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The E-Commerce and Global Value Chains

Author

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  • Yea, Sangjun

    (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP))

  • Lee, Seungrae

    (Hankuk University of Foreign Studies)

Abstract

We investigated the impact of e-commerce on global value chains (GVC). Using firm-level data from Korea for the period 2006-2014, we found that firms that adopted an integrated e-commerce management system had a significantly higher probability of participating in GVC, particularly for firms with productivity levels below the upper quartile. We also examined the implications of firm-level e-commerce participation for the aggregate GVC trade using a theoretical model. The model showed that e-commerce facilitates GVC trade and makes the trade volume more responsive to trade costs. From these results, we conclude that supporting SMEs in their digital transformation and e-commerce participation can be effective in promoting SMEs' participation in GVC. We also highlight that efforts to reduce trade costs remain imperative, even as e-commerce becomes more prevalent.

Suggested Citation

  • Yea, Sangjun & Lee, Seungrae, 2023. "The E-Commerce and Global Value Chains," World Economy Brief 23-34, Korea Institute for International Economic Policy.
    • Handle: RePEc:ris:kiepwe:2023_034
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    Keywords

    E-Commerce; Digital Trade; Global Value Chain; GVC;
    All these keywords.

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