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Productivity Growth and Efficiency Dynamics of Korea’s Structural Transformation

March 7, 2019

DECRG Kuala Lumpur Seminar Series

  • This paper documents the sources of Korea’s economic growth and the associated productivity growth and the efficiency dynamics during its process of structural transformation for the 1970-2016 period. We find that the input-driven growth and structural changes contributed to the early take-off stage of growth in 1970s. However, the growth regime switched to the productivity-driven one (mainly engineered by the industry sector) for the following three decades which was the reason behind Korea’s sustained growth and the escape from the middle-income trap.

    The TFP growth and human capital accumulation in agricultural sector contributed to promoting structural transformation. The efficiency dynamics measured by the wedges suggest the biased allocation of labor and land toward agriculture relative to industry and the biased allocation of capital toward industry relative to agriculture. The former inefficiency worsened while the latter improved during our sample period. The intertemporal wedge indicates Korea’s status of overinvestment. The magnitude of the distortion of the inter-sectoral allocation is largest for land and it has increased fast. The degrees and directions of the inter-sectoral and intertemporal efficiency wedges change over time, seemingly in response to growth and regulation policies and also to the macroeconomic shocks.

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  • Hyeok Jeong

    Hyeok Jeong, Ph.D. from the University of Chicago, worked as a professor at the Economics Departments of University of Southern California and Vanderbilt University in the United States, at the National Graduate Institute for Policy Studies (GRIPS) in Japan, and also at the KDI School of Public Policy and Management in Korea, before he joined the faculty of Graduate School of International Studies at the Seoul National University in 2015, where he works now. Professor Jeong was a visiting scholar at the University of Chicago, at UCLA, and also at the Institute of Empirical Macroeconomics of the Federal Reserve Bank of Minneapolis. He also worked at World Bank as a Consultant Economist and served as the Director of Development Research Division of Center for International Development at KDI.

    Professor Jeong's main research interests include growth and development, human capital, income distribution dynamics in relation to financial deepening and labor market issues. His recent research agenda include firm dynamics and international trade, higher education reform, Korean development experience, North Korean economy, and development cooperation issues such as knowledge sharing, development finance, and the design of triangular cooperation for international development.



  • WHEN: Thursday, March 7, 2019; 9.30- 11.00AM
  • WHERE: World Bank Malaysia Office, Level 3, Sasana Kijang, No. 2, Jalan Dato’ Onn
  • RSVP: Kindly RSVP by Wednesday, March 6, 2019