LABOUR PRODUCTIVITY GROWTH, EDUCATION AND TRAINING

Abstract

Successful economies in East Asia, such as South Korea, Taiwan, Hong Kong and Singapore have hardly any resources to speak of and so, they have to develop the most important resource of all- people. The well-educated and skilled workforce is an important factor explaining the East Asian Miracle. With the ongoing financial crisis in the region, the East Asian Miracle appears to have come to an end. Although we are now preoccupied with just the financial issues and developing a framework for turning the economies around, in the long run, it will be the fundamentals that will turn out to be very important. Strong fundamentals, such as high education level and skills of the workforce, rather than financial measures, will really be the deciding factors when the "dust finally settles". An understanding of these fundamentals is important to both Singapore and those concerned with pulling the East Asian countries out of their economic quagmire. A regression model is used to test the contribution of education and training towards labour productivity. The results of the model show that labour productivity growth is positively correlated with expenditure on education and training. Thus, the winning formula to higher labour productivity growth, and eventually, to a higher economic growth rate and living standards, is to enhance the quality of human resources through continuous investment in education and training.