Evaluating the Regulatory Impacts of Chemicals Laws on South Korean Manufacturing

Sangwon Lee
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Sangwon Lee: Korea Institute for Industrial Economics and Trade

Industrial Economic Review from 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.

Keywords: chemicals; chemicals industry; petrochemicals; industrial policy; regulatory reform; regulation; K-REACH; Chemical Substances Control Act; CBCA; regional economics; policy evaluation (search for similar items in EconPapers)
JEL-codes: L65 R11 R12 (search for similar items in EconPapers)
Pages: 12
Date: 2026
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Published in KIET Industrial Economic Review Vol. 31, No. 2

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