Hak K. Pyo (Seoul National University)

Hyunbae Chun (Sogang University)

Keun Hee Rhee (Korea Productivity Center)

The First World KLEMS Conference August 19-20, 2010Harvard University

Korea KLEMS: History

• Industry-level Database in Korea before KIP2007 DB

– KDI (2004; 29 industries)

– Pyo et al. (2005; 33 industries)

• First KLEMS Database for ICPA(International Comparison of Productivity among Asian Countries) Project

2

Korea KLEMS: History

– Launched by RIETI (33 industries for China, Korea, Japan, Taiwan and the United States, 1980~2000)

– Published in Productivity in Asia, edited by Jorgenson, Kuroda and Motohashi, Edward Elgar (2007)

– “Growth Accounting and Productivity Analysis by 33 Industrial Sectors in Korea (1984-2002)” by Pyo, Rhee and Ha

3

Korea KLEMS: History

• Korea Industrial Productivity (KIP) Database Project in 2007

– Following EU KLEMS Manual (Timmer et al., 2007)

– 72 industries for 1970-2005

4

KIP Database: Variables Construction

• Gross output (GO)– Bank of Korea internal data

• Labor Input– Employment, Hours, Compensation– Composition: 18 types = Gender(2) x Age (3)

x Education (3) for 15 industries

• Intermediate Input– Use U & V tables to divide intermediate inputs

into E,M,S5

Capital Input

KIP EUKLEMS

• 1970–1997 – National Wealth Survey (1968, 1977, 1987, 1997)

• 1998–2007 – Modified Perpetual inventory method – Country-specific depreciation rates (Pyo, 2003)

•Perpetual inventory method (PIM)

• Same depreciation rates for all EU countries

6

Estimated Initial Capital Stock by Dadkhah and Zahedi(1986) Method and K_EUKLEMS

Australia Austria UK Finland Germany

Initial year 1970 1976 1970 1970 1991

D-Z Method 796,984 326,299 1,051,334 123,647 6,430,996

K_EUKLEMS 650,802 375,181 812,482 100,231 5,480,048

Difference(%) 22.5% -13.0% 29.4% 23.4% 17.4%

Italy Netherlands Japan Korea SloveniaCzech

Republic

Initial year 1970 1970 1973 1977 1995 1995

D-Z Method 1,252,831 432,994 464,920,978 278,071,758 25,718 10,599,354

K_EUKLEMS 1,143,575 548,984 452,780,704 119,339,604 21,391 6,501,090

Difference(%) 9.6% -21.1% 2.7% 133.0% 20.2% 63.0%

Source: Pyo(2008) 7

Percentage Difference between Estimated Initial Capital Stock by Dadkhah and Zahedi(1986) Method

and K_EUKLEMS

Source: Pyo(2008)8

Estimated Initial Capital Stock by Kohli (1982) Method and K_EUKLEMS

Australia Austria UK Finland Germany

Initial year 1970 1976 1970 1970 1991

Kohli Method 625,856 360,211 780,460 164,020 5,181,816

K_EUKLEMS 650,802 375,181 812,482 100,231 5,480,048

Difference(%) -3.8% -4.0% -3.9% 63.6% -5.4%

Italy Netherlands Japan Korea SloveniaCzech

Republic

Initial year 1970 1970 1973 1977 1995 1995

Kohli Method 1,736,841 654,907 782,181,760 190,198,636 15,367 4,309,882

K_EUKLEMS 1,143,575 548,984 452,780,704 119,339,604 21,391 6,501,090

Difference(%) 51.9% 19.3% 72.8% 59.4% -28.2% -33.7%

Source: Pyo(2008) 9

Percentage Difference between Estimated Initial Capital Stock by Kohli(1982) Method and

K_EUKLEMS

Source: Pyo(2008) 10

KIP versus K_EUKLEMS

KIPKorea Productivity

Center

EUKLEMSwww.euklems.net

KIP200772 industries up to 2005GO VA KLEMS TFPGO (TFPVA)

March 2008 Release72 industries up to 2005GO VA KLEMS TFPVA

KIP200972 industries up to 2007GO VA KLEMS TFPGO (TFPVA)

November 2009 Release32 industries up to 2007GO VA KLM TFPVA

11

Notes: 2000=100; 1981-2007 for Korea & 1981-2005 for the other countries

MFP (Gross Output) Whole Economy: Korea, US, Japan, EU10

MFP (Value-added) Market Economy: Korea, US, Japan, EU15EX

Contributions to Gross Output Growth

14

Contributions to Value-Added Growth in the Market Economy

Sectoral Composition of MFP Growth in the Market Economy

16

World Input-Output Database (WIOD) Project

• International collaborative research project based on international Input-Output Tables

• Main purpose– Construction of internationally harmonized

database– for the data between countries and between

industries– about national production structure, international

trade, socio-economic issues and environmental issues

Korea’s Participation in WIOD

• WIOD’s first annual consortium meeting

– Vienna, May 26-28, 2010– Paper presented: “The Effect of Intangible Investment

on Employment in Korea”– Supplied WIOD with available Korean I-O tables from

1995 to current

• Korea’s Participation

– Plans to take an active role in this kind of international research

– Intends to provide Korean data for the construction of DB, following WIOD’s 3 years(2010-2012) schedule

18

KIP 2010 Plan

• KIP 2010

– Updates DB for 72 industries for 1970-2008 – Available in December 2010– Extends estimation methods for TFP

• Gross output and value added growth accountings

• TFP analysis for specific sectors

– New growth engines and ICT sectors– Intangible investment (following Corrado, Hulten and

Sichel’s definition) including R&D

• Seoul International Conference on Productivity

– October 20, 2010