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Rapid Economic Growth with Increasing Returns to Scale and Little or No Productivity Growth

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  • Park, Seung-Rok
  • Kwon, Jene K

Abstract

Total factor productivities for 28 Korean manufacturing sectors were estimated jointly with markups, scale economies, and the capacity utilization rate using the short-run generalized Leontief cost function. Concavity conditions necessary for the cost function to be well-behaved and consistent with a firm's optimizing behavior were imposed on the estimation by way of Bayesian inference. The study finds: (1) the superiority of the short-run equilibrium model over the long-run model and of the short-run generalized Leontief cost function over the translog cost function; (2) market imperfection; (3) the existence of scale economies; and (4) biases in the traditional TFP measures. The study also suggests that a rapid growth of output is possible with negative TFP growth. Copyright 1995 by MIT Press.

Suggested Citation

  • Park, Seung-Rok & Kwon, Jene K, 1995. "Rapid Economic Growth with Increasing Returns to Scale and Little or No Productivity Growth," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 332-351, May.
  • Handle: RePEc:tpr:restat:v:77:y:1995:i:2:p:332-51
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    Cited by:

    1. Bloch, Harry & Tang, Sam Hak Kan, 2007. "The effects of exports, technical change and markup on total factor productivity growth: Evidence from Singapore's electronics industry," Economics Letters, Elsevier, vol. 96(1), pages 58-63, July.
    2. Kiyohiko G. Nishimura & Masato Shirai, 2000. "Fixed Costs, Imperfect Competition and Bias in Technology Measurement: Japan and the United States," CIRJE F-Series CIRJE-F-97, CIRJE, Faculty of Economics, University of Tokyo.
    3. Lullit Getachew & Robin C. Sickles, 2007. "The policy environment and relative price efficiency of Egyptian private sector manufacturing: 1987|88-1995|96," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(4), pages 703-728.
    4. Jhang, Kwang-soo, 1996. "Productivity performance in Korean manufacturing industries," ISU General Staff Papers 1996010108000017622, Iowa State University, Department of Economics.
    5. Randall Morck & Bernard Yeung, 2017. "East Asian Financial and Economic Development," NBER Working Papers 23845, National Bureau of Economic Research, Inc.
    6. Brandt, Nicola, 2007. "Mark-ups, economies of scale and the role of knowledge spillovers in OECD industries," European Economic Review, Elsevier, vol. 51(7), pages 1708-1732, October.
    7. Mahadevan, Renuka & Kim, Sangho, 2003. "Is output growth of Korean manufacturing firms productivity-driven?," Journal of Asian Economics, Elsevier, vol. 14(4), pages 669-678, August.
    8. Girma, Sourafel & Görg, Holger, 2002. "Foreign Ownership, Returns to Scale and Productivity: Evidence from UK Manufacturing Establishments," CEPR Discussion Papers 3503, C.E.P.R. Discussion Papers.
    9. Thomsen, Thomas, 2000. "Short cuts to dynamic factor demand modelling," Journal of Econometrics, Elsevier, vol. 97(1), pages 1-23, July.
    10. Karagiannis, Giannis & Tzouvelekas, Vangelis, 2001. "Self-Dual Stochastic Production Frontiers and Decomposition of Output Growth: The Case of Olive-Growing Farms in Greece," Agricultural and Resource Economics Review, Cambridge University Press, vol. 30(02), pages 168-178, October.
    11. Kwack, Sung Yeung & Sun, Lee Young, 2005. "Economies of scale, technological progress, and the sources of economic growth: case of Korea, 1969-2000," Journal of Policy Modeling, Elsevier, vol. 27(3), pages 265-283, April.
    12. Yin Xia & Steven Buccola, 2002. "Size, cost, and productivity in the meat processing industries," Agribusiness, John Wiley & Sons, Ltd., vol. 18(3), pages 283-299.
    13. Ian Keay, 2001. "An Empty Promise: Average Cost Savings and Scale Economies Among Canadian and American Manufacturers, 1910-1998," Working Papers 1002, Queen's University, Department of Economics.
    14. Emi Nakamura & Masao Nakamura (presenter) & Takanobu Nakajima, 2004. "Measuring Firms’ R&D Effects on Technical Progress: Japan in the 199," Econometric Society 2004 Far Eastern Meetings 414, Econometric Society.
    15. Yoo, Jang-Hee, 1996. "Asia's economic growth in the next decade: Opportunities and constraints," Journal of Asian Economics, Elsevier, vol. 7(3), pages 393-406.
    16. Gopinath Pradhan & Kaustuva Barik, 2004. "Sustainability of Output Growth in Indian Manufacturing: A Decomposition Analysis of Selected Industries," Microeconomics 0405003, EconWPA.
    17. Patalinghug, Epictetus, 2000. "A Review of the Components of the Medium-Term National Action Agenda for Productivity: An Integrative Report," Discussion Papers DP 2000-25, Philippine Institute for Development Studies.
    18. Randall Morck & Bernard Yeung, 2017. "East Asian Financial and Economic Development," Working Papers id:12112, eSocialSciences.
    19. Chia-Hung Sun, 2005. "Productivity growth in East Asian manufacturing: a fading miracle or measurement problem?," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(1), pages 1-19.
    20. Patalinghug, Epictetus, 2001. "A Review of the Components of the Medium-Term National Action Agenda for Productivity (MNAAP) 2000-2004," Research Paper Series RPS 2001-02, Philippine Institute for Development Studies.
    21. Xia, Yin & Buccola, Steven T., 2000. "Technological Performance In Meat Processing And Implications For Policy," 2000 Annual meeting, July 30-August 2, Tampa, FL 21862, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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