Biased Technical Change and Economic Growth: The Case of Korea, 1970–2013

Abstract

This paper explores the pattern of technical change in the Korean economy from 1970 to 2013 and investigates its determinants. We use the Classical growth-distribution schedule to show that the labor-saving and capital-using pattern has predominated. For the rationale behind this Marx-biased technical change, we focus on the relationship between technical change and real wage growth via the evolution of labor and capital productivity, and verify the historical direction of technical change against the rise and fall of the working class. Furthermore, we find that the deviation during the post-crisis period from the long-run trend of Marx-biased technical change is not attributable to the vitality of new technological innovations, but rather the reflection of class dynamics over extracting productivity under weaker capital deepening. The results suggest that the recent deterioration of labor share and labor unions in Korea is closely associated with low incentive for technological progress, which contributes to prolonged stagnation.

Citation

Jeong, S. (2017), "Biased Technical Change and Economic Growth: The Case of Korea, 1970–2013", Return of Marxian Macro-Dynamics in East Asia (Research in Political Economy, Vol. 32), Emerald Publishing Limited, Leeds, pp. 81-103. https://doi.org/10.1108/S0161-723020170000032006