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Evaluating the Regulatory Impacts of Chemicals Laws on South Korean Manufacturing

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  • Sangwon Lee

    (Korea Institute for Industrial Economics and Trade)

Abstract

In South Korea, there are two major laws designed to improve safety management in the chemicals industry: The Act on the Registration and Evaluation of Chemical Substances (K-REACH) and the Chemical Substances Control Act. This study employs a Difference-in-Differences model to empirically analyze the effects of these important pieces of legislation on the domestic chemicals industry. The analysis shows that while the overall industrial shock of these laws was limited, some regional economies experienced significant declines in manufacturing value added. The analysis also found a short-term rise in R&D spending following the implementation of the new laws’ provisions, highlighting their potential to catalyze technological innovation. The conclusion describes the implications the analysis carries for policy, proposing that a tailored policy framework that provides targeted support for vulnerable regions and small and medium-sized enterprises (SMEs) is essential to facilitate environmental safety while ensuring long-term industrial resilience.

Suggested Citation

  • Sangwon Lee, 2026. "Evaluating the Regulatory Impacts of Chemicals Laws on South Korean Manufacturing," Industrial Economic Review 022847, Korea Institute for Industrial Economics and Trade.
    • Handle: RePEc:ris:kieter:022847
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    JEL classification:

    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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