Success of Long-term Industrial Growth and Structural Change in Korea, 1955-85 (Written in Korean)

Korean input-output tables for 1975 and 1985 are first deflated into 1975 constant domestic prices(hypothetical terms), and the constant price I-0 data are used to decom­pose the sources of industrial growth and structural change during the 1975-85 period. Using the same methodology, our results for the 1975-85 period are then linked to the results for the earlier period(1955-75) in order to analyze and evaluate the "demand side" sources of industrialization over the past three decades. The results from the decomposition of the whole economy indicate that over three decades(1955-85) the relative contribution of domestic demand expansion (DDE) to growth and structural change has continuously declined while the contribution of export expan­sion(EE) has generally continued to rise. The contribution of import-substitution(IS) which had been significantly higher than that of EE during 1955-63 declined substantially, remaining at an insignificantly low level during the period following 1963. Although it is well known that the government's industrial policy in the 19 70s emphasized import substitution in heavy and chemical industries, no significant changes in the export-oriented growth pattern could be observed even for that period, except for a minor decline in the relative contribution of EE. This may be attributed to the substantially larger, backward linkage effects of EE than that of IS. The sources-of-growth decompositions for major branches of the manufacturing sec­tor generally support the major conclusions derived from the decomposition for the whole economy. The IS contribution which had been significantly high in almost all manufac­turing branches during the 1955-63 period declined to low levels in all but two bran­ches, heavy industry and machinery, during the following period. On the other hand, the relative contribution of EE showed a continuous rise in almost all manufacturing branches(except food processing). Finally, the sources of growth for 1975-85 which were decomposed by detailed sub branches, are analyzed by correlating them with changes in relative prices and in­dustrial protection rates by sub-branches for the same period. A major result is that contrary to general expectations, the EE contributions by sub-branch are not negatively correlated with the nominal rates of protection and/or the effective rates of protection for the same sub-branches. It is also found that no statistically significant, positive correlation exists between IS contributions and nominal protection rates or effective protection rates. These unexpected results may be explained by the peculiar nature of the Korean system of industrial incentives for the past period