Economic growth and technological catching up by Singapore to the USA

• Published in: Mathematics and computers in simulation Vol. 59; no. 1; pp. 133 - 141
• Main Authors: Lim, Lee K, McAleer, Michael
• Format: Journal Article Conference Proceeding
• Language: English
• Published: Amsterdam Elsevier B.V 10.05.2002; Elsevier
• Subjects: Applied sciences; Catching-up; Economic growth; Exact sciences and technology; Foreign direct investment; Inference from stochastic processes; time series analysis; Mathematics; Operational research and scientific management; Operational research. Management science; Probability and statistics; Sciences and techniques of general use; Statistics; Singapore; Asia; United States; North America; America; Foreign direct investment; Economic growth; Catching-up; Productivity; Technological gap; Verspagen model; Unit root test; Time series; Foreign investment; Dickey Fuller test; Research and development
• ISSN: 0378-4754; 1872-7166
• DOI: 10.1016/S0378-4754(01)00401-3

The high growth performance of Singapore can be attributed largely to the rapid inflows of foreign direct investment (FDI). It is generally accepted that FDI brings not only additional capital to the host country, but also the transfer of advanced technology and management skills. The catching up hypothesis states that the lagging country, with low initial income and productivity levels, will tend to grow more rapidly by copying the technology from the leader country, without having to bear the associated costs of research and development. Given the important effects of technological change on growth, this paper examines whether Singapore is catching up technologically to the technology leader (USA). The paper applies two different time series tests of technological catching up, namely the Dickey–Fuller-type unit root test and a test based on the Verspagen model. The empirical evidence suggests technological catching up by Singapore to the USA.