Mun Heng Toh

The RAS Approach in Updating Input–Output Matrices: An Instrumental Variable Interpretation and Analysis of Structural Change

The main purposes of the paper are to reconsider the rationale of the RAS method, and to attempt to improve on its interpretation and usefulness. The substitution and fabrication factors in the RAS method are interpreted as statistical estimates obtained by the method of instrumental variables. This enables the computation of asymptotic standard errors for the factors and the relative precision of the predicted technical coefficients. Furthermore, an adjustment cost minimization model to describe how a sector determines its substitution and fabrication factors is presented. The solutions of the model provide another rationale for the RAS method, and the associated Lagrangian multipliers can be useful for assessing structural constraints and structural change.

EXCHANGE RATE PASS-THROUGH FOR SELECTED ASIAN ECONOMIES

This paper investigates the degree of exchange rate pass-through for the selected Asian countries namely Malaysia, Thailand, Taiwan, and Singapore. Unlike past studies, this paper focuses on small open economies and includes exports of primary commodities in the investigation. We utilize cointegration techniques based on Engle and Granger (1987) and Johansen and Juselius (1990), and error correction modeling, to provide a more robust and rigorous investigation of the long run and short run pass-through of exchange rates. It is found that, in general, the degree of pass-through is high, although there is a small extent of pricing to market found for all countries. For Malaysia, the degree of pricing to market found suggests that there is intense competition in the export industries. In the case of Thailand, there is almost complete pass-through and this conforms to our a priori expectations. In the case of Singapore and Taiwan, we detect a higher degree of pass-through compared to past studies. For a country, the high degree of pass-through will support the adoption of more flexible exchange rate oriented monetary policies, and for firms it will reveal the limits of their price setting behavior amidst international competition.

Competitiveness of the Singapore Economy: A Strategic Perspective

The macroeconomic perspectives of competitiveness, K.Y. Tan and M.H. Ton technological policy and national competitiveness, L. Loh maintaining Singapore as a major shipping and air transport hub, A. Chin and J. Tongzon upgrading Singapores manufacturing industry, P.K. Wong the construction industry - restructuring for competitiveness, M.H. Toh maintaining competitiveness in new age tourism, P.P. Wong strategies for financial sector development, G.H. Lim entrepreneurship and SMEs in the Singaporean context, B. Bjerke globalization and the social fabric on competitiveness, K.C. Ho human resource management for the new competitive environment, W. Koh.

Efficiency of investments in Asian economies: has Singapore over-invested

Abstract This paper compares the investment efficiency in Singapore with the rest of Asia to determine whether Singapore’s capital utilisation has been effective vis-a-vis other Asian economies. In particular, it analyses the key investment differences between Singapore, Hong Kong and Taiwan, the three NIEs with comparable data breakdown. While the government facilitates investment through infrastructure development, market-oriented domestic enterprises and foreign companies make much of the investment in Singapore. Singapore’s returns to capital investment are not inferior to other Asian economies. In terms of total factor productivity (TFP), the findings vary according to the computation method used. But even if the traditional approach adopted by Alwyn Young is used, more recent data suggest that while Singapore’s TFP growth had been negligible compared to Hong Kong between 1971 and 1986, it has improved significantly since then. Singapore’s earlier phase of rapid capital deepening with associated low TFP growth is giving way to more sustainable and perceptible simultaneous growth in capital intensity and TFP. Singapore’s experience accords with that of the U.S. and Japan, which also recorded low TFP growth in the early stages of their economic development.

Differential total factor productivity in the Four Dragons: the Singapore case

This paper introduces a concept of a latent resource to explain the seemingly low total factor productivity estimated for Singapore. It found that total factor productivity growth in the economy is not as dismal as estimated in other studies if the factor shares used in the computation are nearer to those of developed industrialized economies. The existence of a latent resource also explains the discrepancy in factor shares reported in published information as compared to the empirically derived figures. From this, the policy implication is that measures to maintain the latent resource become important for the Singapore economy to remain internationally competitive.

Rates of Return to Education in Singapore

In this paper, the rates of return to education in Singapore are computed by the cost- benefit approach covering the period 1980-1994. The results indicate that the rates of return to education increase with the level of education. Although remaining higher than the rates of return to secondary education, the rates of return for tertiary education are found to be declining during the period of investigation. Social as well as private rates of return for professional university-level courses such as accountancy, law and engineering are also enumerated. The rates for tertiary education are, in general, well above the prevailing prime lending rates. This has provided justification for the government to facilitate a study loan scheme for tertiary students so as to shift part of the burden for financing tertiary education to private individuals (students) who enjoy direct benefits.

THE IMPACT OF R&D ON THE SINGAPORE ECONOMY: AN EMPIRICAL EVALUATION

Much of the literature on the impact of R&D on economic performance is founded on the advanced countries, where the intensity of R&D expenditure has been relatively high and stable for many years. In this paper, we provide empirical estimates of the impact of R&D on the economic growth of a Newly Industrialised Economy, Singapore, where R&D expenditure intensity has been low initially, bur rising rapidly in recent years. The Cobb-Douglas based analysis provided empirical evidence that R&D investment in Singapore had a significant impact on its total factor productivity performance in the last 20 years and established a long-term equilibrium relationship between R&D investments and TFP. However, compared to the OECD nations, the impact of R&D investment on economic growth in Singapore is not as strong, as evidenced by lower estimated elasticity values. The long run elasticity of output with respect to R&D was computed to be 8.1% for Singapore compared to long run elasticities of over 10% estimated by other researchers for OECD countries. This suggests that Singapore still has some way to go in catching up with the advanced nations in terms of R&D productivity. This not only means increasing the level of R&D intensity in Singapore but also more efficient exploitation of domestic R&D activity.

AN INPUT--OUTPUT STUDY OF THE SINGAPORE INFORMATION SECTOR

The development and use of information and communication technologies is one of the key drivers of the ‘knowledge economy.’ In this paper, we investigate the impact of information technology on the output growth of the Singapore economy using the input–output framework. The input–output framework allows us to understand the impact of information sector in an integrated framework in terms of its linkages to the manufacturing and service sectors. In particular, we adopt the input–output approach to shed light on both production and diffusion activities of the information sector on the Singapore economy. The results indicate that the ICT sector provided the key linkages for the expansion of high-value added manufacturing activities and electronics export for the Singapore economy.

Outsourcing and Fragmentation in Singapore's Manufacturing Industry

This paper studies the impact of outsourcing on productive performance of manufacturing industries in Singapore. The paper develops an outsourcing measure based on the narrow definition of intermediate imports given by Feenstra and Hanson (1996, 1999). Based on the input-output tables, the study uses 5-digit industrial-level classifications to measure the impact of outsourcing on productivity of the manufacturing industries in Singapore from 1995–2004. The outsourcing measure is further decomposed by import of services, import of IT services and import of business services. This decomposition allows us to study the impact of outsourcing of services in addition to the cross-border fragmentation of products and components. The results suggest strong positive impact of cross-border sourcing on the productivity of the manufacturing sector. The decomposition of outsourcing measure indicates that the manufacturing industries are more involved in cross-border sourcing of services, particularly in business services.

Singapore's Perspectives on the Proliferation of RTAs in East Asia and Beyond

Abstract In this article the viewpoints and adopted strategies of Singapore in managing its trading relationship with other countries in the world is discussed. Trade being the lifeline and basis for its economic survival, Singapore has been very active in the negotiation and establishment of Free Trade Agreements (FTAs) with countries, practically in every continent. Singapores activism in bilateral FTAs is a reinforcement of its development strategy of expanding and ensuring market access for local and foreign investors. This is also in alignment with Singapores pro- business strategy philosophy and the objective of ensuring economic viability. Also Singapores trade accords go beyond trade liberalization and include “behind the border” impediments to trade; this is reckoned to keep the momentum of trade talk going and to hasten the process of liberalization by inducing other countries to liberalize.