Chapter

Information Technology and Firm Performance in Korea

Jong-Il Kim

in Growth and Productivity in East Asia

Published by University of Chicago Press

Published in print August 2004 | ISBN: 9780226386805
Published online February 2013 | e-ISBN: 9780226387079 | DOI: http://dx.doi.org/10.7208/chicago/9780226387079.003.0011
Information Technology and Firm Performance in Korea

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Information technology (IT) has made a considerable contribution to the recent economic growth of Korea. Semiconductor, personal computer, and telecommunication equipments ranked first, third, and sixth, respectively, in the 2000 Annual Statistical Report of Korea. A recent OECD report shows that the productivity growth in Korea could be to a large extent attributable to the strength in IT manufacturing. Along with expansion of IT manufacturing sectors in Korea, Korean firms have become more IT equipped, particularly after the economic crisis in 1997. This chapter examines the effect of IT use on Korean firm performance in 1997–2000, a period when most Korean firms introduced unprecedented reform under the pressure of economic crisis. It first provides some empirical findings on the role of IT investment in firm productivity growth. It then evaluates the effect of IT spending on firm profitability and total factor productivity. Finally, it estimates the valuation of IT capital in the financial market and performs a simple experimental growth accounting to see how much contribution IT investment might have made to the recent economic growth of Korea.

Keywords: information technology; firm performance; Korea; economic crisis; productivity growth; profitability; total factor productivity; financial market; economic growth

Chapter.  8953 words.  Illustrated.

Subjects: Business and Management

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