By Chew Soon Beng, Li Junhua and Tan Long Hui
Prof Chew is a professor of Economics at the Division of Economics at Nanyang Technological University in Singapore. Li Junhua and Tan Long Hui are researchers at the Division of Economics at NTU.
Abstract:
There is an extensive literature on total factor productivity at the national level. In this paper, we will argue that TFP is a micro concept and not a macro concept. For instance, researchers like to compare Singapore’s TFP with that of Hong Kong’s but how do we define capital at the national level. Hong Kong does not have a budget on defence and does not spend on defence infrastructure and does not have a limited budget to support their foreign service. As an independent country, expenditures on these two areas are significant for Singapore.
This paper proposes to estimate TFP growth for each industry within the manufacturing sector. Once we have the results, we can then compare with the estimates of a similar study in other countries.
Below is the equation we propose to estimate.
TFPG =A1*X1+A2*X2 +A3*X3 +A4*X4 +A5*X5 + A6*X6 + C
Where TFPG is total factor productivity growth.
We want to examine whether TFPG is related to total labour cost per worker, capital labour ratio, number of firms within the industry and export intensity.
We also want to test whether there is learning curve effect which is captured by cumulative output and economies of scale which is captured by annual output.
X1 = remuneration/employee; X2= capital/ labor ratio; X3 = number of firms; X4 =direct exports/total sales; X5= cumulative output, X6= cumulative output C is intercept, and A1 to A6 are coefficients.
Professor Chew Soon Beng is Professor of Economics and Industrial Relations at Nanyang Technological University, Singapore. He received his Ph. D. from the University of Western Ontario, Canada. He is author of Small Firms in Singapore (Oxford University Press), Trade Unionism in Singapore (McGraw Hill), Employment-Driven Industrial Relations Regimes (Avebury), Values and Lifestyles of Young Singaporeans (Prentice-Hall), and Foreign Enterprises in China: Operation and Management (in Chinese). . He has also published in journals such as the Singapore Economic Review, the China Economic Review, Review of Pacific Basin Financial Markets and Policies, and the Journal of Advances in Pacific Basin Business Economic and Finance. His current research interests include trade unionism, labour markets analysis, globalization and entrepreneurship.