韓國 地方公共資本의 地域經濟 成果分析

The Regional Economic Performance of Local Public Capital in Korea

This paper analyzes the economic performance of the local pubic capital in Korea in terms of scale economies and returns to variety. We use the panel data of thirteen local provinces in Korea during 1985-1996 period. Estimating the regional production function incorporating the local public capital as one of production factor we find increasing returns to scale with respect to capital and labor as well as local public capital. We also find that the estimate of the output elasticity of local public capital is 0.054-0.076 and statistically significant. This estimation result contrasts with that of the United States for which the effect of local pubic capital on the private sector output is trivial. We also analyze the effect of local public capital on the private sector of regional economy in the context of returns to variety. Our empirical finding suggests that an increase in the local public capital increases the output in the private sector through returns to variety. We can explain why there exist both returns to scale and returns to variety of local public capital as follows. In Korea the local public capital stock has been deficient at the suboptimal level so that an additional input of local public capital may have increasing returns to scale and returns to variety. In other words the productivity of local public capital in Korea is higher than that of the advanced countries because the latter have the congestion effect while the former has not. The policy implication of our empirical findings is that the local public capital investment should be increased at higher rate in the future than now for private sector productivity increase.