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Global Value Chains and the Industrialization of Korea

Author Youn Woojin Date 2016.12.26 Page
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1. Research Background


The dynamic development of global trade over the past 20 years has led to intensifying competition among the world’s major economies to secure a leading role in global value chains (GVCs). GVCs have the effect of further broadening the horizons of untrammeled competition in a global market where the loosening of trade barriers and developments in transportation and communications have resulted in competition between companies intensifying by the day. While GVCs are formed through the medium of trade, they are actually a complex process created as company management resources and know-how cross national borders. The characteristics defining the multinational corporations that dominate GVCs are their loss of manufacturing functions and their monopolies on ?such key capabilities as product planning and design, global pro curement of production resources, and marketing. 


2. Research Goals and Content


This report was written with the goal of analyzing how GVC development has resulted in changes to the international industry relationship between Korea and other major economies and to industry competitiveness and the vertical international division of labor in GVC terms. Chapter 2 uses an inter-industry analysis to analyze the extent of the impact on industries in Korea and other major economies from shocks in overseas demand. Chapter 3 uses value-added exports to analyze how the industry competitiveness of major economies has changed amid GVC development. Chapter 4 uses the recently developed gross export decomposition method to analyze changes in the vertical international division of labor in terms of value-added structure. The final chapter seeks to offer avenues for Korean mainstay industries at a crossroads to make effective use of GVCs in achieving advanced industrial power status.? 


3. Research Methods


The focus of this study is on using international interindustry tables and recently developed interindustry analysis methods to identify changes in GVC structure.


In addition to conventional interindustry analysis, this report also attempts to calculate different indicators for GVC analysis and assess the positions of different countries within GVCs. 


This approach is expected to contribute to overcoming the ?limitations of traditional trade statistic-dependent competitiveness analysis methods and understanding the sources of industry competitiveness.