Three Essays on external economy of propulsive industry: focuses on Korean renewable energy industry

Abstract

This study analyzed the characteristics of propulsive industry and externalities of propulsive industry. To examine them, this study focused on the case of the renewable energy industry of Korea as an example of a propulsive industry. Propulsive industry is defined as a set of firms or an industry which produce substitutable goods or services which significantly influence economic growth and change. The most important feature of the propulsive industry is its high externality. Externalities can be divided into pecuniary externality and technological externality. Through these externalities, the propulsive industry contributes to economic growth. Therefore, in order to investigate whether the renewable energy industry of Korea is a propulsive industry, the following three parts of the empirical analysis were conducted in this study. The first empirical analysis examined the technological externalities of renewable energy and the resource development industry. Except technologies related to solar thermal and hydro energy, renewable energy technologies have shown a higher degree of spillover of knowledge in other fields, although it is lower than those of resource development technologies. The second empirical analysis examined the pecuniary externalities of the renewable energy industry and the resource development industry. The output multiplier of the renewable energy industry in Korea is higher than the average of all industries, and the economic impact of the resource development industry is rather low. In particular, the output multiplier of the renewable energy industry is gradually increasing. From the value-added multiplier perspective, the renewable energy industry has a somewhat lower value-added effect than the average of all industries. Regarding employment multipliers, the renewable energy and resource development industries have a somewhat lower employment inducement effect than the average of all industries. The third empirical analysis examined the source of value-added change from the renewable energy industry. The renewable energy industrys contribution to the increase of national income is still low compared to other industries. The most significant effect of value added due to the diffusion of renewable energy is the change in the structure of the renewable energy industry, accounting for 61.60%. The second most contributing factor is the increase in the intensity of value added, which accounts for approximately 24.37% of the effect. In summary, the renewable energy industry has higher technological externality and pecuniary externality. And value added from Korea's renewable energy supply is still low but is steadily increasing due to the change of its production technology. Consequently, if the renewable energy industry continues to grow, it is expected to play a role as a propulsive industry.