Sources of output growth in Singapore's services sector

As services are an important engine of growth for Singapore, this paper attempts to empirically investigate the sources of output growth in this sector to shed light on the debate sparked off by Krugman (1994) on the miraculous or mythical growth of Singapore and the other newly industralizing Southeast Asian economies. This is done by using the stochastic production frontier model with panel data. Unlike existing studies which used the conventional growth accounting approach to decompose output growth into just input growth and total factor productivity (TFP) growth, this approach further decomposes TFP growth into technological progress and changes in technical efficiency.