As Krugman (1994), Young (1994), and Lau and Kim (1994)’s studies showed, the East Asian economic
miracle may be characterized as ‘input-led’ growth. However, both the stagnation in investment and the
decrease in average working hours and the fertility rate require a productivity surge for a renewed
sustainable growth in East Asia. The purpose of our study is to identify the sources of economic growth
based on a KLEMS model for the Republic of Korea, which experienced a financial crisis in 1997 after
joining OECD. We report estimates of inputs and gross output in Korea based on preliminary dataset of
72-industry classification following EU KLEMS project guidelines. We also provide estimates of 72
industry-level growth accounting and total factor productivity. We have found that Korea’s catch-up
process with industrial nations in its late industrialization has been predominantly input-led and
manufacturing based as documented in Timmer (1999) and Pyo (2001). However, since its financial crisis
in December 1997, the sources of growth seem to have switched to TFP-growth based. But lower
productivity in service industries seems to work against finding renewed sustainable growth path.