Is Shanghai a rival to Seoul? Analysis on complementary and competitive relationships in trade

Abstract

Despite the continuous expansion of trade and investment agreements between China and South Korea, little is known about the distribution of benefits and losses stemming from synergy and competition at the regional level. This paper aims to investigate the complementary and competitive interactions among 14 economic regions of the two countries concerning bilateral export scale. Using a Dendrinos-Sonis model based on a zero-sum structure, we analyzed the interregional trade patterns between the two countries from 2002 to 2022. The evidence shows that the growth of Seoul metropolitan area is complementary to the growth of Shanghai metropolitan area in terms of regioinal export share, but not vice versa. Central Area in South Korea exhibits widespread complementarity, while Beijing metropolitan leans towards competition.