Capital formation and productivity growth in South Korea and Taiwan: realising the catch-up potential in a world diminishing returns
AbstractIn this paper we reconstruct the non-residential capital stock of South Korea and Taiwan based on long-term series of investment in non-residential buildings and machinery and equipment. Secondly, we looked at the impact of capital input measures, using a stock as a well a flow measure of capital, on total factor productivity growth. Finally, to assess the potential for continued catch-up of the emerging economies towards productivity levels of the more advanced countries, we analyse capital-output ratios and the change in comparative levels of capital intensity and labour productivity. For both countries we find a rapid growth of the capital stock for the total economy and for manufacturing, with growth rates that peaked between the mid-1960s and the mid-1980s. In particular with capital inputs measured in terms of service flows, total factor productivity growth is low up to the mid 1980s. Since then TFP growth slightly improved which is related to the slowdown of labour input growth. Capital-output ratios continued to rise for the total economy. For manufacturing we found a strong rise in capital-output ratios in particular since the 1980s. In terms of comparative levels, there are still large gaps between the two East Asian countries and the USA in terms of capital-labour ratios and labour productivity. This indicates that despite the diminishing returns to capital goods, especially in manufacturing, opportunities for further growth on basis of accumulation are still far from exhausted. This remaining catch-up potential ought to be realised by complementing capital accumulation with productivity growth.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Groningen, CCSO Centre for Economic Research in its series CCSO Working Papers with number 200003.
Date of creation: 2000
Date of revision:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Allen, Robert C., 2012. "Technology and the great divergence: Global economic development since 1820," Explorations in Economic History, Elsevier, vol. 49(1), pages 1-16.
- Kang-Kook Lee & James Crotty, 2004. "Was the IMF's Imposition of Economic Regime Change Justified? A Critique of the IMF's Economic and Political Role in Korea During and After the Crisis," Working Papers wp77, Political Economy Research Institute, University of Massachusetts at Amherst.
- Robert Allen & Robert C. Allen, 2011. "Technology and the Great Divergence," Economics Series Working Papers 548, University of Oxford, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joke Bulthuis).
If references are entirely missing, you can add them using this form.