Sources of Singapore’s Economic Growth, 1965–2008: Trends, Patterns and Policy Implications

This paper analyses the sources of Singapore’s GDP and labour productivity growth in 1965–2008 and reveals insights into related trends and patterns. The study documents four main findings. Firstly, both GDP and average labour productivity (ALP) growth in Singapore tended to decline during this period, and the contribution of ALP growth to GDP growth tended to decrease over time. Secondly, the contribution of labour to GDP growth was rather stable at approximately 1.5 to 2 percentage points per year, of which an increasing share came from foreign labour. Thirdly, total factor productivity growth improved substantially after the mid-1980s and has become a healthy source of GDP and ALP growth since that time. Finally, Singapore’s ALP low growth and its declining trends has become notable recently, of which the main reason was a sharp decrease in the contribution of capital deepening. The study discusses the challenges facing Singapore’s sharply declining ALP growth rate and proposes policy approaches that might help boost the country’s ALP growth in the future.