Productivity and Product Markets in Korea: Evidence from Advanced Economies
IMF Working Papers, October 28, 2022
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- Productivity and Product Markets in Korea: Evidence from Advanced Economies
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Bibliographic details
- Authors: Andrew J Swiston, Stella Tam
- Published: October 28, 2022
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400224065.001
Key findings on productivity levels and gaps
- Korea’s labor productivity and total factor productivity levels are below the median of other advanced economies.
- The paper identifies sizable industry-level productivity gaps in Korea with respect to the global frontier, especially in market-oriented services.
- The analysis is based on an industry-level dataset of productivity across advanced economies.
Product Market Regulation (PMR) effects
- Using the OECD’s Product Market Regulation (PMR) Indicators, the paper shows that tighter PMRs slow industry-level productivity growth.
- These negative effects occur across all areas of PMRs—state control, barriers to entrepreneurship, and barriers to trade and investment—and through several detailed indicators.
- The regulatory effects are transmitted through higher product prices and unit labor costs of industries exposed to regulation.
Policy implications and recommendations
- The results confirm the potential for Korea to boost overall productivity and growth through PMR reforms.
- Recommended reform priorities include:
- Lowering barriers in service and network sectors.
- Reducing restrictions applying to trade and investment.
- Evaluating the scope of government involvement in the economy.
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- Working Paper