EFFICIENCY AND PRODUCTIVITY OF SINGAPORE'S MANUFACTURING SECTOR 2001–2010: AN ANALYSIS USING BOOTSTRAPPED TRUNCATED APPROACH

Abstract

This paper seeks to explain the lagging productivity in Singapore's manufacturing noted in the statements of the Economic Strategies Committee (ESC) Report 2010. Two methods are employed: the Malmquist productivity to measure total factor productivity (TFP) change and Simar and Wilson's (2007) bootstrapped truncated regression approach which first derives bias-corrected efficiency estimates before being regressed against explanatory variables to help quantify sources of inefficiencies. The findings reveal that growth in TFP was attributed to efficiency change with no technical progress. Sources of efficiency were attributed to quality of worker and flexible work arrangements while the use of foreign workers lowered efficiency.