The Role of the Eco-Industrial Park (EIP) at the National Economy: An Input-Output Analysis on Korea

The eco-industrial park (EIP), which aims to minimize by-product and unused energy via reuse and recycling within the industrial complex, offers an innovative pathway to realize regional eco-industrial development. As an environmental, as well as business, innovation, the EIP enables changing the perception of industries and create new business values via the whole supply chain, but such evidences have been less reported to date. As one of the world famous promoter on EIPs, the Republic of Korea (ROK) initiated a national EIP project to enhance its competitiveness and solve environmental problems. While the existing literature reviewed and highlighted its economic outcomes in terms of direct performances of firms within the project, the indirect impacts on the supply chain of national economy were less investigated. Within this circumstance, this study performed a first attempt to apply an input-output analysis (IOA) to investigate the effects of the EIP project on the whole economic system of Korea, via an exogenous specification of the EIP sector in the input-output tables (IOTs). General economic effects in terms of value-added change, employment generation, as well as specific effects like the inducement effects and effects of supply shortage and price pervasiveness were evaluated based on the IOA approach (including demand-driven, supply-driven, and Leontief price models). Results highlighted that, from the supply chain perspective, implementing the EIP project made production and value-added grow by around 1264 billion KRW and 272 billion KRW, respectively (with a unit induction coefficient of 1.6201 and 0.3489 for production and value-added). While generating a direct employment around 1000, an indirect employment was also created of over 5000 persons in the whole supply chain (with an employment inducement effect of 6.4512 persons per 1 billion KRW investment). The production shortage cost from 1 KRW of supply failure is 1.1230 KRW. In summary, EIP was proved to be not environmentally friendly, but also a driver to improve the overall economic performance of upstream and downstream industries in the whole supply chain. As a first attempt to link IOA with EIP, the results of this paper are expected to enlighten policy-makers to forward continued improvement on EIP promotion and combine the EIP idea within national economic system reform and planning.