Asia High Growth (I) - Singapore

1. How did Singapore achieve extremely high economic growth rates after 1965?
Singapore’s high economic growth rates since 1965 may arise from government centralized control and vision. Singapore government was a core organization, formulated strategic plans to correspond with each period necessities and future needs. We separated in two main periods:
The 1960s-1970s
Issue:
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Minimal natural resources and a population of two million people
High unemployment rate and low capital base
Low basic social needs

Strategy:
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Promoted foreign direct investment (FDI) o Attracted multinational corporations (MNCs) to invest in manufacturing in
Singapore for exporting products back to their countries (export-oriented economy) o Through MNCs, Singapore could benefit by gaining employment opportunities, technology transfers, and managerial expertise.
Focused on labor-intensive manufacturing (Initially targeted four industries: ship repair/containers, metal engineering, chemicals and electrical equipment)

Government’s actions
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Created efficient business environment to attract FDI o Investing in basic infrastructure
- Government-owned companies -Jurong Township Corporation (JTC) o Tax incentive o Efficient bureaucracy o Educated labor workforce o Promoted international trade by
- Removed tariffs and invested in port infrastructure
- Established a network of FTAs with main trade partners
- Exchange rate-centered policy
Provided basic social needs for Singaporean o Investing in basic infrastructure
- Government-owned companies – public housing (HDB) and wide variety of firm across economy
Built savings for the nation o Created Central Provident Fund (CPF)
- Originally created as a retirement saving scheme, later expanded to include healthcare, homeownership and asset enhancement

The 1980s – 1990s
Issue:
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Tight labor market with increasing wage (could not compete on labor cost in global)

Strategy:
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