The influx of foreign workers in Singapore : causes and effects on the Singapore economy.

Abstract

Influx of foreign workers has been a controversial issue in Singapore. The thesis attempts to examine the impact and contributions of foreign workers in the Singapore Economy. The Cobb-Douglas production function was employed in the investigation. The growth accounting approach was derived from the production function with real Gross Domestic Products as a function of the aggregate inputs of foreign workers, domestic workers and capital along with total factor productivity change. Divisia and Translog indices were used to examine the contributions made by each factor of production to the real GDP of the overall Singapore economy and the manufacturing sectoral output. Multiple linear regression analysis was employed to estimate the number of foreign workers needed in the Singapore economy in order to achieve its long-term 4.0 percent to 6.0 percent economic growth. The findings indicate that foreign workers have contributed significantly to the real GDP of Singapore, particularly to the manufacturing sectoral output. The findings also suggest that foreign workers has become an important factor in sustaining high economic growth in labour shortage economies.