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BOK Working Paper No.2020-19, Export and Productivity: An Analysis of Plant-level Data

Economic Research Institute (82-2-759-5396) 2020.09.03 1231

Title : Export and Productivity: An Analysis of Plant-level Data

Author : Yoonsoo Lee(Sogang University), Wonhyeok Kim(Sogang University), Jinho Park(BOK)

<Abstract>

The Korean economy experienced a slowdown in both productivity growth and exports in the 2010s. Here we analyze the relationship between changes in exports and in the growth of total factor productivity (TFP). Our empirical analysis of data from the Mine and Manufacturing Survey (2000-2017) shows that there is a positive correlation between exports and productivity. We find that the positive correlation was stronger during periods in which exports decreased. We find that while the decrease in exports may have slowed or reduced the growth in productivity, the increase in exports did not necessarily increase productivity since 2000. In addition, we also find that changes in exports may affect the distribution of more productive producers, which are more likely to be affected by the decline in exports. We focus on the irreversibility of inputs as a possible explanation of the asymmetric relationship between exports and productivity growth. Our results show that in the input-inelastic sectors in which inputs are not flexibly adjusted, productivity declined further as export growth decreased.

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