Impact of Decreasing International Demand for Transport Equipment in Ulsan on the Local Economy

Ulsan is one of the wealthiest and most industrial cities in South Korea. Its manufacturing industries together generate KRW 209 trillion in output, employ a total of 166,114 people (Statistics Korea, 2014), and export USD 72.9 billion in goods (KITA, 2015). Home to a population of 1.19 million, Ulsan accounts for 5.7% of all employment in the nation’s manufacturing sector, 14.0% of gross domestic product, and 13.8% of South Korea’s exports. Ulsan boasts thriving refined petroleum, chemical product, automobile, and shipbuilding industries, accounting for 52.8%, 26.3%, 20.5%, and 29.3% of all refined petroleum, chemical products, automobiles, and ships produced in Korea, respectively. The purpose of this study is to analyze how the decreasing international demand for transport equipment manufacturing is affecting the local economy of Ulsan using a social account matrix (SAM). Conventionally, local economic structures and ripple effects are analyzed using input-output models. Such models, however, focus solely on industries and fail to provide analyses of ripple effects on households and the government (public sector). The SAM, on the other hand, is an expansion of the input-output model and encompasses the transactions among all economic actors, including industries, households, and the public sector. The SAM for Ulsan used in this study provides a useful tool for assessing the local economic structure, which is now under duress due to the drop in the oil price and the global economic recession, as well as for analyzing how the decreasing demand for Ulsan’s exports is affecting the economy at the local and national levels