Author : Haemyoung Ji (Porfessor, Economic Department of Kangwon National University)

Abstract

    Analysing the relation of capital intensity and value-added, a model that includes capital intensity as exogenous variables based on the value-added multiplier model of MRIO is constructed. The total effects of Seoul, Gyeonggi-do and Jeollanam-do region are greater than those of the other regions, and the effects of Gwangju, Daejeon, Jeju-do are smaller than those of the other regions. The intra-regional effects of Jellanam-do, Gyeongsangbuk-do, and Jellabuk-do are greater, and those of Seoul, Daejun, and Jeju-do are smaller than those of other regions.

    Unlike the multiplier effects of the other IRIO analyses(demand, output, and value-added multipliers), first, the relations among adjacent regions are stronger; second, the inter-regional relations of the Sudo-kwon(Seoul, Incheon, Gyeonggi-do) and with the other relations are weaker; third the spill-over effect on Jellanam-do from the other regions are greater. In the view of industrial level, the positive relations between capital intensity and value-added creation are identified. The hypothesis of Galenson and Leibenstein are not fully applicable to the regional industrial level in Korea due to the different effects of value-added creation by heightening capital intensities.