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Productivity, output, and failure: a comparison of taiwanese and korean manufacturers

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  • Bee Yan Aw
  • Sukkyun Chung
  • Mark J. Roberts

Abstract

We use micro panel data for producers in seven two-digit manufacturing industries in South Korea and Taiwan and identify a number of systematic differences in industry structure between the countries. Our empirical findings indicate Taiwanese industries are characterised by less concentrated market structure, more producer turnover, smaller within-industry productivity dispersion across producers, a smaller percentage of plants operating at low productivity levels, and smaller productivity differentials between surviving and failing producers. These patterns are consistent with strong competitive pressures in Taiwan that lead to market selection based on productivity differences. The patterns in Korea are consistent with the presence of some impediments to exit or entry that insulate inefficient producers from market pressures. Copyright 2003 Royal Economic Society.

Suggested Citation

  • Bee Yan Aw & Sukkyun Chung & Mark J. Roberts, 2003. "Productivity, output, and failure: a comparison of taiwanese and korean manufacturers," Economic Journal, Royal Economic Society, vol. 113(491), pages 485-510, November.
  • Handle: RePEc:ecj:econjl:v:113:y:2003:i:491:p:f485-f510
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    References listed on IDEAS

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    1. Dani Rodrik, 1994. "Industrial Organization and Product Quality: Evidence from South Korean and Taiwanese Exports," NBER Chapters,in: Empirical Studies of Strategic Trade Policy, pages 195-210 National Bureau of Economic Research, Inc.
    2. Good, D. & Nadiri, M.I. & Sickles, R., 1996. "Index Number and Factor Demand Approaches to the Estimarion of Productivity," Working Papers 96-34, C.V. Starr Center for Applied Economics, New York University.
    3. Lucia Foster & John Haltiwanger & C.J. Krizan, 2002. "The Link Between Aggregate and Micro Productivity Growth: Evidence from Retail Trade," NBER Working Papers 9120, National Bureau of Economic Research, Inc.
    4. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932.
    5. Aw, Bee Yan & Chung, Sukkyun & Roberts, Mark J, 2000. "Productivity and Turnover in the Export Market: Micro-level Evidence from the Republic of Korea and Taiwan (China)," World Bank Economic Review, World Bank Group, vol. 14(1), pages 65-90, January.
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    10. Dunne, T. & Roberts, M.J., 1989. "Variation In Producer Turnover Across U.S. Manufacturing Industries," Papers 12-89-2, Pennsylvania State - Department of Economics.
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    16. Levy, Brian, 1990. "Transactions costs, the size of firms and industrial policy : Lessons from a comparative case study of the footwear industry in Korea and Taiwan," Journal of Development Economics, Elsevier, vol. 34(1-2), pages 151-178, November.
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    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • L0 - Industrial Organization - - General

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