Technological change and elasticities of substitution in Korean agriculture

Abstract

In this paper, by using the translog cost function, two issues are investigated concerning the Korean agricultural sector during the prewar (1918 to 1938) and postwar (1949 to 1971) periods. First, characteristics of the technology used and the process of technical innovation are analyzed. Second, an attempt is made to determine the partial elasticities of substitution for various pairwise combinations of land, labor, fixed capital, and working capital. We find that the technological innovations in Korean agriculture were land and labor saving, fixed capital neutral, and working capital using. Further, we find that working capital was a strong substitute for land and labor in the prewar period and a weak substitute in the postwar period. Fixed capital was a weak substitute for land and labor in the prewar period and a weak complement to land and labor in the postwar period. Finally, working capital and fixed capital were weak substitutes in the prewar period and strong complements in the postwar period.