The impact of the logistics performance index on global trade volume between the republic of Korea and major GVC reconfiguration participants in ASEAN

Abstract

Logistics’ significance in international trade is being noted more and more frequently. This study was conducted to analyze the influence of logistics performance on trade volume between the Republic of Korea (ROK) and member states of the Association of Southeast Asian Nations (ASEAN) in order to identify the areas of the Indonesian logistics industry that require improvement to increase trade volume between Indonesia and the ROK. This study focuses on Indonesia, Vietnam, Malaysia, Thailand, and the Philippines, which are actively responding to the reconfiguration of the global value chain (GVC). The report also includes Cambodia, Laos, and Myanmar, which can be viewed as potential GVC competitors of Indonesia due to their considerable manufacturing growth potential. Based on the gravity model, which explains trade volume between regions, this study looked into the effect of the logistics performance index (LPI) of these ASEAN nations on trade with the ROK by analyzing panel data. This study utilized previously published (secondary) data to derive new outcomes. Most of the statistical data were extracted from the World Bank database, IHS Markit, and Euromonitor. The results show that an improvement of LPI can lead to growth in the trade volume between ROK and ASEAN Nations including Indonesia. The study’s insights suggest which logistical areas Indonesia should focus on developing in order to boost trade with ROK and obtain a competitive edge in the GVC reconfiguration.