The Effects of Export Insurance on Value - Added Export

Abstract

Proper measurements of international trade activities aremuch in demand as a result of the emergence of global supply chain. In previous studies, the value-added trade is relevant to the discussion about intermediate goods.With the value-added export of Korea, we study the contribution of Korean export insurance to export promotion. In this paper,we focus on the short-termexport credit insurance to examine the effects of the export insurance on the value-added export. As ameasurement of export,we consider the value-added export to study genuine contribution of the Korean export insurance toKorean export. Our empirical evidences are three folds. First, we have found some supporting evidence for the contribution of export insurance to the export promotion when we measure export by using the value-added export. Secondly, our results also suggest that driving force of the value-added export is quality-demand by export destination countries. Thirdly, the value-added export increases by less than the gross export when the export insurance increases. In sum, we suggest that the effect of export insurance on the value-added export should be addressed in a differentmanner fromthe effect on the gross export.