The Economic Impact of Fine Dust in South Korea

The Economic Impact of Fine Dust in South Korea

The impact of the fine dust anywhere around the world causes distress through all aspects of life, whether it be walking to school, going to work, or any activity that involves the outdoors. On the surface it may only seem to be a social problem, but beyond the crust of the problem lies a serious dilemma. The impact of the fine dust is not only social, but also seems to carry much political and economic burden on the shoulders of the nation.

This portion will outline the impact and effect that the fine dust has on the economic sector of the Korean peninsula and cover some of the potential political conflicts that may arise from this issue. The Korean economy, similarly to many other capitalist economies, depends on consumption as one of the main driving forces of economic activity and growth. Figure 1.1 highlights some of the main statistics of the Korean economy, and the economic growth from 2013 through 2017 can be observed. The healthy number for the economy to be growing at is generally agreed to approximately 2-3% (Amadeo, 2019).  It is clear from the observed statistical data that Korea has been hitting the healthy economic growth rate; however, this number might be somewhat compromised by the economic impact of the fine dust.

                Figure 1.1

To find a monetary estimation of the impact of the fine dust, Bae Jeong-Hwan, an economics professor at Chonnam National University sought out to use the available data to calculate a number. He estimated that the air pollution is costing the nation approximately 10-12 trillion won in 2018 ($8.8-10B USD) (Kim & Park, 2018). He calculated this by taking 1 ton of fine particles, volatile organic compounds, and sulfur oxides to equate to 1.96M, 1.75M, 800K won respectively and observed how much of it was in the air in 2018 . The number that was calculated was extremely conservative because he did not take into account several other factors that contribute to economic losses, such as the long-term health problems that the government would have to subsidize in the future (Jia & Ku, 2019). Currently, the costs have been hovering around the 10 trillion won range, but would most likely be considerably larger if factors such as health and the decrease in consumption and industrial activity were to be taken into account.

10 trillion won equates to roughly 0.35% of the GDP of Korea. Referring back to figure 1.1, 0.35% of the entire GDP is approximately 10% of the economic growth rate of Korea. The fine dust alone creates a 10% burden on the economic growth of the nation. Our economic growth rate is currently at an ideal figure, but burdening a 10% loss just from an environmental cause is ludicrous.

                                                  Figure 1.2

To put this financial burden into perspective, we can reflect on the data collected from the transportation sector of Korea. The transportation sector involves any form of services that involve moving people, goods or infrastructure. In Korea this sector has an immense weight on the economy. From figure 1.2, we can see that the transportation sector in 2018 collected approximately 52 trillion won in revenue (keeping in mind that 2018 had a major increase in revenue compared to other years). This means that the impact of the fine dust equates to roughly 20% of all the revenue collected from any form of transport from the entire country for the entire year.

The Hyundai Research Institute had a different approach to calculate the impact of the fine dust (considering that it is fairly difficult to concisely calculate a monetary figure from an intangible problem), and figured that the financial burden was about 4 trillion won ($3.54B USD). From their research they found that the agriculture, forest, and fisheries sectors suffered the most facing a constraint of 8.4%, the service industries by 7.3%, and electric, sewage, and construction industries by 7.2% in revenue respectively (Lee, Ho, & Kim, 2015). According to the institute, the results estimated that 159 billion won ($140M USD) in losses are incurred each day that a fine dust warning is issued to the public (refer fig 1.3). In 2018, there were 26 days where those warnings were issued, and the numbers have grown significantly in 2019 thus far (Park, 2019).

                                                                            Figure 1.3

Amidst all the chaos that the fine dust has created, there are still certain unexpected beneficiaries in some sectors. The size of the air purifier market reached a record high or 1 trillion won last year, up from merely 300 million won in 2013. The market is expected to climb even higher to 1.5 trillion won this year, and the numbers have grown 50% every year since 2013. Moreover, the clothes dryer manufacturing companies, such as LG and Samsung, have grown significantly with electronic retailer Hi-Mart, reporting an increase in sales of 1100% in March 2019.

A complex question such as the one regarding the fine-dust and the potential for conflicts in the international political arena requires a much thought out strategy as to how Korea should deal with this issue. A potentially viable solution to solve the economic portion of this multifaceted problem is to first figure out how much in precise monetary value the fine dust has burdened the Korean economy. Once the study that South Korea, the US, and China are conducting regarding China’s influence on the Korean peninsula is released in November 2019, China should compensate the Korean government the corresponding amount of economic burden that they caused. This would require a significant amount of compromise from the two states, but would be the optimal move from the Korean government. Domestically however, it is without a doubt that Korea needs to take more responsibility on their part and implement more strategies and policies to stop the problem growing domestically. The fine dust has been and will be an ongoing issue in East Asia, especially in South Korea, and requires an even more diligent assessment of the economic situation to commit to a rational solution that all the states can agree upon.


Kim, T., & Park, E. (2015). Status and International Cooperation Aspects of Air Quality Control Laws and Policies in Korea. In Lee S., Lee H., & Bautista L. (Eds.), Asian Yearbook of International Law: Volume 21 (2015) (pp. 211-222). LEIDEN; BOSTON: Brill.

Lee, Y., Ho, C., Kim, J., & Kim, J. (2015). Quiescence of Asian dust events in South Korea and Japan during 2012 spring: Dust outbreaks and transports. Atmospheric Environment, 114, 92-101. doi: 10.1016/j.atmosenv.2015.05.035

Park, J. (2019). Fine dust costs Korea 10 trillion won a year. Retrieved from

Jia, R., & Ku, H. (2019). Is China’s Pollution the Culprit for the Choking of South Korea? Evidence from the Asian Dust. The Economic Journal. doi: 10.1093/ej/uez021

Amadeo, K. (2019). How Fast Should the Economy Grow?. Retrieved from