R&D Investment and Job Creation in Korea

If technical progresses are of a form that can be utilized by existing plant, then investors will be encouraged to create new plants. This is called "capitalization effect". However, if the technical progress is very fast, the proportion of workers released from production unit will be high. This is called "creative destruction effect".(Aghion and Howitt, 1998) We tested some propositions of Schumpeterian growth theory by real data of Korean economy. Considering the results of estimation and testing, we can see that the evidence is strongly in favor of the capitalization effect of growth on unemployment in Korean economy. But, we can see the decreasing trend of those capitalization effect by detecting the increase of creative destruction effect of growth. Finally, recent "jobless growth" may come from the nonexistence of capitalization effect of productivity growth.