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Post-crisis slowdown in the Korean economy and long-term outlook

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Post-crisis slowdown in the Korean economy and long-term outlook04



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Title Post-crisis slowdown in the Korean economy and long-term outlook
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Material Type Videos
Author(English)

Korea Development Institute

Publisher

[Sejong] : Korea Development Institute

Date 2019-07
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < General
Economy < Economic Conditions
Holding Korea Development Institute
License

Abstract

Korea’s economic growth rate dropped to a yearly average of 3% in the 2010s, raising concerns over growth potential. The economic growth rate is an indicator for the growth in the sum of all products and services that are produced by a country. As total output is determined by labor, capital input and productivity, we are able to see the contribution rate of each factor to economic growth. Accordingly, KDI conducted an analysis of the contribution of production factors to the decline in economic growth. It was found that there were no meaningful changes in labor input while a slowdown was seen in physical capital and total factor productivity or TFP. Declines were also evident in these two factors in the per capita economic growth rate, implying that the value-added created by and the labor productivity of an individual has also dropped. The decline in physical capital contribution is often seen when an economy reaches maturity. In Korea, this means that the downtrend in TFP growth was the major driver of the fall in growth, and not that investments have stagnated.