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Issue Report

Collection of full-length papers and in-depth analysis of economic and management issues.

Developing Nations Keep Korean Exports Aloft

Developing Nations Keep Korean Exports Aloft

SHIN Chang-Mock

Sept. 14, 2007

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Despite the strong Korean won, Korean exports have sustained a double-digit growth rate for 17 consecutive months. It would be wrong to assume, however, that exports have been immune to the won’s appreciation, which threatens overseas price competitiveness and exporters’ profitability.

Between March 2002 and July 18 this year, the won/dollar exchange rate fell 30.9%. The result: the exporters’ ratio of operating profit to sales has dropped steadily. Export profitability (i.e. export prices/export production costs) published by the Korea International Trade Association has declined for 30 straight months, from the fourth quarter of 2004 to the first quarter of this year.

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