for 21.9 percent of the total trade volumes of Korea. Consequently, the effects of the trade with China on Korea’s labor market must have been substantial. Goods trade is just one of many important aspects of Korea’s economic trade with China. The Chinese economy went through rapid industrialization during the 1980s and 1990s, which has led China to become one of the major competitors to Korea in the world market. Kim et al. (2006) show that the exports of China shifted from labor-intensive products such as textiles, apparel and shoes toward skill-intensive products such as electronics and information technology (IT)-related products through the 1990s.3 As these have been among Korea’s main exports, the world market share of Korea in these products has accordingly been suppressed. Another important aspect in the two countries’ economic trade that could have affected Korea’s job growth potential has been Korea’s foreign direct investment (FDI) into...

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