Hak K. Pyo

Growth Accounting and Productivity Analysis by 33 Industrial Sectors in Korea (1984-2002)

The outstanding economic performance of East Asian countries has been investigated in numerous studies. However, most comparative studies analyze macro-level productivity. In this book, the productivity performance of China, Korea, Japan, Taiwan and the United States are compared at industry level. The work is a result of an international collaborative research project by RIETI (Research Institute of Economy, Trade and Industry), Japan. The total factor productivity growth and level amongst these five countries sheds new light on the industrial competitiveness of growing Asian economies compared to Japan and the United States. In addition, this book provides detailed information on productivity datasets for these five countries.

Estimates of Capital Stock and Capital/Output Coefficients by Industries: Korea (1953–86)

This paper constructs a polynomial-benchmark model to estimate gross and net capital stocks by explicity estimating implicit retirement rates and depreciation rates. The model is applied to Korean data (1953–86) where such data as national wealth survey, national income accounts and industrial census are available. There alternative series of capital stock estimates are generated and compared with previous estimates. It is shown that the use of a pure perpetual-inventory model or a benchmark-year method alone may introduce a significant bias in the measurement of capital stocks for developing economies.

Estimates of Total Factor Productivity, the Contribution of ICT, and Resource Reallocation Effects in Japan and Korea

The purpose of our study is to identify the sources of economic growth based on a KLEMS model for Japan and Korea. We also identify the growth contribution of ICT assets and resource reallocation effects in the two economies. Both Japan and Korea enjoyed high TFP growth in ICT-producing sectors but suffered low TFP growth in ICT-using sectors. For Japan, we find that the main factor underlying the Lost Decade is the slow-down in TFP growth. We also found that Koreas TFP growth was slow until the Asian financial crisis of 1997-1999 but then accelerated after the crisis. It seems that before the crisis, Korea was following a catch-up process with developed economies that was predominantly input-led and manufacturing-based, as documented by Timmer (1999) and Pyo (2001). However, through the drastic economic reform undertaken during the crisis, Korea seems to have shifted to a new phase of economic growth since the end of the 1990s. TFP growth rates, especially those in manufacturing sectors, have substantially increased in post-crisis Korea. Both in Japan and Korea, productivity in service sectors is much lower than in manufacturing. The reason probably is excessive regulation and a lack of competition in service sectors. And these factors seem to have impeded introduction of ICT in service industries. As for ICT capital accumulation, the ICT investment/GDP ratio of Korea is higher than that of Japan. Especially, the speed of ICT accumulation in the ICT sector in Korea is much faster than that in Japan. Both in Japan and Korea, the largest component in ICT investment is computing equipment. In the case of resource reallocation across sectors, the reallocation effect of capital input was negligible or negative for most periods both in Korea and Japan. After the financial crisis of 1997-99, the resource allocation effect of capital in Korea remained negative, although the size of the negative effect declined. On the other hand, the reallocation effect of labor input was positive for most periods both in Korea and Japan.

Inflationary expectations,"endogenous money," and economic growth

Abstract This paper introduces a neoclassical growth model with money in which (1) money is explicitly treated as both a consumer and a producer good, and (2) the money supply is an endogenous factor resulting from real sector changes rather than an exogenous factor determined by the wisdom of the central bank. The major findings include, first, the effect of an increase in money on growth is positive if a real balance effect on production is greater than on consumption, and second, for the economy to stay in the golden-rule path, the rate of growth of per capita real money balances should be equal to the rate of growth of nominal money.

The transition in the political economy of South Korean development

This article analyzes the current transition in the political economy of South Korea in the context of political democratization and economic development. Because South Korea can be regarded as a case in which successful economic growth preceded political democratization, the article reviews the advantage and the disadvantage of late industrialization and its limitations. It discusses rising conflicts of interest among economic agents, labor disputes, and the erosion of international competitiveness. The article also reviews the sociopolitical reform program advanced by the new administration and its ramifications for the economic prospects.The article concludes that the Korean economy will continue to grow but not as fast as it had grown in the past and that the new political environment will play a critical role in determining the characteristics of capitalism in South Korea. The success of future economic development will depend on the stability of the political system and the national capacity to resolve conflict of interests.