ACJC_H2_ECONS_P2_essay_Q4_(productivity-driven growth)

ACJC 2018 PRELIMS ESSAYS_SUGGESTED ANSWERS (Q4) 1 4. In its report dated 1 February 2010, the Economic Strategies Sub-committee on Fostering Inclusive Growth stated that 'only productivity-driven growth can deliver sustainable and inclusive economic development'. Assess the validity of this statement. [25] Suggested Approach for Q4 UNPACKING KEY TERMS/ PHRASES Setting the context (introduction) • The statement by the Economic Strategies Sub-committee (ESS) on Fostering Economic Growth is all about growing the level of productivity in Singapore to drive growth forward. This is important given the smallness of our economy and hence our tight resource constraints. • While a country can grow its national output by increasing quantity or quality of resources, the severe lack of natural resources in Singapore compels us to depend on productivity gains to sustain growth. Th is is a strong concern for the Singapore government, given the productivity declines in recent years (which compared with already slow gains averaging 1% in 2000-2010) due to heavier reliance on labour inputs (largely foreign) to generate economic growth. Productivity = efficiency with which inputs are converted into output. Expressed as output per unit of input. Higher productivity  firms produce greater output for the same level of input (or same output with less input)  a fall in unit cost  can charge lower prices for its products  higher revenue (PED>1) and/or higher profits. Productivity-driven growth = the case when a country’s economic growth is achieved via an improvement in quality of resources rather than an increase in the quantity of resources. Economic development covers both growth + welfare values. Economic growth = increase in national output but … Economic development = economic growth + improvement in quality of life (usually measured by HDI); has direct relationship with environmental issues. Economic devt. that is sustainable = economic growth that a country can maintain over an extended period of time, without creating other significant economic problems (e.g. depleted resources and environmental harm) for the future generations Economic devt. that is inclusive = economic growth that is broad-based across economic sectors, creates productive employment opportunities for majority of the population, and higher SOL for all Analysis Thesis argument : Productivity gains can deliver sustainable and inclusive economic development … Counter argument 1 : Productivity-driven growth does not always bring about sustainable and inclusive economic development … Counter argument 2: Although necessary, productivity gains alone will not be able to deliver sustainable and inclusive economic development … Synthesis: give overall judgement on whether it is a valid (sound or logical) claim that productivity growth alone can deliver sustainable and inclusive economic development

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