Has Korean Manufacturing Production Reached Its Full Potential?

Renuka Mahadevan ()

Economic Analysis and Policy (EAP), 2002, vol. 32, issue 2, pages 251-260

Abstract: This paper sheds some light on the relevance of the assimilation view for South Korea, whereby successful mastering of foreign technology in its adoption and use would lead to firms producing at their full potential output. This is investigated by studying the technical efficiency performance of firms in four manufacturing industries using firm-level data from 1980-94 and applying the random coefficient frontier model. Empirical results show that the assimilation view holds true in the heavy industries but not in the light industries. Although the rate of technical efficiency varied within the two industries, the variation was statistically significant only for firms in the heavy industries since the late 1980s.

Date: 2002
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