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Korean augmented production function : The role of services and other factors in Korea's economic growth of industries

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  • Korean augmented production function
  • Sanidas, Elias; Par, Hyeri
  • Chung-Ang University(Economic Research Institute)


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Title Korean augmented production function
Similar Titles
Sub Title

The role of services and other factors in Korea's economic growth of industries

Material Type Articles
Author(English)

Sanidas, Elias; Par, Hyeri

Publisher

[Seoul]:Chung-Ang University(Economic Research Institute)

Date 2011-03
Journal Title; Vol./Issue Journal of Economic Development:vol. 36(no. 1)
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Conditions
Industry and Technology < General
Holding Chung-Ang University

Abstract

It is well known that economic growth and services have a positive association. In particular, the more developed an economy is, the higher the share of the services sector. While most research has focused on service output, this study also examines services as input. Recently, the need for taking services a separate input in the production function has come to the fore. Therefore, the OECD productivity manual generalizes the KLEM model to KLEMS (capital-labor-energy-materials-services) model by including the services as an input. We use KLEMS data in this study. In addition, we augmented the standard production function with other variables such as the inventory to sales ratio, R&D to sales ratio, education expenditure to sales ratio, and the debt to sales ratio. The findings are encouraging and lead us to formulate some important conclusions; for example, after the 1998 Financial Crisis, the Korean economy has increased in efficiency and this is partly due to an increased importance of services as both output and input.