The South Korean auto industry's path to maturity

Lila J. Truett and Dale B. Truett

International Review of Economics & Finance, 2014, vol. 31, issue C, 86-94

Abstract: Since 1962, South Korea has recognized the motor vehicle industry as a critical industry for economic development. The government has been closely involved in the industry's growth from infancy to its current position among the top five motor vehicle producers in the world. In its early years, the industry also gained technological knowhow through licensing agreements rather than investing heavily in research and development. The results of this study strongly suggest that the industry as a whole has achieved a minimum efficient scale of operations. However, cross price elasticity estimates indicate that many rigidities exist in the input markets, particularly with respect to outsourced intermediate products. The restrictions on imports of these products may have to be reduced as South Korea seeks to expand its global trade footprint by participating in bilateral preferential trade agreements, presenting challenges for the industry.

Keywords: South Korea; Motor vehicle industry; Scale economies; Cost function (search for similar items in EconPapers)
JEL-codes: D2 F14 L6 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:31:y:2014:i:c:p:86-94

DOI: 10.1016/j.iref.2014.01.002

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