Krugman and Young revisited: a survey of the sources of productivity growth in a world with less constraints

Abstract

Young (1994) and Kim and Lau (1994), among others, argue

that the Asian Miracle of relatively high growth was largely due

to increases in factor inputs. Productivity growth would eventually

slow because of diminishing returns to factors. Thus total factor

productivity growth was not the reason for the Asian Miracle.

Krugman (1994) summarized this research, comparing the growth

experience of Singapore, among the other Asian Tigers, to that of

the Soviet Union and argued that there was reason to expect a

similar outcome, namely a collapse of the political institutions due

to economic stagnation. Interestingly, Krugman consistently refers

to efficiency growth and technical progress as equivalent terms. In

this paper and survey we discuss alternative explanations for

economic growth in Asia as well as elsewhere in the world in the

post WWII years. The alternative explanation is explicit in Krugman's

treatise. It is economic growth due to a world with less constraints.