The Republic of Korea's economic growth and catch-up: Implications for the People's Republic of China

Arbeitspapier

This study investigates the economic growth and catch-up of the Republic of Korea over the past half-century. The gap of output per worker between the Republic of Korea and United States has decreased rapidly, as the Republic of Korea's lower per capita income, relative to its potential level, has led to higher growth, confirming the prediction of a conditional convergence theory. Cross-country regression further suggests that the Republic of Korea's catch-up to the United States is also attributable to strong investment, lower fertility, greater trade openness, and improvements in human resources and rule of law, while improvement in democracy tends to slow the pace of the catch-up. Yet as the Republic of Korea catches up to the United States and its steady-state level in per worker output, it is subject to growth slowdown unless it improves institutions and policy factors. While manufacturing- and export-oriented development served the Republic of Korea's success well, poor productivity performance in the services sector has hampered overall productivity growth. The Republic of Korea's experience implies that the People's Republic of China's potential growth rates are likely to slow in the coming decades due to the convergence effect and with the rebalancing toward a domestic consumption and services-based economy. The People's Republic of China needs to upgrade its institutional quality and improve productivity, particularly in its services sector, to sustain strong growth.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ADBI Working Paper ; No. 571

Classification and Topics

• Classification: Wirtschaft ; Macroeconomic Analyses of Economic Development ; Industrialization; Manufacturing and Service Industries; Choice of Technology ; International Linkages to Development; Role of International Organizations ; Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence ; Economywide Country Studies: Asia including Middle East ; Comparative Studies of Countries
• Subject: Korea export development ; productivity growth ; institutional quality ; economic convergence

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lee, Jong-Wha
• Event: Veröffentlichung
• (who): Asian Development Bank Institute (ADBI)
• (where): Tokyo
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/161447
• Last update: 10.03.2025, 11:43 AM CET