Translog Analysis

8/12/2019 Translog Analysis

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Factor Substitution and Import Demand for South Korea: A Translog AnalysisAuthor(s): Khan A. Mohabbat and Ardeshir J. DalalSource: Weltwirtschaftliches Archiv, Bd. 119, H. 4 (1983), pp. 709-723Published by: SpringerStable URL: http://www.jstor.org/stable/40439177.

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Factor SubstitutionndImportDemand forSouth Korea A TranslogAnalysis

ByKhan A. Mohabbat and ArdeshirJ. Dalai

ContenA: I. Introduction. II. Methodology. III. Data. - IV. Em-piricalResults. - V. Summary nd Conclusions.I. Introduction

number f authors rguethat while conventionalmacromodelsfrequentlyreatmportsither s final oodsor ntermediateoods1thatareseparablefrom rimary actors ntheproductionrocess,it wouldbe more ppropriateo treat mports s a factornput Burgess,1974a,1974b;Mohabbat t l., 1984].More pecifically,ormostdevelop-ingcountries,mports ave been ofparamountmportances substitutesfordomestic nputsor as complementsormeagerdomestic esources[MacDougall, 961; Chenery,trout, 966].Recently smallnumber f studieshave attemptedo verifympiri-callythe roleofimports s a factornput. Burgess 1974a] usingU.S.data,andKohli[1978]usingCanadiandata,havefound hat mportsndcapitalservices re complements, hereasMohabbat et al. [1984]showthat for ndia, imports nd capital services re substitutes. he latterstudy ttributeshedifferingesults o thefact hattheU.S. and Canadaare capital-rich, evelopedcountries,whereas ndia is a capital-poor,underdevelopedountry.The purpose f thispaper s to examine herole of mportsn oneofthe"Newly ndustrializingountries"NICs) [Lim,1979]namely, outhKorea,for heperiod 960 1973.Interestn SouthKorea derives romthefollowing:1) SouthKorea is theonlycountryn the NIC groupforwhichhigh ualitydata comparable o thedata for heU.S. and Canadaare available; (2) Since theheavy ndustrial ectorwas concentratedntheNorth, fter hepartition f Korea the South was leftwithmainlythe light ndustry nd agriculturalectors Hong, Krueger, 975], ndRemark: he authorswish to acknowledge elpful omments y themanaging ditorand an anonymouseferee,nd to thankKy HyangYuhnfor ssistancewith hecomputa-tions.1For examples f mport emand stimation heremportsre treated s finalgoods,see Houthakkernd Magee [1969], nd Learner nd Stern 1970].

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710 KhanA.Mohabbat ndArdeshir .Dalaiimports aveplayed dominantole n thecapital ormationnd n-dustrializationf outhKorea; 3)The ample eriod960 1973ucceedsthepost-Korean arperiod f"rehabilitation".t is significantn thatduringhistime pana single-mindedffortowardsndustrializationtookplace;theaverage rowthateoffixed apital tockwas about10percentnd thisresultedn a rapidgrowthf manufacturedoods.Furthermore,uringhisperiodherewas essevidenceffactormarketdistortionHong, rueger,975, p.65 66].For stimationurposes eusethe ranslogost unctionpproachsit ssuperiorotheoftensedCobb-DouglasndtheCES specifications.Unlike heCobb-Douglasnd theCES, thetranslogoesnot mposeprioriestrictionsn nput ubstitutabilityr eparabilityetweennputsand outputs,nd allows ne to specifyestable ypothesesegardingsubstitutabilityndvarious ormsf eparability.fseparabilityetweeninputsndoutputsxists,hen t mplieshat he ost-minimizingundleof nputss independentf thecompositionf final utput orgivenfactor rices.Verificationf nput-outputeparabilitys significantorSouthKorea, ince casualexaminationfthedata shows ubstantialvariationnthecompositionffinal utput etweenonsumptionoodsand nvestmentoods.n addition e shall lsoexaminehe xistencefseparabilityetweenrimarynputs ndimports.f such eparabilitydoesnot xist,hent would e ncorrectotreat hedemand ormportsasdependingnly n mport ricesnd n ndex fdomesticalue dded,as is done nmost onventionalpecificationsf mportemand.Finally,he ranslogpecificationllows sto derive stimatesf heAllen artial lasticitiesfSubstitutionAES)betweenairs f nputs,andthus o makedeductionsegardingnput ubstitutabilityrcom-plementarity.In SectionsI and II webrieflyiscuss hemethodologynddata,inSectionV we tate he mpiricalindings,nd nSection wepresenta summaryndthemain onclusionsf he nalysis.

II. MethodologyWeemploy three-input,wo-outputodel, hereapitalK), abor(L) andimportsM) are used to produce onsumptionoods Yc) andinvestmentoods )forbothdomesticnd foreignse. Sincetheoutputmeasure sedhere s thevalueoffinalalesnetof ndirectaxesand ubsidiesi.e., ross alue dded lus hevalue f mports)t s inkedtothe otal ost fproductionythe ccountingdentityCYC PiYl==WKK+ WLL+ WMM == ,where ifWj andC aretheprices f thei-th ood,-th actorndtotal ost espectively.



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FactorSubstitution 71 1Weassume hat hecost-minimizingevelofproducinghetwooutputsmaybe exactlyrepresentedy thetranslogointcostfunction1:

InC =


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712 KhanA.Mohabbat ndArdeshir .Dalaito estimate heparameters fthetranslog unction. classical additiveterm s added toeachoftheequations oallowfor rrorsncostminimiza-tion.Since the revenue hares nd the cost shareseach sumtounity, heerror erms t each observationmust um to zero.Thisrestrictionmpliesthatthe covariance tructures singular nd that one equation n eachcategorymustbe droppedforointestimation.We deleted heequationsfor herevenue harefor nvestmentoodsand the cost sharefor apitalservices.A non-linear ellner 1962]estimation rocedures employedhereto estimate heparametersf therevenue nd costshareequations.Kmenta and Gilbert 1968] have shown that iteration f the Zellnerestimation rocedure ntilconvergenceesults n maximumikelihoodestimateswhich are invariant o whichequationsare omitted.Sincemaximum ikelihood stimates re obtained,we use the likelihood atiotestfor esting ypotheses,making se of thefactthatminus wice helogarithmfthe ikelihood atio s distributed s 2,with he number fdegrees f freedomqual to thenumber f ndependentestrictionseingimposed.The use ofa dual cost functionpproachpermits particularlyimplederivationftheAllenPartialElasticities fSubstitution.n general,heAES for ny nputs and j is givenbyaij=CCij/CiCj=^j/Sj (3)whereCi = eC/6Wi,Qj = e^/W^Wj and 0 is the output-constantelasticity f nput withrespect o the -th nputprice see for nstanceLayard,Walters, 978,p. 269].In termsof the inputcost shares and parameters fthemodel, 3)implies

eMLk (4a)(Ymm Tlm) . . eMK-sM(1-sM-sL)+1 (4b). (LL + Ylm) . . LK=-SL(i-SM-SL)+1 . (4C)

ou TU+.Sf"Si; i=L.M,K (5)The ownelasticity fsubstitution,tcan be used to obtainexpressionsfor heownprice lasticities f nputdemand.Using 3) and (5)weobtain



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Factor ubstitution 713ii + Si2 - Si . = ; 1 = L, M (6a)

Since s not estimated irectlyrom2),thesimplestwayto find is to makeuse of thestandardresult hatfor n indirectxpenditurercostfunction, ^ = 0, so that (3) implies Sj ^= 0. Usingthis astequality nd (3),andnoting hat^ = ^ weobtain^kk = Sk = ~ (Sm Sl 0 andnet omplementsifojj < 0 for j. Whencalculating he estimatedvalues of nd ^the fittedostshares nd theparameterstimateswillbe used.III. Data

It is apparentfrom 2) that forestimationwe requiretime-seriesvaluesfor:therevenue hareofconsumption oods Re), the cost sharesof abor nd mportsSLandSM), heratioofconsumptionoods o invest-mentgoods YcIYi)tand theratiosof theprices f abor and imports othepriceofcapitalservicesWL/WKndWM/WK).aluesfor hese erieswerecalculatedfor achyearfrom960 to 1973.Since the outputmeasure s final ales, total cost (C) is calculatedas gross rivate omestic roduct adjustedfor llnon-factorhargesuchas indirect axes and subsidies) t current ricesplusthecurrent alueof mportsWMM).Total cost thus ncludes hevalue ofall goods old nthe domestic conomy lus exports. incewe wishto decompose utputinto wocomponentsnly consumptionoods nd investmentoodswefirstbtained aluesfor omestic ales of onsumptionoods composedofconsumptionfnon-durables,ervices fdurablesand services) ndinvestmentoods.Exportsof non-durablesnd serviceswere hen ddedto domestic ales ofconsumptionoodsto getthetotalcurrent alue ofconsumptionoods (PCYC),and the remainingxportswere added todomestic ales of nvestmentoodsto getthe totalcurrent alue of n-vestment oods PiYi). Re was then calculated s PcYc/C.The consumptionoods productpriceindex,the investment oodsproductprice ndex,and the unitvalue index ofexportswere used toobtainvaluesforPcYc an(l P1Y1m constant i960) prices.These weretreated s indices foutput ndwereusedto calculateYc/YiData onlaborcompensationWLL) and capitalcompensationWKK),adjustedforqualityand rates of utilization,were thenobtained.The

Weltwirtschaftlichesrchiv d. CXIX. 47



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714 Khan A. Mohabbat ndArdeshir .Dalaicost haresmay henbe calculateds SL = WLL/C,K= WKK/CndSM WMM/C.ince he cost hares ecessarilyum ounity,nly woof hese eed o be calculatedirectly,ndthethird an be obtainedsa residual.Finally,he nput rice atioswere alculatedrom he unitvalueindex f mportsWM),he apitalnput ricendexWK),nd heprivatedomesticabornput ricendexWL), llwith960as base.Alldatapertainingo mportsnd xports ere btainedrom ariousissuesoftheEconomictatistics earbookublishedy theBankofKorea.All therataneededorstimationere btainedrom hristensenandCummings1981].

IV. EmpiricalResults1. Estimation and Hypothesis TestingTheratios c/Yi WL/WKndWM/WKre caled o1 nthebaseyear,i960,and are used to estimateheparametersfequations2). Thus,initially,heonly estrictionsmposedrethosempliedysymmetry,constanteturnso scale ndthe inear omogeneityf he ost unctionin nput rices.We refero these stimatess "unconstrainedstimates"whichre hownn ColumnofTable1.Since hetranslogs an extremelyeneralunctionalorm, e wishtosee fwecan narrowt down oobtain morexact epresentationfthe echnology.o this ndweengagen a series fhypothesisests.First,we testfornput-outputeparability.f this xists,hen hecostfunctionanbe expresseds theproductftwofunctions,ne de-pendingnly noutputsnd the other ependingnly n nput rices.Consequently,he ernisepresentingnteractionetweenutputsnd n-putpricesn 1), .e.thefy's, ill e zero. ince herestrictionsf onstantreturnso scale and linearhomogeneityn input rices lreadymplyXpij ^ = 0, in terms ftheparametersf 2) werequirehe m-positionf he wo ndependentestrictionsPcl= Pcm 0 (7)

Theestimates ith7) mposedre hownnColumnofTable1.Wethen se the2 estdescribedn SectionI to test hehypothesishatinput-outputeparabilityxists. hecalculated2 tatistic ith degreesof freedoms 2.593which s wellbelow he5 percentritical alue of5.991. n fact, hehypothesisfinput-outputeparabilityannot e



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FactorSubstitution 715Table - Input-Outputeparability,inearndNon-linearrimaryInputs-Importeparabilityt-ratiosnparentheses)

Input-Output Input-OutputInput-Output and Linear and Non-LineaiNone Separability (K, L)-M (K, L)-MSeparability Separability~~~~ w~~~ (3) " (4)ac .69995 735 749 .70125

(.00405) (.00426) (.00511) (.00410)See .16614 .13162 .10987 .12980(.02310) (.00604) (439) (.00566)pCL -.OOO2O 000(-.01572)PCB -.03198 o o o(-.01918)Pl .49807 j .49830 .53728 .48475(.00733) (.00708) (.01263) (.00704)Pm 23565 23518 .19346 i + lmPl/Yll

(.00761) (.00838) (.01358)Yll .08230 .08451 .13638 -.02423(.01835) (.01508) (.01469) (-.00350)LM .05703 .05728 o .03842(.01434) | (.00789) (.00549)Ymm -03134 | -.06058 o | Ylm2/YllLog of LikelihoodFunction 73.5387 72.2423 58.1835 60.1868

rejectedven t the 5percentevel.Hence, or llsubsequentstimationsand estsweadoptnput-outputeparabilitysa maintainedypothesis1.Our ext asks to est orhe xistencef eparabilityetweenmportsandprimaryactors.erndtnd Christensen1973] have shown hata necessarynd ufficientonditionornputsand tobeseparablerom1Berndt ndChristensen1973 ]haveproved hattest esults egardingeparabilityreinvariant oa scalingof theregressors. ence,the fact thatYc/Yl, Wl/Wkand Wm/Wrhavebeenscaledto 1 in i960 doesnotaffecthevalidity ftheresults.We also notethatin orderfor thecost functiono correspondo a well-behavedechnology,hefitted ostsharesmust epositivend theHessianmatrix f econd artialderivatives ustbenegativesemi-definite.ehave checked hese equirementsor hetranslogost function ith nput-output eparabilitymposed ndhave found hem obe satisfied t eachpoint nthe ample.



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7l6 Khan A. Mohabbat and Ardeshir J.Dalaiinputk is that= ojk In our model eparability etweenmportsndprimaryactors ould hus equire ^ = oLMHeretwopossibilitiesxisteither ^ = oLM l, or^ = oLM . Thefirst fthesehasbeencalledlinear eparability,nd the secondnon-lineareparability yBerndt ndChristensen1973b].The impositionf 7) together ith he above restrictionsn theAESyieldthefollowingestrictionsn theparameters f themodel:

Tmm lm = 0 (8)for inear eparability,ndYMM -^; M= l + ^-L (9)LL LLfornon-lineareparability.Parameter stimates ithnput-outputnd inearM-(K, L) separabilityareobtained ysubstituting7) and (8) into 2),and areshownnColumn3 of Table 1. The calculated2statisticwith 2 degrees f freedom1s

28.118which s considerablybove the 1 percent ritical evelof9.210.Thus,thehypothesisf inear eparability etweenmportsndprimaryfactors s decisively ejected.Finally,we test fornon-linear -(K, L) separability y imposingherestrictionsivenby (7) and (9) in (2). The resultingarameterstimatesare shown n Column4 of Table 1. The calculated2statisticwith2degrees ffreedoms 24.111, nd sincethis s considerably reater hanthe1 percentritical evel of9.210,we are able toreject hehypothesisfnon-linear -(K,L) separability.We have thus concluded hatwhile nput-outputeparabilityannotbe rejected,both forms f separability etween mports nd primaryfactorsmustbe rejected.

2. Interpretation of the ResultsThefact hatwe couldnotreject he existence f nput-outputepara-bility mplies hata consistentndexofaggregate utput xists2,ndcan1The2 tatistic as 2 degrees ffreedomincewe arenowusing hemodelwith nput-output eparabilitys thebasicmodel, nd linear eparabilityequires he mpositionf twoadditional ndependentestrictions. lternatively,ne could use the unconstrained odelas thebasic model and test the ointhypothesisf input-outputnd linearM-(K, L) se-parability.n this ase there re4 independentestrictionsnd the2 tatisticwouldhave4degrees ffreedom.ts value calculatedfrom helogsof the likelihood unction iven nTable 1 wouldbe 30.710, nd the1 percent ritical evel would be 13.277, o that thehy-pothesiss again rejected.See Berndt and Christensen1973a] for a detailedanalysisof the implicationsfseparability.



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FactorSubstitution 717be used forpurposes festimatingactor emand ngeneral, nd importdemand nparticular.n otherwords, hangesnthecompositionfoutputwill not alterthe cost-minimizingnputmix fora given aggregateevelofoutput.This s an interestinginding,ince nSouthKorea theratioofconsumption oodsto total outputchangeddrastically ver thesampleperiod, oing rom highof 87 in i960 to a low of 64 in 1973.The im-plicationhereis that factor hares or incomedistribution ill not beaffectedy changesnthecompositionfoutput lone, lthough hangesintheoutput evelmayhave a distributionalmpact.

This result s in agreement ith hefindingsf Mohabbat tal. [1984]for ndia, but differsromBurgess11974 ] resultsforthe U.S. whereinput-outputeparabilitywas rejected nd factordemandwas sensitiveto changes n the outputmix. While we do not have a fullexplanationfor the differenceetweenthe resultsforthe U.S. and for ndia andSouthKorea, the differingengths f the sample periods nvolvedmayprovidea partial explanation.For both India and Korea the sampleperiodwas about a decade and a half,while forthe U.S. it coveredmuch argerperiodwhich ncluded heGreatDepression,WorldWar IIand the post-war onflicts. uring hisperiod heU.S. economy xperi-enced onsiderabletructuralhangeseeMohabbat, imos, 977 1978] ndit is notsurprisingo findnputdemandvaryingwith hecompositionfoutput.Both linear and non-linear eparabilityof importsfromprimaryfactorswererejected.Consequently, consistent rice ndexfor rimaryfactors oes notexist, nd it would be incorrecto specify functionalrelationshipn which mportdemanddepends only on importprices,aggregate utput, nd a price ndex of domesticvalue added in whichprimary actors re the only inputs.This result confirms ur earliercontentionhat mportshould be treated s inputs nto theproductionprocess ather hanfinal oods.Burgess 1974a]andMohabbat t l. [1984]obtained imilar esults or he U.S. and India,respectively.The test resultsregardingM-(K, L) separability lso enable us todeduce omethingbouttheproductionunctionnderlyinghedualcostfunction. he rejection f the hypothesis hat ^ = ^ = clearlyimpliesthe rejection f completeglobal separability,.e., that aLM =aKL= 1.Sincecomplete lobal eparabilitymplies Cobb-Douglasproductionunction, e are able to conclude hat sucha function ouldnotadequately epresentheproduction echnology.

As already pointedout,the testresults ndicatethat the mostap-propriatemodel s theonewith nput-outputeparabilitymposed.Con-sequently, hen alculatingheAES andthe ownprice lasticitiesf nput



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7l8 Khan A. Mohabbat andArdeshir J. Dalaidemandwe use the parameter stimates iven n Column2 ofTable 1and theresultant itted ost sharesfor achyear.By substitutingheseparameter stimates nd fitted hares ntotheexpressions iven n equations 4) and (6),we are thenable to calculatevalues for own price elasticities f input demand (rj)and pair-wiseelasticitiesf ubstitutionf nputs^)for achyear nthesampleperiod.These are shown nTables 2 and3 respectively.

Table 2 - OwnPrice Elasticities fDemandYear Year 1960 -.27017 -1.35061 -.23086 1967 -3235 -1.09046 -.225841961 -.30626 -.3355 -.25126 I968 -.32983 -1.07384 -229941962 -.30848 -1.29897 --2499I 1969 -332 -1.04274 -2I9791963 -.32607 -1.23833 -.25231 197 -332 -.224 -.213821964 -3447 -. 17238 -.25264 I971 -.32811 -1.00671 --I99441965 -33674 -. 16326 -.25060 972 -33476 -0.99113 -.202021966 -.34087 -.229 -.24819 I973 -33899 -1.00674 -.21657As Table2indicates,ll thetq^shavethetheoreticallyorrect egativesigns.While theelasticities fdemandfor abor and capitalservices reinelastic,mport emand s generally lastic.t)LL aries between .27017and -.34087, variesbetween .19944 and -.25264,and angesfrom .99113 to - 1.35061.The relatively ighvalues formay beexplainedpartlyby theoretical onsiderations. s Haberler 1949]haspointed ut,the demandfor mportss an excess demandrather hana"pure" or "primitive" emand, nd as such ts elasticitys expected obehigherhanthatofa "pure"demand.Anadditional xplanatoryactormaybe the factthatduringmuchofthisperiodKoreapursued strong

import ubstitutionolicy Hong,Krueger, 975,p. 21].An examination f Table 3 revealsthat ^ and re positivethroughouthesampleperiod,mplyinghat mports renet substitutesfor aborand for apitalservices.However, KL s positive or heyearsi960 1968 and negativeforthe remaining ears.This would seemtoimply hatcapitaland labor are netsubstitutes uring heearlyyears,and complementsuring he lateryearsof the sample.A possibleex-planation or hisphenomenon ightie intherapidgrowthndchangesinthe nputmixover heperiod.However,he valuesofaKL revery ow,andwefelt t necessary o testthenullhypothesishatoKL= 0 againstthealternative ypothesishatoKL 0. Wefound hat except or 961)it was notpossible oreject henullhypothesishat^ = 0. Thus,verylittle ignificancehouldbe attached o thecalculated aluesofaKL and



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FactorSubstitution 719Table3 - Allen artial lasticitiesf ubstitution(asymptotictandardrrorsnparentheses)

Year am.


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720 Khan A. Mohabbat andArdeshirJ.DalaiIncontrast/forheU.S. [seeBurgess, 974a]1ndfor anada seeKohli,1978;Appelbaum,ohli, 979] mportsndcapital ervicesrefoundobe complementary.ntuitively,hisdisparityeemsplausible, or ncomparisonith heU.S. andCanada,Korea s a relativelyapital-poorcountry,nd mports ight ell e needed o addto,orbe used nsteadof, carcedomesticapitalgoods. n fact, urresults eem o supportCheneryndStrout's1966] ontentionhat ntheearlytages fndus-trializationforeignesourcesanactuallyubstituteormissingocalfactorsndpermitn ncreasen total utput."

V. Summarynd ConclusionsOne of heprimaryurposesf hispaper asbeen oexplore,n anempiricalramework,hequestionfwhetherr not mportshould etreateds a factornput.Wehave examinedhisquestionsing imeseriesdata for1960-1973or outhKorea- one of the"Newlyn-dustrializingountries".Using dual, ostfunctionpproach,ndemployingtranslogostfunction e obtain esults hichndicate hat mportso indeed ntertheproductionunctions a factornput,ndthatestimatingmportdemand n theassumptionhat mportsre final oodswouldbe in-correct.imilaresultsxist n the iteratureor heU.S., Canada, ndIndia.Wefoundhat or oreanput-outputeparabilityxistsut eparabil-ityof mportsromrimaryactors oesnot.The firstfthese esultsimplieshatduringhesampleperiod hangesn thecompositionfoutput lonewouldnot haveanyeffectn import emandoron thedemandor rimaryactors),hile he econdmplieshat he stimationof mport emandannotegitimatelye basedonly nimport rices,aggregateutputnda pricendex fdomesticalue dded.All inputswerefound o havenegativewnprice lasticities.hedemandormportss elastic nd mportsre net ubstitutesor apitaland abor. n additionML ,mplyinghat n increasen mportpriceswould edistributencomenfavor f abor.Comparingur esults ithhosen heiterature,nobservationhichmaybe of omenterests thefact hat heresultsfthepresentaperare imilaro those orndia,nparticularhatnput-outputeparabilityexists nd importsnd capital ervices re substitutes.n contrast,input-outputeparabilityasrejectedor heU.S.,andfor oth heU.S.

1However,Burgess 1974 ] also finds hat foran overlapping eriod, mports ndcapitalservices re substitutes. ince we are usingthemethodologymployedn Burgess[1974 ], we willrestrict urselves o comparingurresultswiththoseofthe atterpaper.



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Factor ubstitution J21andCanadamportsndcapital ervices ere ound obecomplementaryinputs. his eads o the peculationhat uchdifferencesay epresenta patterninked o the tage fdevelopmenttwhich countrys.Un-fortunatelyhecurrenttate fthe iteratureecessitateshat his dearemain speculationor hepresent.Whether r not t is foundednfactwill nly e clear fter everalimilartudiesf ountriestvaryinglevels fdevelopmentavebeen onducted.

ReferencesAppelbaum,lie,and UlrichR. Kohli, Canada-United tates Trade: Tests for heSmall-Open-Economyypothesis". heCanadianJournal fEconomics,ol. 12,1979, P-1- 14.Berndt, rnstR., and LauritsR. Christensen1973 ], "The Internal tructurefFunctionalRelationships: eparability, ubstitution,nd Aggregation". heReviewfEconomictudies, ol.40, 1973,pp.403 410.- , - [1973 ], "TheTranslog unctionnd the SubstitutionfEquipment,truc-tures nd Labor n U.S.Manufacturing929 68".JournalfEconometrics,ol. 1,1973, p.81-114.- , and David O.Wood, Technology,rices, ndtheDerivedDemandfor nergy".TheReview fEconomicsndStatistics,ol.57, 1975,pp.259 268.Binswanger,ansP., "A CostFunction pproacho theMeasurementfElasticitiesof FactorDemand nd Elasticitiesf Substitution". mericanournalfAgricul-tural conomics,ol.56,1974, p.377 386.Burgess, avid F. [1974a], "A CostMinimization pproach o ImportDemandEquations".The Review fEconomicsndStatistics,ol. 56, 1974,pp.225 234.- [1974b], Production heoryndtheDerivedDemandformports".JournalfInternationalconomics,ol.4, 1974,pp. 103 117.Chenery,ollisB., and AlanM. Strout,ForeignAssistancend Economic evelop-ment". TheAmerican conomic eview, ol.56, 1966, p.679 733.Christensen,auritsR., and DianneCummings,Real Product,Real Factor nput,andProductivitynKorea, 960 1973".JournalfDevelopmentconomics,ol.8,1981, p.285-302.- , andWilliam . Greene,Economies fScale nU.S. Electric owerGeneration".Journal fPolitical conomy, ol.84, 1976,pp.655 676.Dennis, nid, nd V.Kerry mith,A Neoclassical nalysis fthe DemandforRealCashBalances yFirms".JournalfPolitical conomy,ol.86,1978, p.793 813.Denny,Michael,ndMelvynuss,"The Use ofApproximationnalysis oTestforSeparabilityndtheExistence fConsistentggregates".heAmerican conomicReview, ol.67, 1977, p.404 418.Haberler, ottfried,The Market orForeignExchange nd the Stability ftheBalanceofPayments: Theoretical nalysis". yklos, ol.3,1949, p. 193 218.Hong,Wontack, nd Anne 0. KruegerEds.), Trade and Developmentn Korea.Proceedingsf conferenceeldbythe KoreaDevelopmentnstitute,eoul1975.



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722 KhanA.MohabbatandArdeshirJ,DalaiHouthakker,endrik ., and Stephen . Magee, Income and Price ElasticitiesnWorld rade".TheReviewfEconomicsndStatistics,ol.51,1969, p. in - 125.Humphrey,avidB., andJ.R. Moroney,Substitutionmong apital,Labor, ndNaturalResourceProducts n AmericanManufacturing".ournal f PoliticalEconomy,ol.83,1975, p.57 82.Kmenta, an, ndRoyF.Gilbert,SmallSamplePropertiesfAlternativestimatorsofSeeminglynrelated egressions". ournal f heAmericantatistical ssocia-tion,Vol.63,1968, p. 1180 1200.Kohli,Ulrich ., "A GrossNationalProduct unctionnd theDerivedDemandforImports nd SupplyofExports".The CanadianJournal fEconomics, ol.11,

1978, p. 167 182.Layard, . R. G.,andA. A. Walters,Microeconomicheory. ewYork1978.Learner, dward., and RobertM. Stern,Quantitativenternationalconomics.Boston1970.Lim,Youngil,U.S. Imports romKoreaDuringthe 8o's. Korea InternationalEconomicnstitute,eminar eriesNo.28,Seoul1979.MacDougall, . D. .,"India's BalanceofPayments". ulletinf heOxford niver-sity,nstitutefStatistics,ol.23,1961, p. 153 177.Mohabbat,han.,andEvangelos .Simos,Consumerorizon: urthervidence"Journal fPolitical conomy, ol.85, 1977,pp.851 858.- , - , "Consumer orizon:Reconsidered". ournal fPolitical conomy, ol.86,1978, p.539- 541- ,Ardeshir . Dalai, and M. Williams, ImportDemandfor ndia: A TranslogCost Function pproach". conomic evelopmentndCultural hange, pril 984,forthcoming.Zellner,Arnold,An Efficient ethod fEstimatingeemingly nrelated egres-sions nd TestsforAggregationias". Journalf heAmerican tatistical ssocia-tion, ol.57,1962, p.348 368.

Zusammenfassung: Faktorsubstitutionnd Importnachfragedkoreas:EineTranslogAnalyse. Eines derHauptziele ieser tudie stes,die RollederImporte ls Produktionsfaktorn dem , chwellenland"dkorea rdie Zeit voni960 bis 1973zu untersuchen.lsAnsatzwird ine duale Kostenfunktionenutztund diese neineTranslog-Kostenfunktionransformiert.abei ergibtich,da dieImporteatschlichls Input ndie Produktionsfunktioningehen. uerdemeigtsich,da frKorea zwar zwischennputundOutputunterschiedenerden ann,nicht berdie mporte ondenprimrennputsgetrennterden nnen. uerdemwerden eitreihenr ie Eigenpreiselastizittenowiefr ie Substitutionselastizi-ttender mporte ach Allenberechnet. lle nputs Kapital,Arbeit nd mporte)haben die korrekten egativenEigenpreiselastizittennd sind untereinanderSubstitute.



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Factor ubstitution 723Rsum : La substitutiones facteurst la demandemportatricee la CoreduSud Uneanalyse ranslog. Un des butsprimairese cette tude std'examinerempiriquemente rle des importationsomme acteur e productionansun despaysrcemmentndustrialiss,a Coredu Sud,pendant a priode 960 1973.Enutilisant neapproche e la fonctione cot dual et en appliquant ne fonctionecot ransloges auteurs rouventu'enfait es mportationsntrentans a fonctionde productionomme acteur 'input.De plus, l estdmontrue la sparabilitd'input-outputxistepour a Core,maisque la sparabilit our es importationsdes facteursrimaires 'existepas. De plus, es auteurs alculent es sries hro-nologiques espropres lasticits e prixet desAllen lasticits e substitution'inputs.Tous les inputs capital, ravail t importations)ontdes substituts'un l'autreet les valeursdes propres lasticits e prixsont, horiquementorrecte,ngatives.

Resumem Sustitucin e factores demandade importacinara CoreadelSur: un anlisis de tipo translog. Uno de los propsitos rimordialese esteestdio s examinar mpiricamentel rolde las importacionesomo un factor eproduccinn unode lospases e industrializacineciente,oreadelSur,paraelperodo 960 73. Usandouna funcine costosdual y empleando na funcinecostosde tipotranslog,ncontramosue Ias importacionesfectivamentee intro-ducena Ia funcin e produccinomo un factor e insumo.Adicionalmenteemuestra ue Ia separabilidad e insumo-productoxistepara Corea,prono Iaseparabilidad e los factores rimrios. dernas,e calculanseriesde tiempodeelasticidades e precios ropios elasticidades e sustitucin e Allende insumos.Todos os insumoscapital, rabajo importaciones)ienen a elasticidad e preciopropionegativa eoricamenteorrecta son sustitutosntre llos.

Translog Analysis

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