An estimation of growth model for South Korea using human capital

This paper tests the hypothesis of nondecreasing returns to scale in physical capital and human capital. The results cannot support the nondecreasing returns to scale hypothesis, implying the acceptance of the neoclassical growth model and the inevitability of convergence toward the steady state. In Korea, physical capital does not seem to receive its social returns, suggesting the possibility of externalities. However, the test of externalities does not support it. The effect of externalities on TFP was examined and the presence of externalities due to human capital and exports was found only in the 1962-1990 data.