- Long-Term Shifts in Korean Manufacturing and Plant-Level Productivity Dynamics
The Korean manufacturing sector hasundergone active structural transformation in the past fewdecades. In particular, the composition of coremanufacturing products has changed over time. In the 1970s,textiles, which are used to produce fabric, clothes,apparel, and shoes, were the main product. Over time, thevalue added shares have shifted toward electronics, ships,and cars. By analyzing plant-level microdata, this paperdocuments the patterns of entry, exit, job creation anddestruction, and the growth of young plants during theindustrial shift. This industrial shift involved active jobreallocations, as well as the entry and exit of plants. Thepaper quantifies the extent to which such plant-leveldynamics explain aggregate productivity growth. The findingsshow that within-plant productivity growth, which includesthe effects of fast growth of young plants as well as robustgrowth of large continuing plants, played an important rolein the productivity growth of the Korean manufacturingsector. The contribution of reallocations between continuingplants was relatively small. Moreover, productivity growthof an industry accompanied an increase of productivitydispersion, a measure commonly interpreted as the degree of misallocation.