Economic impact of overseas coal bed methane development project on Korean economy

Abstract

Korea has increased its self-sufficiency in natural resources since 2006. Accordingly, the number of overseas resource developments has also increased; however, the quantification of the economic impact of such developments is rarely studied. Therefore, we analyse the economic impact on the Korean economy and create a hypothetical Australian coal bed methane development project. As there is no overseas resource development sector in the Korean input-output table, we identify the relationships between the project and Korean industries using cost data and develop a project-industry relationship diagram. Next, we analyse the economic impacts of overseas coal bed methane development on the Korean economy, especially the production inducement, value added, and labour inducement effects. According to our results, the production inducement effect on the Korean economy is estimated to be 643,360 million Korean Won annually with 1.918 of production inducement coefficient when Korean companies take full charge of the project.