author:Won-Kyu Kim(Industrial Competitiveness Division)

1. Role of Manufacturing as a Growth Engine
During the period of 1970-2002, Korea registered a high growth rate of 7.0% per annum. In this high growth period, manufacturing grew by 10.6% and so led the growth of the whole economy.
Manufacturing also played a role as a growth engine in terms of capital accumulation, employment and total factor productivity(TFP). Since 1970, while the capital stock of the whole economy grew by 10.8%, that of manufacturing did by 12.2%. The labor in manufacturing, which is measured as total employment times hours worked, increased by 3.4%, while that of the whole economy went up by 2.3%. The increasing rate of TFP in the manufacturing Sector showed 2.6%, compared with the growth rate of 1.7% in case of the whole economy.
Due to the growth of the manufacturing sector, the share of manufacturing in the gross domestic product(GDP) increased from 11.1% in 1970 to 24.0% in 2002. In terms of employment, manufacturing’s share increased from 13.2% in 1970 to 27.2% in 1990, but decreased to 19.1% in 2002, due to de-industrialization of the employment side.
For the service sector, its share to GDP showed 55.6% in 1970, but maintained around 50% since the 1980s. In particular, shares of transport, storage & communication and finance, insurance, real estate & businesss services showed increasing trends since 1970, while that of other services experienced a decreasing trend to 22.6% in 2002...