Export Diversification in the Korean Manufacturing Industry and its Implications

The increased uncertainty that has rocked the global trading environment in the aftermath of the global financial crisis has emerged as a significant threat for the Korean economy and its high trade dependence. While advanced countries have found themselves confronted by the possibility of low growth caused by the financial instability and economic slowdown with the delicate financial situation, developing countries have taken active measures at the policy to curb inflation. In addition, they have engaged in efforts to maintain high growth through the advent of stimulus packages designed to promote domestic demand. The ability of Korean exports to rapidly recover has been the result of the steady growth of developing countries such as China, and the increased price competitiveness occasioned by the rapid devaluation of the Korean won in the aftermath of the global financial crisis. However, as Korea is still at risk of being negatively impacted by the uncertainty plaguing foreign economies, efforts should be made to achieve sustainable export growth and establish stable export conditions.From this standpoint, it becomes necessary to conduct an active review of export diversification as part of the strategy to ensure sustainable export growth and increase export stability. Export diversification refers to the strategy of diversifying export products and regions which have been actively used by developing countries as a means to promote export activities during the economic development process. Therefore, export diversification very effective method of ensuring sustainable export growth and export stability at any stage of economic development.This study analyzes the current state of export diversification within the Korean manufacturing industry from the standpoint of product and regional diversification. This assessment is based on the measurement of inequality using Theil index. Furthermore, this study will also analyze export diversification patterns from the standpoint of the relationship between export diversification and market share. Lastly, the implications of the findings will be addressed