• Korea Trade Review
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• v.46 no.6
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• pp.1-19
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• 2021

This paper examines the impact of sanitary and phytosanitary standards (SPS) and technical barriers to trade (TBT) on Korean exports, taking global value chains (GVC) participation into consideration. Using product-level import data from 2000 to 2014, we find heterogeneous effects of importers' SPS and TBT on Korean exports depending on the degree and position of GVC participation. According to the results, trade restrictive effects of SPS and TBT are smaller for industries that are more deeply involved in GVC. However, trade restrictive effects are greater for industries located at a relatively upstream production stage in GVC.

• Journal of Korea Trade
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• v.26 no.4
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• pp.1-22
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• 2022

Purpose - This paper empirically investigates the effect of a rise in the global value chain (GVC) on the industry-level efficiency of resource allocation (based on plant-level inefficiency measures) in Korea, with a focus on various channels through which a rise in the GVC can increase competition among firms and thus induce resources to be allocated more efficiently across firms. Design/methodology - We empirically investigate the relationship between the industry-specific importance of GVC and the industry-level allocative inefficiency that is measured as the dispersion of the plant-level marginal revenue of capital (MRK) as in Hsieh and Klenow's (2009) influential model. We compute MRK dispersion for industries sorted by various characteristics that are closely related to firm/industry sensitivity to the GVC. In other words, we compute the average industry-level MRK dispersion for industries sorted by industry-specific importance of GVC and compute the difference between the two groups of industries (higher vs. lower than the median GVC); we also calculate the difference between industries sorted by industry-specific export (import) intensity. This is our difference-in-difference estimate of the MRK dispersion associated with the GVC for the export (import)-intensive industry versus the non-export (non-import)-intensive industry. This difference-in-difference estimate of the MRK dispersion conditional vs. unconditional on firm-level productivity is then calculated further (triple-difference estimate). Findings - A rise in GVC is associated with a decrease in the MRK dispersion in the export-intensive industry compared to the non-export-intensive industry. The same is true for industries that rely heavily on imports versus those that do not (i.e., import intensive vs. non-intensive). Furthermore, the reduction in the MRK dispersion in the export-intensive industry associated with an increase in the GVC is disproportionately greater for high-productivity firms. In contrast, the negative relationship between GVC and MRK dispersion in the import-intensive industry is disproportionately smaller for high-productivity firms. Originality/value - Existing studies focus on the relationship between GVC and aggregate output, exports, and imports at the country level. We investigate detailed firm/industry-level mechanisms that determine the relationship between GVC, trade, and productivity. Using the plant-level data in South Korea, we investigate how GVC is related to the cross-firm MRK dispersion, an important measure of allocative inefficiency, based on Hsieh and Klenow's (2009) influential economic theory. This is the first study to provide plant-level evidence of how GVC affects MRK dispersion. Furthermore, we examine how the relationship between GVC and MRK-dispersion varies across export intensity, import intensity, and firm-level productivity, providing insight into how GVC can affect firms' exposure to competition in the global market differently depending on market conditions and thus generate trade-related productivity gains.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.3
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• pp.1217-1230
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• 2021

Using a multinomial logit model with the panel-data set of Vietnam manufacturing firms, this paper investigates the impacts of foreign direct investment (FDI) - small and medium enterprises (SMEs) linkages and other factors on SMEs' participation in the global value chain (GVC). We consider GVC firms are those engaging in any of the three modes including (i) using domestic inputs to export (D2E), (ii) using imported inputs to produce for the domestic market (I2P), (iii) using imported inputs to export (I2E). We discover that FDI-SME linkages statistically encourage Vietnamese SMEs to integrate into the GVC via I2P and I2E, while no statistical association between FDI-SME linkage and D2E participation is found. GVCs participation likelihood is also positively correlated with the introduction of new product introduction. The establishment of firms' production facilities in industrial zones and foreign ownership are both reported to be significantly decisive factors to SMEs' decisions on GVC participation. Besides, there is a strong association between firms' attributes, i.e. employment, capital intensity as well as financial access, and their participation in the GVC. Local governance quality (proxied by the Provincial Competitiveness Index) and the share of skilled labor at the province-level can facilitate firms' integration into GVCs, while greater market concentration may be a hurdle to such potential.

• KDI Journal of Economic Policy
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• v.38 no.4
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• pp.45-76
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• 2016

This paper measures the extent to which South Korea participated in global value chains (GVCs) from 1995 through 2011 and scrutinizes the consequences of such participation on the Korean economy. To this end, the World Input Output Database is utilized to calculate GVC income, GVC employment, and value-added exports created by Korean and foreign industries. Our findings show that Korea radically internationalized its production activities during the sample period, widening the gap between gross exports and value-added exports. We also document that Korea's participation in GVCs has changed the value-added and employment structures in domestic industries in accordance with their comparative advantages while exacerbating the degree of wage inequality.

• Korea Trade Review
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• v.46 no.3
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• pp.25-44
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• 2021

This paper analyzes the impact of the recent change in global value chain on the productivity of manufacturing sectors and firms in Chungnam area using ADB MRIO. Forward participation significantly increases sector productivity in Chungnam area and backward participation affects the sector productivity after 2015. In the analysis for firm productivity in Chungnam area, GVC participation does not enhance the productivity of firms in Chungnam area. However, firms in the top 25% of productivity in 2007 improved their productivity with higher GVC participation and the productivity of firms in the top 25% of asset in 2007 was positively affected by forward pariticipation and negatively affected by backward participation. The productivity of firms that were in international market in 2007 was significantly worsened by GVC participation.

• Korea Trade Review
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• v.46 no.3
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• pp.45-63
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• 2021

This paper investigates the effects of China's participation in global value chains (GVC) on the productivities focusing on the manufacturing industries. In this study, several indicators of participation in global value chains were used. These include GVC participation, forward GVC participation, backward GVC participation and GVC position index. In particular, we used the data obtained from 18 manufacturing industries in China during 15 years from 2000 to 2014. The main results of the analysis are as follows. First, the higher the degree of total participation in GVC, the higher the productivity. This means that with the increase in exports and imports of intermediate goods, productivity has increased through technology spillover effects or competition effects, and so on. Second, the backward participation does not increase the productivities significantly while forward participation leads higher productivity. Third, the productivity improvement effects of GVC participation was larger in the high-tech industries than in the low-tech industries. These results show that GVC participation was helpful for the economic growth of China and the efforts for moving toward upstream production stage in GVC is necessary for the improvement of international competitiveness in Chinese manufacturing industry.

• Journal of Korea Trade
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• v.26 no.6
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• pp.96-117
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• 2022

Purpose - Considering the recent instability of world economy and its heavy dependence on foreign, Korea must formulate breakthrough approaches to proactively cope with these adverse global developments. As such, this study aims to ascertain how participation in global value chains (GVCs) relates to corporate productivity and derive policy implications. Design/methodology - This study utilizes the microdata of Korean manufacturers to develop indicators of GVC participation at the enterprise level and analyzes the effects of GVC participation on the firm's total factor productivity by using fixed effect model. Findings - Enterprises with highest rates of export-side GVC participation see their productivity grow as their export-side GVC participation rates increase. In addition, when companies are classified by their export-side GVC participation rates, increasing export values improves all firm's productivity. In particular, those with low participation rates are analyzed to achieve higher productivity by increasing their imports, not only exports, which implies that companies with lower export-side GVC participation can boost productivity by reinforcing their export and import activities. Originality/value - This research paper distinguishes itself from others in that it makes a novel attempt to design the indicators of GVC participation at the enterprise level, not at the national or industry level. In addition, this study contributes to the existing literature by dividing companies into subgroups depending on their GVC participation rates for each of export and import and identifying variances in the effect of GVC participation on productivity growth among subgroups.

• Journal of Digital Convergence
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• v.12 no.7
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• pp.159-175
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• 2014

The proliferation of GVC(Global Value Chain) requires the changes of paradigm on national industrial strategy and trade. It also provides multiple implications on business strategy. The business itself is the main agent which recognizes environmental change and establishes counterstrategy. This study is based on the necessity of support for small-medium sized companies in governmental level, since they are personally and materially vulnerable. This study is emphasize on deriving matching tasks of supporting globalization of companies at governmental level. The spread of GVC requires policy makers' comprehensive view and inspires us that we should focus and provide strategic supports on not only manufacturing business but also high valued service industry as well. The government should provide supporting policies for expansion of globalization of companies. The proliferation of GVC means to enter into the chain which creates high values. This is exactly the same as the paradigm of creative economy which our government pursues constantly.

• Korea Trade Review
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• v.48 no.1
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• pp.1-27
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• 2023

This study is an empirical analysis of export performance according to the type of GVC participation and governance of Korean manufacturing companies. Based on panel data from KOSPI listed firms, it was analyzed that relational investment, information exchange, and innovation affect the level of supply chain integration and corporate performance with the moderating role of trust. In addition, it was found that the degree of integration of the supply chain affects GSCM's performance and export performance. In case of the type of GVC governance, it was analyzed that the higher the integration strength, the higher the performance compared to other types. This result shows that trust-based supply chain integration and continuous GVC investment are very important. This explains that high levels of GVC governance, along with high integration strength, can lead to successful GSCM performance. Innovative investment strategies based on the relationship capabilities and trust levels of GVC participating companies can have a positive effect on the degree of global partnership formation and integration.

• Fashion, Industry and Education
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• v.14 no.2
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• pp.11-23
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• 2016

This study investigated the comparative advantages of the Bangladeshi and Vietnamese apparel industries using Global Value Chain (GVC) framework. In this study, the GVC framework was expanded to include social and environmental sustainability issues. Secondary data, for the 2012 - 2013 period, were collected and analyzed for each component of the apparel GVC. The findings indicated that while both countries have unique comparative advantages, Vietnam clearly emerged as a leader on many GVC components. Bangladesh's comparative advantage lies in lower wages, producing high volume orders, and lean manufacturing. In spite of Vietnam's higher labor costs, it has comparative advantages in higher productivity, skilled and trained workers, manufacturing of intricate styles of high quality, agility and flexible manufacturing, more developed infrastructure and logistic services as well as greater social and environmental compliances. This study contributes towards insight into best sourcing fit for fashion brand business models. Based on the findings, fashion driven companies offering more complex styles at a faster rate will benefit from choosing Vietnam. In contrast, Bangladesh might be a better choice for high volume driven companies that offer basic apparel and better value for their consumers. From theoretical perspective, the research makes an important contribution by expanding the GVC framework.