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The Impacts of Bilateral Value Chains between Japan and Korea on Value-added Creation of Manufacturing Firms

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  • HUR Jung
  • KWON Hyeog Ug
  • SONG Hangeul

Abstract

This study investigates the bilateral value chain participation between Japan and Korea and the impacts on their firms’ value-added creation. We found a firm-level evidence that there exist mutual gains of Japanese and Korean firms when both firms belong to an industry that highly participates in a backward bilateral value chain of Korean with Japan, or equivalently say, a forward bilateral value chain of Japan with Korea. This evidence qualitatively remains the same in main manufacturing industries except for automobile and trailer industry. Our result may imply that a trade dispute between Japan and Korea hurts firms in both countries and a mutually beneficial trade relationship should be restored.

Suggested Citation

  • HUR Jung & KWON Hyeog Ug & SONG Hangeul, 2023. "The Impacts of Bilateral Value Chains between Japan and Korea on Value-added Creation of Manufacturing Firms," Discussion papers 23046, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:23046
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    References listed on IDEAS

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    3. Thomas Farole & Deborah Winkler, 2014. "Making Foreign Direct Investment Work for Sub-Saharan Africa : Local Spillovers and Competitiveness in Global Value Chains," World Bank Publications - Books, The World Bank Group, number 16390, December.
    4. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
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