The estimation of total factor productivity of IT industry in Korea

Abstract

In the age of technology competition, a lot of capital and labor of high class have been invested in the information and telecommunication(IT) industry since it was considered as an important infrastructure of future economy growth in Korea. Due to such a great investment, IT industry in Korea have been growing very rapidly. However the contribution of technological advance and accumulation to the output growth of IT industry has not been investigated so far. In this study, the total factor productivity of overall manufacturing industry and IT manufacturing industry in 80``s and 90``s were estimated respectively. We used the growth accounting model. The contributions of technological advances in IT manufacturing and non-IT manufacturing sectors were comparatively analyzed. The major results found in this study can be summarized as follows: First, IT manufacturing industry in 80``s recorded high growth rate, but the growth rate of TFP was not more than the average of non-IT sectors. More specifically, while the growth rate of output of IT sector in 80``s was about two times more than that of non-IT sectors, the growth rate of TFP of IT sectors was estimated less than that of non-IT sectors. This result can be interpreted that the growth of IT sectors in 80``s was not achieved by technological advance or innovation, but by the increased investment of inputs such as labor, capital, and intermediary. Second, although the growth rate of IT manufacturing sectors in 90``s became decreased compared with in 80``s, the growth rate of TFP of IT sectors in 90``s was higher than that in 80``s. Also it was much higher than the growth rate of TFP of non-IT sectors in 90``s. But this success in 90``s has still the limit since contribution of TFP to output growth of IT sectors in 90``s did not reached that of non-IT industry in 90``s. Third, in spite of technology intensive characteristics of IT sectors, the growth of IT industry so far was achieved by the massive inve...