Industrialization and the Big Push: Theory and Evidence from South Korea
IMF Working Papers, December 20, 2024
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- Industrialization and the Big Push: Theory and Evidence from South Korea
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Bibliographic details
- Authors: Jaedo Choi, Younghun Shim
- Published: December 20, 2024
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400292927.001
Research question and approach
- Study objective: how one-time subsidies for adoption of modern technology drove Korea's industrialization in the 1970s.
- Data and identification: leveraging unique historical data to provide causal evidence consistent with coordination failures.
- Methods: empirical causal analysis combined with a quantitative model calibrated using parameters mapped to the causal estimates.
Key empirical findings
- Adoption improved adopters' performance.
- Adoption generated local spillovers.
- Firms were more likely to adopt when other local firms had already adopted.
- Evidence pattern is consistent with coordination failures (complementarities across firms in adoption decisions).
Quantitative model and calibrated results
- Model feature: potential for multiple steady states depends on parameters mapped to the causal estimates.
- Calibrated outcomes attributed to Korea's one-time subsidies:
- Increased heavy manufacturing's GDP share by 8.6%.
- Increased export intensity by 16.2%.
- Mechanism noted: larger market access amplifies the effects of these subsidies because gains from adoption increase with firms' scale.
Subject areas and keywords
- Subject: Economic sectors, Exports, Financial sector policy and analysis, International trade, Manufacturing, Spillovers, Technology
- Keywords: adopter share, adoption increase, Big push, Complementarity, Coordination failure, Exports, Global, IMF working paper No. 2024/259, Industrialization, Korea's industrialization, Local spillover, Manufacturing, Market access, Spillovers, Younghun shim
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- Working Paper