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KDI Journal of Economic Policy

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KDI Journal of Economic Policy, November 2017
Language English
SUMMARY Aggregate Productivity Growth in Korean Manufacturing: The Role of Young Plants / Minho Kim

I measure aggregate productivity growth in manufacturing between 1995 and 2013 as defined by Petrin and Levinsohn (2012). I decompose aggregate productivity growth into technical efficiency improvements, resource reallocations, and net entry effects. I find that aggregate productivity growth slows down after 2004 and that the rapid drop in technical efficiency growth contributed most to the decline. In this paper, I focus on the role of young plants with regard to productivity growth of Korean manufacturing. I show that young plants account for nearly half of APG (48%), while their value-added share is 14 percent on average between 1995 and 2013. I find that productivity growth at young plants has been declining for the last ten years. The lower growth of continuing young plants contributes to this trend. These results stress the important role of young plants in aggregate productivity growth and imply that understanding the dynamics of young plants is necessary to form effective start-up policies.

Contributions of Public Investment to Economic Growth and Productivity / Sungmin Han

Whereas a large variety of previous studies show mixed results regarding the relationship between public investment and economic outcome, several studies have been conducted on related issues in Korea. The present study deals with the effect of public investment in Korea on economic growth and productivity. Using administrative data, it exploits three different methodologies: the total factor productivity approach, production function approach, and stochastic frontier production function approach. The results of this study show that public investment has a statistically significant effect on economic growth. However, it contributes little to enhance productivity. It is explained that there exists inefficiency of production in the Korean economy. These findings indicate that public investment has played a central role in the direct input factor and not in indirect role in Korea. Thus, it is necessary for public investment policies to concentrate on enhancing the efficiency of the Korean economy.

Economic Effects of Regulatory Reform in Korea / Jungwook Kim

This paper adapts the World Bank Regulatory Quality Index (RQI), which is produced annually to provide a better understanding of the effects of regulatory reforms, instead of the Production Market Regulation (PMR) indicators, which are published every five years. We find that 9.9 to 36.0 billion USD worth of regulatory cost could be reduced if the regulatory quality in Korea improves to the level of the OECD average considering that the total burden of regulation in Korea is estimated to range from 2.2 to 357.4 billion USD. The estimated reduction in the regulatory cost accounts for roughly 0.76 to 2.47% of Korea’s GDP in 2013, underscoring the importance of regulatory reforms for the Korean economy. This paper introduces a new method with which to examine the distribution of regulatory costs across different industries and firm sizes. This alternative method is largely consistent with the conclusions reached by other studies, specifically that small firms typically bear a disproportionate regulatory burden.

The Effects of Institutions on the Labour Market Outcomes: Cross-country Analysis / Yong-seong Kim and Tae Bong Kim

This paper re-examines the impacts an institutional arrangement may have on labour market outcomes such as the employment and unemployment rates. Based on the results from a generalized econometric model, the generosity of unemployment insurance benefits, organized labour and active labour market policy have effects on a labour market in line with previous findings. However, taxes on labour and the degree of employment protection are found to affect neither the employment rate nor the unemployment rate. Thus, some findings in this paper validate earlier findings, whereas others do not.
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