A recent Oxford Economics report sheds light on the mysterious divergence of Taiwan’s and Korea’s export performance, reports Bloomberg.
Despite the two countries similar trade mix and Taiwan’s seeming competitive advantages, the volume of South Korean exports increased by 5.3% from 2010 to 2016, while Taiwan lagged behind with a 1.4% increase.
This happened while Taiwan’s labor remained relatively cheap and their exchange rate significantly more competitive.
Senior economist at Oxford Economics Oliver Salmon explains that the phenomenon is due to Korean companies’ success moving up the value chain and developing global brands. Taiwan is home to technologically advanced manufacturing, but has struggled to develop global brand names.
“In part, this is because Taiwan is handicapped by its relatively low profile and uncertain status,” Salmon added.