The Outbreak of the 1997
Financial Crisis and Its Recovery
Doowon Lee
Professor of Economics
Yonsei University, Seoul, Korea
Doowon Lee, School of Economics, Yonsei University
I. Outbreak: Causes of Crisis
IMF Bail Out & Sharp
Depreciation of e
Absence of
International Crisis
Management System
Korean Gov.'s Effort to
Defend Exchange Rate Failed
Failure to Roll over ShortTerm Foreign Debts
(kind of Bank run)
Losing International
Credibility
Financial Sector
*Mounting Bad Loans
Corporate Sector
*Losing Competitiveness
*Excessive Investment
(I>S)
*Poor Corporate
Governance System
Doowon Lee, School of Economics, Yonsei University
External Sector
*Current Account Deficits
Financed by Foreign
Borrowing (carry trade?)
*Unprepared Financial
Market Liberalization
I. Outbreak: International Comparison of Debt-Equity Ratios of
Mfg Industry
South
Korea
(1997)
South
Korea
(2004)
Germany
(1966)
3.96
1.04
0.98
Japan
(1999)
Taiwan
province of
China
(1995)
U.S.
(1999)
1.74
0.86
1.64
* Sources : Krueger and Yoo (2001).
Bank of Korea, Bank of Korea Information (June, 2001, p.66)
Doowon Lee, School of Economics, Yonsei University
I. Outbreak: Debt Service Burden of Manufacture Company
(%)
Financing Cost of Manufacture Co.
10
9
8
7
6
5
4
3
2
1
0
1996
1997
1998
1999
Ratio of Financial Cos t to Sales
* source: The Bank of Korea website (www.bok.or.kr)
Doowon Lee, School of Economics, Yonsei University
2000
2001
I. Outbreak: International Comparison of NPL (unit: %)
South
Korea
(1997)
South
Korea
(1999)
6.0
8.3 →
13.6*
South
Korea
(June, ’01)
5.7
U.S.**
(2000)
Japan**
(2000)
Germany
***
(1999)
U.K.***
(1999)
1.21
5.44
1.3
2.17
 Sources : Korea Financial Supervisory Service (www.fss.or.kr) ;
The Banker (July 2000, July 2001), recited From www.seri.org
(2001.6) and www.bok.or.kr
 Note : * Average of all the commercial banks’ NPL.
Korea has changed its criteria of NPL in 1999 according
to international standard. The ratio of NPL to total loans
increased after the adoption. Thus ‘13.6’ is value derived
from new criteria and ‘8.3’ is based on previous criteria.
** Average of ten biggest commercial banks’ NPL.
*** Average of five biggest commercial banks’ NPL.
Doowon Lee, School of Economics, Yonsei University
II. Crisis Recovery
 Corporate and financial sector restructured
 Three party agreement between labor, manager,
and government
 Export led recovery -> current account surplus
 Exchange rate stabilized
Doowon Lee, School of Economics, Yonsei University
II. Recovery: General Review
Domestic
Economy
Support by
Government
Budget
Financial Sector
Restructuring
Corporate Sector
Restructuring
• M&A or Liquidation
(Applying BIS criteria)
• Lower Debt/Equity Ratio
• Liberalization
• Improving Corporate
Governance
• Removing Bad Loans
• M&A
Establishment of Social Safety Net
• Calm Labor Dispute
• Create Jobs
• Help the Unemployed
Attracting Foreign Capital
External
Economy
• FDI
• Portfolio Investment
• Increase Foreign Exchange Reserve
• Decrease Foreign Debt
Current Account Surplus
Doowon Lee, School of Economics, Yonsei University
Recovery
of Korean
Economy
II. Recovery: Summary of Reforms in Four Major Areas
1) Financial Sector
Pre-Crisis Situation
① 14 of the 27 commercial
banks below BIS ratio of
8%*
② Troubled loans are
estimated to be W 118
trillion as of March 1998
③ Lack of proper supervision
Reform Measures
① FSC and FSS established.
② Initially W64 trillion of
public fund was thought to
be needed. As of the end
of 2005, total of W168
trillion was injected and
W76 trillion retrieved.
Changes and Achievements
① Number of financial
institution dropped from
2,102 to 1,341 between
1997 and 2007.
② Impaired loans
(substandard or below) as
of June 2001 estimated to
be W 65 trillion, estimated
to be W 49.8 trillion.
• Note : * BIS(bank of International Settlements) ratio measures the ratio of bank’s equity over a weighted average of
risky assets. The higher this ratio is, the more financially sound is the bank.
• sources : Bank of Korea website (www.bok.or.kr); Korea Financial Supervisory Commision website (www.fss.or.kr);
Korea National Statistical Office website (www.nso.go.kr); Korea Development Institute website
(www.kdi.re.kr); Fair Trade Commission website (www.ftc.go.kr)
Doowon Lee, School of Economics, Yonsei University
II. Recovery: The Number of Financial Institutions
Fianacial Sector
End of 1997
March, 2007
Change
Commercial Banks
26
13
-13
Specialized and Development Banks
7
5
-2
Merchant Banks
30
2
-28
Securities Firms*
36
54
+18
Insurance Companies
50
51
+1
Investment Companies
31
51
+20
Leasing Companies
25
35
+10
Mutual Savings & Finance Companies
231
110
-121
Credit Unions (Credit Cooperatives)
1,666
1,020
-646
Total
2,102
1,341
-761
• Note : * The number of security firms increased due to the establishment of foreigners-owned security firms.
Also, some merchant banks are transformed into security firms.
• Sources : Recited from Figure 5 of Jones (2002), Financial Supervisory Service of Korea
Doowon Lee, School of Economics, Yonsei University
BIS ratio of Commercial Banks in Korea
BIS(%)
BIS ratio
14
13
12
11
10
9
8
1997
1998
1999
2000
Domestic
2001
Foreign
2002
2003
2000
Compounded
* Sources : Bank Management Statistics of Financial Supervisory Service of Korea
Doowon Lee, School of Economics, Yonsei University
2005 Year
ROE ratio of Commercial Banks in Korea
ROE(%)
ROE ratio
30
20
10
0
-10
1997
1998
1999
2000
2001
2002
2003
2004
-20
-30
-40
-50
-60
Domestic
Foreign
Compounded
* Sources : Bank Management Statistics of Financial Supervisory Service of Korea
Doowon Lee, School of Economics, Yonsei University
2005 Year
ROA ratio of Commercial Banks in Korea
ROA(%)
ROA ratio
2
1
0
1997
1998
1999
2000
2001
2002
2003
2004
-1
-2
-3
-4
Domestic
Foreign
Compounded
* Sources : Bank Management Statistics of Financial Supervisory Service of Korea
Doowon Lee, School of Economics, Yonsei University
2005
Year
II. Recovery: Summary of Reforms in Four Major Areas
2) Corporate Sector
Pre-Crisis Situation
Reform Measures
① Highly leveraged firms with
debt/equity ratio of 396.3%
for manufacturing firms in
the end of 1997
② Poor corporate
governance : cross-debt
guarantees, crossshareholdings
Changes and Achievements
① Debt/equity ratio dropped :
100.9% for manufacturing
firms by 2005.
① Five guidelines
② Big Deals
③ Lack of transparency and
tricky accounting practice
② Cross-debt guarantee
decreased from W 11
trillion of 1998 to W 0.2
trillion of 2001 for the
largest 5 conglomerates
• sources : Bank of Korea website (www.bok.or.kr); Korea Financial Supervisory Commision website (www.fss.or.kr);
Korea National Statistical Office website (www.nso.go.kr); Korea Development Institute website
(www.kdi.re.kr); Fair Trade Commission website (www.ftc.go.kr)
Doowon Lee, School of Economics, Yonsei University
II. Recovery: International Comparison of Debt-Equity Ratios of
Mfg Industry
South
Korea
(1997)
South
Korea
(2005)
Germany
(1996)
3.96
1.01
0.98
Taiwan
provinc
Japan
e of
(1999 -> 2003) China
(1995)
1.74 -> 1.45
0.86
U.S.
(1999 -> 2004)
1.64 -> 1.41
* Sources : Krueger and Yoo (2001).
Bank of Korea, Bank of Korea Information (June 2001, Sep 2005)
Bank of Korea, Principal Economic Indicators (May 2007)
Doowon Lee, School of Economics, Yonsei University
The Volume and Composition of Corporate Finance
(Unit : bn Kr\, %)
Average of
1990~1997
1998
2000
2002
2004
115.9
59.6
128.7
167.2
176.6
Internal
Source
33.9
(29.3)
31.6
(53.0)
62.9
(48.9)
83.9
(50.2)
110.8
(62.7)
External
Source
82.0
(70.7)
28.0
(47.0)
65.8
(51.1)
83.3
(49.8)
65.8
(37.3)
Corporate
Finance
* Note : Numbers in parentheses are % ratios.
* Source : A periodical, “경제포커스 (in Korean)” No.112, Samsung Economic Research Institute
Doowon Lee, School of Economics, Yonsei University
Proportion of Direct Finance Out of External Sources
•Source : Hahm, Joon-Ho(2007), “금융시스템의 변화와 평가” presented at
『A Decade after Financial Crisis : Process and Problem』,
2007 Seminar of Korean Economic Association (June 11th, 2007)
Doowon Lee, School of Economics, Yonsei University
II. Recovery: Summary of Reforms in Four Major Areas
3) Labor Market
Pre-Crisis Situation
① Rigid and militant labor
union
② Average nominal wage
increase rate (13.45%)
higher than average labor
productivity growth
rate(10.37%) from ’92~’96
③ Absence of social safety
net
Reform Measures
① Tripartite Commission
established.
Changes and Achievements
① More flexible labor market
② Average labor productivity
growth rate (18.73%)
② Social safety net hastily set
higher than average
up (employment insurance
nominal wage increase
system, public works
rate (5.87%) from ’98~’00.
program, national basic
livelihood security act).
③ Productive welfare system
• sources : Bank of Korea website (www.bok.or.kr); Korea Financial Supervisory Commision website (www.fss.or.kr);
Korea National Statistical Office website (www.nso.go.kr); Korea Development Institute website
(www.kdi.re.kr); Fair Trade Commission website (www.ftc.go.kr)
Doowon Lee, School of Economics, Yonsei University
Painful Process of Laying-Off
* Sources : Recited figure 3 of An article on East Asian Economies “Gold from the Storm”,
Economist, June 28th 2007
Doowon Lee, School of Economics, Yonsei University
II. Recovery: Unemployment Rate
8
7
7
6.6
6
%
5
4.4
4
4
3
3.3
3.6
3.7
3.7
3.5
3.3
2.6
2
1
0
1997
1998
1999
2000
2001
2002
* source : Bank of Korea (http://www.bok.or.kr)
Doowon Lee, School of Economics, Yonsei University
2003
2004
2005
2006
2007
II. Recovery: Summary of Reforms in Four Major Areas
4) Government Sector
Pre-Crisis Situation
Reform Measures
Changes and Achievements
① Total number of civil
servants decreased from
919,404 to 885,164
between Feb 1998 and
Feb 2003.
① Regulation
① Administrative reform
② Inefficient public
enterprises
② Deregulation
③ Privatization
② Number of regulations
decreased from 10,717 of
August 1998 to 7,156 of
July 2001.
③ Privatized 6 public
enterprises and plan to
privatize 5 more as of Jan.
2001.website (www.fss.or.kr);
• sources : Bank of Korea website (www.bok.or.kr); Korea Financial Supervisory Commision
Korea National Statistical Office website (www.nso.go.kr); Korea Development Institute website
(www.kdi.re.kr); Fair Trade Commission website (www.ftc.go.kr)
Doowon Lee, School of Economics, Yonsei University
The Number of Public Officials by Successive Administrations
The Total Number of Public Officials
(unit : persons)
5th
Administration
6th
“Civilian”
“A People” “Participation”
* Sources : Maeil Business Newspaper, July 11th 2007.
Doowon Lee, School of Economics, Yonsei University
II. Recovery: Growth Rates of Macroeconomic Indices
2000
1998
2001
1999
1/4
2/4
3/4
4/4
1/4
2/4
3/4
4/4
Growth Rate(%) *
GDP
-6.7
10.9
12.6
9.7
9.2
4.6
3.7
2.7
1.8
3.7
Consumption
-11.7
11.0
10.8
8.9
5.7
3.2
1.5
4.1
4.8
6.6
Investment(equipment)
-38.8
36.3
62.6
41.6
31.9
8.1
-8.4
-11.2
-15.7
-3.1
Investment(construction)
-10.1
-10.3
-6.8
-4.2
-3.5
-2.5
1.5
1.1
8.2
10.7
-4.2
-2.7
40.4
24.5
1.6
2.9
4.2
3.5
2.8
3.8
1.0
1.1
Inflation rate
7.5
0.8
2.0
1.6
3.0
2.5
3.6
5.0
4.2
3.4
Unemployment rate
6.8
6.3
5.1
3.8
3.6
3.7
4.8
3.5
3.3
3.2
Consolidated budget
/ GDP(%)**
Current account balance
(bn $)
1.3
1.0
• Note : * The growth rates are compared to the same quarter of the previous year.
** Figures for 2000 and 2001 are annual figures.
• sources : Major Indicators of Korean Economy, Korea Development Institute, 2002. 3. 9., p.41
Bank of Korea website (www.bok.or.kr)
Doowon Lee, School of Economics, Yonsei University
II. Recovery: Exports Have Been the Main Driver for
Growth
45
40
45
Merchandise Exports
(Percent change, y/y,
two-month average)
40
35
35
30
30
25
25
20
20
15
15
10
10
Sep02
Dec02
Mar03
Jun03
Sep03
Doowon Lee, School of Economics, Yonsei University
Dec03
Mar04
Jun04
Sep04
II. Recovery: Exchange Rate Fluctuation (monthly)
II. Recovery: Exchange Rate Movement (annual)
(won)
1,600
1,400
1,399
1,291
1,200
1,189
1,000
800
1,251
1,131
1,192
1,145
1,024
951
771
956
805
600
400
200
0
1995
1996
1997
1998
1999
2000
2001
* source : Bank of Korea (http://www.bok.or.kr)
Doowon Lee, School of Economics, Yonsei University
2002
2003
2004
2005
2006
II. Recovery: Movement of KOSPI after the
Crisis
1200
1000
800
600
400
200
0
1998-01-03
1999-01-03
2000-01-03
KO S P I
2001-01-03
2002-01-03
III-1. Role of Foreign Capital in the Outbreak of Crisis
 Withdrawal of foreign capital, but in what
channel?
- Little FDI before 1997
- Stock market partially opened
- Borrowing from foreign banks
- Especially the loan from the Japanese banks
Doowon Lee, School of Economics, Yonsei University
Inflow & Outflow of Portfolio Investment
(bn, US$)
5
Inflow & Outflow of Portfolio Investment
4
3
2
1
0
-1
1997 1Q
2Q
3Q
4Q
1998 1Q
2Q
3Q
-2
-3
-4
-5
(Year, Quarter)
Outflow of Portfolio Investment
Inflow of Portfolio Investment
* Source : Economic Statistic System, Bank of Korea
Doowon Lee, School of Economics, Yonsei University
4Q
Composition of Foreign Liabilities
(mn, US$)
Total Foreign Liabilities
Government
Monetary Authority
Commercial Banks
Excetra (NBFI)
* Source : Economic Statistic System, Bank of Korea
Doowon Lee, School of Economics, Yonsei University
III-1. Role of Foreign Capital in the Outbreak of Crisis
 Were there no crisis if capital market was not liberalized?
 Even before capital market liberalization, there existed
insatiable demand for capital by conglomerates.
 Excessive investment caused chronic trade deficit and
increasing NPLs
 Foreign exchange crisis could have been avoided if e was
allowed to depreciate, which was politically difficult
 Even if capital market was not liberalized, mounting
NPLs would have caused domestic financial crisis.
Doowon Lee, School of Economics, Yonsei University
III-2. Role of Foreign Capital in the Recovery: Positive
Aspect
 Initially, it provided much-needed liquidities.
 It boosted stock market, and partially eliminated
the so-called ‘Korea Discount’
 Structural reforms and improved profitability
 Protection of minority shareholders’ right
 Improved transparency (case of SK)
Doowon Lee, School of Economics, Yonsei University
Inflow of Foreign Capital
Inflow of Foreign Capital
(bn, US$)
350
325
300
275
250
225
200
175
150
125
100
75
50
25
0
-25
-50
1997
1998
1999
FDI
2000
2001
2002
Portfolio Investment
* Source : Economic Statistic System, Bank of Korea
Doowon Lee, School of Economics, Yonsei University
2003
2004
Foreign Debt
2005
2006
(Year)
Price Earning Ratio, August 10 2005
30
25
PER
20
15
10
5
0
Japan
U.S.
Hong
Kong
Singapore
Taiwan
Thailand
Korea
Price Earning Ratio, Apr 18 2006
40
35
30
PER
25
20
15
10
5
0
Japan
U.S
Singapore
Taiwan
Hong Kong
Korea
Thailand
Price Earning Ratio (PER)
MSCI World Average PER (left scale)
MSCI Korea PER (left scale)
( times)
Korea PER / World PER (right scale)
year
* source : Maeil Business Newspaper (June the 4th, 2007)
Doowon Lee, School of Economics, Yonsei University
Proportion of Foreign Possession in Stock Market
(%)
Institutes
Corporate
Individuals
Foreigners
* Sources : A Periodical “Securities & Futures, the May 2007 issue, Korea Exchange
Doowon Lee, School of Economics, Yonsei University
III-3. Role of Foreign Capital in the Recovery:
Negative Aspect 1
 Consumer loans increased, and HH debt (fueled
by the government policy of easy credit)
accumulated that dampened consumption
Doowon Lee, School of Economics, Yonsei University
Proportion of Corporate Loan and Household Loan Out of
Commercial Bank Credit
Corporate Loan
Household Loan
•Source : Hahm, Joon-Ho(2007), “금융시스템의 변화와 평가” presented at
『A Decade after Financial Crisis : Process and Problem』,
2007 Seminar of Korean Economic Association (June 11th, 2007)
Doowon Lee, School of Economics, Yonsei University
Household Debt & Credit (percentage of GDP)
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Household debt
Doowon Lee, School of Economics, Yonsei University
Household credit
HH Debt Suppress Consumption
14
12
10
8
6
4
2
0
1999
2000
2001
2002
2003
2004
-2
-4
Consumer Expenditure
* source : ecos.bok.or.kr
Doowon Lee, School of Economics, Yonsei University
GDP
2005
2006 1/4
III-3. Role of Foreign Capital in the Recovery:
Negative Aspect 2
 Growth potential deteriorated
 Less investment as banks are reluctant to lend
 Threat of hostile take-over has prevented big
companies from making large-scale and long-term
investment: cash-hoarding, increased divident payment,
buying its own shares. But, it is difficult to generalize.
 Increased regulation, rapidly aging population, and
instable labor relation are also responsible for
deterioration of growth potential
Doowon Lee, School of Economics, Yonsei University
Falling Growth Rate
12
10
8
GDP Growth Rates
6
4
2
0
1991
1992
1993
1994
1995
1996
1997
1998
1999
-2
-4
-6
-8
Years
경제성장률
잠재성장률
2000
2001
2002
2003
2004
Falling Growth Rate
Five Asian Economies’ Investment ratio & Growth rate
* Sources : Recited figure 1 of An article on East Asian Economies “Gold from the Storm”,
Economist, June 28th 2007
Doowon Lee, School of Economics, Yonsei University
III-3. Role of Foreign Capital in the Recovery:
Negative Aspect 3
 PEF: Short-term speculative gains that were non-taxable:
Case of Lone Star’s take over of Foreign Exchange Bank
of Korea in 2003
 As part of the banking sector is under foreign ownership,
public good nature of banking industry is under threat.
Also, it is difficult to carry out the old-style industrial
policy (case of The First Bank w.r.t. Hynix), which is not
always a bad thing.
 Some myths about foreign capital: herd behavior?
Increased volatility? Increased divident/profit?
Doowon Lee, School of Economics, Yonsei University
Invasion of Private Equity Fund
* source : Maeil Business Newspaper (June the 23rd, 2007)
Doowon Lee, School of Economics, Yonsei University
IV. Lessons of the Korean Crisis
 Fixed e with capital market liberalization is difficult to
maintain
 After all, it was sound fundamentals of the Korean
economy that enabled the recovery
 Foreign capital is a two-edged sword. Also, it is difficult to
define ‘foreign capital’ in one word as they are not
homogeneous.
 Sequential liberalization of capital market is necessary
 Too much foreign exchange reserve can also be a problem
Doowon Lee, School of Economics, Yonsei University
V. Side Effects and Remaining Agenda
 Low investment growth rate
 Credit bubble and household debt -> weak consumption
growth
 Government owned financial institutions
 Ballooning government debt: public fund and budget
deficit
 Worsened income distribution and poverty problem
 Bi-polarization of the economy
 Set back of reforms in labor market and government
Doowon Lee, School of Economics, Yonsei University
Resulting in Unbalanced Growth
200
200
180
180
160
160
140
140
120
120
100
100
80
80
60
60
40
40
1997
1998
1999
2000
Industrial Production Index
2001
2002
Export
Doowon Lee, School of Economics, Yonsei University
2003
2004
2005
2006 1/4
* source : kosis.nso.go.kr
Private consumption & Export % change
35
30
25
20
% change
15
10
5
0
-5
1997
1998
1999
2000
2001
2002
2003
2004
-10
-15
-20
p r i v a t e c o n s u mp t i o n
* source : Bank of Korea (http://www.bok.or.kr)
Doowon Lee, School of Economics, Yonsei University
e xport
2005
2006
Recipient of Basic Livelihood Guarantee
(thousand)
1,550
1,513
1,500
1,450
1,424
1,420
1,400
1,374
1,351
1,350
1,300
1,250
2001
2002
2003
Doowon Lee, School of Economics, Yonsei University
2004
2005
Gini's coefficient
0.33
0.32
0.320
0.316
0.317
0.319
0.312
0.31
0.310
0.310
0.306
0.30
0.29
0.28
0.283
0.27
0.26
1997
1998
1999
2000
2001
* source : Bank of Korea (http://www.bok.or.kr)
Doowon Lee, School of Economics, Yonsei University
2002
2003
2004
2005
Recent movement of Korean labor market:
•
Anglo Saxon8to Europe
1998
7
1999
Unemployment (%)
6
5
2000
4
2004
2003
2001
2002
3
1997
1996
2
1
0
0
2
4
Labour Regulation Index
Doowon Lee, School of Economics, Yonsei University
6
450
1800
400
1600
350
1400
300
1200
250
1000
200
800
150
600
100
400
50
200
0
0
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
participans(left scale)
* source: Korea Labor Institute (https://www.kli.re.kr)
Doowon Lee, School of Economics, Yonsei University
cases(right scale)
the number of cases
the number of participants(thousand)
Conflicts between Labor and Capital
Deregulation Index (2004)
9
8
7.9
7.4
7.3
6.9
7
6.8
6.8
6.3
6.1
6
5.7
5.1
5
%
4.7
4
3.5
3
2
1
0
Singapore
Hong Kong
Canada
USA
Japan
UK
France
country
Germany
Italy
Korea
India
China
Number of Regulations
Year
1998
2000
2002
2004
2007
Regulations
10190
7156
7723
7846
8083
Korea of 2004 and the reference years of advanced countries
Reference Years for Advanced Economies
Countries
Finland
France
German
Ireland
Italy
Japan
Years
1997
1986
1990
1995
1987
1987
Countries
Netherlands
Norway
Spain
Sweden
U.K.
U.S.A.
Years
1989
1978
1999
1987
1989
1974
Doowon Lee, School of Economics, Yonsei University
Government role and size: G/Y, social security/G, index of aging
Country
Reference Year
Government Size (%,
G/Y)
Social Security and
Welfare out of GDP (%)
Index of Aging
unemployment rate
Japan1)
1987
16.48
9.79
11.5
2.8
USA
1974
19.4
8.1
10.11
5.59
Spain
1999
20.64
11.34
16.4
15.88
Korea
2004
25.18
6-7 (2005)
7.28
3.49
Germany
1990
29.46
13.78
15
6.21
Ireland
1995
30.63
10.31
11.4
14.1
UK
1989
33.93
10.6
15.5
5.99
Finland
1997
34.54
13.52
14.5
16.35
Norway
1978
35.35
17.26
14.8
1.65
Italy
1987
38.63
17.84
14.1
11.9
Sweden
1987
39.63
18.4
17.7
2.1
France
1986
43.4
19.41
13.5
10.4
Netherlands
1989
54.08
18.61
13
5.8
Doowon Lee, School of Economics, Yonsei University
Decomposition of Sectoral Output per Worker
Growth, Average of 1970-2001
12
10
Capital-labor
Human capital
Productivity
5.3
8
6
3.9
4
2.7
2
0.5
0.3
5.8
2.9
3.0
0.6
0.6
0.1
0.5
1.7
1.9
1.9
2.6
1.5
0
3.6
-0.1
0.3
-0.2
-0.1
-0.4
-1.6
-2
All industry
Manuf.
Elec.,gas,water
Construct.
Wh.,retail
trade
T ransport
Finance
Other serv.