Abstract

International trade usually changes the production patterns of an economy. The share of exporting industries tends to increase and that of importing industries tends to decrease. In the process of industrial restructuring, it is natural for the economy to experience a concentration toward exporting industries. At the same time, this concentration might also occur within separate industries; exporting firms tend to grow and the share of other firms tends to decrease. All these changes can result in a polarization of the economy. This paper investigates if this polarization trend occurred in the Korean economy by using industry and firm level data. In particular, we explore the question of whether there is any relationship between polarization and international trade, as there has been a lot of criticism focused on the idea that international trade has resulted in income inequality and polarization of the Korean economy. We calculated the GINI coefficient and other indices to measure the degree of polarization, and we performed regression analysis on the time series and panel data. This paper finds that there is a positive relationship between export ratio and polarization.

 

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