Bilateral Value Chain(BVC) Participation and Its Impact on Korean Firms’ Value Added: Evidence from Korea and Japan

February 28, 2026Korea Trade Review

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Key Points

This research aims to analyze how bilateral value chain (BVC) participation influences value creation in Korean firms amidst export restrictions from Japan.
Combined international input-output tables and company activity panel data from 2015 to 2022
Calculated forward, backward, and bilateral BVC participation levels
Analyzed BVC participation's relationship with firm performance using fixed effects models
2019 export restrictions from Japan had a significant negative impact on the real value added across all industries
Increased forward and backward BVC participation negatively affected value added
Bilateral BVC participation in manufacturing showed a significant positive effect on value added

Analysis shows BVC participation affects value creation in Korean firms, suggesting supply chain enhancements.

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EunJung LIM (2026) studied this question.

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