How Large is the Impact of Exports on Economic Growth? Korea from the 1960s through the 2010s

Abstract

This paper investigates the impact of exports on Korean economic growth since its economic take-off period in the 1960s, employing the import-adjusted GDP decomposition method and the related export multiplier. Our results indicate that the direct contribution of net exports to GDP growth was 27.2% over the period 1960-2019, equivalent to 2.1 percentage points per annum over the last six decades. This figure is truly a remarkable one, taking into consideration that the average growth rates of developed and developing countries were 3.1% and 3.4% over the same period, respectively. We also find that, while the direct contribution of net exports to GDP growth remained undiminished at the later stages of economic development, the indirect impact of exports via their stimulation of domestic demand was the major source of exports’ contribution to growth at the take-off period in the 1960-70s.