Journal of Korea Trade

Korea Trade Research Association (한국무역학회)
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Comparison of the RCA Between China and KOR: From the Perspective of Value-Added

  • Xiaosong Jiao (Dali Institute of Economic Research, Dali University) ;
  • Yingqi Cao (Dali Institute of Economic Research, Dali University) ;
  • Lily Jiao (College of Economics, HeBei GEO University) ;
  • Chandaith Neak (Department of International Studies, Royal University of Phnom Penh) ;
  • Yaqian Zhang (Office of Foreign Affairs, Hebei University of Economics and Business)
  • Received : 2021.12.06
  • Accepted : 2022.05.06
  • Published : 2022.06.30
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Abstract

Purpose - This paper empirically explores the RCA of electrical equipment trade between China and Korea from the perspective of gross trade and value-added trade. The goal of this paper is to scan the electrical equipment's RCA, the decomposition of gross exports, and the impacts of an exerted shock. Design/methodology - We applied the domestic value-added method in measuring the RCA, which could be more accurate than traditional RCA since it excludes foreign value-added. Based on the research purpose, this paper follows the framework of Koopman, Wang, and Wei (2014)-as extended by Wang, Wei, and Zhu (2018). It extracts the data from the 2019 Multi-regional Input-Output (MRIO) databases compiled by the Asian Development Bank in January 2021. Findings - After rigorous examination, the main findings are as follows: First, the electrical equipment sector maintains a consistent comparative advantage in either assessing method. Second, China exports more gross goods of electrical equipment to the world than South Korea does, but there is a trade deficit with Korea. Third, South Korea and P.R. China are the most significant bilateral partners of foreign value-added sourcing. Finally, it is surprising that there is a shock on electrical equipment; the partner's service, as well as manufacturing sectors, would be affected. Originality/value - This paper explores the revealed comparative advantage between Korea and China from traditional gross export and value-added perspectives. Second, we apply the information from the 2019 MRIO database compiled by the Asian Development Bank in January 2021, reflecting the current situation. Third, this paper analyzes the electrical equipment and the impacts on other parties' sectors. Finally, we carry out the subjects that deserve to be investigated in the future.

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Acknowledgement

We would like to express our sincere gratitude to anonymous reviewers for their valuable comments, which have greatly improved this paper. We thank the General Program of Social Science Fund of Yunnan Province for funding the research for this paper through the Research on the Evolution, Transformation and Upgrading of Yunnan's specialization from the Perspective of Regional Value Chain(YB2021018); Research on the Synergy and Adaptive Adjustment of Industrial Chains in Southwestern China (YB2021020); A Study on the Employment Effect of Service Trade in Hebei Province from the Perspective of High Quality-Stage Results Based on the Analysis of Labor Technology Differences (SD2021065); 2021 Hebei Social Science Development Research Project (20210201221), respectively.

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