Information Technology Investment and Productivity Growth in Korea

Jong-Il Kim
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Jong-Il Kim: Dongguk University

Korean Economic Review, 2004, vol. 20, 95-113

Abstract: This study analyzes the effect of IT investment on productivity growth based on Korean firm level data in 1996-2000. Empirical findings support the hypothesis that IT investment enhanced productivity by increasing value-added and saving ordinary capital and labor. Installed IT capital is estimated to be valued in the financial market much higher than the acquisition price. It implies that IT investment accompanies creation of unmeasurable intangible assets. Taking this into account, the contribution of IT investment to economic growth could be greater than suggested by conventional growth accounting. Strong structural reform after recent economic crisis might have helped IT investment to have a substantial impact on firm performance.

Keywords: Information Technology; Total Factor Productivity; Intangible Capital; Growth Accounting (search for similar items in EconPapers)
JEL-codes: O3 O4 (search for similar items in EconPapers)
Date: 2004
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