Measuring economic sustainability of nations : Singapore as case study
Chew, Mona Poh Gek
Date of Issue2013
School of Humanities and Social Sciences
An economic system is sustainable in the long term only if it accommodates the production eco-systems of the economy. Over expansion, unbalanced and pre-mature growth of the economy can lead to bottlenecks and structural strains, ultimately decreasing the net prosperity of the people. In the extreme, the eco-systems of production may be irreparably damaged, leading to economic collapse. An intuitive way to study the complex interrelationships of the production eco-systems is based on the ‘EGOIN’ theory, which comes from the first letters of the five main domestic co-determinants of economic development: Entrepreneurship, Government, Ordinary labour, Investment and Natural resources. The main outcome of this research is a proposed framework for the computation of EGOIN Composite Index. The core model of the index is a root-mean-square deviation weighted summation of five component indices for the Entrepreneurship, Government, Ordinary Labor, Investment and Natural Resource eco-systems respectively. The proposed equations allow the weights to be automatically adjusted in favor of any economy whose production eco-systems are developing in balanced tandem and with global sustainability as one of its objective functions. The key variables for each of the five components have been identified and sample data sets have been collected and analyzed. The selected sets of variables are grouped under several main factors for each component index. The weights for each factor can be found using economic regression analysis. For E, G, O and I eco-systems, the objective functions are more related to economic performance, while that for the N eco-systems is more related to ecological sustainability. The composite index can thus served as an indicator of economic sustainability. The EGOIN Composite Index has been computed for a selected group of over 100 countries including Singapore. The results are consistent with generally accepted classifications of nations in terms of their economic sustainability, and correlate well with the S-Curve and Triple-C theories.
DRNTU::Social sciences::Economic development::Singapore