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Seoul Journal of Economics
[ Article ]
Seoul Journal of Economics - Vol. 21, No. 1, pp.93-139
ISSN: 1225-0279 (Print)
Print publication date 29 Feb 2008
Received 09 Oct 2007 Revised 11 Feb 2008

Total Factor Productivity of the Korean Firms and Catching up with the Japanese Firms

Moosup Jung ; Keun Lee ; Kyoji Fukao
Doctor, Department of Economics, Seoul National University, Seoul 151-746, Korea econ@snu.ac.kr
Professor, Department of Economics, Seoul National University, Seoul 151-746, Korea, Tel: +82-2-880-6367 kenneth@snu.ac.kr
Professor, Institute of Economic Research, Hitotsubashi University, Japan k.fukao@srv.cc.hit-u.ac.jp

JEL Classification: D24, L25, O53, O57

Abstract

This paper measured the Total Factor Productivity (TFP) of all listed firms in Korea from 1984 to 2005 and compared this TFP of Korean firms with that of Japanese firms. This study used the chain-linked index number method developed by Good et al. (1999) to find that the average TFP of Korean firms grew about 44.1% between 1984 and 2005, with 2.1% annual growth rates. The catch-up index of Korean firms with Japanese firms is defined at an individual firm level for the first time among existing literature. Through this comparison analysis, the researchers found that there were four patterns of catching up methods practiced by Korean firms in closing in on the Japanese firms. These patterns were over catch-up, just catchup, under catch-up, and reverse catch-up.” Furthermore, the researchers found that the number of under catch-up and reverse catch-up industries was more than 40% of the firms subjected in the study. In contrast, only 10.1% of all the Korean listed firms and 8.7% of total sales of all the listed firms surpassed Japanese firms in terms of TFP in 2004. Also, the catch-up performance was quite better in bigger firms, which is indicative of polarization in TFP catch-up performance.

Keywords:

Catch-up, Productivity, Korea, Japan, Polorization

Acknowledgments

This is the revised version of the paper which was presented at the 2007 Seoul Journal of Economics International Symposium, held in Seoul. This study uses the international database developed by the international research team led by Kyoji Fukao, jointly sponsored by the Hitotsubashi University, Nihon University, and Seoul National University.

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