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The role of ICT productivity in Korea-Japan multifactor CES productions and trades

Author

Listed:
  • Kim, Jiyoung
  • Nakano, Satoshi
  • Nishimura, Kazuhiko

Abstract

In this paper, we examine the economic impact of information and communication technology (ICT) innovation, under the general equilibrium framework, with empirically estimated constant elasticity of substitution (CES) production frontiers. Innovation can generate not only productivity growth and price changes but also changes in the economic structure of production and trade patterns, eventually increasing social welfare. To study such impact of ICT innovation, we construct a bilateral general equilibrium model, spanning 350 commodities and sectors with trades between Japan and the Republic of Korea (South Korea). We estimate all CES parameters from published statistics such as the linked input–output tables and Comtrade databases. A small exogenous productivity shock in ICT is examined in terms of potential price reduction in all commodities in both countries.

Suggested Citation

  • Kim, Jiyoung & Nakano, Satoshi & Nishimura, Kazuhiko, 2019. "The role of ICT productivity in Korea-Japan multifactor CES productions and trades," IDE Discussion Papers 747, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper747
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    File URL: https://ir.ide.go.jp/?action=repository_action_common_download&item_id=50841&item_no=1&attribute_id=22&file_no=1
    File Function: First version, 2019
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    Citations

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    Cited by:

    1. Lee, Jong-Wha & Song, Eunbi & Kwak, Do Won, 2020. "Aging labor, ICT capital, and productivity in Japan and Korea," Journal of the Japanese and International Economies, Elsevier, vol. 58(C).

    More about this item

    Keywords

    CES Production Function; Linked Input-output Tables; Information and Communication Technology; Armington Elasticities; General Equilibrium Modeling; Input-output tables;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • F19 - International Economics - - Trade - - - Other

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