Chapter 15: International Comparison of Productivity in Market Services: Korea with EU KLEMS Member Countries
15. International comparison of productivity in market services: Korea* with EU KLEMS member countries Hyun Jeong Kim and Hak Kil Pyo 15.1 INTRODUCTION In most of the developed countries, the share of market services in the economy1 has increased steadily over time. In terms of nominal gross output, most of advanced countries have observed a rise in the shares of market services as shown in Figure 15.1. The sector’s importance for economic and productivity growth has increased accordingly. Thus, if there are any remaining gaps in terms of growth or growth potential among developed countries, it is understood that the catching-up should take place mainly in market services. Since the late 1990s, market services have drawn much attention from economists and policy-makers alike in advanced countries. This is because economic growth and thereby per capita GDP growth in the US and in the other developed countries appear to have stopped converging and instead started to show a widening gap again. And it has been pointed out that the source of the gap exists mainly in the service sector. In the US, the service sector has been the main engine for the economy’s revival in economic and productivity growth since the mid-1990s until the recent global financial crisis took place (Triplett and Bosworth, 2003; Jorgenson et al., 2005). In contrast, the sector has been pinpointed as causing economic slowdowns and overall decelerations in productivity growth in the EU and Japan (Inklaar et al., 2007; Fukao and Miyazawa, 2007). After the 1997...
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