Participation in the Kaesong Industrial Complex and its impact on productivity: South Korean textile firms’ experiences |
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| Institution: | 1. Department of Economics, Korea University, Republic of Korea;2. Graduate School of International Studies, Korea University, Republic of Korea;1. Graduate School of International Studies, Seoul National University, Republic of Korea;2. Economic Research Institute, The Bank of Korea, Republic of Korea;1. Division of Cardiology, Department of Medicine, Keio University School of Medicine, Tokyo, Japan;2. Division of Cardiology, Tachikawa Hospital, Tokyo, Japan;3. Ogawa Satoshi Clinic, Tokyo, Japan;1. Samsung Economic Research Institute, Seoul, Republic of Korea;2. Department of Economics & SIRFE, Seoul National University, Seoul, Republic of Korea;1. National Central University, Taiwan;2. Keio University, Japan;3. Gakushuin University, Japan |
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| Abstract: | This paper examines the effects of participating in the KIC on firms’ productivity using firm-level data from 1998 to 2012, focusing on the textile sector. To do this, we implemented PSM estimations employing the radius matching method with 0.01 caliper and 10nearest-neighbor matchings with replacement. We found 100 matched firms in control groups(domestic firms) that corresponded to each of the 10 treated firms.For analysis, we used a difference-in-differences (DID) framework and extended the basic DID framework to the event study framework of Gathmann et al. (2018). The results reported that the treated firms experienced the increased sales but the improvement in sales had not lead to improvements in productivity. These results can be found in the DID event study as well as the DID analysis. That is, improvement in productivity through FDI cannot be found in the empirical results. |
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| Keywords: | Difference-in-differences Event study Propensity matching score Kaesong Industrial Complex (KIC) North Korea |
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