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Abstract

This paper examines the impact on the South Korean Cultural Entertainment Indus- try(CEI) of China’s “Korea Limitation Order”. In November 2016, Beijing restricted South Korean artists from holding concerts and the broadcast of South Korean TV dramas and banned cooperation between the two countries in the entertainment in- dustries. This paper focuses on the effect this had on exports of cultural products and relating industries from Korea, and how Korea was able to adjust to this geopolitical shock. I examine exports from Korea to China, Japan, and the United States using data from Cultural Entertainment Industry Products Exports, such as Korean mu- sic and filming industries, and South Korean inbound foreign tourism statistics from 2011 to 2019. Utilizing the deviation from an estimated autoregressive moving average (ARMA) model specification of exports from Korea after the “Korea Limitation Order” and a Difference-in-Difference (DID) Model, I found that South Korea’s tourism indus- try was particularly affected, with the most significant decline relative to the other two countries. The film and broadcasting industries saw similar but less dramatic declines. There is no evidence that sectors of the cultural industry that are not included in this restriction category, such as the cartoon industry, were impacted by this shock.

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