Comparing Prospects for Korean Economy based on Two Growth Models

This paper aims to identify the prospect for South Korea using several growth models. We distinguish the fact that share of technical change is relatively small in decomposition of output growth from that research effort is significant in growth regression. This paper also aims to identify the relationships between R&D share and macroeconomic variables like employment in R&D sector, overall economic growth rate, etc. In comparative statics, a permanent increase in research efforts cause the economy to grow at higher speed. Input of Korean economy to R&D sector has many effects on the whole economy. We try to distinguish growth effects from level effects, and, if possible, measure the magnitude of policy shocks. Based on the numerical results of the analysis on several sectors like manufacturing sector, we try to give policy implication: in the Korean economy, creativity in order to accelerate technological development and adoption of a new innovation mode determine the (long-run) equilibrium level of GDP per capita and may have scale effects. Finally, we calculated the diffrences in optimal and decentralizedly determined research intensity using two new growth models. We concluded that government policy is need to correct market failure(externalities).