Innovation, Regional Growth, and Housing Prices: Do Housing Prices Affect Local Innovation?

초록

In this study, we examine the effect of regional innovation with the number of registered patents as a proxy for innovation on regional growth in South Korea. We use economic and housing price data from 17 regions from 2012 to 2021 to examine the interrelationships among housing market and local innovation and regional growth. We adopt the 2-stage least squares method to overcome the endogeneity issue of our regional growth and housing price models while controlling for housing price appreciation and regional specific characteristics. Our findings reveal that while innovation has a significantly positive effect on both the local residential real estate market and regional growth, housing price does not affect regional innovation. We find that a 1% increase in patents increases the gross regional domestic product per capita by 0.188%. Innovation has a positive impact on the housing market, with a 10% increase in patent increases leading to an increase of 0.329% in housing prices. Our findings have a policy implication: innovative activity stimulates regional growth and innovation driven growth increases housing demand, thus emphasizing the need to ensure housing affordability and adequate supply.

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