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History of Singapore's Economic Development

History of Singapore's Economic Development

In the early 1960s, the city-state of Singapore was an undeveloped country with a GDP per capita of less than U.S. $320. Today, it is one of the world's fastest-growing economies. Its GDP per capita has risen to an incredible U.S. $60,000, making it one of the strongest economies in the world. For a small country with few natural resources, Singapore's embraced globalization, free-market capitalism, education, and pragmatic policies, the country has been able to overcome its geographic disadvantages and become a leader in global commerce.

Independence
For over 100 years, Singapore was under British control. But when the British failed to protect the colony from the Japanese during World War II, it sparked a strong anti-colonial and nationalist sentiment that subsequently led to Singapore's independence.

On August 31, 1963, Singapore seceded from the British crown and merged with Malaysia to form the Federation of Malaysia. This didn't turn out well in the two years Singapore spent as part of Malaysia. the Malaysian parliament voted to expel Singapore from Malaysia. Singapore gained formal independence on August 9, 1965, with Yusof bin Ishak serving as its first president and the highly influential Lee Kuan Yew as its prime minister.
Globalization
During colonial times, Singapore's economy was centered on entrepot trade.
The most feasible solution to Singapore's economic and unemployment was to embark on a comprehensive program of industrialization, with a focus on labor-intensive industries. Unfortunately, Singapore had no industrial tradition. The majority of its working population was in trade and services. Singapore was forced to look for opportunities well beyond its borders to spearhead its industrial development.

Pressured to find work for their people, the leaders of Singapore leaders has to connect with the developed world and convince multinational corporations to manufacture in Singapore.

In order to attract investors, Singapore had to create an environment that was safe, corruption-free, and low in taxation. To make this feasible, the citizens of the country had to suspend a large measure of their freedom in place of a more autocratic government. Anyone caught conducting narcotic trade or intensive corruption would be met with the death penalty.

By 1972, just seven years after independence, one-quarter of Singapore's manufacturing firms were either foreign-owned or joint-venture companies, and both the United States and Japan were major investors. As a result of Singapore's steady climate, favorable investment conditions and the rapid expansion of the world economy from 1965 to 1972, the country's Gross Domestic Product (GDP) experienced annual double-digit growth.

As foreign investment money poured in, Singapore began focusing on developing its human resources in addition to its infrastructure. The country set up many technical schools and paid international corporations to train their unskilled workers in information technology, petrochemicals, and electronics. For those who could not get industrial jobs, the government enrolled them in labor-intensive un-tradable services, such as tourism and transportation. The strategy of having multinationals educate their workforce paid great dividends for the country. In the 1970s, Singapore was primarily exporting textiles, garments, and basic electronics. By the 1990s, they were engaging in wafer fabrication, logistics, biotech research, pharmaceuticals, integrated circuit design, and aerospace engineering.

A Modern Economy
Today, Singapore is a modern, industrialized society and entrepot trade continues to play a central role in its economy. The Port of Singapore is now the world's busiest transshipment port, surpassing Hong Kong and Rotterdam. In terms of total cargo tonnage handled, it has become the world's second busiest, behind only the Port of Shanghai.

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In the early ...................., the city-state of Singapore was an undeveloped country