Wages, Profitability, and Growth in a Small Open Economy

Bankim Chadha

No 1990/045, IMF Working Papers from International Monetary Fund

Abstract: This paper examines issues raised by the evolution of a rapidly growing small open economy—Singapore—from a labor-intensive, low-technology production base to a capital-intensive, high-technology, knowledge-and-skill-intensive emphasis as it approached the limits of its resource constraints in the labor market. In order to analyze the process of restructuring a model of endogenous growth for a small open economy that is driven by increases in labor productivity from learning and that allows for the dynamic acquisition of comparative advantage is developed. In this framework the effects of various policies and exogenous shocks on the direction and pace of restructuring are investigated.

Keywords: WP; rate of return; physical capital; open economy; learning by doing; shifts production; wage-correction policy; high-technology good; productivity increase; Wage adjustments; Wages; Labor force; Labor costs; Employment; Global (search for similar items in EconPapers)
Pages: 40
Date: 1990-05-01
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