Regional Industrial Structure and Regional Economic Fluctuation: Empirical Analysis for Korean Metro-areas, 1981-1996.

초록

This paper examines the relationship between regional industrial structure and regional economic fluctuation in South Korean metro areas. Indices for regional industrial structure were calculated by the national average approach while indices for regional economic fluctuation were estimated by the slight modification of Shift/Share analysis. This empirical analysis shows that there is strong positive correlation between these two variables. This indicates that the higher the level of specialization in regional industrial structure, the greater the regional economic fluctuation. Previous studies on this issue generally investigated the linear association. However, the logarithmic model indicates that non-linear, rather than linear model, is more appropriate to explain the relationship between regional industrial structure and regional economic fluctuation. This finding provides an important policy implication that at the extreme of specialized industrial structure, the diversification policy to reduce the economic fluctuation is not appropriate since the policy effect might be so small compared to the sunk cost.