Singapore s Economic Transformation. Zhanna Medvedeva MA-1

Transcription

1 Singapore s Economic Transformation Zhanna Medvedeva MA-1

2 Intro & Plan Past few decades the rise of South Korea, Taiwan, Hong Kong and Singapore The phenomenal case of Singapore s economic growth has seen the most attention Currently Singapore: small territory (685 sq km), no natural resources, population ~ 5 M people the highest standards of living, modern city-state, base for >3000 multinationals. Plan: 1. Short history and background of Singapore 2. Traces of Singapore economic strategy - The 1960s: - The 1970s: main economic challenge, actions, results - The 1980s: - The 1990s: 3. Current state of Singapore s economy and plans 2

3 Overview of Singapore 1819 Sir Stamford Raffles from the British East India company arrived on the island by 1825 important port, amount of trade exceeded that of Malaya s Penang and Malacca 1921 the British built a naval and air bases in Singapore Japanese occupation 1959 Singapore gained self-governance 1963 Singapore became the part of Malaysia, confrontations with Indonesia (2nd largest trade partner of Singapore) 1965 Singapore separated from Malaysia and has been an independent republic since then. 3

4 Traces of economic strategy Pro - business Pro - foreign investment Export - oriented Economic Policy Framework Singapore s economic strategies: State-directed investments in strategic government-owned corporations (1) The government's strategic role (2) Mobilization of its human capital (3) Continuous development of infrastructure 4

5 The 1960s Main economic challenge: to overcome Singapore s high unemployment problem need for an extensive growth in manufacturing industries, but the economy is too dependent on entrepot trade Actions: - UN economic advisors helped to establish The Economic Development Board (EDB), providing a one-stop general and procedural information to the foreign investors (to bypass bureaucracies) - EDB officers went around Western countries and promoted Singapore among multinationals as the right place to build manufacturing base (political stability, English-speaking & low-cost workforce, tax benefits for 5 years etc.) Results: - Lots of foreign companies came to Singapore, brought technologies and created jobs - Manufacturing share of GDP grew from 10% to 15% 5

6 The 1970s Main economic challenge: to maintain economic growth without the British back - British withdrawal from Singapore, Indonesian policy of confrontation, separation from Malaysia Actions: - The EDB: improved tax incentive scheme for foreign firms as well as for local small manufacturing firms - Emergence of nationalized companies the Development Bank of Singapore (DBS), the Singapore Airlines, Sembawang Shipyard. - Central Provident Fund (CPF) was established for funding housing purchases and medical benefits for working individuals ( hard work and self-help). - National Trade Union Congress was established to improve working conditions and wages. Results: - Unemployment rate fell to 3.5% - Manufacturing share of GDP grew to 25% - Singapore gained international recognition 6

7 The 1980s Main economic challenge: to shift to high value added industries (IT), to develop high-skilled workforce - no low-wage workers anymore, competition with other Asian emerging economies Actions: - Infosphere development : the National Computer Board was formed to train workers in IT-related industries to attract global IT firms to produce and sell software through Singapore, implement a culture of IT use throughout local firms, to link the business with the West. - The EDB: tax incentives for manufacturing firms and financial service providers. Results: - High growth rate of GDP (at an average of 7.3%) - Increased proportion of high-skilled employees (from 11% to 30%) - IT domestic and export sales increased by 10 times 7

8 The 1990s Main economic challenge: to ensure that the nation would adopt high-technology Actions: - Government invested 6 billion SGD in the clustering of high technology institutions (technological research by National University of Singapore, Nanyang Technological University etc.) - Expansion of economic activity in the region: relocating investments in manufacturing to Malaysia and Indonesia, acting as the financial hub for them. Results: - Share of financial services in GDP skyrocketed to 30% - Number of scientists surged to 10,000 - Economy grew at an average of 8% 8

9 Current state and plans Manufacturing - Electronics - Chemicals - Engineering - Biomedical manufacturing Construction Commercial services - Wholesale and retail trade - Financial services - Business services Transport and Commutations Tourism K E Y I N D U S T R I E S Plans: - to continue transformation into a hightech economy - to expand external ties through WTO, ASEAN and bilateral arrangements - to instill more creativity into education system 9

10 Lee Kuan Yew Born in Singapore in 1923 (91) Education: University of Cambridge, lawyer was the prime minster of Singapore from 1959 to 1990, making him the longest-serving PM in the world history widely recognized as the founding father of modern Singapore 10