A comparative study on production inducement effects in key industries of Korea and the Netherlands

Purpose: Although the growth of trade industry has been pushed mainly by intermediary trades due to Koreas geopolitical characteristics, intermediary trades fail to take the pivotal role in industrial growth because the environment could not support the industry on the national level. This study intends to help find new trade structures and directions to break the problem, by comparing Korea with the Netherlands, which has similar characteristics with Korea. Design/methodology/approach: This study applied the competitive import model and used data from World Input-output Data(WIOD), and focused on Information and Communications Technologies(ICT) manufacturing and ICT service industries as the key industries in Korea, and chemical and medical industries as the key industries in the Netherlands. Findings: The results indicated that Koreas ICT manufacturing and chemical industries have high backward linkage effect, while the Netherlands ICT manufacturing, ICT service, and medical industries have high forward linkage effect. Research limitations/implications: When comparing between industries, it is clearer to consider not only the effect of generating production but also the creation of value added and the creation of employment in order to directly compare differences. As a contribution, comparisons between countries with large-scale trade were found to require the use of competitive models over non-competitive ones. Originality/value: This study showed that competitive analysis model should be used instead of non-competitive import model when Input-Output(IO) analysis is applied to countries with a high proportion of intermediary trade.