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

Hung-Yi Chen () and Yang-Ming Chang

Open Economies Review, 2006, vol. 17, issue 3, 340 pages

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

Keywords: vertical specialization; fragmentation; tariff reductions (search for similar items in EconPapers)
Date: 2006
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DOI: 10.1007/s11079-006-9052-y

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