The Korea Local Administration Review

The purpose of this research was to evaluate the effectiveness of the policy of ‘Innovative City’ on regional economic growth in South Korea. This study focused particularly on the case study of ‘Innovative City’ governed from federal government in order to achieve balanced national development and its impact on regional economic growth. Specifically, this research demonstrates empirically a research question: How do the policy of ‘Innovative City’ planned from federal government affect regional economic growth at the city level in South Korea?
With using a panel dataset with the 31 cities of South Korea during the period from 2006 to 2016, the statistical modeling framework most closely aligned with the postulated causal process, and supportable with available data, was a difference-in difference(DID) methodology. The results of DID model are showing that the ‘Innovative City’ has had statistically significant positive effects after its terminated on the regional economic growth. On the other hand, the treatment effects regarding ‘Innovative City’ have a negative and significant relationship on the regional economic growth variables. Otherwise, findings from this study provide empirical evidences that both effects of post-and-treatment did not significantly impact to regional economic growth. This study found no evidence of any post-treatment effects with estimation of a series of DID model. The importance of this research stems from recognition that it is importance to evaluate the effectiveness of the ‘Innovative City’ policy in terms of stimulating economic growth. These finding help to expand understanding of the mechanism on the decentralization policy in South Korea. It will be more robust to understand on how the policy of ‘Innovative City Season 2’ can be improved aspect of regional economic growth.