Jongmin Lee, Seohyun Lee, and Seungho Jung (2026), “Corporate Investment under North Korea Threats,” Applied Economics Letters, 1–8.

The paper examines how geopolitical risk arising from North Korea affects corporate investment in South Korea. The authors construct a monthly North Korea-related geopolitical risk (GPRNK) index using news articles and examine how changes in geopolitical tensions influence firms’ investment decisions.

The main findings:

- Heightened geopolitical risk associated with North Korea reduces corporate investment, with stronger effects for more capital-intensive firms.

- Firms with greater labor flexibility are less affected, suggesting that firms’ production structure influences their ability to adjust to geopolitical uncertainty.

- The decline in investment persists beyond the initial increase in geopolitical risk, indicating that geopolitical tensions can have lasting effects on firms’ real economic decisions.

https://doi.org/10.1080/13504851.2026.2731151