Discussion.

This article presents author Alwyn Young's response to comments on his paper A Tale of Two Cities: Factor Accumulation and Technical Change in Hong Kong and Singapore. Responding to the Robert Barro, Young noted that all endogenous growth models are in a sense trivially linear in something. The AK model and other models of endogenous growth certainly do not yield the same predictions. Nouriel Roubini noted that because of the large volume of foreign investment, there is likely to be a substantial gap between gross domestic product and gross national product (GNP). Because much of the capital in Singapore is foreign owned, and, therefore, much of the income to factors of production flows abroad, the growth rate of GNP may better reflect the welfare of Singaporeans and may help to explain the relative low growth rate of consumption. Michael Bruno observed that subsidies to capital accumulation will cause the true elasticity of output with respect to capital to be less than its observed factor share. Because both implicit and explicit subsidies play such an important role in Singapore, Bruno wondered if one could estimate the true production elasticities. Young replied that he did not attempt to estimate the true elasticities.