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Global value chains, structural change and growth dynamics in South Korea and Spain: Costs and benefits of globalization

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  • Lee, Keun
  • Álvarez, Isabel
  • Valarezo, Ángel

Abstract

This paper revisits structural change, economic complexity, and Global Value Chain (GVC) participation in long-term growth dynamics of South Korea and Spain. The findings reveal both similarities and differences in their growth patterns, despite comparable economic size and income levels. First, we confirm the importance of capital formation, along with structural change at different intensities across the two countries. Second, we confirm the heterogeneous effects of economic complexity across two countries, which is because Korea exports high-tech and high complexity goods whereas Spain exports a mix of complex manufactured goods and low-complexity agricultural products. Third, and most importantly, we find a negative effect of forward GVC participation on economic growth, particularly in certain industries, highlighting the perils of globalization. Lastly, while some positive effects of backward GVC participation are observed in specific Spanish subsectors, negative effects on growth and structural change persist in Korea, underscoring the variability in growth outcomes.

Suggested Citation

  • Lee, Keun & Álvarez, Isabel & Valarezo, Ángel, 2025. "Global value chains, structural change and growth dynamics in South Korea and Spain: Costs and benefits of globalization," Structural Change and Economic Dynamics, Elsevier, vol. 74(C), pages 517-537.
    • Handle: RePEc:eee:streco:v:74:y:2025:i:c:p:517-537
    DOI: 10.1016/j.strueco.2025.05.017
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    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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