Testing endogenous growth in South Korea and Taiwan

We evaluate the endogenous growth hypothesis using sectoral productivity data and the product variety of exports for South Korea and Taiwan. We find that changes in relative export variety (entered as either a lag or a lead) have a positive and significant effect on total factor productivity (TFP) in nine of the 16 sectors, Seven out of these sectors are what we classify as secondary industries, in that they rely on and produce differentiated manufactures, and therefore seem to fit the idea of endogenous growth. Among the primary industries, which rely more heavily on natural resources, we find mixed evidence. (C) 1999 Elsevier Science B.V. All rights reserved.