Abstract
The purpose of this paper is to examine the impact of education and R&D investment on regional economic growth in South Korea. We develop a simultaneous model of production, human capital accumulation, migration, population and physical capital investment of two regions: the Seoul Metropolitan Area and the rest of Korea. We decompose the regional growth path into a quality path and a quantity path to identify how regional economies grow and run simulations to evaluate alternative policies in terms of effectiveness and adaptability. The impact of education and R&D investment on regional growth in the rest of Korea is only 22.3% of that in the Seoul Metropolitan Area due to lower elasticity values of young in-migrants with respect to the investment in the rest of Korea. An enhanced efficiency of regional human capital accumulation is effective and adaptable to alleviate regional economic disparity.
Highlights
As reported by the TIMES of London in 2010, universities in Scotland would confront a brain drain unless the investment on higher education is properly addressed
We develop a simultaneous model of production, human capital accumulation, migration, population and physical capital investment of two regions
The purpose of this paper was to examine the impact of education and R&D investment on regional economic growth in South Korea
Summary
As reported by the TIMES of London in 2010, universities in Scotland would confront a brain drain unless the investment on higher education is properly addressed. The government has focused on allocating more resources to the ROK’s higher education institutions (HEIs) and developing industrial parks in the ROK since the 1990s Despite these efforts of the Korean government, human capital, as well as financial capital, is concentrated in the SMA. Even the Korean government’s policy to expand investment in the ROK’s HEIs and industrial parks since the 1990s failed to narrow the regional economic disparity between the SMA and the ROK. While previous works have focused on the analysis of the overall effect of intellectual capital investments, distinguishing the two types of growth paths can be useful in identifying how lagging regions economically grow [3,4,5,6].
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