TECHNOLOGICAL CHANGE AS A SERIES OF LOCALIZED TECHNICAL GAINS:  EVIDENCE FROM KOREA, SINGAPORE, AND TAIWAN

by Ghunsu Park and Pham Hoang Van, University of Missouri

ABSTRACT

Many one-sector aggregate growth accounting exercises done for the countries of East Asia have concluded that the high rates of output growth are mostly accounted for by capital accumulation and little technological gain.  If efficiency gains in specific sectors bring about capital investments in those sectors, then the conclusions of these studies can be misleading.  This paper provides a graphical conceptualization of how localized technological gains leading to capital accumulation can be detected by comparing the marginal rates of substitutions implied by an aggregate growth-accounting exercise with market factor price ratios.  This methodology is applied to industry data from Taiwan and S. Korea.  The evidence suggests that localized technology progress was present in three distinct episodes over the period 1972-1992.

Link to Paper (PDF):

http://www.missouri.edu/~phamv/papers/Local_Tech_Gains.pdf