Determinants of Export Competitiveness of the Manufacturing Industry

At a time when Korea's exports are slowing down due to rapid changes in the global trade, this study analyzes the determinants of export competitiveness by industry in the manufacturing sector and suggests implications. In this study, the 40 largest manufacturing industries were categorized according to their technology level, and the current comparative advantage index was utilized as a proxy variable to find factors that influenced export competitiveness according to industry characteristics. The results show that the factors affecting export competitiveness vary by industry and differ before and after the global financial crisis. First, R&D investment was found to have a positive effect on export competitiveness, with no differences across industries. However, the nonlinear relationship between the two variables shows differences by industry, with a nonlinear relationship in low-tech industries but no relationship in high-tech industries. This suggests that continuous R&D investment in high-tech industries can lead to export competitiveness. Second, labor productivity and capital productivity are found to have a positive impact on export competitiveness, but the statistical significance varies by industry technology level, suggesting that the impact of productivity varies by technology level. Third, an increase in the debt ratio is found to have a positive effect on export competitiveness for high-tech industries, but for low-tech industries, the debt ratio acts as a constraint and has a negative effect on export competitiveness. Finally, looking at the difference in coefficient values before and after the global financial crisis, the coefficient value of R&D investment is larger after the crisis than before the crisis, suggesting that the impact of R&D investment increased after the crisis. However, in the case of debt ratio and wages, the coefficient values are smaller after the crisis. These results suggest that policies to strengthen export competitiveness should take into account the technological level of the industry.