Report

Institute for Future Strategy – Economic Security Cluster
First-Year Research Report

Economic security has become one of the most crucial keywords in contemporary international politics—shaping not only economic relations among nations but also influencing security and foreign policy dynamics. Since its establishment in 2022, the Economic Security Cluster of the Institute for Future Strategy at Seoul National University has undertaken research to define and advance Korea’s future strategies in the realm of economic security. During its first year, the cluster focused on developing a scientific, objective, and intuitive index capable of explaining the mechanisms of economic security.

The cluster identified “supply chain dominance” as the core concept of economic security. This term is defined as:

1. A nation’s ability to control or exert influence over global supply chains through dominant export companies or products; and

2. A nation’s ability to protect its domestic economy from disruptions in global supply chains.

To measure supply chain dominance, the cluster utilised bilateral trade data at the HS6 classification level. Analysis of trade data from 1995 to 2021 revealed that the distribution of export power closely resembles a power-law distribution, demonstrating significant inequality across countries. In contrast, import vulnerability followed a relatively symmetrical normal distribution.

The key findings from the analysis of supply chain dominance were as follows:

1. The rise of China’s supply chain dominance

2. The decline of U.S. dominance

3. The vulnerability of Korea and Japan

4. The decline of Hong Kong

5. The upward trajectory of India

6. The increasing import vulnerability of Vietnam and Thailand

Particular attention was given to high-tech industries expected to play pivotal roles in the next phase of technological competition. For this purpose, the cluster analysed trade structures of nine industries—including electric vehicles and robotics—selected from the twelve “new industries” designated by the Korean government and the Korea International Trade Association (KITA) in March 2017.

The findings indicate that, while Korea remains structurally vulnerable in terms of supply chain dominance, it holds considerable export power within emerging industries. This suggests that as U.S.–China competition increasingly centres on advanced industries and technology, Korea is strategically positioned to play an active and influential role within this competitive landscape.

In its second year, the Economic Security Cluster plans to expand its analysis of supply chain dominance to the HS12 level and incorporate firm-level data on foreign direct investment (FDI). The ultimate goal is to construct a comprehensive Economic Security Index that can systematically describe and evaluate the current state and strategic direction of Korea’s economic security.

Keywords:
Economic security, supply chain dominance, export power, import vulnerability, U.S.–China competition, international trade, economic security index