TOTAL FACTOR PRODUCTIVITY IN SINGAPORE MANUFACTURING INDUSTRIES, 1970-1995

Abstract

Previous research on total factor productivity (TFP) growth in Singapore has arrived at qualitatively identical conclusion that contribution of total factor productivity (TFP) growth to growth in output is minimal, and in some cases marginally negative. The objective of this thesis is to evaluate total factor productivity (TFP) growth of eighteen (18) manufacturing industries in Singapore between 1970 and 1995 using the transcendental logarithmic production function. To accomplish this, the thesis is divided into two main parts. Firstly, the methodology and sources of data will be covered, and the second part comprises of the analysis of the results. An attempt is made to analyze the sources of growth for the overall manufacturing sector. Translogarithmic indices arc used, with output as a function of material, energy, labour and capital inputs, and time. The main conclusion that can be drawn is that, the growth of output was attributed largely to the growth of factor inputs, particularly material and energy inputs. Recognizing this, the residual of output growth and input growth, known as total factor productivity (TFP) growth, is insignificant as a contributor the output growth. The findings of this thesis do not differ much from the other studies done on the total factor productivity (TFP) growth in Singapore, thus the conclusion is that total factor productivity (TFP) growth has hardly made any significant contribution to the growth of output.