Korean industrialization: Competing hypotheses

The purpose of this dissertation is to describe and test competing hypotheses regarding Korean industrialization. Has Korea followed the neoclassical path of static comparative advantage or did Korea anticipate comparative advantage? We will attempt to answer this question through three essays.In the first essay, we simulated Korea's dualistic development in order to find the internal process of industrialization. Following earlier work by Allen Kelley and Jeffrey Williamson, the simulation was built using a neoclassical computable general equilibrium model. Comparing the simulation results with actual data, we found that most macro-economic variables changed more rapidly than they would have changed if industrialization had proceeded by market forces alone, showing that the extent of difference between the simulated and historical data is significant.In the second essay, we attempted to find the trend of revealed comparative advantage (RCA) of Korean manufacturing industries in the international market. By using Balassa's formula, we calculated RCA indexes of three-digit SITC items in the Korean manufacturing exports for the period of 1965-1992. As the result of reviewing the RCA trend in terms of absolute value and ranking, we found that Korea rapidly gained competitiveness in capital-intensive industries, though it maintained competitiveness for a relatively long time in some labor-intensive industries.The third and last essay measured the total factor productivity (TFP) growth in Korean manufacturing industries. In order to observe 'true' TFP, the methodology of Catherine Morrison was used, which extends the Solow model and takes into account imperfect competition, scale economies and short-run fixities. By measuring the 'true' TFP growth of sixteen manufacturing industries for 1963-1990, we found that most capital-intensive industries showed high productivity, while most labor-intensive industries failed to increase their productivity over the period.The empirical results of the above three essays do not support neoclassical development theory. Therefore, we conclude that neoclassical hypotheses are not appropriate to Korean industrialization.U of I OnlyETDs are only available to UIUC Users without author permissio