Export Effects
The Bank of Korea said on July 31 that the trickle-down effect of an increase in exports from South Korea is on the decline.
According to its data, the added value inducement effect per unit export fell from 0.6 to 0.55 between 2000 and 2014 and the number of employees per one billion won in export fell from 15 to 7.7 during the same period.
“This has to do with the fact that large exporting companies’ major export items are process industry items and they have increased their overseas local production since 2000,” the central bank explained, adding, “An increase in import reliance on the export side has resulted in a more loose connection between those companies’ growth and production and employment by intermediate material manufacturers in South Korea.”
The examples include the semiconductor industry, which has led the total export growth since the latter half of last year. Trillions of won has been invested in the typical process industry in the middle of the recent boom, but most of the investment has gone to facilities instead of employment because of the nature of the sector.
When it comes to the automobile sector, an increase in overseas production is likely to continue for a while, limiting production and employment at the same time, until large-scale investments are made in future vehicles such as self-driving and electric cars.
As far as the shipbuilding sector is concerned, any rebound in terms of production and employment is unlikely to be possible until 2019 as the recession is still ongoing and manufacturing capacity adjustment is not sufficient yet.