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As the foreign production share of Korean multinational enterprises (MNE) rises, the issue that global value chain (GVC) expansion may reduce domestic employment becomes a topic of hot debate. Using Hyundai Motor Company’s (HMC) partner firms’ domestic employment and the joint OECD/WTO statistics on trade in value-added (TiVA) data between 2000 and 2011, this paper empirically investigates the effect of Korean MNE’s GVC expansion on domestic employment creation. Findings reveal that in year 2011 when the sales of Beijing HMC rapidly increased, HMC’s small and medium-sized partner companies’ domestic employment, sales, and foreign exports rose greater than those of non-partner companies by 4%p, 14%p, and 16%p respectively. Analyzing at the industry level, partner companies’ domestic employment growth rate is on average 0.9%p greater than non-partner companies. Furthermore, this paper empirically estimates to what extent GVC expansion of Korean MNE affects partner companies’ sales to the MNE and domestic employment. The results show that GVC expansion of HMC induces a greater amount of domestic partner firms’ sales to HMC, plus there is a positive spillover effect on domestic employment creation. However, this paper has limitations to generalize its findings to the whole Korean MNEs since it only investigates Beijing HMC case.
