Total Factor Productivity of Korean Manufacturing Industries: Comparison of Competing Models with Firm-Level Data

Donghyun Oh (), Almas Heshmati () and Hans Lööf ()
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Donghyun Oh: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden, http://cesis.abe.kth.se/

No 201, Working Paper Series in Economics and Institutions of Innovation from Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: This paper presents the parametric estimation of the rates of technical change and total factor productivity (TFP) growth of 7,462 Korean manufacturing firms for the period 1987 to 2007. Two alternative formulations of technical change measured by the time trend and the general index approaches are estimated with panel data models assuming flexible functional forms. Several extensions of each approach are also considered and their benefits and limitations are discussed. In addition to making estimates of the TFP growth and its decomposition, the paper compares the parametric TFP growth measure with the non-parametric Solow residual serving as a benchmark. Several hypotheses related to technology level, firm sizes, industrial sectors, skill biased technological change and macroeconomic and industrial policies are tested to explain the growth patterns and heterogeneity in technical change, input biases and TFP growth rates. Using second regression analysis, the paper explores the determinants of TFP growth and their policy implications.

Keywords: Total factor productivity; technical change; manufacturing industry; determinants of growth (search for similar items in EconPapers)
JEL-codes: C23 C51 D24 L25 L60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-eff and nep-sbm
Date: 2009-10-12
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