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Analysis of Korea’s Long-Term Growth Process and Lessons for Sustainable Development Policy

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  • Hyeok Jeong

    (Seoul National University)

Abstract

This paper analyzes Korea’s growth process, not only rapid but also sustained for six decades at 6% per year. The sources of such growth were balanced among labor market demographic factors, capital investment, human capital accumulation, and productivity growth. However, the main engine of growth evolved sequentially, e.g., labor and human capital factors in the 1960s, capital deepening in the 1970s, and then productivity growth for the following periods. We found that major sources of the six-decade sustained growth were productivity growth and human capital accumulation rather than the expansion of labor force or capital investment. Counterfactual analysis of neoclassical growth model reveals that the accelerated productivity growth after the fast capital deepening was the key to Korea’s long-term growth, avoiding the middle-income trap. Appropriate calibration of the neoclassical growth model allowing time-varying transitional growth parameters explains Korea’s growth experience well and provides useful lessons for sustainable development policy.

Suggested Citation

  • Hyeok Jeong, 2018. "Analysis of Korea’s Long-Term Growth Process and Lessons for Sustainable Development Policy," Korean Economic Review, Korean Economic Association, vol. 34, pages 237-265.
    • Handle: RePEc:kea:keappr:ker-20180701-34-2-06
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    File URL: http://keapaper.kea.ne.kr/RePEc/kea/keappr/KER-20180701-34-2-06.pdf
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    References listed on IDEAS

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    1. Barry Eichengreen & Donghyun Park & Kwanho Shin, 2012. "When Fast-Growing Economies Slow Down: International Evidence and Implications for China," Asian Economic Papers, MIT Press, vol. 11(1), pages 42-87, Winter/Sp.
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    Cited by:

    1. Jeong,Hyeok, 2020. "Productivity Growth and Efficiency Dynamics of Korean Structural Transformation," Policy Research Working Paper Series 9285, The World Bank.

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    More about this item

    Keywords

    Korea’s Development Experience; Long-Term Growth Process; Sustainable Development Policy; Middle Income Trap; Growth Accounting; Productivity; Human Capital;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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