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The Decline of Korean Industrial Vitality as Shown by the Structural Change Index

Author

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  • Lee, Geonwoo

    (Korea Institute for Industrial Economics and Trade)

Abstract

The proportion of added value in Korean manufacturing has remained stable without major changes since the 1990s, and the same was true for the nation’s service sector in the 2010s. But the structural change index (SCI), which measures the vitality or dynamism of industry as a whole, shows that the extent of structural change in domestic sectors has steadily declined over time. The continued decline in dynamism could sap Korean industry of its vitality and have a negative impact on productivity and economic growth through owing to less efficient resource distribution. This paper conducts an empirical analysis of the 30 member countries of the Organization for Economic Cooperation and Development (OECD). The findings show a relatively strong positive correlation between SCI levels and the rate of economic growth. The paper describes implications for industrial policy carried by these findings.

Suggested Citation

  • Lee, Geonwoo, 2021. "The Decline of Korean Industrial Vitality as Shown by the Structural Change Index," i-KIET Issues and Analysis 21/10, Korea Institute for Industrial Economics and Trade.
    • Handle: RePEc:ris:kietia:2021_010
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    More about this item

    Keywords

    economic growth; growth; growth policy; structural change; structural change index; SCI; Korea; resource distribution; resource efficiency; restructuring; corporate restructuring; macroeconomics; macroeconomy; industrial policy;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • L00 - Industrial Organization - - General - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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