Economic impacts of the coal extraction sector on the South Korean national economy: An input-output analysis

Abstract

This article applies input-output (IO) techniques to appraising the role and economic impacts of the coal extraction sector (CES) in South Korea. IO tables for five years, namely 2000, 2005, 2010, 2015, and 2019, are used. Three IO models are utilized to deal with various economic impacts by treating the CES included in the endogenous sectors as an exogenous one. The impacts of a production or investment in the CES on inducing production, value-added, and wages in the national economy have been gradually increasing, which is interpreted as the result of the restructuring of the CES that the South Korean government has promoted over the past 20 years. However, the value-added coefficient, employment coefficient, and employment creation impact have gradually decreased, which seems to be due to the worsening profitability due to the gradual phasing out of the CES. Both the impact of production disruptions in the CES on other sectors’ production and the impact of a change in the output price of the CES on that of other sectors have been gradually decreasing. Thus, the government can continue to phase out the CES without creating the burden of production disruptions and inflationary pressure in the national economy.