Signal Slower total factor productivity explains two-thirds of Korea's post-2010 growth decline

Summary

Using a Cobb-Douglas production function with a labour share of 0.65, the authors decompose past growth into labour, capital and total factor productivity. Growth in 2011 to 2019 was 1.6 percentage points lower than in 2001 to 2010, and 66.9 percent of that drop reflects slower productivity growth. The slowdown after the global financial crisis was therefore driven mainly by weaker productivity. Comparing the decade 2015 to 2024 with 2011 to 2019, growth fell a further 0.6 percentage points as productivity stayed weak and labour input growth also slowed. The decomposition shows the drag shifting from productivity alone toward productivity and labour together.