Title: What Explains the Industrial Revolution in East Asia? Evidence from the Factor Markets
Reference Number: 1015
Publication Date: April 2000

Chang-Tai Hsieh
Princeton University

The paper presents price-based (dual) estimates of total factor productivity growth (TFPG) for the East Asian countries. While the dual estimates of TFPG for Korea and Hong Kong are similar to the primal estimates, they exceed the primal estimates by roughly 1 percent a year for Taiwan and by more than 2 percent a year for Singapore. The basic reason for the large discrepancy for Singapore is that despite the high rate of capital accumulation indicated by Singapore's national accounts, the return to capital has remained constant in Singapore. Furthermore, changes in the risk-premium, financial market controls, taxes on capital, and public investment subsidies do not explain why the rental rate of capital in Singapore has not fallen.

Last modified: 07/25/2002