Productivity growth in Korea: efficiency improvement or technical progress?

Abstract

This paper shows that the productivity gains in Korean manufacturing are mostly from efficiency improvement rather than from technical progress. These findings are contrary to those of previous sectoral studies of Korean and Taiwanese manufacturing, but are consistent with those of cross-country studies. Regression results show that both domestic and foreign R&D played an important role in increasing efficiency and technical progress in Korean manufacturing. However, domestic R&D has more effect on technical progress, while foreign R&D has played a relatively stronger role in efficiency improvement.