Sources of Singapore’s Economic Growth, 1965–2008: Trends, Patterns and Policy Implications
ASEAN Economic Bulletin, Vol. 28, pp. 315-336, 2011
24 Pages Posted: 6 Feb 2012
Date Written: December 1, 2011
This paper analyses the sources of Singapore’s GDP and labor productivity growth in 1965–2008 and reveals insights into related trends and patterns. The study documents four main findings. Firstly, both GDP and average labor productivity (ALP) growth in Singapore tended to decline during this period, and the contribution of ALP growth to GDP growth tended to decrease over time. Secondly, the contribution of labor to GDP growth was rather stable at approximately 1.5 to 2 percentage points per year, of which an increasing share came from foreign labor. Thirdly, total factor productivity growth improved substantially after the mid-1980s and has become a healthy source of GDP and ALP growth since that time. Finally, Singapore’s ALP low growth and its declining trends has become notable recently, of which the main reason was a sharp decrease in the contribution of capital deepening. The study discusses the challenges facing Singapore’s sharply declining ALP growth rate and proposes policy approaches that might help boost the country’s ALP growth in the future.
Keywords: growth decomposition, capital deepening, total factor productivity
JEL Classification: O40, O47
Suggested Citation: Suggested Citation