Trades between Korea and Taiwan: The GVC Structure in Major Exporting Industries

Abstract

This paper investigates the trade structure in four major trading industries between Taiwan and Korea in the frame of Global Value Chain(GVC) and value-added exports. First, this paper identifies major exporting industries of Taiwan and Korea, and shows the value-added RCA of major Asian countries. We found that Taiwan’s exports are heavily concentrated on three industries(Electronics, Chemicals, and Basic metal) and that both Taiwan and Korea have comparative advantage in all of three industries. Second, we decompose both countries’ industrial exports to China into sixteen terms based on the method of Wang, Wei, and Zhu(2013), and find that both countries are actively participating in East Asian supply chains. Finally, we decompose the industrial exports between Taiwan and Korea by the same method. We found that electronics and basic metal industries of Taiwan and Korea build important and interdependent production value chains to maintain higher competitiveness. Korea’s chemical industry is located upper stream of GVC while Taiwan reexports its products to the 3rd countries by importing intermediate goods from Korea. Refined petroleum industries of both countries have high competitiveness and participate in GVC actively.