Growth Accounting for a Follower-Economy in a World of Ideas: The Example of Singapore
AbstractIn this paper, we take another approach to accounting for the sources of Singapore’s economic growth by being explicit about the channels through which Singapore, as a technological follower, benefits from international R&D spillovers. Taking into account the channels through which technology developed in the G5 countries diffuses to technological followers, we show that 57.5 percent of Singapore’s real GDP per worker growth rate over the 1970-2002 period is due to multifactor productivity growth. In particular, about 52 percent of the growth is accounted for by an increase in the effectiveness of accessing ideas developed by the technology leaders through improvement in our educational quality and increase in machinery imports and foreign direct investment from the G5 countries. We also find that capital accumulation that takes the form of imports of machinery as well as foreign direct investment from the G5 countries enhances the effectiveness of technology transfer thus raising the rate of return to capital. Compared to the rate of return to capital inferred from the traditional Solow growth model with purely exogenous technological progress of 10.8 percent, taking into account the technology transfer channel raises the implied rate of return to 13 percent.
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Bibliographic InfoPaper provided by Singapore Management University, School of Economics in its series Working Papers with number 15-2006.
Length: 61 pages
Date of creation: Jun 2006
Date of revision:
Publication status: Published in SMU Economics and Statistics Working Paper Series
Other versions of this item:
- Kong Weng Ho & Hian Teck Hoon, 2006. "Growth Accounting for a Follower-Economy in a World of Ideas : The Example of Singapore," Development Economics Working Papers 22435, East Asian Bureau of Economic Research.
- Kong Weng Ho & Hian Teck Hoon, 2006. "Growth Accounting for a Follower-Economy in a World of Ideas: The Example of Singapore," Economic Growth centre Working Paper Series 0606, Nanyang Technolgical University, School of Humanities and Social Sciences, Economic Growth centre.
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-08-26 (All new papers)
- NEP-EFF-2006-08-26 (Efficiency & Productivity)
- NEP-INO-2006-08-26 (Innovation)
- NEP-SEA-2006-08-26 (South East Asia)
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