Assuming constant returns to scale, perfect competition (so that factors of production are paid their marginal products) and Hicks-neutral technical change (so that shifts in the production function do not affect marginal rates of substitution between inputs), output growth can be expressed as a weighted sum of the growth rates of inputs and an additional term that captures shifts over time in the production technology. The weights for the input growth rates are the respective shares in total input payments – the labour and capital shares. More specifically:  where A(t) is a multiplicative factor in the production function capturing technical change.  K ,  L represent respectively the capital and labour shares of income. Charts 8 and 9 look at the proportion of labour and physical capital employed by the financial intermediation sector in the UK relative to the whole economy over the past forty years. They follow a not dissimilar path, with both labour and capital inputs rising as a share of the whole economy for much of the period. The proportion of labour employed by finance rises by around 50% between 1977 and 1990, while the proportion of capital almost trebles from 4% to 12% over the same period. Financial liberalisation over the period drew factors of production into finance, both labour and capital, on a fairly dramatic scale. Perhaps the most striking development, however, is what happens next. These trends have not persisted during this century.
Lim Hng Kiang: The Singapore financial services sector Address by Mr Lim Hng Kiang, Deputy Chairman of the Monetary Authority of Singapore and Minister for Trade and Industry, at the ABS Annual Dinner, Singapore, 29 June 2007. *  *  *  Chairman, ABS Council Members of ABS Ladies and gentlemen It is good to be here tonight. The ABS Dinner is an excellent opportunity for the Singapore financial services community to get together, catch up and look ahead. State of the Singapore financial sector 2006 has been a good year for Singapore. The financial services sector has done particularly well. All in, financial services grew 9.2% in 2006, outperforming Singapore’s overall GDP growth of 7.9%. This momentum has carried into this year. 2007 first quarter growth for the financial services sector came in at 13% on a year-on-year basis. Growth has been broad-based, with brokerage, treasury and advisory-related services being the largest contributors. Volumes in the Singapore foreign exchange market have also grown steadily. The equity markets have been hot. Volume of securities traded has gone up sharply. The local debt market has also registered good growth in 2006. In the latest Annual Corporate Debt Review for 2006 which MAS released today, the total market capitalization of the Singapore bond market has reached $ billion. Indeed, the Government’s efforts to grow the Singapore Government Securities (SGS) market have produced results. Since 1996, outstanding SGS has grown from $ billion to $ billion in December 2006. This year we issued the first 20-year SGS.