Multifactor Productivity in Korea and an International Comparison: Data and Productivity Estimates of the Korea Industrial Productivity Database

Hyunbae Chun ; Hak K. Pyo ; Keun Hee Rhee

Associate Professor, Department of Economics, Sogang University, Seoul 121-742, Korea, Tel: +82-2-705-8515, Fax: +82-2-704-8599 hchun@sogang.ac.kr
Professor, Department of Economics, Seoul National University, Seoul 151-746, Korea, Tel: +82-2-880-6395, Fax: +82-2-886-4231 pyohk@plaza.snu.ac.kr
Senior Researcher, Korea Productivity Center, Seoul 110-751, Korea, Tel: +82-2-724-1054, Fax: +82-2-724-1050 ghlee@kpc.or.kr

JEL Classification: O14, O47

Abstract

The purpose of our study is to identify sources of economic growth for the Republic of Korea, which experienced a financial crisis in 1997 after joining the OECD. We provide estimates of output, input, and productivity based on the newly constructed Korea Industrial Productivity (KIP) database following EU KLEMS project guidelines. We find that Korea’s catch-up process with industrial nations during its period of late industrialization has been predominantly input-led and manufacturing-based. However, following the financial crisis in December 1997, the Korean economy growth seems to have shifted to productivity-led growth. However, lower productivity in the service industries seems to work against a renewed sustainable growth path.

Keywords:

Economic growth, EU KLEMS, Korea Industrial Productivity (KIP) database, Multifactor productivity

Acknowledgments

We are grateful to Michael Denny, Erwin Diewert, Kyoji Fukao, Dongseok Kim, Tsutomu Miyagawa, participants at the 2008 World Congress on National Accounts and Economic Performance Measures for Nations, OECD, the International Conference on Total Factor Productivity Based on KLEMS Industrial Database, and RIETI Workshop on Productivity Database in China, Japan, and Korea, and two anonymous referees for valuable comments and suggestions. We appreciate the research assistance of the EU KLEMS Korea Project Team at Seoul National University: Eunkyung Jeon, Sun Young Jung, and Jungsam Cho. We acknowledge funding from the Korea Productivity Center and the Bank of Korea.

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