The Effects of Strategic Goods Control on Productivity: The Case of Korea

• Published in: East Asian economic review Vol. 27; no. 2; pp. 89 - 114
• Main Authors: Moon, Min Hye, Jang, Yong Joon
• Format: Journal Article
• Language: English
• Published: Sejong Korea Institute for International Economic Policy (KIEP) 01.06.2023; Korea Institute for International Economic Policy; 대외경제정책연구원
• Subjects: Costs; Credibility; Economic growth; Exports; Hypotheses; International trade; National security; Productivity; Regression analysis; strategic goods control; total factor productivity; 경제학; South Korea
• ISSN: 2508-1640; 2234-8867; 2508-1667; 2287-8793
• DOI: 10.11644/KIEP.EAER.2023.27.2.419

This paper empirically examines how controlling strategic goods affects productivity by focusing on Korean industries from 2015 to 2019. We hypothesize that strategic goods control positively affects productivity because it promotes international trade by making up for market failures, building up national credibility, and stabilizing market environment; in turn, international trade contributes to productivity growth. The regression results are congruent with our hypothesis. The effects of strategic goods control on productivity were positive and statistically significant in general. These positive effects were more prominent in the group of industries that include strategic goods and, thus, are technologically intensive. The results also support that international trade is a key medium for the effects of strategic goods control on productivity. Consequently, our empirical results support government policy on strategic goods control, ensuring that strategic goods control can contribute to economic growth by reducing diplomatic friction and stabilizing the global market.