Convergence of South Korean productivity on West German levels, 1966–1978

Abstract

South Korean labor productivity in manufacturing converged rapidly on the productivity level in West German manufacturing during the period 1966–1978, achieving two-thirds of the German level by 1978. This convergence was more rapid at the industry level than for all manufacturing. The capital-labor ratio and total factor productivity in South Korean manufacturing also converged on West German levels during this period, with the former accounting for two-thirds, and the latter, one-third, of the labor productivity convergence. The source of labor productivity convergence, however, differed greatly across industries, with capital deepening the dominant source in heavy industries, and total factor productivity (TFP) convergence the main source in light industries.