Economic growth and productivity: A case study of South Korea

Abstract

The economic performance that South Korea has achieved over the past quarter century is often likened to a ‘miracle’. Recently, much interest has been expressed in the driving forces behind the Korean economic transformation. Using the valueadded measure of output, Christiansen and Cummings have shown that technology measured by TFP accounts for about 43% of Korean economic growth between 1960 and 1973. This figure is considerably high compared with recent major studies on Japanese and Singaporean economic growth. We found that the value-added framework is not appropriate for the description of the structure of the Korean economy and re-examined the sources of Korean economic growth, using the gross-output framework. Surprisingly, it has been discovered that only 7% of real output growth in the manufacturing sector during the 1962–1981 period is attributable to technological progress. These findings parallel those for the Japanese and Singapore economies.