Capital accumulation, capital-output ratios and total factor productivity in Singapore

Abstract

Capital, together with labor, land and technology, are the key factors of production.Various growth theories relate the growth of capital to the growth of output. In Rostow’s growth model, an increase of investment rate to 10% or more is necessary before growth can gather enough momentum to take-off. In the Harrod-Domar model, the growth rate of national output is equal to the growth rate of capital. In Lim’s S-Curve hypothesis (1996, 2004), the rapid accumulation of physical capital is an important driver behind the superlative growth of the Newly Industrializing Economies (NIEs). De Long and Summers (1991, 1993) have also shown that investment in machinery and equipment has a strong association with growth.