"Concentration of South Korea's Export Items Highest Among Top 10 Export Countries"

Reforming the Biased Export Structure Remains a Challenge

To overcome the sluggishness in South Korea's exports, it has been argued that the high concentration of export items and countries compared to major overseas nations must be alleviated.

On the 2nd, the Korea Economic Research Institute (hereinafter KERI) revealed in its analysis report titled 'Comparison of Export Concentration among the World's Top 10 Exporting Countries and Implications' that South Korea's export item concentration is the highest among the world's top 10 exporting countries.

Using international trade statistics from the Korea International Trade Association and the United Nations (UN), KERI calculated the export item concentration (based on the UN's SITC 2-digit classification) of major countries. South Korea scored 779.3 points, the highest among the world's top 10 exporting countries (average 548.1 points). Following South Korea were Japan (753.0 points), China (640.2 points), Canada (621.5 points), Belgium (584.1 points), and Germany (529.7 points) in order of export item concentration. The country with the lowest item concentration among the top 10 exporters was the Netherlands (372.1 points), which was only about half of South Korea's level.

KERI analyzed that this result reflects South Korea's export structure, which is highly dependent on specific items such as electrical apparatus and equipment (export share 20.2%, average from 2020 to 2022) and automobiles (10.5%). In fact, the export value of the top 10 export items accounted for 68.7% of South Korea's total exports, the highest among the world's top 10 exporting countries (average 58.8%).

The concentration of export destination countries is also at a high level. South Korea's export destination country concentration was 1019.0 points, the second highest among the world's top 10 exporting countries (average 1214.7 points), following Canada (5734.4 points). After South Korea were Japan (971.0 points), the Netherlands (863.7 points), Belgium (779.0 points), the United States (729.9 points), and China (562.5 points). The country with the lowest concentration was Germany (434.8 points).

This reflects the fact that about 40% of South Korea's exports are concentrated in China (export share 24.5%, average from 2020 to 2022) and the United States (15.2%). The export share of the top five export countries relative to South Korea's total exports was 58.6%, the second highest after Canada (86.1%).

KERI explained that countries like South Korea, which have high export dependence on specific items and countries, inevitably face relatively greater export shocks due to changes in the external environment compared to other countries. Choo Kwang-ho, Director of Economic Policy at KERI, emphasized, “To ensure that exports continue to serve as a pillar of the Korean economy, reforming the export structure concentrated on specific items and countries is an urgent task that can no longer be postponed.” He added, “Along with efforts to diversify export markets, it is necessary to foster a variety of competitive items through expanded support for private sector innovation such as research and development (R&D).”