Lagging Behind
While competitors such as China are increasing their share of global new industry exports, Korea is lagging behind, seeing its gaps with its competitors widen, according to a new report by the Korea International Trade Association (KITA).
The KITA’s International Trade Research Institute published this analysis in a report on five new growth drivers’ export competitiveness and economic contributions released on May 4. The five new growth drivers mentioned in the report are next-generation semiconductors, next-generation displays, electric vehicles, secondary batteries, and bio-health products.
According to the report, the global trade volume of the five increased 1.8 times from US$1.6 trillion in 2016 to US$3.2 trillion in 2021. They account for about 14 percent of total global exports.
China’s export share of the global markets climbed by 1.6 percentage points, from 11.9 percent in 2016 to 13.5 percent in 2021. In contrast, Korea’s share descended by 0.1 percentage points from 5.5 percent to 5.4 percent. The gap between China and South Korea widened further by 1.7 percentage points, from 6.4 to 8.1 percentage points over the period.
By new industry, Korea’s share in 2021 was led by next-generation semiconductors (11.0 percent), next-generation displays (10.7 percent), secondary batteries (8.7 percent), electric vehicles (6.6 percent), and bio-health products (1.2 percent).
The report analyzed changes in their export competitiveness over the period using their global export shares and Revealed Symmetric Comparative Advantage (RSCA) index. The analysis found that Korea’s share of electric vehicle and next-generation semiconductor exports increased by 2.4 percentage points and 0.6 percentage points, respectively, by 2021. Korean electric vehicles’ and next-generation semiconductors’ RSCA indices also increased by 2.4 percentage points and 0.04 percentage points, respectively, indicating that they put up a good fight in the global export market.
On the other hand, Korea’s next-generation displays and secondary batteries showed stagnant competitiveness with their export shares falling by 3.3 percentage points and 3.5 percentage points, respectively, and their export competitiveness indexes declining slightly (-0.06 percentage points and -0.09 percentage points). In the case of next-generation displays, Korea was overtaken by Vietnam (13.4 percent), which has rapidly dialed up its export share since 2016. In secondary batteries, Korea’s gap with China widened to 25 percentage points, and in bio-health products, Korea’s share has stagnated in the 1 percent range, indicating that an improvement is urgently needed.
“Compared to other export powerhouses, Korea’s export share in the top five new industries (26.3 percent) is very high, but almost two-thirds of the share is concentrated in next-generation semiconductors,” said Hong Ji-sang, a researcher at KITA. “Efforts to foster industries and improve regulations should be made to expand Korea’s exports in new industries and keep its export portfolio balanced.”