• Journal of Korea Trade
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• v.23 no.4
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• pp.103-114
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• 2019

Purpose - This paper investigates the structure of exports across countries in terms of value added. Exports value added is examined under two categories, domestic and overseas. Using a statistical classification method by distance based on these two value added categories, this paper estimates the similarity of exports value added across countries including Korea. Design/methodology - The model of study is to employ a generalized distance function and then derive the Manhattan and Euclidean distances. The paper also performs cluster analysis using the Partitioning Around Medoids (PAM) and hierarchical methods to classify the 44 sample countries considered in this study. Findings - Our main findings are as follows. The 44 countries can be classified under 5 groups by their domestic and overseas value added in exports. Korea has a sandwich global value chains (GVCs) position between Japan, China, and Taiwan in the East Asian region. Originality/value - Existing papers point out the double counting problem of trade statistics as the intermediate goods trade across borders increases. This paper addresses the double counting problem by using the World Input-Output Table. The paper shows the need to explore the similarity of value added in exports structure across countries and investigate the GVCs position and role of each country.

• East Asian Economic Review
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• v.28 no.1
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• pp.37-67
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• 2024

This paper analyses carbon emissions and value-added embodied in trade between two large developed countries, South Korea and the United States, during 2000-2014. Using multi-regional input-output (MRIO) tables, our analysis reveals that carbon emissions and value-added embodied in exports grew by 19% and 101% for South Korea but shrank by 43% and 7% for the United States. As a result, South Korea experienced a 40% increase in net carbon exports and 243% increase in net value-added exports. At the industry level, the primary drivers of changes in carbon exports were electricity and basic materials. The majority of industries in witnessed improvements in carbon intensities suggesting improved environmental efficiency. While both countries achieved a decoupling of carbon emissions from value-added exports, substantial year-to-year and sectoral variations were observed. Finally, structural decomposition analysis indicates that domestic supply-side factors played a role in decreasing emissions whereas foreign demand-side factors contributed to emissions increases. In line with the main findings, various implications for policy and future research are discussed.

• Korea Trade Review
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• v.43 no.2
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• pp.1-22
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• 2018

Utilizing OECD-WTO's Trade in Value Added (TiVA) data, this study investigates the effects of economic integration (EI) on TiVA Empirical results obtained from structural gravity specifications reveal that EI increases trade between member countries, irrespective the types of exports in final goods and intermediate goods as well as foreign value added in total exports and domestic value added in total exports. The empirical results also reveal that EI does not decrease the share of domestic value added in total exports.

• Journal of Korea Trade
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• v.26 no.2
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• pp.65-83
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• 2022

Purpose - The purpose of this study is to evaluate the economic effects of FTAs using the concept of value-added exports. So far, the economic effects of FTAs have been dependent on decrease in import prices due to tariff cuts in importing countries, but the actual tariff reduction need to consider the value added of the exporting countries. Design/methodology - Value-added export refers to the added value created in the exporting country out of total exports. Among value-added exports, direct value-added export is interpreted as the Regional Value Contents (RVC), from which the economic effect of the FTA can be analyzed. A modified GTAP-VA model takes into account RVC in order to estimate accurate effects of FTAs. Findings - By the re-evaluation of the FTA based on the RVC, this paper makes it clear that the economic effects of the existing FTA methodology have the possibility of overestimation. In addition, as a new FTA with a strengthened Rules of Origin (ROO) is being initiated, a negative impact on international trade and GVC utilization may occur. Originality/value - This study introduces the concept of value-added export in analyzing the effects of FTAs. The new analysis methodology of this paper emphasizes the importance of value-added exports. Re-organization of GVCs would change regional trade agreements and empower ROO by weakening existing GVCs and transforming the value chain from global into regional scope.

• Korea Trade Review
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• v.44 no.1
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• pp.207-220
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• 2019

In the context of export-oriented growth strategy, Korea has promoted the conclusion of FTAs and 16 FTAs have entered into force or concluded so far. Despite of these efforts, the expansion of the global value chain (GVC) has resulted in fragmentation of production processes and international companies have been struggling to meet the criteria for determining the rule of origin. In order to overcome these difficulties, some foreign FTAs have been introducing cross-cumulation of origin. In this paper, we try to examine empirically whether the easing of the rules of origin using cross-cumulation contributes to the increase in actual value-added exports. we quantify the effects of cross-cumulation included in the EU-Vietnam FTA on Korean exports of the textile through a gravity model using the concept of value-added export. Based on the analysis results, the proportion of value-added exports in Vietnam increased by adoption of cross-cumulation of origin, which consequently resulted into an increase in total exports. This paper tries to draw several implications for the rules of origin in Korea's FTAs including cross-cumulation considering the export value chain of Korea.

• Korea Trade Review
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• v.47 no.1
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• pp.199-214
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• 2022

This study aims to quantify the value of origin among CPTPP and Korea, under the assumption that the 'cumulation' clause has large economic effects in multilateral FTAs and increase the possibility of improving FTA utilization. Analysing the relationship between value-added exports and FTA utilization rate, there is a positive correlation between the two variables, and the cumulation of multilateral production of CPTPP is expected to increase Korea's value-added exports. In the GTAP-VA model, the target of cumulation is calculated as 'Domestic Value Added', and all value-added of CPTPP are cumulated in the form of value added exports of exporting country. When Korea participates in CPTPP, it is possible to cumulate additional 6.3~9.6% value added, and the agreements with low FTA export utilization rates such as New Zealand, ASEAN would have greater economic effects of cumulation. For the successful implementation of CPTPP in Korea, it is necessary to develop a new origin verification system that enables multilateral value-added cumulation. It is time to seek cooperation with countries currently participating in CPTPP to prove the value added inherent in CPTPP-originating products.

• 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.41 no.2
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• pp.97-121
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• 2016

This study evaluates industrial competitiveness of 34 industries in the 41 countries in terms of several trade indices such as value-added RCA(VRCA) and value added intra-industry trade(VIIT). Conclusions are as follows: First, China is still showing week evidence to replace or overtake Korea in terms of VRCA. Second, it is not supportive of the assertion that the gap between Japan and South Korea had widened in the 1995-2011 period. Third, Korea's exports pattern in the manufacturing sector has shifted from the one featured by developing countries(re-exportation of final goods produced using imported intermediate inputs) to that of the developed (exportation of intermediate goods). According to dynamic panel analysis regressing the RCA gap on the IIT gap, intermediate-goods RCA and the market share gap, the estimated coefficient of the gap between value-added IIT and gross IIT is 0.253 and statistically significant at the 2% level. This implies that increases in IIT or intermediate-goods trade to sustain the global competitiveness are the main reasons for the gap between value-added RCA and gross RCA.

• Journal of Korea Trade
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• v.26 no.4
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• pp.23-38
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• 2022

Purpose - This paper empirically explores the RCA of electrical equipment trade between China and Korea from the perspective of gross trade and value-added trade. The goal of this paper is to scan the electrical equipment's RCA, the decomposition of gross exports, and the impacts of an exerted shock. Design/methodology - We applied the domestic value-added method in measuring the RCA, which could be more accurate than traditional RCA since it excludes foreign value-added. Based on the research purpose, this paper follows the framework of Koopman, Wang, and Wei (2014)-as extended by Wang, Wei, and Zhu (2018). It extracts the data from the 2019 Multi-regional Input-Output (MRIO) databases compiled by the Asian Development Bank in January 2021. Findings - After rigorous examination, the main findings are as follows: First, the electrical equipment sector maintains a consistent comparative advantage in either assessing method. Second, China exports more gross goods of electrical equipment to the world than South Korea does, but there is a trade deficit with Korea. Third, South Korea and P.R. China are the most significant bilateral partners of foreign value-added sourcing. Finally, it is surprising that there is a shock on electrical equipment; the partner's service, as well as manufacturing sectors, would be affected. Originality/value - This paper explores the revealed comparative advantage between Korea and China from traditional gross export and value-added perspectives. Second, we apply the information from the 2019 MRIO database compiled by the Asian Development Bank in January 2021, reflecting the current situation. Third, this paper analyzes the electrical equipment and the impacts on other parties' sectors. Finally, we carry out the subjects that deserve to be investigated in the future.

• Journal of Korea Technology Innovation Society
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• v.9 no.2
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• pp.279-303
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• 2006

We consider IT equipment industry, especially IT equipment exports, in Korea. Currently IT equipment exports are about 30% of the total exports in Korea. Furthermore the amount of IT equipment exports continues to increase. The impact of IT equipment exports to Korea economy must be large enough. However the research on this impact analysis is not found easily. In this paper we analyze the economic repercussion effects of IT equipment exports from 2002 to 2005 by using the Input-Output Analysis. The status of IT equipment exports in Korea is summarized. The extensive results on various levels of IT equipment industry are proposed.