Human capital accumulation : a comparative study of Singapore and Malaysia - 1975 to 2006
Creators: name: Maynes, Greg
Publisher: name: RMIT University
Year: 2024

description: Many East Asian economies experienced rapid economic growth since the early 1960’s, with Singapore and Malaysia being two of the best performers. Various factors have contributed to this growth. They include export-orientated policies, capital investment, a market-friendly approach and an institutional regulatory framework that attracts foreign investors. Another factor is the role of human capital in the form of formal and informal education. Human capital has been researched at both the theoretical and empirical levels. This thesis explores the relationship between economic growth in Singapore and Malaysia, and human capital accumulation as measured by labour force educational attainment.<br><br>This thesis uses two empirical models and data sets that are not available for most other developing economies to assess the link between education and the growth rates in both economies. The Seemingly Unrelated Regression approach and Seemingly Unrelated Time Series Equations are used. They find that that the returns to investment in human capital appear to be higher in Singapore compared to Malaysia. <br><br>The empirical results suggest that for a more developed economy, investment in higher education levels produces stronger growth. Alternatively, for a less mature economy, such investments in higher education are less productive. The thesis identifies nine points that may explain the disparities between Singapore and Malaysia.<br><br>1. Singapore promoted a close interaction between education and industry policies, and the needs of the private sector. This was not so evident in Malaysia.<br>2. Singapore has maintained high levels of investment in vocational and technical education. This was less so in Malaysia.<br>3. The capacity of Singapore to attract and maintain highly qualified and motivated teaching staff at all levels by offering attractive remuneration and conditions. <br>4. Singapore mandated the use of English as the language of instruction at all levels, compared to the Malaysian emphasis on the Malay language.<br>5. Singapore has long been seen as having high quality and systematic policy-making processes as well as competent government agencies. This was not the situation in Malaysia.<br>6. In Singapore foreign investment provided an impetus for better domestic and industry-relevant education and training. This was less so in Malaysia.<br>7. Singapore is open to international trade. This exposed the economy to the spread of new technologies, as well as new products and services. Malaysia was less open and this diffusion was less uniform.<br>8. Singapore was advantaged by the quality and timing of government interventions in the domestic economy so as to maximise efficiency. <br>9. Malaysia was disadvantaged by the role that ethnic and racial considerations played in the policy-making process. These were absent in Singapore.<br><br>Given these points it would be useful for developing economies to follow some of the lessons from Singapore. Specifically, education policy cannot be created independently of the overall policy-making process. Also there must be a willingness to efficiently allocate resources to education. Allocations should be based on the relevant stage of development. Also, non-economic criteria such as ethnic and social issues should be minimised as considerations when education policies are being framed.<br>