The Main Region’s Global Value Chain (GVC) and Its Implications in Korea

Abstract

Purpose This study aims to analyze the main region’s global value chain in Korea, and to present policies that can appropriately respond to the international trade environment based on the current situation. Design/Methodology/Approach Value-added decomposition methodology and WIOD data were collected and used to examine the current global value chain. The method in this research can distinguish the overestimated volume in gross trade, and divides it into domestic and foreign value added, including pure double counting exports. Findings The analysis results show that the participation of the forward industry increased slightly compared to the participation of the backward industry. In particular, the transportation equipment industry was evaluated as having made stable entry into the global market through high value-added goods. Although GVCs in Korea are developing in forward linkage industries, when divided it into regions, the results can be quite different. Research Implications We expect the protectionism and decoupling between the US and China will last for the time being due to the loss of WTO functions. As we have seen in the GVC structure of Korea, the difference in the regional trade structure may be different in the size of damage depending on external effects. Thus, it is necessary to transform the economic structure into high-tech industry by region in order to minimize the damage of radical changes in international trade circumstances by supplying essential intermediate goods in the global market.