Emerging Economics

Economics of Emerging Markets Project

The project is based on the case study “Singapore Inc.” that is linked to in the “Project” folder in WebCT. Read it carefully and focus on the connections between what you read and the content of the lectures.

1) The Solow model is constructed on the following basic relations:

Identify in the variables and constants above the different concepts discussed in the case study. For each one specify briefly what policies have been put in place to foster growth.

[40%]

2) Represent graphically the evolution of GDP, gross fixed investment and gross fixed investment as a percentage of GDP in Singapore from 1970 to 2000. Comment on the evolution of these variables.

[10%]

3) Consider next the evolution of gross national saving, net funds from abroad and gross capital formation. What explains the evolution of these variables. Does this data help you explain the pattern(s) identify above? How?

[10%]

4) Compare the size and sign of the contribution to GDP growth of TFP, Labour input and capital input. What pattern can you identify, if any?

[10%]

5) Assess whether your answers to questions 2), 3) and 4), in the context of the model discussed in 1) present worrying signs for the future growth of Singapore. The paper “A tale of two cities: factor accumulation and technical change in Hong Kong and Singapore” by MIT economist Alwyn Young should help you answer this question.

[10%]

6) Using data from the UK Data Service, compare GDP growth rates with Gross Capital Formation and Gross Fixed Capital Formation (annual growth in all three cases) from 1976 to 2012. Establish a comparison with the situation in Hong Kong. In light of your answer to 5), what can you conclude in terms of the implications for Singapore’s growth strategy?

[20%]