International Trade and Regional Growth: Evidence from Korea’s Subregions

Purpose - This study analyzes the effects of international trade on regional growth based on data from 2007 to 2016. Design/methodology/approach - In this study, socioeconomic factors such as investment, human capital, and industrial structure were selected as major variables in order to measure the influence relationship between international trade and regional growth. To analyze these influence relations, we applied panel model. Findings - Estimated results show that there is a positive and significant relationship between international trade and regional growth as presented in previous studies. However, socioeconomic variables such as investment, human capital and industrial composition showed a difference in the estimated results. In the relationship between international trade and regional growth, investment and human capital were expected to have a positive and significant impact as in previous studies, but this was not the case in this study. Research implications or Originality - Although the composition of the industry varies from region to region, the manufacturing industry was found to contribute more to international trade and regional growth, despite the high proportion of the service industry. Therefore, Korea’s sustainable regional growth will be possible when it realizes a more service-oriented economy and establishes a specialized strategy for it.