Measuring distortion in capital allocation - The case of heavy and chemical industries in Korea

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

This paper investigates whether or not capital allocation was distorted in favor of the heavy and chemical industries in the manufacturing sector in Korea during 1970-90. Expected marginal products of capital are compared by estimating production functions of each industry. According to the test results, there was overinvestment in basic metal industries and machinery industries in the 1970s, while there was underinvestment in chemical industries, at least in the 1970s. The result suggests that more capital was allocated toward industries whose TFP growth rates were high, and toward producer goods industry than consumer goods industry. Distortion in capital allocation became smaller in the 1980s, however.

Original languageEnglish
Pages (from-to)427-452
Number of pages26
JournalJournal of Policy Modeling
Volume21
Issue number4
Publication statusPublished - 1999 Jul
Externally publishedYes

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Capital allocation
Korea
Chemical industry
Industry
Overinvestment
Machinery
TFP growth
Underinvestment
Marginal product
Production function
Manufacturing sector
Metal industry

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Measuring distortion in capital allocation - The case of heavy and chemical industries in Korea. / Ueda, Atsuko.

In: Journal of Policy Modeling, Vol. 21, No. 4, 07.1999, p. 427-452.

Research output: Contribution to journalArticle

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