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Measuring productivity growth in Asia: do market imperfections matter?

  • John G. Fernald
  • Brent Neiman

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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