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Korea’s economy has leaped to high-income status thanks to several decades of sustained high growth. However, population aging and shifts in global demand provide headwinds for future growth and Korea now faces the effects of COVID-19 on economic activity. This paper asseses the expected drag on potential growth from these factors and discusses policies that could provide offsetting upward momentum by facilitating structural transformation. We find that potential output growth slowed to about 2½ percent before the COVID-19 pandemic and would have fallen to 2 percent by 2030, mainly due to demographic factors. Moreover, there is a possibility of scarring from the COVID-19 shock as adjustment frictions from structural rigidities interact with shifts in demand and supply patterns, lowering investment and labor force participation. At the same time, industry-level analysis suggests ample scope to raise productivity, especially in services where productivity gains have lagged. Addressing these rigidities could offset a large proportion of the expected downward pressure on potential output.

Korea, Republic of --- Macroeconomics --- Economics: General --- International Economics --- Production and Operations Management --- Labor --- Diseases: Contagious --- Investment --- Capital --- Intangible Capital --- Capacity --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Human Capital --- Skills --- Occupational Choice --- Labor Productivity --- Macroeconomic Analyses of Economic Development --- Measurement of Economic Growth --- Aggregate Productivity --- Cross-Country Output Convergence --- Macroeconomics: Production --- Labor Standards: Labor Force Composition --- Production --- Cost --- Capital and Total Factor Productivity --- Labor Economics: General --- Health Behavior --- Economic & financial crises & disasters --- Economics of specific sectors --- Labour --- income economics --- Infectious & contagious diseases --- Potential output --- Labor force participation --- Capacity utilization --- Total factor productivity --- Currency crises --- Informal sector --- Economics --- Economic theory --- Labor market --- Industrial productivity --- Industrial capacity --- Labor economics

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This paper constructs an industry-level dataset of productivity across advanced economies, showing that Korea’s labor productivity and total factor productivity levels are below the median of other advanced economies. We identify sizable industry-level productivity gaps in Korea with respect to the global frontier, especially in market-oriented services. Using the OECD’s Product Market Regulation (PMR) Indicators, we show that tighter PMRs slow industry-level productivity growth, and these effects occur across all areas of PMRs—state control, barriers to entrepreneurship, and barriers to trade and investment—and through several detailed indicators. These effects are transmitted through higher product prices and unit labor costs of industries exposed to regulation. The results confirm the potential for Korea to boost overall productivity and growth through PMR reforms, especially by lowering barriers in service and network sectors, reducing restrictions applying to trade and investment, and evaluating the scope of government involvement in the economy.

Korea, Republic of --- Macroeconomics --- Economics: General --- Production and Operations Management --- Finance: General --- Exports and Imports --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Institutions and Growth --- Measurement of Economic Growth --- Aggregate Productivity --- Cross-Country Output Convergence --- Other Economic Systems: Productive Enterprises --- Factor and Product Markets --- Prices --- Population --- Macroeconomics: Production --- Production --- Cost --- Capital and Total Factor Productivity --- Capacity --- General Financial Markets: General (includes Measurement and Data) --- Human Capital --- Skills --- Occupational Choice --- Labor Productivity --- Trade Policy --- International Trade Organizations --- Economic & financial crises & disasters --- Economics of specific sectors --- Finance --- International economics --- Productivity --- Total factor productivity --- Commodity markets --- Financial markets --- Labor productivity --- Trade barriers --- International trade --- Currency crises --- Informal sector --- Economics --- Industrial productivity --- Commodity exchanges --- Commercial policy

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Central America experienced moderate growth during the last decade, including in the years leading up to the global financial crisis, but the rate of convergence toward advanced country income levels has still been slow. Moreover, forecasts imply that these trends will continue. What can be done to spur higher growth in Central America? We bring new data to bear on this question-version 7.0 of the Penn World Table and a new IMF database on structural reforms. Our cross-country panel regression of economic growth using System GMM captures the importance to growth of conditional convergence, factor accumulation, and macro policies. In addition, structural efficiency is a significant factor in explaining growth performance. We construct a broad index of efficiency and find that increasing the degree of structural efficiency by one standard deviation raises growth by ½ percent. This implies that Central American countries could significantly increase their long-run growth rates by increasing the flexibility of markets and improving the quality of regulation.

Central America--Economic policy. --- Economic development--Econometric models. --- Economic policy. --- Economic nationalism --- Economic planning --- National planning --- State planning --- Economics --- Planning --- National security --- Social policy --- Finance: General --- Foreign Exchange --- Labor --- Macroeconomics --- Multiple or Simultaneous Equation Models: Models with Panel Data --- Institutions and the Macroeconomy --- Macroeconomic Analyses of Economic Development --- Economic Development: Financial Markets --- Saving and Capital Investment --- Corporate Finance and Governance --- Institutions and Growth --- Measurement of Economic Growth --- Aggregate Productivity --- Cross-Country Output Convergence --- Human Capital --- Skills --- Occupational Choice --- Labor Productivity --- Personal Income, Wealth, and Their Distributions --- General Financial Markets: General (includes Measurement and Data) --- Labour --- income economics --- Finance --- Currency --- Foreign exchange --- Human capital --- Structural reforms --- Personal income --- Commodity markets --- Purchasing power parity --- Macrostructural analysis --- National accounts --- Financial markets --- Income --- Commodity exchanges --- El Salvador --- Economic development --- Econometric models. --- Central America

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The decline in oil prices in 2014-16 was one of the sharpest in history, and put to test the resilience of oil exporters. We examine the degree to which economic fundamentals entering the oil price decline explain the impact on economic growth across oil exporting economies, and derive policy implications as to what factors help to mitigate the negative effects. We find that pre-existing fundamentals account for about half of the cross-country variation in the impact of the shock. Oil exporters that weathered the shock better tended to have a stronger fiscal position, higher foreign currency liquidity buffers, a more diversified export base, a history of price stability, and a more flexible exchange rate regime. Within this group of countries, the impact of the shock is not found to be related to the size of oil exports, or the share of oil in fiscal revenue or economic activity.

Investments: Energy --- Exports and Imports --- Foreign Exchange --- Macroeconomics --- Economic Growth of Open Economies --- Measurement of Economic Growth --- Aggregate Productivity --- Cross-Country Output Convergence --- Energy and the Macroeconomy --- Energy: Demand and Supply --- Prices --- Energy: General --- Trade: General --- Currency --- Foreign exchange --- Investment & securities --- International economics --- Oil prices --- Oil --- Exchange rate flexibility --- Exchange rate arrangements --- Oil exports --- Commodities --- International trade --- Petroleum industry and trade --- Exports --- South Sudan, Republic of

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We analyze the flexibility of the Canadian labor market across provinces in both an interand intra-national context using macroeconomic data on employment, unemployment, participation, and (for Canada) migration and real wages. We find that Canadian labor markets respond in a similar manner to their U.S. counterparts and are more flexible than those in major euro area countries. Within Canada, the results indicate that labor markets in Ontario and provinces further west are more flexible, particularly with regard to migration, while those further east are less so.

Electronic books. -- local. --- Labor market -- Canada. --- Manpower policy -- Canada. --- Business & Economics --- Labor & Workers' Economics --- Labor market --- Manpower policy --- Labor --- Emigration and Immigration --- Demand and Supply of Labor: General --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Wages, Compensation, and Labor Costs: General --- International Migration --- Labour --- income economics --- Migration, immigration & emigration --- Labor markets --- Real wages --- Migration --- Labor market flexibility --- Economic theory --- Emigration and immigration --- Canada