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Korea’s participation in global value chains and policy implications

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The expansion of global value chains during the past 20 years has widened the gap between export value and domestic value added, diminishing the per-unit contribution of exports to the country’s economic growth. Thus, policies now need to target creating value added rather than increasing gross exports and focus on enhancing the competitiveness of input and production activities. In particular, regulatory reform must take place in the service sector to eliminate unnecessary obstacles to competitiveness. Moreover, to utilize global value chains more effectively, efforts should be made to enhance the efficiency of offshoring and attract production to the country’s shores in order to create more domestic valued added and jobs.
Ⅰ. Issue
Concerns have been raised over the structural problems in the Korean economy with gross exports recording consecutive year-on-year losses during the January-July period. However, such concerns are justified in Korea’s case due to its heavy dependence on exports for economic growth.
KDI FOCUS
2
The landscape was significantly different even up until as late as the end of last year (2014); Korea broke records in trade, exports, and trade surplus for two successive years, winning the triple crown of trade. However, at the same time, the economy was in fact locked in a low-growth trough of about 3%. The above reveals that although measures to counter shrinking exports are certainly needed, such measures alone are insufficient to acceler


Full Text
Title Korea’s participation in global value chains and policy implications
Similar Titles
Material Type Articles
Author(English)

Chung, Sunghoon

Publisher

[Sejong]:Korea Development Institute

Date 2015-07
Journal Title; Vol./Issue KDI FOCUS:no. 59
Pages 10
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Trade
Industry and Technology < Others
Government and Law < International Politics
Holding Korea Development Institute: KDI School

Abstract

The expansion of global value chains during the past 20 years has widened the gap between export value and domestic value added, diminishing the per-unit contribution of exports to the country’s economic growth. Thus, policies now need to target creating value added rather than increasing gross exports and focus on enhancing the competitiveness of input and production activities. In particular, regulatory reform must take place in the service sector to eliminate unnecessary obstacles to competitiveness. Moreover, to utilize global value chains more effectively, efforts should be made to enhance the efficiency of offshoring and attract production to the country’s shores in order to create more domestic valued added and jobs.