Input-Output Analysis of Power-Intensive Industries: The Case of Korea

Purpose: This study quantifies the economy-wide effects of Korea’s electricity-intensive industries (EIIs) and elucidates how shocks to their activity propagate through production, value added, supply, and prices. The aim is to provide an analytical foundation for energy-transition policy and for safeguarding industrial stability. Design/methodology/approach: Using the 2020 Bank of Korea input–output (I–O) table, we construct a 45-sector model that explicitly isolates EIIs as a standalone account alongside 44 aggregate industries. From this framework we derive the technical coefficients and Leontief inverse, and estimate backward/forward linkages, output and value-added multipliers, supply-disruption (bottleneck) effects, and price pass-through/price propagation effects associated with EII demand and cost shocks. Findings: Korea’s EIIs exhibit pronounced forward linkages and large output and value-added multipliers, indicating strong upstream and downstream interdependencies. The results show that stable EII production materially supports aggregate output and value creation, whereas supply interruptions or cost surges in EIIs transmit swiftly across the production network, amplifying adverse impacts on sectoral production, intermediate supply chains, and economy-wide prices. These dynamics underscore the macrocritical role of EIIs in sustaining growth and stabilizing industrial ecosystems. Practical implications: Ensuring reliable, cost-effective electricity supply to EIIs is pivotal for macroeconomic stability during the energy transition. Policy priorities should include (i) tailored support for EIIs that conditions assistance on efficiency and decarbonization trajectories, (ii) electricity tariff and market design that internalize volatility while preserving international cost competitiveness, and (iii) active supply-chain risk management and monitoring to mitigate propagation of EII-origin shocks. Together, these measures can reduce systemic exposure to bottlenecks and support sustainable, resilient growth. Originality/value: By explicitly delineating EIIs within a national I–O framework and jointly estimating production, value-added, supply-disruption, and price effects, the study provides an integrated assessment of how EII stability shapes Korea’s macroeconomic performance and the credibility of its energy-transition pathway.