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Taxes, outward orientation, and growth performance in Korea

  • Trela, Irene
  • Whalley, John

This paper uses an applied general equilibrium model to investigate the contribution of outward oriented policies to the earlier years of Korean growth, through induced intersectoral resource transfers and impacts on effort and labor supply in agriculture and manufacturing sectors. What seems to emerge from the model calculations is that one should look beyond tax policy for the main factors underlying strong Korean growth. Model calculations portray the tax component of outward oriented policies as accounting for 6.2 to 7.9 percent of Korean growth between 1962 and 1982, and only 6.7 percent between 1962 and 1972. This paper also emphasizes how, in Korea's extraordinary growth performance since the early 1960s, tax policy has been used in several different ways to meet economic objectives of the time.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 519.

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Date of creation: 31 Oct 1990
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Handle: RePEc:wbk:wbrwps:519
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