GDP growth moderated from an average of 7.3%
p.a. in 1990-1999 to 5.1% in 2000-2009. At the
same time, labour productivity growth fell from
an average of 3.1% p.a. to 1.3%. Recently, MAS
conducted a quantitative study of the factors
that have contributed to economic growth over
the past two decades2.
Such studies are part of MAS’ research
into the broader issues and challenges facing
the Singapore economy.
medium-term growth depends on its labour and
capital stock as well as the efficiency with
which it uses its resources. As such, economic
growth can be attributed to labour inputs, capital
inputs - including information and communication
technology (ICT), as well as technological progress
and intangible socio economic improvements,
or total factor productivity (TFP).
study showed that labour input has gained in
importance as a source of growth for Singapore
over recent years (Chart 4). While this was
largely underpinned by increased hours worked,
labour quality also became increasingly important
as a result of ongoing government policies to
build a higher-skilled and more educated workforce.
Tertiary-educated workers, for example, now
account for about one-third of the workforce,
compared to just a quarter in the late 1990s.
same time, the contributions of capital and
TFP to output growth have fallen. Notably, non-ICT
investment as a share of GDP fell after the
Asian financial crisis, although this was mitigated
somewhat by steady ICT investment. In fact,
Singapore’s share of ICT investment in
GDP was higher than the average of advanced
economies in 2005. The slowdown in TFP growth,
meanwhile, is probably attributable to the increased
frequency of cyclical shocks over the last decade,
rather than to a structural downshift.
were also made for the average growth of Singapore’s
labour productivity over the next decade. The
expected labour productivity growth rate of
between 2% and 3% p.a., combined with the projection
of an average 1-2% p.a. labour force growth
by the Economic Strategies Committee, produces
a medium-term potential GDP growth rate of 3-5%
p.a. for the Singapore economy over 2010 –
2019. Thus, there is potential for higher quality
albeit slower growth than in the past. The productivity
gains over the next decade should be underpinned
by higher quality of labour and capital inputs,
and a stronger rate of capital accumulation.
In particular, ICT investment will be an important
enabler of capacity-driven growth.