Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/246699
Authors: 
Murach, Michael
Wagner, Helmut
Kim, Jungsuk
Park, Donghyun
Year of Publication: 
2020
Series/Report no.: 
ADB Economics Working Paper Series No. 622
Publisher: 
Asian Development Bank (ADB), Manila
Abstract: 
We analyze and compare the patterns of economic growth and development in the Japan, the People's Republic of China, and the Republic of Korea in the postwar period. The geographical proximity and cultural affinity between the three countries, as well as the key role of the development state in the economies, suggest that an analytical comparison would be a meaningful and valuable exercise. Furthermore, Japan and the Republic of Korea are two of the few economies that have jumped from middle income to high income in a short period and thus offer potentially valuable lessons for the PRC. We use Cobb-Douglas production functions to assess the long-run equilibrium relationships between per capita gross domestic product, capital, and labor by means of cointegrated vector autoregressive models. We show that such equilibrium relationships cannot be rejected for all three countries, while the evidence is stronger for the PRC and the Republic of Korea than for Japan. Our hypothesis tests show that the estimated Cobb-Douglas production functions display coefficients of capital and employment that sum up to 1 and broken linear trends that can be attributed to structural breaks and (changes in) total factor productivity growth. We observe a striking similarity between the experience in the Republic of Korea and the PRC, which gives some optimism that the PRC may be capable of graduating to high income, like the Republic of Korea.
Subjects: 
aggregate production function
comparative economic growth
economic development
Japan
People's Republic of China
Republic of Korea
JEL: 
E23
O47
O53
O57
P52
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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