Growth Accounting for a Follower-Economy in a World of Ideas: The Example of Singapore

Kong Weng Ho () and Hian Hoon

No 15-2006, Working Papers from Singapore Management University, School of Economics

Abstract: In 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.

Keywords: technological diffusion; idea production function; multifactor productivity growth (search for similar items in EconPapers)
JEL-codes: F43 O33 O47 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2006-06
New Economics Papers: this item is included in nep-eff, nep-ino and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in SMU Economics and Statistics Working Paper Series

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Related works:
Working Paper: Growth Accounting for a Follower-Economy in a World of Ideas: The Example of Singapore (2006)
Working Paper: Growth Accounting for a Follower-Economy in a World of Ideas: The Example of Singapore (2006)
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