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Measuring productivity growth in Asia: do market imperfections matter?

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Author Info
John Fernald
Brent Neiman

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Abstract

Recent research reports contradictory estimates of productivity growth for the newly industrialized economies (NIEs) of Asia. In particular, estimates using real factor prices find relatively rapid TFP growth; estimates using quantities of inputs and output find relatively low TFP growth. The difference is particularly notable for Singapore, where the difference is about 2-1/4 percentage-points per year. We show that about 2/3 of that difference reflects differences in estimated capital payments. We argue that these differences reflect economically interesting imperfections in output and capital markets, including sizeable economic profits in Singapore and government-directed credit. We derive a measure of technology growth, corrected for the imperfections that we quantify.

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Paper provided by Federal Reserve Bank of Chicago in its series Working Paper Series with number WP-03-15.

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Date of creation: 2003
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Handle: RePEc:fip:fedhwp:wp-03-15

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Keywords: Asia ; Economic conditions ; Productivity;

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This paper has been announced in the following NEP Reports: References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Lee, Jong-Wha, 1996. " Government Interventions and Productivity Growth," Journal of Economic Growth, Springer, vol. 1(3), pages 391-414, September.
  2. John G. Fernald & Susanto Basu, 1999. "Why is productivity procyclical? Why do we care?," International Finance Discussion Papers 638, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
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  3. Leipziger, Danny M., 1988. "Industrial restructuring in Korea," World Development, Elsevier, vol. 16(1), pages 121-135, January. [Downloadable!] (restricted)
  4. Young, Alwyn, 1994. "Lessons from the East Asian NICS: A contrarian view," European Economic Review, Elsevier, vol. 38(3-4), pages 964-973, April. [Downloadable!] (restricted)
  5. Michael Sarel, 1997. "Growth and Productivity in ASEAN Countries," IMF Working Papers 97/97, International Monetary Fund.
  6. Charles I. Jones, 2003. "Growth, capital shares, and a new perspective on production functions," Proceedings, Federal Reserve Bank of San Francisco, issue Nov. [Downloadable!]
  7. Alwyn Young, 1992. "A Tale of Two Cities: Factor Accumulation and Technical Change in Hong Kong and Singapore," NBER Chapters, in: NBER Macroeconomics Annual 1992, Volume 7, pages 13-64 National Bureau of Economic Research, Inc. [Downloadable!]
  8. Alwyn Young, 2000. "Gold into Base Metals: Productivity Growth in the People's Republic of China during the Reform Period," NBER Working Papers 7856, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Douglas Gollin, 2002. "Getting Income Shares Right," Journal of Political Economy, University of Chicago Press, vol. 110(2), pages 458-474, April. [Downloadable!] (restricted)
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  10. Olivier Blanchard & Francesco Giavazzi, 2001. "Macroeconomic Effects of Regulation and Deregulation in Goods and Labor Markets," NBER Working Papers 8120, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. Alwyn Young, 1998. "Alternative Estimates of Productivity Growth in the NICs: A Comment on the Findings of Chang-Tai Hsieh," NBER Working Papers 6657, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  12. Chang-Tai Hsieh, 2002. "What Explains the Industrial Revolution in East Asia? Evidence From the Factor Markets," American Economic Review, American Economic Association, vol. 92(3), pages 502-526, June. [Downloadable!]
  13. Barro, Robert J, 1999. " Notes on Growth Accounting," Journal of Economic Growth, Springer, vol. 4(2), pages 119-37, June. [Downloadable!] (restricted)
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  14. Young, Alwyn, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 641-80, August. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jesus Felipe & J. S. L. McCombie, 2004. "On The Rental Price Of Capital And The Profit Rate: The Perils And Pitfalls Of Total Factor Productivity Growth," CAMA Working Papers 2004-10, Australian National University, Centre for Applied Macroeconomic Analysis. [Downloadable!]
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  2. Bigsten, Arne & Durevall, Dick, 2004. "Kenya’s Development Path and Factor Prices 1964-2000," Working Papers in Economics 142, Göteborg University, Department of Economics. [Downloadable!]
  3. Hyeok Jeong & Robert M. Townsend, 2005. "Sources of TFP Growth: Occupational Choice and Financial Deepening," IEPR Working Papers 05.28, Institute of Economic Policy Research (IEPR), revised May 2005. [Downloadable!]
    Other versions:
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