Major Research Outputs
1. Measuring the Social Capital in Korea by Region: Factor Analysis Based Index
Although the importance of social capital has become widely accepted in the academic and policy side, the study of this in Korea remains very li ...
Major Research Outputs
1. Measuring the Social Capital in Korea by Region: Factor Analysis Based Index
Although the importance of social capital has become widely accepted in the academic and policy side, the study of this in Korea remains very limited level. This research, by compensating the defects of the previous studies, develops the reduced method to measure the social capital. In particular, since this method uses the published official data of National Statistics Office instead of questionnaire survey, it provides the time series of regional social capital, which can be used extensively in economic analysis. Our study measures the regional social capital of 16 metropolitan or provincial regions from 1999-2010. First, we find that although the social capital in 2010 has increased for all over the regions compared to that in 2000, but the growth rate differs among those regions. The social capital is distributed less in the metropolitan or densely populated area, while it is distributed more in the provincial or less densely populated area. In addition, our econometric results show that the measured social capital has a positive relationship with birth rate but a negative relationship with crime rate, which implies that the regional social capital is adequately measured.
2. Event Study Methodology and Exchange-rate Exposure of Regional SMEs: A Case of Daegu, Gyeongbuk, Busan, and Gyeongnam SMEs
Existing literature using the standard empirical model of Adler & Dumas (1984) for estimating exchange -rate exposure of firms have difficulty in providing statistically significant results. Responding such difficulty, this paper first attempts to find the impact of the sizable exchange rate changes on returns of Korean "small and medium enterprises (SME)" located in 4 major regions out of the capital area for the 2008 global credit crisis period using the event study method. The primary finding is that about 51% of the total sample SMEs are significantly exposed to exchange rate fluctuations, which is an astonishing result compared to about 10% by most of prior studies. In addition, it is found that the significantly exposed SMEs have higher ratio of export to total sales and greater short-term debt, on average, rather than insignificantly exposed SMEs.
3. The Difference in Regional Trade Margins and Its Determinants: Evidence from Korea
This paper decomposes the extensive and intensive margins of the 16 Korean regions’ exports over the sample period from 2000 to 2010, using regional export data dis-aggregated at HS 10-digit level. We find that there is a large disparity in the extensive and intensive margins among Korean regions. Consistent with international trade theories, the size of a region’s economy (GDP, income, and population) has a significant and appropriated signed effect on the extensive and intensive margins. However, the effects work dominantly through the intensive margin rather than the extensive margin. We also find that regional innovation activity has only positive effect on the extensive margin, and regional infrastructure variables are found to have a strong effect on the two margins. This paper contributes to the literature regarding the extensive and intensive margins of a country’s regional trade.
4. Spatial Agglomeration of Human Capital in Urban Areas
The purpose of this paper is to investigate the factors that influence the urban agglomeration and the population change of human capital, i.e., high skilled and low skilled labors, by introducing the externality of residential environment such as amenities and land market into the “New Economic Geography (NGE) Model.” We also examine the effects of these factors through empirical analysis by using the data of labor and land market in 127 cities, Japan.
The main results are as follows. First, the factors such as the preference for the variety of intermediate goods, fixed input in the market of intermediate goods, and amenity cause the concentration of skilled labors into the urban area. Second, the positive external economy by the agglomeration of labors incurs the concentration of labors again. Third, contrary to our expectation, the centrifugal force with the increase of congestion effect by population density affects low skilled labors not high skilled labors. Finally, the agglomeration of high skilled labors raises the land price, while that of low skilled labors brings the fall of land price.
5. Pollution Haven with Technological Externalities Arising From Foreign Direct Investment
This paper presents a two-stage game, in which in the first stage two multinational firms (MNFs) seeking pollution havens choose a location, that is, whether to export to or undertake FDI in the host country, and in the second stage, these two MNFs and a firm in the host country play a Cournot game. The MNFs’ location decisions are influenced by the fixed cost of FDI, the spillover of technologies to a foreign firm, and pollution emission standards in the host and home countries. There exist multiple equilibria in the location pattern because of the technology spillover accompanied by FDI. In addition, the analysis leads to the possibility of an equilibrium based on the Prisoners’ Dilemma. When the host country relaxes emission standards, the MNFs choose FDI, although their profits are higher if both choose to export instead. This provides a rationale for the FDI source country’s intervention to restrict the MNFs’ FDI according to the level of environmental regulation in the host country.