Changes in Comparative Advantage of OECD East European Countries and Korea

Abstract

It was found that export products of Poland (P in short hereafter) are the most concentrated for the period of 2002-2007. This concentration of Polish export products is followed by Hungary (H in short hereafter), Slovak Republic (S in short hereafter), Korea and Czech Republic (C in short hereafter) in that order. Since this kind of high concentration of export products is not desirable, it should be diversified to avoid any potential economic loss associated with unfavorable trade-environmental changes against these concentrated export products. Export patterns of Hungary are found to have changed faster than those of Korea, Slovak Republic, Poland, and Czech Republic for the period of 2002-2007. On the other hand, export patterns of Czech Republic remained the most stable in the same period. Therefore both Korea and CHPS should fully adjust their economies to ever-changing patterns of their exports. It was found that Korea’s export patterns do not resemble those of PS due to the differences in factor endowment ratios of PS and Korea. Therefore Korea can increase her exports to PS by exploiting non-similarity of Korean and PS export patterns. Both CH and Korea are found to have had similar export patterns due to the resemblances in factor endowment ratios of CH and Korea. Especially, Korean export patterns became increasingly similar to Czech export patterns and Korean products’ competition with Czech products in the world export market became increasingly severe. Therefore both CH and Korea should cooperate in exporting their products in the world market. It was found that trade patterns of Czech Republic, as a transforming economy, did not closely follow a so-called comparative advantage structure for the entire period of 2002-2007. Therefore it will be desirable that trade patterns of Czech Republic will closely follow her comparative structure by pursuing a more market-oriented economy. Hungary is found to have exported products which are less physical capital intensive and less skilled human capital intensive. Therefore Hungary should try to export more of these products to the world market from now on. It was found that Poland exported products which are less R&D intensive from 2002 to 2005. Therefore Poland should try to export more of these products to the world market from now on. Slovak Republic is found to have exported products which are less physical capital intensive and/ or less R&D intensive for those respective years. Therefore Slovak Republic should try to export more of these products to the world market from now on. It was found that Korea exported products which are less skilled human capital and more R&D intensive for the entire period of 2002-2007. Therefore Korea should try to export more of these products to the world market from now on.