The Korea Local Administration Review

This study empirically analyses the impact of Special Zone Policy on regional
economic growth. The Daedeok Innopolis, which is the foundation of Korea’s
innovation cluster policy, is used as a case to analysis. To determine the impact
of Special Zone Policy on local economic growth, a 9-year(from 2002 to 2010)
panel data from 33 cities in Daejeon Metropolitan City, Chungcheongnam-Do,
and Chungcheongbuk-Do is used. And, the main findings driven from the analysis
are as follows: Although GRDP (Gross Regional Product), population, and
employment have increased in the regions where the Special Zones are located
since 2005 when the policy was implemented, the difference-in-difference analysis
shows that the policy has no statistically significant effect on local economic growth.
Finally, this paper suggests some implications that are helpful for the design of
new relevant policies. The importance of this paper is to show that the impact
of Special Zone Policy on adjacent regional economic growth is statistically identified
in a situation where different types of special zones have been introduced, while
there is little empirical evidences on the policy effect.