Multilateral Dimensions of Bilateral Trade of Korea: A Comparative Analysis of Gross, Value-Added, and Income-based Approaches

This study presents a comprehensive analysis of South Korea's bilateral trade relationships by applying three distinct trade measurement frameworks: gross, value-added, and income-based balances. We reveal significant misrepresentations of trade gains when relying solely on gross measures. Our findings show that gross trade balances overstate Korea's gains with China while understating them with the United States. We also uncover a notable shift in China-U.S. trade dynamics: in 2014, China's value-added and income trade surpluses with the U.S. were two-thirds and less than half of the gross surplus. By 2020, this gap had nearly disappeared.