LONG-RUN DETERMINANT OF KOREAN ECONOMIC-GROWTH - EMPIRICAL-EVIDENCE FROM MANUFACTURING

This paper challenges the recent contrarian view that the phenomenal g rowth of East Asian NICs is fuelled mainly by the accumulation of prod uction inputs not by TFP growth. To appraise this view, we investigate d and re-evaluated South Korean manufacturing growth (1973(Q1)-1993(Q4 )). Using Johansen's cointegrating analysis, our results show that Sou th Korean manufacturing appears to have increasing returns to scale in production technology. The 'learning by doing' effect defined by Luca s (1988) is empirically supported. This effect appears to be observed as a long-run determinant of South Korean manufacturing growth. Conseq uently, South Korean manufacturing growth can be described by an endog enous economic growth model, such as the Lucas (1988) model, contradic ting the contrarian view.