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The South Korean auto industry's path to maturity

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  • Truett, Lila J.
  • Truett, Dale B.

Abstract

Since 1962, South Korea has recognized the motor vehicle industry as a critical industry for economic development. The government has been closely involved in the industry's growth from infancy to its current position among the top five motor vehicle producers in the world. In its early years, the industry also gained technological knowhow through licensing agreements rather than investing heavily in research and development. The results of this study strongly suggest that the industry as a whole has achieved a minimum efficient scale of operations. However, cross price elasticity estimates indicate that many rigidities exist in the input markets, particularly with respect to outsourced intermediate products. The restrictions on imports of these products may have to be reduced as South Korea seeks to expand its global trade footprint by participating in bilateral preferential trade agreements, presenting challenges for the industry.

Suggested Citation

  • Truett, Lila J. & Truett, Dale B., 2014. "The South Korean auto industry's path to maturity," International Review of Economics & Finance, Elsevier, vol. 31(C), pages 86-94.
    • Handle: RePEc:eee:reveco:v:31:y:2014:i:c:p:86-94
    DOI: 10.1016/j.iref.2014.01.002
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    Cited by:

    1. Truett, Lila J. & Truett, Dale B., 2017. "The German motor vehicle industry: Costs and crisis," International Review of Economics & Finance, Elsevier, vol. 48(C), pages 49-55.

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    More about this item

    Keywords

    South Korea; Motor vehicle industry; Scale economies; Cost function;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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