Korea's Growth Experience and Long-Term Growth Model
This paper analyzes the Republic of Korea's rapid and sustained growth experience for the past six decades from the perspective of the neoclassical growth model (the workhorse model of the World Bank’s Long Term Growth Model (LTGM) project). O...
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| Format: | Working Paper |
| Language: | English |
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World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/721471510252769303/Koreas-growth-experience-and-long-term-growth-model http://hdl.handle.net/10986/28859 |
| Summary: | This paper analyzes the Republic of
Korea's rapid and sustained growth experience for the
past six decades from the perspective of the neoclassical
growth model (the workhorse model of the World Bank’s Long
Term Growth Model (LTGM) project). Overall, the sources of
Korea's growth were balanced among labor market and
demographic factors, capital investment, human capital
accumulation, and productivity growth. However, the main
engine of growth evolved sequentially, e.g., labor and human
capital factors in the 1960s, capital deepening in the
1970s, and then productivity growth for the following
periods. The major sources of sustained growth over six
decades were human capital accumulation and productivity
growth rather than labor or capital investment. A
counterfactual calibration of the model explains
Korea's actual growth experience well, and shows why
gaps between the model’s predictions and the data arise.
This illustrates that an appropriate calibration of a simple
neoclassical growth model provides useful lessons and tools
for policy makers in developing countries in designing their
national development strategies. |
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