The Decline of Korean Industrial Vitality as Shown by the Structural Change Index

Geonwoo Lee ()
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Geonwoo Lee: Korea Institute for Industrial Economics and Trade, Postal: Sejong National Research Complex, Korea Institute for Industrial Economics and Trade, 370 Sicheong Dae-ro C-dong 8-12F 30147, Republic of Korea, http://www.kiet.re.kr

No 21/10, i-KIET Issues and Analysis from Korea Institute for Industrial Economics and Trade

Abstract: The proportion of added value in Korean manufacturing has remained stable without major changes since the 1990s, and the same was true for the nation’s service sector in the 2010s. But the structural change index (SCI), which measures the vitality or dynamism of industry as a whole, shows that the extent of structural change in domestic sectors has steadily declined over time. The continued decline in dynamism could sap Korean industry of its vitality and have a negative impact on productivity and economic growth through owing to less efficient resource distribution. This paper conducts an empirical analysis of the 30 member countries of the Organization for Economic Cooperation and Development (OECD). The findings show a relatively strong positive correlation between SCI levels and the rate of economic growth. The paper describes implications for industrial policy carried by these findings.

Keywords: economic growth; growth; growth policy; structural change; structural change index; SCI; Korea; resource distribution; resource efficiency; restructuring; corporate restructuring; macroeconomics; macroeconomy; industrial policy (search for similar items in EconPapers)
JEL-codes: E01 E17 E30 E32 E37 E61 L00 L10 L11 L16 L22 L25 (search for similar items in EconPapers)
Pages: 13 pages
Date: 2021-05-24
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Persistent link: https://EconPapers.repec.org/RePEc:ris:kietia:2021_010

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