Hing-Man Leung

Total factor productivity growth in Singapore's manufacturing industries

This paper contributes to the debate concerning the sources of growth of newly industrializing East Asian economies, of which Singapore is an example. We first of all measure Total Factor Productivity (TFP) growth from industry level data for Singapore over a time series, and then regress the estimates to a list of variables. The TFP growth is estimated to be around 2-3% per annum over the last ten years, somewhat higher than previous estimates but remains a small fraction of the actual GDP growth. The variables found to have significant influence on TFP growth include foreign ownership, export orientation, and remuneration per employee. The result also suggests that Singapore has not gained much from learning-by-doing.

External debt and worsening business cycles in less developed countries

Less developed countries (LDCs) have seen considerable business cycles in recent decades. At the same time they have significantly increased their external‐debt‐to‐GDP ratios. It seems natural to suspect that increased indebtedness and the amplified cycles are linked. The paper presents a simple macroeconomic model to formalize this connection. External debt is the novelty of this model. The papers main contribution is to calibrate the dynamic parameter using the World Development Indicator. It is found that the LDC dynamic behavior is generally non‐oscillatory. Alarmingly though, the dynamic convergent system in the 1970s has been replaced by one of divergence.

Productivity of Singapore's Manufacturing Sector: An Industry-Level Non-Parametric Study

This paper seeks to measure and to explain the productivity of Singapores manufacturing sector using industry level data. It utilises a non-parametric approach consisting of a set of production distance functions, each of which is obtained by solving a linear programming problem. From a time-series of 1983 to 1993, across thirty industries, we obtain three indices: a Malmquist total factor productivity (TFP) index, an efficiency change index, and a technological change index. The resulting TFP growth stands at 4.6% per annum, considerably greater than previous estimates using aggregate country level data. Three-stage least squares are then applied to the pooled data. Foreign ownership and labour quality are found to have important impact on TFP growth.

Persuasive Advertising and Market Competition

This paper studies a duopoly industry where the firms compete for market shares by choosing output prices and advertising outlays. Advertising is purported here to be persuasive rather than informative as it is described in most signaling models. Persuasive advertising tends to cancel each other out and this leads us to question the possibility of firms reducing advertising outlays collusively. Using output cost to stand proxy for output quality, it is found that a robust positive association exists between output cost (quality), output price and advertising activity. We should therefore expect a firm producing higher output quality to advertise more and charge higher price than its lower quality rival even when neither advertising nor price is used as an information dissipating signal. Advertising is also found to be a credible tool to facilitate collusive commitment.

What has luck got to do with economic development? An interpretation of resurgent Asia's growth experience

Abstract This paper critically reexamines the belief, currently gathering strength in the literature, that economic development depends on good luck rather than on good policy, and that Prometheus is “unchained by chance”. While it is impossible to disprove the role of luck in growth, we argue that luck is endogenous, and good luck is a function of good policy. Luck favours those who strive. Again contrary to common belief, we show that resurgent Asian economies have endured more, not less, than their fair share of economic volatility. They learned their lessons by success and failures, and luck is endogenous through learning-by-investing.

Tax Reforms in Singapore

Abstract This paper takes the view that tax reforms in the form of a reshuffling of marginal tax rates are more appropriate policy recommendations than a whole-sale restructuring of a countrys tax system. We adopted a simple model that yields simple and intuitive recommendations on the directions of such tax reforms. This model is estimated using the 1987/88 Singapore Household Expenditure Survey. The result also suggests that the recently introduced Goods and Services Tax may be an efficient reform, especially if the government puts limited value on inequality.

Intertemporal price discrimination and consumer demand

Under a particular class of utility functions, intertemporal price discrimination (IPD) is not feasible. That is, customers cannot be made to pay different prices for a durable good at different points in time. Other factors such as falling costs, and differing discount rates between buyers and sellers have been found to make intertemporal pricing schemes feasible, or even profitable. None of these factors, however, were fundamental demand differences which give rise to static price discriminations. In this paper we argue that IPD is indeed feasible and sometimes profitable, if only we allow for a nondurable good in the utility function. A simple additively separable utility is examined first, which is then extended to a nonseparable utility function which allows richer substitution/complementary relations between the durable and the nondurable goods. This may help us to better understand the similarities between static and intertemporal price discriminations.

Two New Lessons from the Asian Miracles

Abstract Four Asian economies – Hong Kong, Singapore, Korea and Taiwan – have grown at spectacular speeds adopting different strategies. Past debates focused on their growth takeoff. The present paper studies their future outlook. As an economy matures, sustaining economic performance requires innovation and technology upgrading. Hong Kong, under a minimalist administration, is now critically deficient in technology. Singapore, dependent on foreign multinationals, is struggling to become a creator and not just a user of technology. We seek to explain why Hong Kong and Singapore are so much less innovative than Korea and Taiwan.

Trade and Growth: A Theoretical Exploration into Foreign Debts by Nics

Abstract This paper studies foreign debts of newly industrializing countries (NICs). These countries develop by imitating foreign technology and by exporting goods that are lower down the ‘quality ladder’. Differentiated by quality differences, such goods are often substitutes to those exported by advanced countries in the West. As NIC incomes rise their consumers seek to smooth their consumption over time. The novelty of our finding is that NICs borrow from abroad only when these goods are substitutes, but they would not have done so had the goods been complements. The intuition, obvious yet ignored in the literature, is the opposite terms of trade effects arising from substitutes and complements in consumption. Most papers in the ‘growth–debt’ literature adopted the Romer/Lucas steady-state framework. They concentrated on issues such as population growth and foreign debt, but neglected the imitation-growth–debt relation. A simple theoretical model is devised to fill this gap in the literature.

THE DEMAND FOR WHEAT UNDER NON-LINEAR PRICING IN PAKISTAN*

Abstract It is common for economic agents to face non-linear pricing schedules. This poses difficulties for the estimation of demand functions but also advantages in that we have price variation in a cross-section. We illustrate this with two examples from Pakistan: the urban rationing of wheat and the demand for wheat by rural households that produce and consume wheat. In the first case consumers have to pay higher prices for purchases above the ration, and in the second buying and selling prices differ. Demand elasticities are estimated using maximum likelihood methods. These estimates are considerably different from those obtained using standard LES assumptions.