Hyunbae Chun (Sogang University) Hak K. Pyo (Seoul National University) Keun Hee Rhee (Korea Productivity Center) The 2 nd Asia KLEMS Database Management Workshop RIETI, Tokyo, Japan October 17, 2014

 A brief history of KIP DB revision ◦ KIP 2007 and KIP 2009 ◦ Output, labor, and capital  Growth accounting results ◦ Asia KLEMS Korean Dataset based on the 2013 KIP DB ( )  Future revision of KIP DB & Asia KLEMS ◦ 2008 SNA ◦ KIP 2014 or

 The first Korea Industrial Productivity (KIP) Database Project released in 2007 ◦ Following EU KLEMS Manual (Timmer et al., 2007) ◦ Period: ◦ Industry: 72 industries (ISIC rev 3; KSIC rev 8)  Gross output, value-added, intermediate Inputs ◦ Bank of Korea National Accounts, KSIC rev 8 ◦ 23 industry (plus 78 industry-level internal data and 397 IO tables) 3

 Labor Input ◦ Employment, Hours, Compensation ◦ Composition: 18 types = Gender(2) x Age (3) x Education (3) for 15 industries ◦ Economically active population survey (plus Survey on wage structure and Annual survey of manufacturers)  Capital Input ◦ 1970–1997: National Wealth Survey (1968, 1977, 1987, 1997) ◦ 1998–2005: Modified perpetual inventory method; Country-specific depreciation rates (Pyo, 2003) 4

 EUKLEMS November 2009 Release ◦ 72 industries; up to 2007  Revision of the National Accounts ◦ KSIC rev 9 (ISIC rev 4) ◦ New raw data: Census on Service Industries ◦ Chain index and base year from 2000 to 2005 ◦ 23→27 industry (plus 78→147 industry-level internal data and 397→399 IO tables) ◦ Nominal GDP rose about 6% in , but a change in GDP growth rate is close to zero. ◦ Share of service sector increases from 56% to 59%. 5

 Labor data ◦ Coverage change in the ASM (from 5 to 10 employees); Use Census on establishments  Capital data ◦ Modified perpetual inventory method ◦ Country-specific depreciation rates (Pyo et al., 2007) 6

7 Pyo et al. (2007) EU KLEMS (2007) Asset type1987~97MinimumMaximum Residential structure3.3%1.1 Non-residential structure Infrastructure Transport equipment Computing equipment Communications equipment11.5 Other machinery and equipment Products of agriculture & forestry Other products Software Other intangibles

 Industry Classification and Period ◦ 2013 KIP: 72-industry, ◦ Asia KLEMS: 32-industry, ◦ Tornqvist aggregation from 72 to 32 industries ◦ Base year: 2005

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Asia KLEMSnoIndustry 11Agriculture 22Forestry B3Fishing 104Mining of coal and lignite; extraction of peat 115Extraction of crude petroleum and natural gas and services 126Mining of uranium and thorium ores 137Mining of metal ores 148Other mining and quarrying 15MFG 9Food products and beverages 1610Tobacco products 1711Textiles 1812Wearing apparel, dressing and dying of fur 1913Leather, leather products and footwear 2014Wood and products of wood and cork 2115Pulp, paper and paper products 22116Publishing 22x17Printing and reproduction 2318Coke, refined petroleum products and nuclear fuel 24419Pharmaceuticals 24x20Chemicals excluding pharmaceuticals 2521Rubber and plastics products 2622Other non-metallic mineral products 2723Basic metals 2824Fabricated metal products

Asia KLEMSnoIndustry 2925Machinery, nec 3026Office, accounting and computing machinery 31327Insulated wire 31x28Other electrical machinery and apparatus nec 32129Electronic valves and tubes 32230Telecommunication equipment 32331Radio and television receivers 331t332Scientific instruments 334t533Other instruments 34 Motor vehicles, trailers and semi-trailers 35135Building and repairing of ships and boats 35336Aircraft and spacecraft 35x37Railroad equipment and transport equipment nec 3638Manufacturing nec 3739Recycling 40x40Electricity supply 40241Gas supply 4142Water supply F43Construction 5044Sale, maintenance and repair of motor vehicles and motorcycles; retail sale of fuel 5145Wholesale trade and commission trade, except of motor vehicles and motorcycles 5246Retail trade, except of motor vehicles and motorcycles; repair of household goods H47Hotels and restaurants 6048Inland transport

#(32)EUKLEMS 32code 1AGRICULTURE, HUNTING, FORESTRY AND FISHINGAtB 2MINING AND QUARRYINGC MFG 3FOOD, BEVERAGES AND TOBACCO15t16 4TEXTILES, TEXTILE, LEATHER AND FOOTWEAR17t19 5WOOD AND OF WOOD AND CORK20 6PULP, PAPER, PAPER, PRINTING AND PUBLISHING21t22 7Coke, refined petroleum and nuclear fuel23 8Chemicals and chemical24 9Rubber and plastics25 10OTHER NON-METALLIC MINERAL26 11BASIC METALS AND FABRICATED METAL27t28 12MACHINERY, NEC29 13ELECTRICAL AND OPTICAL EQUIPMENT30t33 14TRANSPORT EQUIPMENT34t35 15MANUFACTURING NEC; RECYCLING36t37

#(32)EUKLEMS 32 code 16ELECTRICITY, GAS AND WATER SUPPLYE 17CONSTRUCTIONF 18 Sale, maintenance and repair of motor vehicles and motorcycles; retail sale of fuel Wholesale trade and commission trade, except of motor vehicles and motorcycles Retail trade, except of motor vehicles and motorcycles; repair of household goods 52 21HOTELS AND RESTAURANTSH 22TRANSPORT AND STORAGE60t63 23POST AND TELECOMMUNICATIONS64 24FINANCIAL INTERMEDIATIONJ 25Real estate activities70 26Renting of m&eq and other business activities71t74 27PUBLIC ADMIN AND DEFENCE; COMPULSORY SOCIAL SECURITYL 28EDUCATIONM 29HEALTH AND SOCIAL WORKN 30OTHER COMMUNITY, SOCIAL AND PERSONAL SERVICESO 31PRIVATE HOUSEHOLDS WITH EMPLOYED PERSONSP 32EXTRA-TERRITORIAL ORGANIZATIONS AND BODIESQ

Asia KLEMSnoIndustry 6149Water transport 6250Air transport 6351Supporting and auxiliary transport activities; activities of travel agencies 6452Post and telecommunications 6553Financial intermediation, except insurance and pension funding 6654Insurance and pension funding, except compulsory social security 6755Activities related to financial intermediation 70imp56Imputation of owner occupied rents 70x57Other real estate activities 7158Renting of machinery and equipment 7259Computer and related activities 7360Research and development 741t461Legal, technical and advertising 745t862Other business activities, nec L63Public admin and defence, compulsory social security M64Education N65Health and social work 9066Sewage and refuse disposal, sanitation and similar activities 9167Activities of membership organizations nec 921t268Media activities 923t769Other recreational activities 9370Other service activities P71Private households with employed persons Q72Extra territorial organizations and bodies

 Methodology ◦ Industry aggregation of outputs and inputs using the Tornqvist index

Real value-addedVAQ8.82% Labor hoursLH Labor compositionLC IT capitalKIT Non-IT capitalKNIT TFP

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Real value-addedVAQ Labor hoursLH Labor compositionLC IT capitalKIT Non-IT capitalKNIT TFP

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20 Electric and Electronic equipment Transportation equipment

21 Retail Trade Business services

 2008 SNA revision ◦ 2008 SNA based National Accounts released in 2014 (in progress) ◦ 93 SNA National Accounts Data ended in 2012 ◦ But 2008 SNA NA only available from 2000  National Accounts ◦ Also incorporated 2010 Economic Census data ◦ Changed baseyear from 2005 to

 Main details of the 2008 SNA revision ◦ Treating expenditures for R&D and creation of entertainment, literary and artistic originals as fixed investment ◦ Modifying the point of transactions of global manufacturing activities ◦ Other revisions 23

Change in nominal GDP (Trillion KRW) Change in nominal GDP (% of GDP) Nominal GDP SNA ▪ R&D ▪ Artistic originals and others ▪ Global Manufacturing Incorporating Census data

New GDP (billion KRW) OLD GDP (billion KRW) Difference , ,2365.3% , ,4155.6% , ,5395.7% , ,1145.7% , ,8935.9% , ,2416.3% , ,7446.3% ,043, ,0137.0% ,104,492 1,026,4527.6% ,151,708 1,065,0378.1% ,265,308 1,173,2757.8% ,332,681 1,235,1617.9% ,377,457 1,272,4608.3% 25

NewOldDifference Agriculture, forestry and fishing 30,775 30,2482% Mining 2,279 2,318-2% Manufacturing 388, ,8369% Electricity, gas and water supply 26,178 23,51511% Construction 59,959 66,862-10% Services 744, ,19312% All industries 1,251,455 1,145,9719% 26

NEW (A, %) OLD (B, %) (A-B, %p) Real R&D Growth rates (contribution from R&D) (+0.1)(+0.3)(+0.2) (+0.4)(+0.3)(+0.2) 27

Year Residential Structures (Billion KRW) Non-residential structures Infrastructure Transportation equipment MachineryR&D Other intangibles Total R&D/ Total (R&D+ Intangibles) /Total ,53526,15047,71018,97958,78414,47510,192200,8257.2%12.3% ,12228,48750,78517,84454,74217,96011,146211,0868.5%13.8% ,14835,28250,58520,62856,34719,04813,481231,5198.2%14.1% ,05642,97855,91518,59558,15820,79213,918253,4138.2%13.7% ,28647,31359,71817,27163,34723,96514,419273,3208.8%14.0% ,55446,93861,49317,98065,52625,35716,012283,8598.9%14.6% ,85049,83664,35921,50866,55426,81517,049296,9709.0%14.8% ,31453,69070,59524,63769,30830,83017,965318,3399.7%15.3% ,05660,00779,06329,45973,50735,05318,467346, %15.4% ,75359,28690,11431,47372,03538,70118,335360, %15.8% ,01066,72487,88534,06687,55644,94018,744385, %16.5% ,82872,74588,09535,78191,93048,64621,020403, %17.3% ,64973,39483,65735,60392,68254,96922,354407, %19.0% ,61475,06486,95836,85386,59961,74522,750423, %19.9% 28

Year Residential structures Non-residential structures Infrastructure Transportation equipment MachineryR&D Other intangibles Total (excl. R&D) Total %-1%2%7%4%NA5%3%11% %-3%2%7%4%NA6%3%13% %-5%3%6%4%NA9%3%12% %-7%3%7%4%NA9%3%13% %-6%3%8%4%NA9%3%13% %-5%3%8%4%NA8%4%14% %-5%4%21%1%NA7%4%14% %-4%4%24%-1%NA4%3%14% %-2%4%34%-3%NA1%4%15% %-2%4%37%-2%NA-3%4%16% %-1%4%39%-6%NA-3%3%16% %-3%6%41%-5%NA1%4%19% %-5%1%44%-4%NA2%4%20% 29

 Need pre-2000 data for value-added (its components) and investment at the industry- level  Need to revise labor hours and composition data (compensation for lab workers to be excluded from LAB)  BOK uses industry-specific depreciation rates for R&D (e.g., especially high dep. rate for electric and electronic industry (about 31%), all others (about 12-21%) 30