Research on the Effect of Knowledge Stock on Technological Advance and Economic Growth in Republic of Korea

Round 1

Reviewer 1 Report (Previous Reviewer 1)

Referee report on the paper entitled “Research on the Effect of Knowledge Stock on Technological 2 Advance and Economic Growth in South Korea” submitted for publication to Sustainability

 

This paper has some potential but in my opinion, a major revision would be required, at the minimum, before publication.

 

Major comments:

 

The abstract and the paper later on first talk about innovation and growth, then about innovation and TFP and finally about TFP and growth. I would have a slightly different approach. Innovation fure sure first affects TFP, and in turn, TFP affects growth. From this, one can infer the impact of innovation on growth. I suggest the authors rethink the argumentation in ths sense,

 

The paper estimates output regressions in which logged GDP, value added and TFP are regressed on a measure of capital, labour and the stock and growth rate of innovation and different innovation variables (differentiated by sector or type).

I have the following observation on this:

-      In the GDP regressions, one would need to have per capita income as the dependent variable.

-        In a growth model like that, there are many other variables that would exert an effect on growth including trade openness, financial development, product and labour market regulations and the stock of human capital.

-        Many of these variables would also flow into the TFP regressions.

At the minimum, the paper should discuss these other factors.

 The literature overview should cite general studies on innovation, not focussed exclusively on Korea.

 

By contrast, the review of the methodologies (flow vs stock), PIM and different growth theories are too detailed at his level, a more compact summary would be desirable.

 Minor comments:

 It is very unusual to use arrows in the abstract, rather than writing out full sentences

 “data processing and time series trend analysis → time 13 series characteristic analysis → OLS(Ordinary Least Squares).”

The paper uses acronyms, which are not defined in the paper. Examples are  CAGR and GRED.

Figure 2, I think the concept of flow and stock is very basic, probably no need to have a chart on it.

Line 115: Osolescence rate  => obsolescence rate

 

The language is of good quality, though a quick language check always comes handy to anybody.

Author Response

Thank you for your specific comments. The following is my response to your comment.

• (Comment 1) The abstract and the paper later on first talk about innovation and growth, then about innovation and TFP and finally about TFP and growth. I would have a slightly different approach. Innovation fure sure first affects TFP, and in turn, TFP affects growth. From this, one can infer the impact of innovation on growth. I suggest the authors rethink the argumentation in ths sense.

• (Respond & Revised) I think that my paper follows exactly what you said. However one difference is thaat the R&D stock does not talk about Innovation. The R&D Stock is not an innovation but an accumulation of R&D investment. Rather, TFP is technological progress, or innovation. Thus, this study first deals with the relationship between R&D Stock, economic growth, and innovation that is technology progress. And finally, it is to estimate whether TFP(innovation) has a positive effect on R&D Stock and economic growth. It is believed that this process is exactly in line with your proposed research procedure.

• (Comment 2) In the GDP regressions, one would need to have per capita income as the dependent variable.

• (Respond & Revised) In previous researches, both real GDP and per capita GDP were used. I refer to the previous researches.

• (Comment 3) In a growth model like that, there are many other variables that would exert an effect on growth including trade openness, financial development, product and labour market regulations and the stock of human capital.

• (Respond & Revised) This study basically used labor, capital, and R&D stock as main variables based on the Cobb–Douglas production function. In addition, it was added as a control variable based on neoclassical and endogenous growth theory.Based on this, the focus of research is on differences by industry according to R&D intensity.The variables you present will be used to estimate instrumental variables in future studies. Thank you for the idea, and I add it to the conclusion of the study.

• (Comment 4) Many of these variables would also flow into the TFP regressions. At the minimum, the paper should discuss these other factors.

• (Respond & Revised) As you know, TFP is a representative indicator of technological progress or innovation. A number of previous studies, including Krugman and Young, use TFP as an indicator of technological innovation. References to this have been sufficiently presented. In addition, discovery and empirical research on additional technological innovation indicators will be conducted as follow-up studies. I will present it to the conclusion of the study.

• (Comment 5) The literature overview should cite general studies on innovation, not focussed exclusively on Korea. By contrast, the review of the methodologies (flow vs stock), PIM and different growth theories are too detailed at his level, a more compact summary would be desirable.

• (Respond & Revised) This study aims to estimate the R&D stock and efficiency of Korea. For this reason, prior studies are somewhat focused on the Korean situation. However prior studies on overall innovation were reviewed in '2.2 Literature Reviews'.As a follow-up study, international comparative studies will be conducted to the extent that data is allowed. I will present this to the conclusion of the study.

• (Comment 6) It is very unusual to use arrows in the abstract, rather than writing out full sentences“data processing and time series trend analysis → time 13 series characteristic analysis → OLS(Ordinary Least Squares).”

• (Respond & Revised) It has been revised.

• (Comment 7) The paper uses acronyms, which are not defined in the paper. Examples are CAGR and GRED.

• (Respond & Revised) It has been revised.

• (Comment 8) Figure 2, I think the concept of flow and stock is very basic, probably no need to have a chart on it.

• I think a figure is necessary.

• (Comment 9) Line 115: Osolescence rate  => obsolescence rate

• (Respond & Revised) It has been revised.

I'm attaching the revised paper, so please check it.

Thank you for sincerely.

Author Response File: Author Response.pdf

Reviewer 2 Report (Previous Reviewer 3)

The language is much improved, added references well selected. There are only few typos detected:

Line 30: I believe you are referring to GERD and not GRED?

Line 115: osolensce> probably obsolensce 

table 1- I would change the title: An Analysis of R&D Contribution to Growth in Previous Research in South Korea 

Can you provide a source for the definition of knowledge you use? Lines 100-102

Author Response

I reflected all your detailed reviews. Please check the attached file.

Author Response File: Author Response.pdf

Reviewer 3 Report (New Reviewer)

Abstract - please the importance, relevance and managerial implications of this research to the abstract.

The papers needs proof reading. It also needs to have the reference citation revised.

Page 2 - before advancing the research question, the authors needs to present and describe the problem, which has not been done properly yet. The authors refers the increase in R&D but have not yet linked it to the advance of science. 

Why the choice of the Solow model? Are there other models? 

On page 3 there is another set of research questions. What is the relationship with the research question presented on page 2?

Page 9 - Separate the information regarding your study from the information from the literature review. Create a section where the methodology of the study is presented.

Discussion- table 12 - It is said (...)"the following 3 policy implications (...)" - but in table 12 the authors label it as "Models". Are the authors talking about the same thing? Please do not forger to mention all the tables / figures in the text.

Page 23 - Table 13 - The table is not mentioned in the paper.  It is not clear why it appears after the conclusion.

Moreover, please avoid using the noun "I". Use the "we" instead.

 

 

 

The English is good. some minor typos meed to be corrected.

 

Author Response

Thank you for your specific comments. The following is my response to your comment.

 

• Abstract - please the importance, relevance and managerial implications of this research to the abstract.

• I accepted your opinion and revised it(p 1).

 

• The papers needs proof reading. It also needs to have the reference citation revised.

• Some references have been added. This study cited both research papers and reports, with differences in each reference form(p 27~28).

 

• Page 2 - before advancing the research question, the authors needs to present and describe the problem, which has not been done properly yet. The authors refers the increase in R&D but have not yet linked it to the advance of science.

• I accepted your opinion and revised it(p 2).

 

• Why the choice of the Solow model? Are there other models? 

• This study used the second endogenous model together based on the Solow model, the basic model of the neoclassical school. In particular, the second endogenous growth model distinguishes R&D intensity. All of these models are most commonly used because they are the most suitable models for quantitative analysis using the Cobb–Douglas production function.

 

• On page 3 there is another set of research questions. What is the relationship with the research question presented on page 2?

• The research questions presented on page 3 are sequential summary of the research questions on page 2 more specifically focusing in this study.  I accepted your opinion and revised it(p 3).

 

• Separate the information regarding your study from the information from the literature review. Create a section where the methodology of the study is presented.

• I accepted your opinion and revised it(p 6, 7, 10).

 

• Discussion- table 12 - It is said (...)"the following 3 policy implications (...)" - but in table 12 the authors label it as "Models". Are the authors talking about the same thing? Please do not forger to mention all the tables / figures in the text.

• I accepted your opinion and revised it(p 22).

 

• Discussion- table 12 - It is said (...)"the following 3 policy implications (...)" - but in table 12 the authors label it as "Models". Are the authors talking about the same thing? Please do not forger to mention all the tables / figures in the text.

• I accepted your opinion and revised it(p 23).

 

• Moreover, please avoid using the noun "I". Use the "we" instead.

• I accepted your opinion and revised it(p 23).

 

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report (Previous Reviewer 1)

The new version of the paper contains minor cosmetic changes. None of the authors' responses are satisfactory, they are a mere hand-waiving. I recommend rejection of the paper. 

good

Author Response

First of all, I thank you for your special advice.

I think you may not be satisfied with our revision. We would like to emphasize once again that this study does not only look at the relationship between various variables but also estimate R&D stock, TFP, and elasticity more accurately. It is revealed once again that the relationship and instrumental variable estimation of the various variables you proposed will be performed in a follow-up study. And we think this study is meaningful in that it estimates knowledge stock and TPF by industry group.

There was no particular advice from you in Round 2, but I attach a revised version.

This manuscript is a resubmission of an earlier submission. The following is a list of the peer review reports and author responses from that submission.

Round 1

Reviewer 1 Report

Referee report on the paper entitled “A Research on the Effect of Knowledge Stock on Technological Advance and Economic Growth in Korea”, submitted for publication to the journal Sustainability

 

This is a potentially interesting paper. However, I would recommend rejection given the serious limitations of the empirical exercise presented therein. Please find below my main comments and some detailed second-order observations.

 

MAIN COMMENTS

 

-        The paper needs a major redrafting effort. The first part of the paper does not have references. Some sentences read in a strange manner. Structure and how arguments are put one after the other need revision. Literature is heavily focussed on Korea. The paper should consider evidence from other (OECD) countries as well.

-        Some of the time series econometrics is based less than 30 observations (Tables 2 and 3). Results presented in Table 4 use 15 observations. This is very scary…

-        In many regressions, most independent variables are imprecisely estimates (statistically non-significant). This casts doubt on the whole approach.

-        In TFP regressions (eg Table 9), TFP is regressed on L and K. This is dubious as TFP is a residual once L and K are taken out from output. Also, a number of conventional drivers of TFP are not considered, including trade intensity and product and labour market regulations.

-        The paper claims to be using an error correction modelling framework. Yet estimation results only show static OLS regressions and nothing on the error correction and short-term dynamics.

 

REFERENCES

 

Page 2: but the analysis results are different for each researcher because the method of measuring each variable is different for each re-searcher.  => please cite papers

 

Page 2: Theoretical consensus on how to estimate labor stocks, labor contribution rates, 51 and capital stocks has not been reached, and the TFP estimation results are different. => same, please cite papers.

 

Page 2: Therefore, it is necessary to secure the stability of the results by esti-54 mating TFP and estimating the contribution to economic growth through data and meas-55 urement methods widely used at home and abroad.  => So, first, the authors argue that there is problem of measurement and no consensus reached in the literature. They then go forward by saying they are estimating TFP and their drivers. This is is contradctionary.

 

Page 2: Most of the existing studies have ana-69 lyzed the economic growth effect of R&D investment at the national or corporate level.  . => same, please cite papers

 

Table 1 => are the papers cited referreing to Korea? If so, it should be said so somewhere.

 

Page 3: there is a citation without a reference. In addition, this sentence does not make full sense:  "Stock of information technically useful to facili-92 tate future innovation as a company (industry, country) is directly used in actual produc-93 tion activities."

 

Figure 1, the paper should be more nuanced. It is of course not true that the flow of R&D in t-2 and t-1 are independent from each other. They build on each other.

 

Page 3, not sure what 'base year access method' is.

 

Page 4, the depreciation rate is called advancedization rate. This is a word that probably does not exists.

 

Page 6, second box, TFP is a function of growth rates. I wonder how the level of TFP can be a function of growth rates.

 

DRAFTING

 

This sentence in the abstract does not read well: The analysis procedure is analyzed by the procedure of 'data processing and time series 14 trend analysis → time series characteristic analysis → OLS'.

 

Page 1:

 "Is the rapid increase in R&D investment 38 actually contributing to domestic science and technology and economic growth?" If so, how much do you contribute?"  => How much DOES IT contribute.

 

Page 2. However There are countless studies on the estimation of 48 total factor productivity at domestic and foreign,  => “at domestic and foreign” does not make much sense.

 

Reviewer 2 Report

 

The researcher has covered an important topic showing interesting results for the readers. Although the article is good enough, but one or two points worth mentioning for the clarity of readers.

1.       In the title of the article, the word should be “technological advancement instead of technological advance”

2.       How this article is different from the existing studies available

3.       Justification of using ECM

4.       The discussion part should be a detailed one for readers to justify the importance of knowledge stock for advancement and economic growth

Comments for author File: Comments.pdf

Reviewer 3 Report

Please carefully re-read your text and correct the sentences (there are, especially in the first part of the paper) several illogical sentences, repetitions, etc. Language is complex and at places extremely difficult to follow.

 

1.       What is the main question addressed by the research?

The research addresses the impact of R&D investment on the GDP growth in Rep. Of Korea. Korea is one of the countries with the highest growth of R&D investments, and currently the first one in terms of the percentage of R&D expenditures of GDP. The research discusses the relevance of such high investment, especially from the point of technological capacity.

 

2.       Do you consider the topic original or relevant in the field? Does it address a specific gap in the field?

The topic is definitely highly relevant, since many countries are trying to increase R&D investments, yet there is limited detailed empirical evidence of the benefits: which is the essence of the paper here. The issues which are problematic in this field are how to measure the impact, which variables affect one another, how to gather the right data, etc. The modelling proposed in this paper is certainly contribution to the field.

This is mentioned in my original review as well.

3.       What does it add to the subject area compared with other published material?

I mentioned that they construct a special econometric model.

4.       What specific improvements should the authors consider regarding the methodology? What further controls should be considered?

My particular problems were two:

                - the language is used is at places very difficult to follow, with not just several typos, but also the construction of the sentences

                - I am not an expert in econometrics, so I asked the editor to ask another reviewer to assess the econometric part

5. Are the conclusions consistent with the evidence and arguments presented and do they address the main question posed?

                Mostly yes, I have a problem with conclusions only in a part where new issues are being opened.

6.       Are the references appropriate?

I suggested and added a study prepared by OECD with extensive literature review of precisely the types of modelling the authors have developed.

 

I attach a relatively new paper which addresses the econometric modeling of similar/ same issues by OECD. I believe it is worth looking at, also since it includes an extensive literature review. Your list of references can benefit from some additional sources.

Comments for author File: Comments.pdf