Current Status and Issues of GVC in Korea’s Major industries: Focusing on the Electronics and Automobiles Industries

Abstract

The recent GVC disconnection caused by the Russia-Ukraine war, COVID-19, US-China hegemony and technology competition requires strategic policy establishment and preparation at the national level as it goes beyond firm-level response capabilities. Since transactions under already established supply chains still account for a significant portion of trade in the perspective of firms, based on diagnosis and objective understanding of the current status, efforts are required to actively respond to changes in the global economic-security and industrial environment. Therefore, this study analyzes the current status of GVC, focusing on the electronics and automobile industries, which are the main industries that contribute the most to Korea's domestic value-added exports, and summarizes the implications related to GVC restructuring to respond to the changing trade environment. This study uses ICIO (2021), the most up-to-date data as of 2023, to analyze the results of value-added export decomposition of Korea's main export industries, electronics and automobiles. In particular, the study is meaningful in that it links recent changes centered on the US-China in the macro policy environment (country-industry) to the implications of the microscopic aspect (industry-item).