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The Productivity Dispersion of the Korean Manufacturing Industry and Macroeconomic Allocation Efficiency Measures

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  • Kim, Jong Il
  • Kang, Dong Keun

Abstract

According to the macroeconomic allocation efficiency measure, particularly based on the methodology of Hsieh and Klenow (2009), Korea's allocation efficiency in the manufacturing industry deteriorated in the 2000s compared to that in the 1990s. This study compares the potential TFP gain when resource allocation is removed, an indicator of allocation inefficiency according to Hsieh and Klenow (2009), and the productivity dispersion in the Korean manufacturing industry. It finds that the TFP gain may be better explained by TFP dispersions rather than proxies related to factors of distortion. The findings imply that we should investigate the sources of TFP dispersion rather than the sources of distortion to explain increases in the TFP gain (or TFP loss), which is considered as allocation inefficiency in the literature.

Suggested Citation

  • Kim, Jong Il & Kang, Dong Keun, 2015. "The Productivity Dispersion of the Korean Manufacturing Industry and Macroeconomic Allocation Efficiency Measures," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 37(3), pages 31-53.
    • Handle: RePEc:zbw:kdijep:v:37:y:2015:i:3:p:31-53
    DOI: 10.23895/kdijep.2015.37.3.31
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    References listed on IDEAS

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    1. Abhijit Banerjee & Kaivan Munshi, 2004. "How Efficiently is Capital Allocated? Evidence from the Knitted Garment Industry in Tirupur," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(1), pages 19-42.
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    3. Flora Bellone & Jérémy Mallen-Pisano, 2013. "Is Misallocation Higher in France than in the United States?," GREDEG Working Papers 2013-38, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
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    More about this item

    Keywords

    Misallocation; Total Factor Productivity (TFP); Productivity Dispersion;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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