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Measuring the Degree of Integration into the Global Production Network by the Decomposition of Gross Output and Imports: Korea 1970-2018

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  • Kim, Dongseok

Abstract

The import content of exports (ICE) is defined as the amount of foreign input embodied in one unit of export, and it has been used as a measure of the degree of integration into the global production network. In this paper, we suggest an alternative measure based on the decomposition of gross output and imports into the contributions of final demand terms. This measure considers the manner in which a country manages its domestic production base (gross output) and utilizes the foreign sector (imports) simultaneously and can thus be regarded as a more comprehensive measure than ICE. Korea's input-output tables in 1970-2018 are used in this paper. These tables were rearranged according to the same 26-industry classification so that these measures can be computed with time-series continuity and so that the results can be interpreted clearly. The results obtained in this paper are based on extended time-series data and are expected to be reliable and robust. The suggested indicators were applied to these tables, and, based on the results we conclude that the overall importance of the global economy in Korea's economic strategy has risen and that the degree of Korea's integration into the global production network increased over the entire period. This paper also shows that ICE incorrectly measures the movement of the degree of integration into the global production network in some periods.

Suggested Citation

  • Kim, Dongseok, 2021. "Measuring the Degree of Integration into the Global Production Network by the Decomposition of Gross Output and Imports: Korea 1970-2018," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 43(3), pages 33-53.
    • Handle: RePEc:zbw:kdijep:243310
    DOI: 10.23895/kdijep.2021.43.3.33
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    References listed on IDEAS

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    1. Emanuele Breda & Rita Cappariello & Roberta Zizza, 2007. "Vertical Specialisation in Europe: Evidence from the Import Content of Exports," Rivista di Politica Economica, SIPI Spa, vol. 97(3), pages 189-189, May-June.
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    More about this item

    Keywords

    Integration into Global Economy; Input-output Analysis; Decomposition of Gross Output and Imports; Import Content of Exports; Korea;
    All these keywords.

    JEL classification:

    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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