• The Journal of the Korea Contents Association
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• v.17 no.10
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• pp.598-615
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• 2017

This paper compares the sources of the changes in the production of manufacturing industry between Korea and Japan during year 2000 ~year 2011 by I-O SDA. The results show that the first source of the increase in the production of Manufacturing industry in Korea is export, while in Japan the technological change. However, the contribution of technological change is relatively small in Korea and moreover decreasing. Meanwhile, the domestic final demand is the second source of the increase in the production of Korean manufacturing industry, but it was the first source of the decrease in the production of Japanese counterpart. On the other hand, the decrease in import substitution for both the intermediate and domestic final goods is significantly contributed to the decrease in the production of both Korean and Japanese manufacturing industry. Conclusively, these results confirm that the growth of Korean manufacturing industry has heavily depended on export. Then, considering the current global economic environment that is rapidly becoming more uncertain as well as volatile, the results imply that the heavy export dependence may become a key hurdle for the solid sustained growth of Korean manufacturing industry, so that policy ensuring more evenly balanced growth contribution from all growth sources is necessary. In particular, policy to promote technological change and import substitution is required with greater weight.