Economic Cooperation of Northeast Asia and Industrial Structuring

Using transition matrices of RCA indices for 20-year trade data of three countries (China, Japan and Korea) by 3-SITC digit level, this paper investigates long-run pattern of comparative advantage of each country to the world market and each partner countries. In general it is shown that the main issued faced under economic cooperation is continuous surplus with China but deficit with Japan of trade balance. In terms of transition matrices, foe Korea the industries which are competitive in the world market have fluctuated more than those of Japan. In addition there is more fluctuation in terms of bilateral competitiveness. Finally economic cooperation with China might hurt mainly textile-related industries in Korea while that with Japan might affect significantly glass, ingots and other primary forms of iron or steel and machineryrelated products.