IDEAS home Printed from https://ideas.repec.org/a/kap/openec/v17y2006i3p321-340.html
   My bibliography  Save this article

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

Author

Listed:
  • 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

Suggested Citation

  • 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
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11079-006-9052-y
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11079-006-9052-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Dornbusch, Rudiger & Fischer, Stanley & Samuelson, Paul A, 1977. "Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods," American Economic Review, American Economic Association, vol. 67(5), pages 823-839, December.
    2. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
    3. Yeats, Alexander J., 1998. "Just how big is global production sharing?," Policy Research Working Paper Series 1871, The World Bank.
    4. Baier, Scott L. & Bergstrand, Jeffrey H., 2001. "The growth of world trade: tariffs, transport costs, and income similarity," Journal of International Economics, Elsevier, vol. 53(1), pages 1-27, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bridgman, Benjamin, 2012. "The rise of vertical specialization trade," Journal of International Economics, Elsevier, vol. 86(1), pages 133-140.
    2. Kei-Mu Yi, 2003. "Can Vertical Specialization Explain the Growth of World Trade?," Journal of Political Economy, University of Chicago Press, vol. 111(1), pages 52-102, February.
    3. Michelle Connolly & Kei-Mu Yi, 2015. "How Much of South Korea's Growth Miracle Can Be Explained by Trade Policy?," American Economic Journal: Macroeconomics, American Economic Association, vol. 7(4), pages 188-221, October.
    4. Kei-Mu Yi, 2005. "Vertical specialization and the border effect puzzle," Working Papers 05-24, Federal Reserve Bank of Philadelphia.
    5. Lopez-Gonzalez, Javier, 2012. "The Impact of Free Trade Agreements on Vertical Specialisation," Papers 442, World Trade Institute.
    6. Kei-Mu Yi, 2010. "Can Multistage Production Explain the Home Bias in Trade?," American Economic Review, American Economic Association, vol. 100(1), pages 364-393, March.
    7. Idrisova, Vittoria (Идрисова, Виттория), 2017. "Determinants of Value-Added Exports: The Role of Import Demand Factors [Детерминанты Экспорта Добавленной Стоимости: Роль Факторов Спроса На Импорт]," Working Papers 051715, Russian Presidential Academy of National Economy and Public Administration.
    8. Shalah M. Mostashari, 2011. "Vertical specialization, intermediate tariffs, and the pattern of trade: assessing the role of tariff liberalization to U.S. bilateral trade 1989-2001," Globalization Institute Working Papers 71, Federal Reserve Bank of Dallas.
    9. -, 2016. "The South American input-output table: Key assumptions and methodological considerations," Documentos de Proyectos 40832, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    10. Andrei A Levchenko & Jing Zhang, 2013. "The Global Labor Market Impact of Emerging Giants: A Quantitative Assessment," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(3), pages 479-519, August.
    11. Markusen, James R., 2013. "Expansion of trade at the extensive margin: A general gains-from-trade result and illustrative examples," Journal of International Economics, Elsevier, vol. 89(1), pages 262-270.
    12. Coeurdacier, Nicolas, 2009. "Do trade costs in goods market lead to home bias in equities?," Journal of International Economics, Elsevier, vol. 77(1), pages 86-100, February.
    13. Kose, M. Ayhan & Yi, Kei-Mu, 2006. "Can the standard international business cycle model explain the relation between trade and comovement?," Journal of International Economics, Elsevier, vol. 68(2), pages 267-295, March.
    14. Richard Baldwin & Javier Lopez-Gonzalez, 2015. "Supply-chain Trade: A Portrait of Global Patterns and Several Testable Hypotheses," The World Economy, Wiley Blackwell, vol. 38(11), pages 1682-1721, November.
    15. Burstein, Ariel & Kurz, Christopher & Tesar, Linda, 2008. "Trade, production sharing, and the international transmission of business cycles," Journal of Monetary Economics, Elsevier, vol. 55(4), pages 775-795, May.
    16. Oliver Schenker & Simon Koesler & Andreas Löschel, 2018. "On the effects of unilateral environmental policy on offshoring in multi‐stage production processes," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 51(4), pages 1221-1256, November.
    17. Yukio Fukumoto & Tomoko Kinugasa, 2017. "Age Structure and Trade Openness: An Empirical Investigation," The World Economy, Wiley Blackwell, vol. 40(6), pages 1247-1263, June.
    18. Markusen, James R. & Venables, Anthony J., 2007. "Interacting factor endowments and trade costs: A multi-country, multi-good approach to trade theory," Journal of International Economics, Elsevier, vol. 73(2), pages 333-354, November.
    19. Benjamin Bridgman, 2013. "International Supply Chains And The Volatility Of Trade," Economic Inquiry, Western Economic Association International, vol. 51(4), pages 2110-2124, October.
    20. David Hummels & Jakob R. Munch & Chong Xiang, 2018. "Offshoring and Labor Markets," Journal of Economic Literature, American Economic Association, vol. 56(3), pages 981-1028, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:openec:v:17:y:2006:i:3:p:321-340. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.