Testing Endogenous Growth in South Korea and Taiwan

UC Davis Working Paper #97-16

Posted: 21 Jul 1997

See all articles by Robert C. Feenstra

Robert C. Feenstra

University of California, Davis - Department of Economics; National Bureau of Economic Research (NBER)

Dorsati Madani

The World Bank

Tzu han Yang

Executive Yuan

Multiple version iconThere are 2 versions of this paper

Date Written: April 1997

Abstract

We evaluate the endogenous growth hypothesis using sectoral data for South Korea and Taiwan. Our empirical work relies on a direct measure of the variety of products from each sector, which can serve as intermediate inputs or as final goods. We test whether changes in the variety of these inputs, for Taiwan relative to Korea, are correlated with the growth in total factor productivity (TFP) in each sector, again measured in Taiwan relative to Korea. We find that changes in relative product variety (entered as either a lag or a lead) have a positive and significant effect on TFP in eight of the sixteen sectors. Seven out of these eight sectors are what we classify as secondary industries, in that they rely on differentiated manufactured inputs, and therefore seem to fit the idea of endogenous growth. Among the primary industries, that rely more heavily on natural resources, we find more mixed evidence.

JEL Classification: F14, O47, O53

Suggested Citation

Feenstra, Robert C. and Madani, Dorsati and Yang, Tzu han, Testing Endogenous Growth in South Korea and Taiwan (April 1997). UC Davis Working Paper #97-16, Available at SSRN: https://ssrn.com/abstract=8646

Robert C. Feenstra (Contact Author)

University of California, Davis - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Dorsati Madani

The World Bank ( email )

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Washington, DC 20433
United States

Tzu han Yang

Executive Yuan

Taiwan

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