Global Value Chain Disruptions During the COVID‐19 Pandemic: Korean Firm‐Level Evidence

Hyejoon Im

The World Economy, 2025, vol. 48, issue 5, 1139-1155

Abstract: The COVID‐19 outbreak caused demand and supply shocks. In this study, I analyse Korean annual firm‐level data in the manufacturing sector from 2017 to 2021. Using a difference‐in‐differences approach combined with propensity score matching, I estimate the causal effect of global value chain (GVC) disruptions, which represent indirect supply shocks, on firms' performance, such as sales and exports. After controlling for demand and supply shocks, I find that GVC disruptions did not adversely influence the sales of manufacturing firms participating in GVCs compared with non‐GVC firms. Thus, the sales of GVC firms had greater resilience to GVC shocks during the pandemic than anticipated. However, GVC shocks substantially negatively affected their exports—they declined by approximately 65%. Further, service firms experienced large negative impacts on their exports due to GVC disruptions.

Date: 2025
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