What Explains the Recent Global Competitiveness of the Korean Automotive Industry?
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Abstract
Empirical results and the global standing of advanced technology of the Korean automotive industry revealed that the competitiveness of the automotive components suppliers is far behind that of the assembled vehicle manufacturers. The returns to scale () of the assembled vehicle manufacturers showed strong increasing return to scale (RTS), whereas the automotive components suppliers displayed decreasing return to scale (IRS). The average total factor productivity (TFP) growth of the assembled vehicle manufacturers was ten times greater than that of the automotive components suppliers in the past decade. The technical progress (TP) has been a key contributor to the growth of both sectors, but the strength of the capital-using technical progress (TP) of the automotive components suppliers was less than half of that of the assembled vehicle manufacturers. The paradigm shift of the automotive industry urges persistent, collaborative R&D between the two sectors against expeditious commercialization of Next Generation Vehicles (NGV).
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