A Shift-Share Analysis of the Growth and Structural Change of Manufacturing Industries in Singapore

Abstract

This paper analyses the "sources" of the phenomenal growth of the manufacturing industries in Singapore during the 1960-1974 period in terms of a shift-share analysis which apportions output growth to import substitution, domestic demand expansion and export expansion. It is argued that Chenery's non-proportional growth reference framework of import substitution is a sound measure with reference to a small open economy. The empirical results have shown that in the early phase (1960-1965) of industrialization process, growth of output and value added can be attributed primarily to import substitution and expansion of domestic demand. Export expansion became an important "source" of industrial growth after 1965. This tends to support the hypothesis that manufacturing growth is export-induced.