The Effects of FDI inflows into Korea’s 16 Metropolitan Cities and Provinces on Regional Growth

Abstract

Purpose - This study aimed to analyze the long-term effects of FDI inflows into 16 metropolitan cities and provinces on the economic growth of individual regions, and to compare and analyze differences in regional performance through these estimates. Design/Methodology/Approach - This study analyzed the impact of FDI flows into 16 metropolitan cities and provinces on regional economic growth by applying the FMOLS model after organizing panel time series data from 1998 to 2021. Findings - As a result of estimation through the Panel FMOLS model, when RFDI inflows to all metropolitan cities and provinces increased by 1%, GRDP increased by 0.21% on average in the long run. However, 12 individual metropolitan cities and provinces, which were statistically significant, showed different degrees of impact on growth. when RFDI inflows increased by 1%, GRDP showed various estimation results from lowest +0.09% (Ulsan) to the highest +0.93% (Gyeonggi). In addition, Ulsan (-0.12%p), Gangwon (-0.05%p), and Jeju (-0.11%p) fell below the overall average estimates as a result of comparing and analyzing growth differences between the average estimates of all metropolitan cities and provinces, and 12 individual metropolitan cities and provinces. This means that even if there is a positive growth of GRDP due to RFDI inflows, the ripple effect varies considerably between regions. Research Implications - Metropolitan cities and provinces should promote the growth of GRDP by reorganizing the industrial structure to attract high-tech industries, sharing skilled manpower in the metropolitan economy, and converting to SOC for technological innovation.