This paper empirically examines the relationship between outward foreign direct investment (OFDI) of Korean manufacturing firms and the servicification of domestic employment using a firm-level panel data. In this study, considering the issue of low productivity in the Korean service sector, we categorize service employment into core and non-core services and investigate their relationship with OFDI using the firm-fixed effects model. The empirical results show that the share of core service employment exhibits a positive correlation with the extensive OFDI. On the other hand, the share of non-core service employment, which is expected to generate relatively low valueadded, does not show a significant relationship with the extensive OFDI. When we divide the samples based on host countries and the type of subsidiaries, the impact on servicification varies depending on the technological capabilities of host countries and their participation in global value chains. Our study suggests that Korean manufacturing firm’s internationalization strategies may facilitate a transition from labor-intensive employment, like the cases in advanced countries, to technology-intensive employment through OFDI and other means.

This paper investigates the impact of immigration on Korea’s value-added exports and participation in Global Value Chains (GVCs) using a country-level panel dataset. To address the endogeneity between immigration and trade, this study employs a fixed effects two-stage model and uses visa policy as an instrumental variable. The results reveal that immigration significantly enhances Korea’s domestic value-added exports and GVC involvement, highlighting the crucial role of immigrants in the nation's trade dynamics. The impact of immigration on value-added exports varies with the economic status of immigrants' home countries, with significant effects observed primarily in low-income countries. This effect is mainly driven by the increase in Korea's domestic value-added embedded in exports from these low-income countries, demonstrating a forward linkage. Additionally, the study finds that the coefficient for the industry sector is larger, providing insights into sector-specific dynamics.