Korea's Export Competitiveness and Opportunity Potential

Korean export growth posted steady gains since 2001, but abruptly fell following sharply a slowdown in global trade in 2014, which precipitated two years of sluggish export performance. Concern regarding export competitiveness is growing as major domestic industries have continued to record weak export figures, suggesting a need to improve the competitiveness of industry and promote structural change. This is based on the fact that the slowdown in exports is caused not by temporary phenomena, but by structural factors including an overall decline in world trade as well as changes in import demand and the in comparative advantage of partner countries. In 2017, total exports increased and recorded a high growth rate, finally reversing the decline of the previous two years. Exports of semiconductors grew by more than 50 percent and those of steel, petroleum products and displays—which had recorded a negative growth rate in 2016—posted double-digit growth. The semiconductor industry achieved the greatest growth due to unit price increases driven by global demand for servers in emerging industries. Steel products and displays also showed a rise in prices from 2016, whereas exports of automobile parts and wireless communication devices are still declining. Despite positive prospects for exports in 2018 given increases seen in 2017, a policy for promoting export competitiveness should be considered in order to stem export declines in weaker sectors and to expand specific industries’ exports. This paper explores the shape such a policy might take.