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Purpose – To understand women's participation in domestic and global sex (entertainment) industries in South Korea, this study proposes an integrative theoretical framework of political economy with three analytical dimensions: position in the world-system, local patriarchy, and the state policies.

Method/approach – The theory that seeks to understand the South Korean government's policy on prostitution is formulated based on reviews of transnational and global research on gender and sex work, local patriarchy, and political economy of world-system. Two historical examples of the sex industry, businesses near U.S. military camps on the Korean peninsula and Korean prostitutes in several cities of Japan, are used to illustrate the theory. The data for these cases were collected from a variety of sources including government and nongovernment documents, newspaper articles, film, and demographic information.

Findings – The application of the theoretical frame makes it possible to understand the socioeconomic and political contexts in which South Korean society, as a semiperipheral nation, has produced a vast number of women in the sex industry.

Practical implications – When the government's policy emphasizes rapid economic growth viewing women as a source of revenue, it will be difficult to understand marginalization of women's status in informal sectors and massive production of prostitutes in domestic and transnational scale.

Value of study – Using a macro and structural perspective, this study sheds light on the transnational/global nature of the prostitution industry, and specifically the role of the state, and local patriarchy in the globalizing South Korean sex industry.