ANALYSIS OF THE ECONOMIC IMPACT OF KOREAN STEEL INDUSTRY ON ECONOMIC GROWTH OF KOREA

Abstract

This paper analysis the effect of steel industry on the GDP of Korean Republic. The data from 1980 to 2019 is explained for running regression and realizing the real effect of steel industry to Korean GDP. Because the data is a time series OLS model of regression is run through STATA. On the basis of this search, it is clarified that the steel industry output has a negative effect on the GDP of Korean Republic. Because of the large amount of pollutants emission, steel industry causes the other industries to decrease. In this paper, two hypotheses are used: a) steel industry output has a positive relationship with Korean GDP; b) unemployment rate has a negative relationship with the GDP of country. As a result of regression, hypothesis (a) is rejected and hypothesis(b) is accepted. Even though, the steel industry has a negative relationship with GDP as a production, it plays a crucial role as a raw material in Korean economy. It is impossible to develop the shipbuilding industry, vehicle industry, building construction industry and some other fields of economy without steel material. I hope that, on the basis of new advanced technologies, The Republic of Korea will be able to find new ways on using steel without polluting of environment very soon. Besides steel industry, there are some other variables which can effect on the GDP growth of Korean Republic. In this thesis, apart from steel industry, unemployment rate, inflation rate, trade openness, foreign direct invest (FDI) and tax revenue are used as variables. Unemployment rate and inflation rate are acceptable from them. Both of them have a negative relationship with the GDP growth of Korea.it means that, if unemployment rate or inflation rate increases the GDP of the country decreases. The other variables such as trade openness, foreign direct invest and tax revenue has no relationship with the GDP growth of Korea. It can be concluded that, for increasing the GDP of country, the Republic of Korea must decrease unemployment rate and inflation rate as much as possible. Moreover, the government of Korea should find innovative ways of decreasing pollutions of environment which is the result of manufacturing steel products.