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The Impact of Technical Efficiency on Productivity Growth: Evidence from the Korean Pharmaceutical Industry

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  • Mikyung Yun

Abstract

This study examines the effects of technological capability, technological spillovers, and technological gap on firm‐level productivity growth in the Korean pharmaceutical industry over the period 2000‐2023. Utilizing the generalized true random effects (GTRE) stochastic frontier analysis, this article estimates technical efficiency to serve as a proxy for the technological gap. The results indicate that technological divergence is the primary driver of inter‐firm productivity polarization, with limited evidence of technological spillovers from frontier firms to laggards. These findings support the low technological capability hypothesis over the Schumpeterian catch‐up hypothesis, which posits convergence through innovation diffusion. The study further highlights that, even at the frontier, intra‐firm technological diffusion can be sluggish under conditions of rapid technological change. It underscores the importance of intra‐firm diffusion, characterized by distinct mechanisms from inter‐firm diffusion, as a key determinant of productivity growth alongside inter‐firm technological divergence.

Suggested Citation

  • Mikyung Yun, 2025. "The Impact of Technical Efficiency on Productivity Growth: Evidence from the Korean Pharmaceutical Industry," The Economic Record, The Economic Society of Australia, vol. 101(S1), pages 26-49, July.
    • Handle: RePEc:bla:ecorec:v:101:y:2025:i:s1:p:26-49
    DOI: 10.1111/1475-4932.70001
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