FUNCTIONAL INCOME DISTRIBUTION AND GROWTH IN SOUTH KOREA: A POST KEYNESIAN ECONOMETRIC ANALYSIS

Yıl 2017, Cilt: 39 Sayı: 2, 555 - 578, 24.12.2017

Ozan Ekin Kurt

https://doi.org/10.14780/muiibd.384208

Öz

The aim of this article is to analyze the short-term impact of functional income distribution on aggregate

demand and its components in South Korea within a post Keynesian framework, in which demand

regime of an economy is either wage or profit-led. The article firstly portrays the structural change and

the macroeconomic performance of South Korea, and then presents the evolution of the labor income

share in the country. The article follows with the presentation of the theoretical model employed for the

analysis of the demand regime in the country and offers a survey of the empirical literature of the post

Keynesian models of income distribution and growth. Then takes place the econometric analysis and the

article proceeds with the evaluation of the results and concludes. The econometric investigation shows that,

over the period 1970–2011, the growth regime of the domestic economy is wage-led, while that of the total

economy is profit-led. The results are partially in contradiction with those already found in the literature

and point that pro-labor growth policies are not viable within the current structure of the South Korean

economy in the short run.

Anahtar Kelimeler

Income Distribution, Demand, Growth, Post Keynesian Economics, South Korea

Kaynakça

• BARBOSA-FILHO, N.H., Taylor, L. (2006). Distributive and demand cycles in the US economy-a structuralist Goodwin model, Metroeconomica, 57(3): 389-411.
• BHADURI, A. and Marglin, S. (1990). Unemployment and the real wage: the economic basis for contesting political ideologies, Cambridge Journal of Economics, 14(4): 375–93.
• BOWLES, S., Boyer,R. (1995). Wages, aggregate demand, and employment in an open economy: an empirical investigation”, Macroeconomic Policy after the Conservative Era: Studies in Investment, Saving and Finance, Editor: G. A. Epstein, H. M Gintis, Cambridge (UK), Cambridge University Press, p. 143-71.
• CEPII (2014). CHELEM (Comptes Harmonisés sur les Echanges et L’Economie Mondiale, Harmonized international trade flows, balances of payments and world revenues), https://chelem.bvdep.com, (Date of Access: 28.04.2014)
• COTTRELL, A., Lucchetti, R. (2015). GRETL: Gnu regression, econometrics and time-series library, http:// gretl.sourceforge.net.
• FEENSTRA, R. C., Inklaar, R., Timmer, M.P. (2013). The Next Generation of the Penn World Table, www.ggdc.net/pwt, (Date of Access: 17.09.2013)
• FOSTER, J.B., Yates, M.D. (2014). Piketty and the Crisis of Neoclassical Economics, Monthly Review, 66(6): 1-24.
• GORDON, D.M. (1995a). Putting the horse (back) before the cart: disentangling the macro relationship between investment and saving, Macroeconomic Policy after the Conservative Era. Studies in Investment, Saving and Finance, Editor: G. A. Epstein, H. M Gintis, Cambridge (UK), Cambridge University Press, 57-108.
• GORDON, D.M. (1995b). Growth distribution and the rules of the game: social structuralist macro foundations for a democratic economic policy, Macroeconomic Policy after the Conservative Era. Studies in Investment, Saving and Finance, Editor: G. A. Epstein, H. M Gintis, Cambridge (UK), Cambridge University Press, 335-83.
• HART-LANDSBERG, M. (1993). The rush to development: Economic change and political struggle in South Korea, New York, Monthly Review, p.26-27.
• HART-LANDSBERG, M. (2009).The Promise and Perils of Korean Reunification, Monthly Review, 60(11): 50–59.
• HARTWIG, J. (2014). Testing the Bhaduri-Marglin model with OECD panel data, International Review of Applied Economics, 28(4): 419-35.
• HEIN, E. (2014). Distribution and Growth After Keynes: A Post-Keynesian Guide, Cheltenham, Edward Elgar.
• HEIN, E., Vogel, L. (2008). Distribution and growth reconsidered: empirical results for six OECD countries, Cambridge Journal of Economics, 32(3): 479-511.
• ILO (2014), Global Wage Database, www.ilo.org, (Date of Access: 29.05.2014)
• JETIN, B., Kurt, O.E. (2016). Functional income distribution and growth in Thailand: A post Keynesian econometric analysis, Journal of Post Keynesian Economics, 39(3): 334-60.
• KALDOR, N. (1955/56). Alternative Theories of Distribution, Review of Economic Studies, 23(2): 83-100.
• LAVOIE, M., Stockhammer, E. (2013). “Wage-led Growth: Concept, Theories and Policies”, Wage-led Growth: An equitable strategy for economic recovery, Editor: Marc Lavoie, Engelbert Stockhammer, New York, Palgrave Macmillan, 13-39.
• MOLERO-SIMARRO, R. (2015). Functional distribution of income, aggregate demand, and economic growth in the Chinese economy, 1978–2007, International Review of Applied Economics, 29(5): 435-54.
• NAASTEPAD, C. W. M., Storm, S. (2006/7). OECD demand regimes (1960–2000), Journal of Post-Keynesian Economics, 29(2): 213-48.
• OECD (2014), OECD.Stat, http://stats.oecd.org, (Date of Access: 27.05.2014)
• ONARAN, O., Galanis, G. (2014). Income Distribution and Growth: A Global Model, Environment and Planning A, 46(10): 2489-2513.
• ONARAN, O., Obst, T. (2016). Wage-led growth in the EU15 member-states: the effects of income distribution on growth, investment, trade balance and inflation, Cambridge Journal of Economics, 40(6): 1517-1551.
• ONARAN, O., Stockhammer, E. (2005). Two Different Export-Oriented Growth Strategies: Accumulation and Distribution in Turkey and in South Korea, Emerging Markets Finance and Trade, 41(1): 65-89.
• ONARAN, O., Stockhammer, E., Grafl, L. (2011). Financialisation, Income Distribution and Aggregate Demand in the USA. Cambridge Journal of Economics, 35(4): 637-661.
• PESARAN, M. H., Shin, Y., Smith, R.J. (2001). Bounds testing approaches to the analysis of level relationships, Journal of Applied Econometrics, 16(3): 289-326.
• PIKETTY, T. (2014). Capital in the 21st Century, Cambridge (US), Harvard University Press.
• STOCKHAMMER, E., Onaran, O. (2004). Accumulation, Distribution and Employment: A Structural VAR Approach to a Kaleckian Macro-Model, Structural Change and Economic Dynamics, 15(4): 421-47.
• STOCKHAMMER, E., Onaran, O., Ederer, S. (2009). Functional Income Distribution and Aggregate Demand in the Euro-area, Cambridge Journal of Economics, 33(1): 139-59.
• STORM, S., Naastepad, C. W. M. (2005). Strategic factors in economic development: East Asian industrialization 1950-2003, Development and Change, 36(6): 1059-94.
• WORLD BANK (2014). World Bank Development Indicators, http://databank.worldbank.org/data/download/archive/WDI_excel_2014_04.zip, Date of Access (14.04.2014).
• WORLD BANK (2017). World Bank Development Indicators, http://databank.worldbank.org/data/download/WDI_excel.zip, (Date of Access: 01.03.2017)