The Impact of Foreign Resident Inflows on Regional Economies in South Korea

This study examines the impact of foreign resident inflows on regional economic growth in 17 metropolitan cities and provinces in South Korea from 2012 to 2023. Employing a panel fixed effects model with time trends and a panel dynamic ordinary least squares (DOLS) model based on the Cobb–Douglas production, the estimation results present that first, a 1% increase in the share of foreign residents among the economically active population is associated with a 0.11 ∼ 0.19% increase in nominal Gross Regional Domestic Product (GRDP) per capita, equivalent to approximately 2.64 ∼ 4.57 trillion KRW nationwide. By region, Ulsan and South Chungcheong Province have the largest growth effects, highlighting the potential benefits of strategically attracting foreign labor to industrialized regions. Furthermore, disaggregation by residence status shows that inflows of skilled and employment-eligible foreign labor have potential positive effect on regional economic growth, while non-employment visa holders are insignificant or negative. These findings suggest the importance of implementing immigration policies that prioritize high-skilled talent and diversify residence categories to promote regional economic growth.