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Growth and Productivity in East Asia$
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Takatoshi Ito and Andrew K. Rose

Print publication date: 2004

Print ISBN-13: 9780226386805

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226387079.001.0001

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Information Technology and Firm Performance in Korea

Information Technology and Firm Performance in Korea

(p.327) 10 Information Technology and Firm Performance in Korea
Growth and Productivity in East Asia

Jong-Il Kim

University of Chicago Press

Information technology (IT) has made a considerable contribution to the recent economic growth of Korea. Semiconductor, personal computer, and telecommunication equipments ranked first, third, and sixth, respectively, in the 2000 Annual Statistical Report of Korea. A recent OECD report shows that the productivity growth in Korea could be to a large extent attributable to the strength in IT manufacturing. Along with expansion of IT manufacturing sectors in Korea, Korean firms have become more IT equipped, particularly after the economic crisis in 1997. This chapter examines the effect of IT use on Korean firm performance in 1997–2000, a period when most Korean firms introduced unprecedented reform under the pressure of economic crisis. It first provides some empirical findings on the role of IT investment in firm productivity growth. It then evaluates the effect of IT spending on firm profitability and total factor productivity. Finally, it estimates the valuation of IT capital in the financial market and performs a simple experimental growth accounting to see how much contribution IT investment might have made to the recent economic growth of Korea.

Keywords:   information technology, firm performance, Korea, economic crisis, productivity growth, profitability, total factor productivity, financial market, economic growth

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