A Study on the Determinants of Trade Costs in Terms of Logistics, Customs, and GVC Participation

Global market uncertainties caused by COVID19 pandemic, Russia-Ukraine war, Israel-Palestine Hamas war, and other conflicts are leading to an increase in trade costs. The Korean economy is also vulnerable to these uncertainties. This study examines the factors influencing trade costs in maritime and air transportation, focusing on logistics, customs, and GVC participation. Furthermore, we explore the impact of trade costs on national competitiveness. In this study, the Panel-Corrected Standard Error(PCSE) was applied, considering the possibility of heteroskedasticity and autocorrelation in the panel data. The PCSE panel analysis reveals that trade costs via maritime and air transportation tend to decrease due to logistics efficiency and customs facilitation. However, the reduction in trade costs through GVC forward participation is limited to maritime transportation costs Furthermore, the decrease in trade costs contributes to enhancing national competitiveness regardless of the mode of transportation. The empirical findings of logistics, customs, and GVC participation-related determinants can provide important insights for companies to improve financial performance at the firm level and formulate strategies for enhancing competitiveness at the national level.