Agglomeration Economies and Intergovernmental Cooperation in Productive Disaster Management Expenditure

ABSTRACT This study examines how disaster management expenditure affects regional economic growth across different institutional contexts. Analyzing panel data from 226 South Korean municipalities (2011–2021) using fixed effects and System GMM, the analysis reveals systematically heterogeneous effects even after explicitly controlling for population density as a proxy for agglomeration: districts demonstrate the strongest impact, whereas counties show the weakest returns. These differences are consistent with agglomeration economies and vertical intergovernmental cooperation advantages in metropolitan districts. The findings contribute to fiscal federalism theory by demonstrating that for public services with network externalities, cooperative governance can be as crucial as local autonomy in shaping the economic returns to resilience‐enhancing disaster management expenditure. Results support differentiated regional policies leveraging institutional characteristics.