Determinants of Comparative Advantage Impairment by Industry in Regions of Korea : Private and Public Investment

This study aims to investigate how R&D and FDI affect the comparative advantages(CA) in Gangwon district, Korea by deriving Comparative Advantage Impairment Index that could identify how well CA realized in the export specialization. The results are as follows. First Gangwon-do was specified as a district where comparative advantages were not adequately revealed by exports than other local governments except Jeju. Secondly, although private R&D , FDI and capital returns could increase the CA, the effect did not link into a corresponding export specialization. Also, public R&D makes the CA worse controlling capital and factor endowments in public sector. Thirdly, comparative advantage in agriculture, forestry and mining sector which are classified into labor intensive industries, are not affected by private FDI and capital endowment. Forth, the FDI locational diversification reduces CA impairments. Lastly, private-public R&D ratio eases impairing comparative advantages.