An Analysis of Income Sensitivity to Social Technology : A comparison among Country Groups Using Panel Date

Chul-Kyu Kang and Jae-Hyung Lee

Using available panel data on 68 countries covering the years 1998-2006, we measure the sensitivity of per capita real GDP to change in each of the five social technologies by six country groups: OECD, Asia NIEs, developing countries, BRICs, less-developed countries, and Korea. The regression results suggest that each of the five social technologies in this paper (i.e., anti-corruption, deregulation, property rights, government size, and law) is positively related to per capita real GDP. The regression results also suggest that per capita real GDP is more elastic with respect to each of the five social technologies than IT as a proxy for physical technology in the groups of relatively rich countries. It is evident that per capita real GDP is elastic with respect to social technologies in Korea. This implies that to speed up Korea's advancement, improving social technology may be crucial.