The Korean Journal of Economic Studies
Estimation of Interregional Trade in Korea: An Inference on Regional Economic Growth
Haemyoung JiYear 2009Vol. 57No. 4
Abstract
This article focuses on estimating the trade structure between regions inKorea. It is estimated through Wilsonian entropy measure for the period 1995~2000. The major findings are that the ratios of larger regions in terms ofintra-regional trade had increased more than those of smaller regions, whilethe patterns of inter-regional trade turned out comparatively stable. Theseresults imply that there will be an undesirable effect on economic growth in thelight of the hypothesis that the expansion of an inter-regional trade contributesto economic growth and balanced growth among regions, which is verified bya lot of theories and empirical tests.These findings provide several implications on the relationship between theinter-regional trade structure and economic growth. First, the expansion ofintra-regional trade diminishes the spillover and feedback effect, which maylead to the larger gap of growth between metropolitan regions and the otherregions. Second, the “trickle-down” effect, which has so far been consideredas the basic and significant eAn-ffect of the Korean regional economicdevelopment, will be limited. The reason is that the expansion ofintra-regional trade goes faster than that of inter-regional trade. Third, for theprevious five years in question the inter-regional trade has tended to remainconstant. It means that the mobility, which is a motive for growth, alsoremains the same.According to the empirical findings, the decreasing mobility among regionsindicates that growth potentials of Korean regions are becoming smaller thanbefore. So instead of the intensive investment, including the deregulation ofdevelopment, on the certain region such as Seoul metropolitan area,co-development plans among regions and specialization policies for theundeveloped regions should be promoted.