Driving forces and structural changes of China as a market provider for Korea: An input-output analysis

Purpose The purpose of this paper is to provide a better understanding of the driving forces and structural changes of China as a market provider for Korea. This paper gives the answers for the following questions: How do China's final demands trigger the growth of its imports from Korea? And what's the impact of China's final demands on the import in different industries? Design/methodology/approach Based on the Multi-Regional Input-Output model and World Input-Output Table database, this paper constructs the non-competitive imports input-output (IO) table of China to Korea. According to this table, we can calculate the induced imports coefficient and comprehensive induced import coefficients of China's four final demands for imports from Korea in the 56 industries in China. Findings Among the four driving forces, the strongest one is changes in inventories and valuables. The impact of final consumption expenditure and fixed capital formation is much lower than that of changes in inventories and valuables, but they have a broader impact for the 56 industries. This paper finds out the China's import induction of the final demands to Korea peaked in 2005 and 2010 and decreased greatly in 2014, so the position of China as market provider for Korea will no longer rise substantially, contrarily it will be in a steady state. Originality/value First, this paper constructs the non-competitive IO table to analyze the market provider issues between two countries and provides practical ways and methods for studies on the issues of imports and market provider. Second, this paper investigates the different roles of four final demands on driving force of China as market provider for Korea and the structural changes of China as a market provider for Korea among 56 industries from 2000 to 2014.