Growth and Productivity in ASEAN Economies
Michael Sarel

 

An understanding of the sources of growth in the ASEAN economies--a much discussed subject in recent years--is central to an assessment of their past performance and future growth prospects. Some previous studies have concluded that growth rates of total factor productivity (TFP) in Asian economies are not nearly as spectacular as their growth rates of output, and, at least in Singapore's case, are virtually zero. If true, this would imply that the success of the ASEAN economies may not be sustainable.

This paper argues that the results of previous studies were greatly influenced by their reliance on national accounts data for measures of various variables. In particular, the results were driven by the values that were used for the factor income shares of capital and labor. This study uses internationally comparable data from the Summers-Heston database and explores an alternative method for estimating the capital and labor factor shares, based on the assumption that technological factor shares are determined by the industrial structure of the economy and, possibly, by its level of development.

The results of this study for the period 1978-96 show impressive growth rates of TFP in Singapore (2.5 percent), Thailand (2.0 percent), and Malaysia (2.0 percent); a slower rate for Indonesia (1.2 percent); and a negative rate for the Philippines (-0.8 percent). The proportion of output growth per person attributable to TFP growth is not systematically different in the ASEAN economies and the United States.


Michael Sarel is an economist in the Southeast Asia and Pacific Department of the IMF. He received a Ph.D. from Harvard University.

 

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