Sectoral Decomposition of Korea’s Energy Consumption by Global Value Chain Dimensions

Taeyoung Jin and Bongseok Choi
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Taeyoung Jin: Division of Climate Technology Cooperation, Green Technology Center, Seoul 04554, Korea

Sustainability, 2020, vol. 12, issue 20, 1-17

Abstract: This paper analyzed the annual trends in energy consumption of 14 industries in Korea from 2000 to 2014 using an extended log mean Divisia index (LMDI) method that embedded global value chain (GVC) divisions in the standard LMDI decomposition. Using a world input–output table, we calculated foreign value-added share in the GVC activities for each industry. Based on a Cobb–Douglas production technology, we embedded GVC divisions in the ordinary LMDI factor decomposition. The key findings indicate that the production effect mainly drives energy consumption, while energy consumption has decreased by both the foreign-structure effects and the foreign-intensity effects. Together with a decline in the domestic energy intensity effects, both of the GVC effects have improved energy efficiency. Energy-intensive industries have consumed more energy than other industries, while they have more incentive to save energy costs because these costs are a large proportion of total import costs. The opposite pattern occurred in other industry groups. Industries that do not naturally depend on energy tend to consume more energy and became more energy-intensive.

Keywords: GVC; LMDI; energy consumption; world input–output table (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:12:y:2020:i:20:p:8483-:d:428113

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