Import Penetration, Export Expansion, and Election Outcome: Evidence from the 2022 Election in South Korea

Abstract This paper studies how trade exposure affects election outcomes in South Korea. We quantify the degree of export expansion as well as import penetration for 240 regions in South Korea by incorporating industry-specific labor distributions at the regional level using data compiled from the firm-level census. We implement a two-stage least squares estimation to handle the possible simultaneity associated with the trade exposure variables. The results indicate that the regions with higher import penetration from China had relatively more support for the conservative candidate in the 2022 presidential election compared with the 2002 presidential election. On the other hand, the regions with higher export expansion to China had relatively smaller support for the conservative presidential candidate in 2022. Adding South Korea's bilateral trade with Vietnam, another major trading partner of South Korea, provides the same insights. These findings confirm that the heterogeneous local labor market impacts coming from exposures to import and export can lead to different political preferences of voters and hence different political outcomes.