A Study Of The Regional Economic Impacts Of The Incheon And Busan Jinhae Free Economic Zones

With the aim of actively attracting foreign investment and achieving balanced regional development,the South Korean government has established a total of seven Free Economic Zones across the country since2003.In accordance with the recent 2^ndBasic Plan for Free Economic Zones published by South Korean government,the development of Free Economic Zones has shifted from attracting foreign investment to innovation growth.In the process of implementing the plan,Incheon and Busan-Jinhae Free Economic Zones were selected as major sectors to attract global investment,including global-focused Bio-Health Care,Complex Logistics and High-Tech parts Industries.Therefore,it is time for two Free Economic Zones to develop investment and development strategies tailored to the plan.In addition,the efficiency of the establishment of Free Economic Zones has been questioned due to insufficient investment performance,for example,the overall performance of current Free Economic Zones is not optimal,especially in comparison with the beginning stage,and half of Free Economic Zones in Incheon and Busan-Jinhae are disqualified.Based on Regional Input-Output table,this paper analyzed the regional economic ripple effect of Logistics and High-Tech,which are the main industries of the Incheon and Busan-Jinhae Free Economic Zones.With regards to the characteristics of the tenant companies in mentioned Free Economic Zones,this paper conducted the reclassification of the Logistics and High-Tech industries within the Regional Input-Output table.The paper also compiles Regional Input-Output tables for Incheon and Busan based on 2015 Korean Input-Output table released by the Bank of Korea in 2019.The ripple effect of Logistics and High-Tech industries in the Incheon and Busan-Jinhae Free Economic Zones were analyzed,considering different dimensions,such as inducement effect,income inducement,and job inducement effects.The result shows that the Incheon Free Economic Zone has a large economic ripple effect on Incheon regional economy in the Logistics industry,and the High-Tech industry in Busan-Jinhae Free Economic Zone has a large economic ripple effect on the Busan regional industry.Based on the above research,this paper presents the following suggestions for the development of the Incheon and Busan-Jinhae Free Economic Zones.First,scholars should compare and analyze the economic ripple effects of certain industries in the Free Economic Zones on the local economy.Also,it is necessary to conduct researches on local residents and tenant companies'satisfaction level of projects in Free Economic Zones.Finally,Korea Free Economic Zones should make use of the existing sister and friendship relations with China,and attract overseas capital with the same development direction as that of its region to promote the activity of regional economy.This will enable detailed implementation of business development and increase efficiency in Korea Free Economic Zones in the future.