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Korea Has Highest Comparative Advantage in Ships
Highest Competitive Product
Korea Has Highest Comparative Advantage in Ships
  • By Jung Suk-yee
  • February 9, 2015, 04:51
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The equation to determine the revealed comparative advantage index number for one country. EXc,i,t denotes the exports of industry i of country c in year t. RCAc,i,t denotes the revealed comparative advantage of industry i of country c in year t.
The equation to determine the revealed comparative advantage index number for one country. EXc,i,t denotes the exports of industry i of country c in year t. RCAc,i,t denotes the revealed comparative advantage of industry i of country c in year t.

 

According to data on Korea's competitiveness in its major products compiled by Shinhan Investment Corp and UN Comtrade on Feb. 8, ships (special vessels excluded) were 9.4 in the revealed comparative advantage (RCA) index in 2013, the highest among the 12 major products. 

RCA is an index used to calculate the relative advantage or disadvantage a country in the export of a certain good. A country has RCA in a product if it exports more than its fair share, or a share that is equal to or greater than the share of total world trade that the product represents. If the index is greater than zero, the product is regarded to have a comparative advantage.

The 12 major products, accounting for 58.7 percent of the total exports in 2013, were classified using the international Harmonized System (HS). The two countries in the top slots for each export product were also compared. 

Ships were followed by liquid crystal displays with 7.7, and batteries at 3.6. Electric circuits scored 2.5, and autos and auto parts were both at 1.5. Organic chemicals (1.3), steel and mobile devices (1.2 each), plastic and petroleum products (1.1 each), and rubber tires (0.9) followed.  

When the nation's major export items are compared with those of other countries, Korea's index for electric circuits decreased from 3.16 in 2007 to 2.50 in 2013. However, the number for China increased from -0.91 to 0.30, showing that its competitiveness in electric circuits improved.

Korea's index for cars edged down from 1.52 in 2007 to 1.04 in 2009, and reached 1.52 in 2013. Germany, on the other hand, saw its index rose from 1.38 in 2007 to 1.75 in 2013. As for Japan, the figure inched down from 3.08 in 2007 to 2.44 in 2011, but rebounded to 2.96 in 2013, achieving a higher index than Korea and Germany. 

When it comes to chemicals, the figure for China increased from -1.07 in 2007 to -0.36 in 2013, but was unable to escape from negative growth. The U.S. witnessed its index shrink from 0.82 to 0.64 during the same period. As a result, Korea maintained its comparative advantage in chemicals. 

Korea improved its index for steel from 1.00 to 1.24 in the cited period, but Japan's number rose from 1.03 to 1.78. It shows that Japan has export competitiveness in the steel industry.