We examine the correlation between aggregate productivity and inefficiencies in the distribution of a production factor, capital. We also discuss how these misallocation of capital is correlated with capital flows. It has been well known that the growth rate of the Korean economy has declined over the past 20 years. Using ORBIS company data, we confirm that the marginal revenue productivity of capital productivity has been continuously rising since 2002. We argue that the pattern signals the rise of capital misallocation, which could hamper the aggregate productivity growth. Furthermore, comparing with other ten countries, we show that the Korean economy exhibits a tendency to show the GDP growth rate decreas with the increase of the dispersion of MRPK(marginal revenue product of capital). Also, the economy tends to show the increase of the dispersion of MRPK(marginal revenue product of capital) when net capital inflows increase. We note that we are abstract from the causality or full dynamic system of the aforementioned macroeconomic variables, which we will remain for the future research.

Preface
Executive Summary

Chapter 1 Introduction
　Section 1 Overview
　Section 2 Allocation of Production Factors and Aggregate Productivity

Chapter 2 Efficiency of Factor Allocation and Aggregate Productivity
　Section 1 Estimation of Marginal Revenue Productivity
　Section 2 Changes in Marginal Revenue Productivity in the Korean Economy
　Section 3 (In)Efficiency of Capital Allocation and Growth Rates: International Panel Analysis

Chapter 3 Capital Flows and (In)Efficiency of Capital Allocation
　Section 1 Capital Flows and (In)Efficiency of Capital Allocation: National Panel Analysis
　Section 2 Capital Flows and (In)Efficiency of Capital Allocation: Focusing on Firms and Their Main Banks in the Korean Economy
　Section 3 Policy Implications

Chapter 4 Conclusion

References
Appendix
ABSTRACT