The catch-up effect explains South Korea's rapid economic growth through investments in human capital, technology, and physical capital.
The catch-up effect can help explain the spectacular economic growth experienced by South Korea over the years 1960 to 1990. South Korea's rapid growth was fueled by investments in human capital, technology, and physical capital, leading to significant increases in GDP per capita.
Growth accounting studies have shown that the combination of investing in physical and human capital, along with advancements in technology, played a crucial role in South Korea's economic development.
Trade surpluses in the mid-1980s to mid-1990s allowed South Korea to repay past borrowing by sending capital abroad, showcasing the successful economic growth strategy implemented by the country.
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