The variations in the technical efficiency of Korean Manufacturing Establishments under two distinctive industrial policies

The main objective of this study is to analyze the effects of two distinctive government industrial policies of Korea, the "GM" (Governed Market) in the 1960s and 1970s and the "SM" (Simulated Free Market) in the 1980s, on Relative Technical Efficiency of the two different groups, "Favored" and the "Less favored.";Under GM policy, the Favored were LEs (Large Establishments) in the 1960s, and LEs of the HCI in the 1970s while the Less Favored were SMEs (Small and Medium-sized Establishments) in the 1960s, and the Non-HCI in the 1970s.;The 1978 Census of Manufacturing Establishments of Korea is used for pre-1980, and the 1989 Survey of Manufacturing Establishment is used for post-1980 in order to estimate technical efficiency of firms under two distinctive industrial policies in Korea.;The primary contribution of this study is the use of micro-level establishment data to analyze the technical efficiency of four Non-HCI (Non-Heavy machinery and Chemical Industries) and seven HCI (Heavy machinery and Chemical Industries) of Korea in 1978 and 1989.;The concept of technical efficiency includes price efficiency as Farrell (1957) first constructed.;The econometric model applied in this study was translog Full Frontier Production Function with Gamma density using the MLE (Maximum Likelihood Estimation).;It was concluded that the GM policy, especially the HCI strategy had significant effects on the level of the Relative Technical Efficiency of HCI and Non-HCI as well as SMEs (Small and Medium-sized Establishments) and LEs (Large Establishments) in Korea.