Measures of Economic Growth

1. Measures of Economic Growth

Gross domestic product (GDP)

overall economic activity. It represents the total value at constant prices of final goods and

services produced within a country during a specific period, such as one year (Callen, 2017;

Parkin, 2016).

Macroeconomic stability is needed to be considered as well when a country wants to increase

their GDP. Macroeconomic stability is dependent on the structure of key markets and sectors

to sustain high rates of economic growth. It can be a

lessened its vulnerability to external shocks and it is vital for sustainable rates of economic

growth (Wessels, 2006).

To enhance to support

macroeconomic policies adjustments to expand fiscal deficits and structural reforms in areas

such as economic liberalization, capital account liberalization, corporate restructuring and

financial restructuring. (Ames, et al., 2001).

1.1 GDP = C + I + G + (X - M)

GDP is the sum of consumption expenditure (C), investment (I), government expenditure on

goods and services (G) and net exports of goods and services (X M).

So long as one of the components in the GDP formula increases, there will be an economic

growth. In order to attract more investments which will in turn spur on the increase on

consumption and export, we will need to increase government spending. Government

spending will create a multiplier effect known as the government spending multiplier.

It is the ratio of change in the output to the change in government expenditure. This will

encourage growth in investment. Consumption expenditure will also increase due to the

multiplier effect. In long term, the overall productivity will increase, GDP will increase as

well (Parkin, 2016).

This paper will explore and discuss on some of the policies that Singapore and South Korea

governments had implemented to sustain economic growth and macroeconomic stability on

the note that endowment of natural resources is not available for both countries.

2. Knowledge-based economy (KBE)

Knowledge is becoming an increasingly critical stimulant of a countr

globally (OECD, 2018). Under KBE context, knowledge plays an important role as a part of

the economic processes where production, distribution and knowledge usage are the main

driving forces of economic growth and employment in all the industries (OECD, 2005). It is

noted that the wards a KBE now.

3. Four aspects of KBE Framework

Economic growth is most sustainable for countries with the following aspects to flourish

under the KBE framework.

3.1 Human resources development (HRD)

HRD is inevitable. Basic education and lifelong training is pervasive and a long-term

investment. It is important for the government to invest in and develop human resources to

close knowledge gap amongst its citizens (OECD, 2005).

South Korea recognised the importance of education and devoted much of its resource in this

area. The government developed and introduced a comprehensive education fee support

system to target students from low-income household who need educational fee support

(Ministry of Education, Science and Technology, 2008). Government had made efforts to

provide free early childhood education to reduce financial burden on households for

expenditure on education and financial investment to increase a fair access to higher

education and initiatives to improve quality of education at all levels. (OECD, 2016)

In Singapore, basic education is mandatory as well. The Compulsory Education Act (Cap 51)

was passed by the parliament on 9 October 2000. Government had implemented the

Compulsory Education (CE) in 2003 with two main objectives: to provide common core

knowledge to build up a strong foundation for further education and training, and to build a

national identity and cohesion (Ministry of Education, 2018).

Singapore Workforce Development Agency (WDA) established in 2003 was reconstituted

into a new statutory board, Workforce Singapore (WSG) in 2016, with the aim to encourage

lifelong learning through SkillsFuture Singapore (SSG) and enhance employability where one

can upgrade their skill sets to assume quality jobs and careers in the competitive market

(Ministry of Manpower, 2016).

3.2 Innovation systems

Innovations and technologies advances every day and are seen to be of a significant role to

facilitate industries that revolutionise existing business models. It emphasized the flow of

technology and information to enhance innovative performance of KBE (APEC Economic

Committee, 2000). Acknowledging the impact of the innovation system can have to the

economy, governments