Examining the Bilateral Relationship between Mexico and South Korea through the Trade in Value-Added Perspective, 2000–2021

Author:

Morales-López Rodrigo1,Quintana-Romero Luis1ORCID,Mun Nam Kwon2,Oh Inhye2

Affiliation:

1. Department of Economics, Facultad de Estudios Superiores Acatlán UNAM, Naucalpan de Juárez 53150, Mexico

2. Department of Latin American Studies, Graduate School of International and Area Studies, Hankuk University of Foreign Studies, Seoul 02450, Republic of Korea

Abstract

This article examines the trade relationship between Mexico and South Korea through the lens of trade in value-added perspective. Using the global input–output model, we dissect gross exports into their value-added components to analyze the sectors benefiting most from value-added generation in both countries. To do this, we use the multiregional input–output matrices developed by the Asian Development Bank (ADB). The results show a growing bilateral relationship between 2000 and 2021, with South Korea having a stronger position by generating a larger share of value-added linked to the bilateral relationship. Nevertheless, the gap has narrowed over time. Notably, South Korean exports to Mexico have substantially contributed to value-added generation in technology-based manufacturing sectors such as machinery, equipment, electronics, electrical, and optical products. Similarly, Mexico’s mining sector increasingly relies on exports to South Korea for value-added generation. The trends observed in this study’s findings persist even amidst the reconfiguration of Global Value Chains, indicating that a free trade agreement between Mexico and South Korea has the potential to further enhance value-added generation.

Funder

Hankuk University of Foreign Studies

Publisher

MDPI AG

Subject

General Mathematics,Engineering (miscellaneous),Computer Science (miscellaneous)

Reference38 articles.

1. World Bank (2020). World Development Report 2020: Trading for Development in the Age of Global Value Chains, World Bank Group.

2. Kaplinsky, R., and Morris, M. (2002). A Handbook for Value Chain Research, Institute of Development Studies.

3. Borin, A., and Mancini, M. (2023). Measuring what matters in value-added trade. Econ. Syst. Res.

4. Sino-US trade balance from national income perspective and global income chains;Li;J. Chin. Econ. Bus. Stud.,2019

5. Castro, A., and Cardozo-Medeiros, D. (2020). The US-Mexico Bilateral Trade Relation through a Value Added Lens, Banco de México. Working Papers no. 2020-08.

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