Analyzing the degree of integration into the global production network of Korean exports by trading partner

Abstract

In the globalized era, vertical specialization is prevalent as countries import intermediate materials to export products. Traditionally, the import content of exports (ICE), referring to the amount of foreign input embodied in one unit of export, has been used to measure the degree of vertical specialization. I use an alternative formula devised by Kim to measure the degree of verticalization, as it considers the simultaneous operation of the foreign sector and the domestic production base when exporting products. This thesis applies the alternative formula and analyzes Korean exports to the US, China, Europe, and the Middle East by means of an input-output analysis, specifically examining the degree of vertical specialization according to the trading partner between 2000 and 2018. This thesis explains the difference in the degree depending on the trading partner based on an industry-level analysis. By calculating the degree of vertical specialization for the computer, motor vehicle, chemical, and machine industries independently, the study shows how major industries affect vertical specialization depending on the trading partner, also presenting how each industry’s degree of vertical specialization and export volume determines its degree of vertical specialization with its trading partners.