Korean Economic Growth
An Empirical Inquiry into the Nature of South Korean Economic Growth
South Korea has experienced spectacular economic growth rates over the last forty years.How did this economic “miracle” occur? Economic growth in Korea can be explained interms of geography, demography, human development or economic convergencetheories. However, the debate over the role of legal, political and institutionaldevelopment in Korean economic growth is perhaps the most complex of all. This paper offers an empirical estimation of the explanatory variables of growth, touching uponlegal, political, cultural and institutional developments, and measures the impact of physical and human capital and productivity increases on economic growth. Usinggrowth regressions, I find that the early protection of property rights and, to a lesser extent, contract enforcement, was extremely important in achieving ex-post growth inSouth Korea. On top of that, this East Asian country has benefited from a very successfullegal tradition from an economic perspective: the German legal system. The uniformcomposition in terms of race and language has also favored economic growth in Koreawhile political stability has been crucial over the development period. This last proposition is also tested in a second empirical exercise where I estimate the role of different factors of production, technical change and productivity growth in South Korea.The role of capital accumulation is very important while productivity growth is importantand the growth in human capital is moderate. However, productivity is negative only in periods of high political instability, reinforcing the link between growth, productivity,and political developments.
Economic growth, Korean economy, political economy, law and economics
K11, N15, O47, O50, O53 ________________________________________________________________ Francisco Garcia-Blanch is a PhD. candidate in applied economics at ComplutenseUniversity of Madrid and a graduate of the Kennedy School at Harvard. He has also beena reciprocity fellow in the Group in Asian Studies in the University of California atBerkeley and a Korea Foundation Fellow in Seoul National University.
I am very grateful to Prof. Dwight Perkins for invaluablesuggestions and support. I would also like to thank Lorenzo Isla for excellent researchassistance and Carlos Arteta for sharing his data. All errors on the paper are, of course,only mine