The impact of technological change on economic growth in the manufacturing sector of Korea

Abstract

The relationships between technological change and economic growth, and research and development and economic growth in the manufacturing sector of Korea were investigated. This study was based on an analysis of capital and labor input, research and development (R&D) stock, productivity, and output data for the period of 1971-1989.

The effects of technological change and other factor inputs on economic growth were examined using ordinary least squares regression and generalized least squares in the Cobb-Douglas production function. As expected, the results indicated that there is a significant relationship between technological change and output growth. A strong relationship was also found between Research and Development (R&D) and output growth. And the results indicate that R&D stock accumulated domestically has a positive correlation with the stock of imported technology.

The rate of return to R&D investment was estimated at 64 percent and was reduced to 20 percent with consideration of the time lag between R&D investment and the application and commercialization of the R&D innovation. The rate of return to imported technology stock was found larger than that of R&D stock accumulated domestically.

A description of the theoretical framework, the methodology applied, and the detailed results are included.