Impacts of transportation and industrial complexes on establishment-level productivity growth in Korea

Abstract

This study examines how transportation and industrial complexes influence the productivity of manufacturing establishments. The study achieves this by combining and analyzing microdata and industrial location data for manufacturing establishments in Korea, from 2007 through 2014. The study estimates economic effects in a more precise manner than earlier work and suggests policy implications based on various land use and location characteristics, such as accessibility to expressways, road ratio, average land price, and employee density.Other things being the same, a shorter linear distance to the nearest expressway interchange was overall linked with higher establishment productivity growth but when focusing on technology level, this effect was not found for the high-technology industry. Also, the annual productivity growth rate of establishments located within industrial complexes was generally higher than that of establishments outside. The productivity growth enhancing effect of industrial complexes was observed in low and medium-technology industries, but not in high-technology industries. The results therefore suggest a new policy is required for the high-technology industry in order to provide a better link to highly skilled labor, academia and research institutes to help transform the industrial complexes of Korea into technological innovation centers in a transition to a knowledge-based economy.