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The Impact of R&D on the Singapore Economy:An Empirical Evaluation

  • Yuen Ping Ho

    (Entrepreneurship Centre, National University of Singapore)

  • Poh Kam Wong

    (Entrepreneurship Centre, National University of Singapore)

  • Mun Heng Toh

    (School of Business, National University of Singapore)

Much of the literature on the impact of R&D on economic performance is founded on the advanced countries, where the intensity of R&D expenditure has been relatively high and stable for many years. In this paper, we provide empirical estimates of the impact of R&D on the economic growth of a Newly Industrialised Economy, Singapore, where R&D expenditure intensity has been low initially, bur rising rapidly in recent years. The Cobb-Douglas based analysis provided empirical evidence that R&D investment in Singapore had a significant impact on its total factor productivity performance in the last 20 years and established a long-term equilibrium relationship between R&D investments and TFP. However, compared to the OECD nations, the impact of R&D investment on economic growth in Singapore is not as strong, as evidenced by lower estimated elasticity values. The long run elasticity of output with respect to R&D was computed to be 8.1% for Singapore compared to long run elasticities of over 10% estimated by other researchers for OECD countries. This suggests that Singapore still has some way to go in catching up with the advanced nations in terms of R&D productivity. This not only means increasing the level of R&D intensity in Singapore but also more efficient exploitation of domestic R&D activity.

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Paper provided by EconWPA in its series Macroeconomics with number 0508003.

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Date of creation: 03 Aug 2005
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Handle: RePEc:wpa:wuwpma:0508003
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