INPUT-OUTPUT ANALYSIS OF SINGAPORE : INCOME DISTRIBUTION, TRADE AND GROWTH

Abstract

In the pursuit of economic development, nations are often faced with two overriding concerns: the possible trade-off between growth and income equality, and finding a suitable trade policy. The former is a renown controversial issue. Some economists strongly believed that deterioration in income equality is necessary in the initial stage of development. Others argued that the dual goal of growth and income equality is not an impossible task. The later issue is less complicating in most cases it narrows down to the choice between export expansion and import substitution. The purpose of this study is to conduct a simulation exercise, using an adapted version of the Paukert's Semi-Closed Input-Output Model, to examine the above mentioned controversies. The second aim is to keep in line with the growing interest in Input-Output analysis. This simulation studv will be based on Singapore Input-Output table in 1978, and is divided into two stages. In Stage I, scenarios depicting different income equality are simulated by stipulating 15 hypothetical income distribution alternatives. These 15 alternatives are then incorporated into the model simultaneously, in the order of their degree of equality measured by the Gini-coefficient. From this, we hope to investigate the effects on income redistribution on gross output, employment, income and growth. Stage II of the exercise involves the quantitative assessment of export expansion and import substitution, in terms of ability 10 generating output, income and employment. Implications of existing consumption patterns of different trade policies will also be analysed. Here, we wish to know if there is a need to account for existing consumption pattern 1n the formulation of trade policies.