Structural shift and increasing variety of Korea, 1960-2010 : Empirical verification of the economic development model by the creation of new sectors

In this paper, we examine the experiences of Korean economy to verify the theoretical knowledge of economic development and structural change. To demonstrate the generalized hypotheses in structural changes, input-output tables of Korea, from 1960 to 2010, are analyzed. Our interest in taking a time series form of Input-output tables originates from the following two questions. Firstly, we inquire whether the change of Korean industrial structure has been followed a certain pattern of structural shift as well as increasing variety. Secondly, if so, it is questioned how the meso-level conditions for the economic development could be explained out of such a pattern. To complete the set of answers, we start from adopting a model of the economic development by the creation of new sectors, TEVECON model, as our theoretical framework. Using this growth model, it is preliminarily experimented how the structural change could impact on the economic development, and then, we figured out how the empirical analysis of Korean economy verifies and more deepens our understandings of the structural change and development. Therefore, this paper contributes to empirically identify the theoretical knowledge of economic development by the emerging of key sectors as well as the creation of new sectors. To complete the set of answers, we start from choosing the model of the economic development by the creation of new sectors, TEVECON, as our theoretical framework. Using this simulation model, it is preliminarily experimented how the different scenarios upon meso-level conditions could impact on the economic development. In the other hand, as analyzing the classification of industries over time and each set of sectoral outcomes and demand-induced outputs, we figured out how the empirical analysis of Korean economy supported and more deepened theoretical understandings of structural change and development. Accordingly, the presented empirical results provide a starting point to expand the model, TEVECON, into a history-friendly model, bridging the gap between the artificial world of formal theories and the real world of historical experiences. In this regard, this paper is the first to identify and enhance empirically the theoretical model of economic development by the creation of new sectors.