• Journal of Korea Trade
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• v.24 no.8
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• pp.19-38
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• 2020

Purpose - The Korean government has been promoting the New Southern Policy (NSP) prior to the onset of the COVID-19 pandemic, which damage global value chain (GVC). The purpose of this paper is to emphasize that the NSP should be developed to provide tangible support in corporate GVC adjustment, away from diplomatic activities in order to offset GVC losses due to COVID-19 and expand export capabilities. Design/methodology - Two research methodologies are combined for this paper: A computational general equilibrium (CGE) model is used to estimate the impacts of the COVID-19 pandemic and NSP on Korea's exports, and the decomposition methodology (Wang, Wei and Zhu, 2013) to evaluate the stability of GVC. The conventional CGE model was modified to obtain an estimate for decomposition. The research methodology adopted in this study was attempted for the first time, and it can be widely used in future GVC research. Findings - Results found the effects of COVID-19 reduced Korea's total exports by 27% and GVC by more than 30%. In particular, VA in Korea's exports to the NSP region was found to have a huge impact in heavy industries and textiles, and its exports to Vietnam seemed to suffer the largest loss in GVC among ASEAN countries. If the NSP is implemented properly, it appears that it could offset much of the negative impacts of COVID-19, implying the importance of the effectiveness of the NSP. Originality/value - Many papers have assessed the NSP descriptively, and the GVC has been a topic for many publications. However, the impact of COVID-19 on Korea's GVC with the NSP countries has not been quantitatively studied. This paper emphasizes that the NSP should be pursued based on the results of quantitative analysis. In addition, the research methodology of this paper can be used for other GVC research with relevant modifications.

• International Area Studies Review
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• v.21 no.4
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• pp.101-124
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• 2017

This study is to examine the current situation of the AEC (ASEAN Economic Community) and analyze macroeconomic situation of Vietnam since the launch of AEC. According to recent trade indicators, Vietnam is expected to be more productive in the manufacturing and processing sectors because it is at the heart of the global value chains (GVCs) in electronics, telephones, and textiles and shoes industry. Vietnam has signed or is negotiating free trade agreements with various countries around the world including Korea, Israel, EU and RCEP and so on. Therefore, it is expected that Vietnam's trade dependency and FDI inflows to Vietnam increase more and more. However, the fact that the proportion of exports by foreign-invested companies accounts for about 70% of the total exports implies the uncertainty of Vietnam's economy in the future. Attracting FDI investment can further reduce the competitiveness of domestic companies in Vietnam. Therefore, in order for Vietnam to maintain sustainable development in the future, it is necessary to reform the momentum of foreign-invested enterprises to the development of Vietnamese companies.