The economic effect and policy performance of ship registration—A case of Korea

Abstract

In response to the preference for flags of convenience, shipping countries have implemented offshore registries as second ship registers to prevent nationals from flying flags of convenience abroad. Korea likewise established the Jeju Special Ship Registration Zone system in 2003 to enhance the global competitiveness of its shipping industry, expanding its fleet. Various studies on ship registration mainly examine registration factors, ignoring the economic and policy effects on a country. Therefore, this study is the first to quantitatively evaluate the performance of the Jeju Special Ship Registration Zone system, employing the synthetic control method to analyze the effect of the system’s performance on the national economy. As a result of the analysis, the fleet increased to 42.16 million DWT out of 64.56 million DWT of Korean-flagged ships. Thus, Korea's shipping industry imports increased by 289 trillion won over 17 years from 2003 to 2019. Further, the effect of increasing the number of seafarers was 3714 persons. Hence, the policy continuation will benefit the Korean shipping industry and the national economy. The findings furnish useful grounds for evaluating policy effectiveness and continuity.