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Productivity and Product Markets in Korea: Evidence from Advanced Economies
Author:
Mr. Andrew J Swiston
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Stella Tam
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Series:
IMF Working Papers
Volume/Issue:
Volume 2022: Issue 213
Language:
English
Publication Date:
28 Oct 2022
DOI:
https://doi.org/10.5089/9798400224065.001
ISBN:
9798400224065
ISSN:
1018-5941
Pages:
40
Keywords:
Korea; productivity; product markets; regulation; growth; labor productivity distribution; OECD product market regulation; regulation-productivity linkage; OECD PMR indicators structure; IMF Product Market Regulation; PMR indicator; productivity comparison; productivity measurement; Total factor productivity; Commodity markets; Labor productivity; Trade barriers; Global
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper constructs an industry-level dataset of productivity across advanced economies, showing that Korea’s labor productivity and total factor productivity levels are below the median of other advanced economies. We identify sizable industry-level productivity gaps in Korea with respect to the global frontier, especially in market-oriented services. Using the OECD’s Product Market Regulation (PMR) Indicators, we show that tighter PMRs slow industry-level productivity growth, and these effects occur across all areas of PMRs—state control, barriers to entrepreneurship, and barriers to trade and investment—and through several detailed indicators. These effects are transmitted through higher product prices and unit labor costs of industries exposed to regulation. The results confirm the potential for Korea to boost overall productivity and growth through PMR reforms, especially by lowering barriers in service and network sectors, reducing restrictions applying to trade and investment, and evaluating the scope of government involvement in the economy.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2022: Issue 213