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Trade Verticality and Structural Change in Industries:The Cases of Taiwan and South Korea

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  • Hung-Yi Chen
  • Yang-Ming Chang

Abstract

This paper documents that a significant portion of trade for Taiwan and Korea follows the trend of world trade in moving toward a pattern of vertical specialization (VS). Noteworthy is the manufacturing sector, whose VS shares of exports has been steadily increasing and has accounted for more than 90% of the total VS shares of manufactured exports. For Taiwan, nearly 57% of the growth in exports is contributed by the growth in VS-based trade; for Korea, it is as high as 64%. In the analysis, we compare VS shares of exports with or without input-output circulation among domestic industries in an open economy. Using Taiwan as a case study, we further discuss the implications of trade liberalization through tariff reductions for trade verticality. Copyright Springer Science + Business Media, LLC 2006

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  • Hung-Yi Chen & Yang-Ming Chang, 2006. "Trade Verticality and Structural Change in Industries:The Cases of Taiwan and South Korea," Open Economies Review, Springer, vol. 17(3), pages 321-340, July.
    • Handle: RePEc:kap:openec:v:17:y:2006:i:3:p:321-340
    DOI: 10.1007/s11079-006-9052-y
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Amador, João & Cabral, Sónia, 2008. "International fragmentation of production in the Portuguese economy: What do different measures tell us?," MPRA Paper 9783, University Library of Munich, Germany.
    2. Amador, João & Cabral, Sónia, 2009. "Vertical specialization across the world: A relative measure," The North American Journal of Economics and Finance, Elsevier, vol. 20(3), pages 267-280, December.
    3. Hongbo Cai & Xiangjun Zhang, 2011. "Off-shoring and labor productivity: Evidence from China," Frontiers of Economics in China, Springer;Higher Education Press, vol. 6(2), pages 271-289, June.
    4. Amador, João & Cabral, Sónia, 2014. "Global value chains: surveying drivers and measures," Working Paper Series 1739, European Central Bank.
    5. Marcela Sabaté, 2009. "Vertical Specialization and Nonstationarities in International Trade Series," The Institute for International Integration Studies Discussion Paper Series iiisdp309, IIIS.
    6. Sandra M. Leitner & Robert Stehrer, 2014. "Trade Integration, Production Fragmentation and Performance in Europe - Blessing or Curse? A Comparative Analysis of the New Member States and the EU-15," wiiw Research Reports 397, The Vienna Institute for International Economic Studies, wiiw.
    7. Frank A.G. den Butter & Christiaan Pattipeilohy, 2007. "Productivity Gains from Offshoring: an Empirical Analysis for the Netherlands," Tinbergen Institute Discussion Papers 07-089/3, Tinbergen Institute.
    8. Nenci, Silvia & Fusacchia, Ilaria & Giunta, Anna & Montalbano, Pierluigi & Pietrobelli, Carlo, 2022. "Mapping global value chain participation and positioning in agriculture and food: stylised facts, empirical evidence and critical issues," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 11(2), July.
    9. repec:ptu:bdpart:a200808 is not listed on IDEAS
    10. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.
    11. Yang, Yiwen & Lin, Chinho, 2021. "Impact of the “Belt and Road Initiative” on machinery production networks," Economic Modelling, Elsevier, vol. 104(C).
    12. Marina Gamilovna Mazitova, 2018. "International Production Fragmentation: Approaches to Measuring," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 2, pages 154-169.
    13. Ceren Gündoğdu & Dürdane Şirin Saracoğlu, 2016. "Participation of Turkey in Global Value Chains: An Analysis Based on World Input Output Database," ERC Working Papers 1610, ERC - Economic Research Center, Middle East Technical University, revised Sep 2016.
    14. João Amador & Sónia Cabral, 2008. "Vertical Specialization in Portuguese International Trade," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.

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