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Productivity, output, and failure : A comparison of Taiwanese and Korean manufacturers

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  • Productivity, output, and failure
  • Aw, Been Yan; Chung, sukkyun; Roberts, Mark J.
  • National Bureau of Economic Research


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Title Productivity, output, and failure
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Sub Title

A comparison of Taiwanese and Korean manufacturers

Material Type Reports
Author(English)

Aw, Been Yan; Chung, sukkyun; Roberts, Mark J.

Publisher

Cambridge:National Bureau of Economic Research

Date 2002-02
Series Title; No NBER Working Paper Series / 8766
Pages 47
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Original Format pdf
Subject Industry and Technology < Manufacturing
Holding National Bureau of Economic Research

Abstract

Industry cost and demand conditions can vary across countries leading to differences in industry
market structure, including the distribution of output and productivity across firms and the magnitude of
entry and exit flows. It has been argued that despite many outward similarities, two of the most
successful Southeast Asian economies, Taiwan and South Korea, differ systematically in the nature of
entry costs, the competitiveness of output markets, and the working of their capital markets. In this paper
we use micro panel data for producers in seven two-digit manufacturing industries in South Korea and
Taiwan and identify a number of systematic differences in industry structure between the two countries. Our empirical findings indicate that, relative to their counterparts in Korea, Taiwanese industries are characterized by less concentrated market structure, more producer turnover, smaller within-industry productivity dispersion across producers, a smaller percentage of plants operating at low productivity levels, and smaller productivity differentials between surviving and failing producers. These patterns are consistent with strong competitive pressures in Taiwan that lead to market selection based on productivity differences. In contrast, the patterns in Korea are consistent with the presence of some impediments to exit or entry that insulate inefficient producers from market pressures.

User Note

The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research.