The determinants of total factor productivity growth in Korea and Singapore: Moving from perspiration to inspiration

It is widely recognized that the key to sustainable economic growth is technological progress or productivity growth. Two of the Asian Tigers, Korea and Singapore, have achieved remarkable economic growth in the past 20 years, but the engine driving this growth was mainly physical inputs. This study emphasizes the importance of productivity growth for the future advancement of these two countries and develops conceptual and empirical models in support of this contention. The regression analysis shows that human capital is critically important for productivity growth in both countries. The findings also indicate that R&D has been particularly important in the case of Korea. Moreover, the results reveal that some determinants of productivity growth, such as the quality of governance, number of patents, openness, and R&D in a major trading partner, have varying degrees of importance and impact productivity growth differently in the two countries. Finally, the important policy implications are drawn from this analysis. The governments of Korea and Singapore need to continue to support efforts to improve human capital,...