1. Study Objectives and Methods

❚ Study Objectives

￮ Jeonbuk-do was designated as a ‘special industrial crisis response area’ and received support from the central government, but the crisis is still ongoing and monitoring of the economic crisis and regular diagnosis of the economic status are necessary.

￮ For economic monitoring, Jeonbuk is maintaining an Coincidental Indicator, but it is difficult to understand the economic trend with this indicator alone. So the development of additional processed statistics is required.

￮ The purpose of this study is to develop a leading indicator that can diagnose the economy in conjunction with the existing coincident indicator, and through this, to better understand Jeonbuk's economic trends.

❚ Study Scope and methods

￮ The scope of this study includes all activities to develop a leading indicator. In order to create the Jeonbuk leading indicator, collection and trend analysis of indicators that can be used in the preparation for the leading indicator, seasonal adjustment and rregular adjustment of indicators, analysis of the economic response of indicators through turning point analysis, calculation of candidate indicators. We used the statistical package KOSTAT-CIS, and when necessary, commercial programs were used to perform time series analysis and index calculations.

2. Study conclusion and policy implication

❚ Study Conclusion

￮ 985 pieces of data from the Jeonbuk region and nationwide were collected and analyzed to review their usability to form a primary data pool, and through additional analysis of these, 15 indicators were selected to create constituent indicators by measuring correlation and economic response.

￮ Based on this, 14 models/indexes were chosen through simulations, and additionally analyzed to select the index that could best explain the Jeonbuk economy. To review the consistency of 14 models/indexes, the prediction accuracy of the indices was measured along with regression analysis and phase transition analysis, and most models were found to have high explanatory power and prediction accuracy.

￮ Jeonbuk's leading indicator consists of 7 indicators, including 6-month moving average of Jeonbuk's construction order receipts, Jeonbuk's capital goods imports, Jeonbuk credit, Jeonbuk manufacturing facility investment BSI, Jeonbuk job search ratio, national domestic export index, and national service production index.

❚ Policy implication

￮ Since the leading composite index can only be published after approval from the National Statistical Office, it will go through the approval process of the National Statistical Office, and for this purpose, professional personnel must continuously manage and supplement it.

￮ Since there is a shortage of experts who can provide technical advice in the region, efforts are needed to improve the quality of the indicator through close cooperation with the National Statistical Office. In order to increase the usability of the index, governance with local economic-related organizations must be maintained.

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