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Diminished Returns? Growth and Investment in East Asia

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  • PETER E. ROBERTSON

Abstract

This paper investigates the investment‐led growth hypothesis for the newly industrialized economies of East Asia. Using numerical simulations and a neoclassical model, it is shown that the revolution in investment rates only explains about 30 per cent of the growth of GDP per worker. In contrast, productivity growth and improvements in labour quality, explain around half the growth of GDP per ‐worker. This reflects the effects of productivity growth on capital accumulation. Contrary to recent growth‐accounting studies, the results suggest that understanding the sources of productivity growth in East Asia will provide the most useful lessons for other developing economies.

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  • Peter E. Robertson, 2000. "Diminished Returns? Growth and Investment in East Asia," The Economic Record, The Economic Society of Australia, vol. 76(235), pages 343-353, December.
    • Handle: RePEc:bla:ecorec:v:76:y:2000:i:235:p:343-353
    DOI: 10.1111/j.1475-4932.2000.tb00031.x
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    References listed on IDEAS

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    3. Anaman, Kwabena A., 2004. "Determinants of economic growth in Brunei Darussalam," Journal of Asian Economics, Elsevier, vol. 15(4), pages 777-796, August.
    4. Nguyen, Canh Phuc & Su, Thanh Dinh, 2021. "Economic integration and economic complexity: The role of basic resources in absorptive capability in 40 selected developing countries," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 609-625.
    5. Temple, Jonathan, 2001. "Growing into Trouble: Indonesia After 1966," CEPR Discussion Papers 2932, C.E.P.R. Discussion Papers.

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