South Korea's Foreign Trade Share Falls to 29.3%... Employment Induction Coefficient Stagnates

Decline in Export Prices Leads to Decrease in Foreign Trade... Import Dependence Falls
Increase in Localization Rate of Intermediate Goods... Rise in Production and Value-Added Induction Coefficients

[Asia Economy Reporter Jang Sehee] In 2019, the proportion of external transactions (exports + imports) in the Korean economy recorded 29.3%, showing a decrease of 0.9 percentage points from 30.2% the previous year. Additionally, the employment inducement coefficient for the entire Korean economy was 10.1, the same level as in 2018. The employment inducement coefficient refers to the number of full-time equivalent jobs directly and indirectly induced across all industries when domestic product demand amounts to 1 billion KRW.

According to the "2019 Input-Output Table (Extended Table) Compilation Results" announced by the Bank of Korea on the 21st, the total supply (total demand) of goods and services in the Korean economy in 2019 was 5097.5 trillion KRW. This increased by 0.46% (23.3 trillion KRW) compared to the previous year (5074.2 trillion KRW).

A key characteristic of the Korean economic structure is the decline in the proportion of external transactions combining exports and imports. In 2019, the external transaction ratio was 29.3%, down from 30.2% the previous year.

The decrease in external transactions was influenced by a decline in export prices. The export price index rose to 102.6 in 2017 and 103.4 in 2018 but fell to 99.9 in 2019.

While the value-added ratio increased, import dependence decreased. The value-added ratio in 2019 was 43.5%, up 0.3 percentage points from 43.2% the previous year. This was due to the rise in value-added ratios in industries highly dependent on petroleum products and energy, influenced by the drop in crude oil prices. Import dependence in 2019 was 12.3%, down 0.4 percentage points from 12.7% a year earlier.

As the localization rate of intermediate goods increased, the production inducement coefficient slightly rose (from 1.790 to 1.791). With the decrease in import dependence, the value-added inducement coefficient also increased (from 0.773 to 0.780), while the import inducement coefficient decreased (from 0.227 to 0.220).

The production inducement coefficient and value-added inducement coefficient indicate the magnitude of production and value-added directly and indirectly induced across all industries when demand for domestic goods and services occurs by one unit.

Furthermore, the full-time equivalent employment in 2018 was 24.56 million, an increase of 61,000 from the previous year. The number of regular employees increased by 398,000, but temporary and daily workers, self-employed persons, and unpaid family workers decreased by 283,000 and 53,000 respectively. The industrial distribution of wage workers was 71.7% in services, 18.9% in manufactured goods, and 7.8% in construction.

The employment coefficient across all industries was 5.6, with services at 8.4, construction at 6.5, and manufactured goods at 2.1. Accordingly, the employment inducement coefficient was 10.1, with services (12.5) being 2.02 times that of manufactured goods (6.2). Notably, the overall employment inducement coefficient remained at the same level as in 2018 (10.1).

This content was produced with the assistance of AI translation services.