Abstract
As one of the world’s most successful developing economies, Singapore’s economic development has been extensively chronicled (e.g. You and C. Y. Lim (ed.), 1971, 1984; Chen, ed., 1983; Pang and L. Lim, 1985; Krause, Koh and Lee (Tsao), 1987; C. Y. Lim et al., 1988; Sandhu and Wheatley, eds, 1989). Table 7.1 presents some aggregate statistics that document this success. They show a nation that, over a period of roughly twenty years, transformed itself from a state of economic underdevelopment into, by 1991, a ‘high-income’ country by the World Bank’s classification, and is widely regarded today as fullyindustrialized.
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Notes
Dr. Winsemius remained for over twenty years as Singapore’s formal and informal economic advisor and, together with Dr. Goh Keng Swee, a London School of Economics economist who served as Minister of Finance until the early 1980s, is credited with being the ‘architect of Singapore’s economic development’.
Singapore inherited a colonial monetary and banking system, which was subsequently greatly enlarged through various government licensing and tax incentive schemes aimed at turning Singapore into an international financial center engaged in a great deal of offshore business. These policies and institutions are not discussed here because they are not directly related to the industrialization process (except for the Development Bank of Singapore, which is discussed). See, for example, S. Y. Lee, 1984; Bryant, 1989.
After winning their independence, Singapore’s neighbors sought to reduce their dependence on its entrepot trading services by developing competing facilities themselves (i.e. ‘cutting out the middleman’). In addition, a territorial dispute with Malaysia since 1963 had caused Indonesia to officially boycott the port of Singapore (though it could not stop the smuggling which then took place).
For an analysis of the political complexities underlying the relative roles of the state, foreign and local private capital in Singapore’s economic development, see Lim (1987). Unlike Singapore, Hong Kong was able to rely for capital, technology and industrial entrepreneurship on industrialists who relocated from Shanghai and other mainland Chinese cities after the communist revolution of 1949. Like Singapore, Puerto Rico also relied heavily on (mainly US) multinationals for its industrialization. While Singapore did have an active local, predominantly Overseas Chinese, business class, it was almost exclusively involved in the entrepot trade, and lacked the knowledge and incentive to venture into manufacturing.
Many if not most of the numerous work stoppages conducted by unions in the early 1960s were politically motivated, reflecting the political struggle between ‘moderate’ and ‘eft-wing’ factions of the PAP which split up in 1962. The ‘moderate’ PAP faction which retained the reins of government thus had a political motivation to curtail the power of unions, with which they had been locked in an ‘anti-communist struggle’. (See Devan Nair (1976).)
One casualty of the ‘industrial restructuring’ policy was the local automobile assembly industry, which lost its tariff protection (without which it could not compete with imports) and closed down in 1980. The government’s policy was to shift into export-oriented auto parts and components production instead (see Lim (1982a, pp. 210–14).
As an example of high living standards, despite the country’s small size (now 3 million people), Singaporeans constitute by far the largest group of foreign tourists in neighboring Malaysia and Indonesia; about one in four Singaporeans travels abroad every year.
Some of these costs arise from government social policies — e.g. the world’s highest taxes on motor vehicles to reduce traffic congestion — while others reflect strong international demand for limited local resources, especially land and labor.
It is also arguable that, politically, a weak local capitalist class poses less of a competitive challenge to the state and ruling party, whose role is rather enhanced by the needs of both foreign capital and labor for it to act as a broker between the two. In addition, the PAP argues that government support and leadership of the union movement is necessary to strengthen the bargaining power of local labor vis-à-vis otherwise much more powerful multinational employers, who concur that government backing of unions make them take the latter’s demands more seriously.
As mentioned above in the text, in Singapore this has been done, variously, by progressively restricting foreign labor (i.e. tightening labor supply), raising wages, providing fiscal incentives for worker training and capital-labor substitution, and providing worker and management training programs in government and government-affiliated institutes and programs.
The southern Chinese merchant and laboring classes which formed the bulk of Singapore’s population at independence were economically-motivated migrants who did not have particular respect for the corrupt local and central state bureaucracies that they had left behind in a disintegrating feudal China. In the Confucianist social hierarchy, in any case, merchants and bureaucrats despised each other. The Chinese population of Singapore itself was linguistically heterogeneous, and living with a substantial minority of Malays and Indians. The southern Chinese cultural personality and tradition is also one where ‘family means everything, but nation means nothing’, and the state is generally to be evaded and avoided (even escaped, through emigration) as a corrupt regulator and onerous tax-collector. Since Singapore itself had no pre-colonial history as an independent nation-state, nationalism was absent among the population. This contrasts vividly with the homogeneous, 2,000-year-old so-called ‘Hermit Kingdom’ of Korea, which followed Confucianist traditions much more closely.
In the early days, the predominantly English-speaking PAP and the civil service which served it were frequently at odds with the local left-leaning Chinese-speaking merchant and intellectual communities, which were subsequently suppressed, in part by the weakening of Chinese-language education.
It is noteworthy that in January 1993, former Prime Minister Lee Kuan Yew seemed to voice second thoughts about this achievement when he publicly lamented the fact that Singapore Chinese businesses could not compete in China because they had ‘forgotten’ how to use ‘relationships’ (a code word for bribery and corruption) in business transactions.
In the computer disk-drive industry, for example, many US companies came to Singapore in the 1980s virtually as start-ups which were subsequently nurtured by Singapore government assistance, and stayed to derive in some cases as much as 90 per cent of their production for world markets from or through Singapore, for whom, however, each company was only a small and replaceable player in its large diversified pool of multinational employers.
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© 1995 Palgrave Macmillan, a division of Macmillan Publishers Limited
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Lim, L. (1995). Foreign Investment, the State and Industrial Policy in Singapore. In: Stein, H. (eds) Asian Industrialization and Africa. International Political Economy Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-24473-7_7
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DOI: https://doi.org/10.1007/978-1-349-24473-7_7
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