Economic Development in Case of Singapore

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Business freedom, monetary freedom, labor freedom give high percent as well. The overall entrepreneurial environment remains one of the world’s most transparent and efficient. The business start-up process is straightforward, with no minimum capital required. The labor market is vibrant and functions well, supported by flexible labor regulations. The government funds generous housing, transport, and health care subsidy programs and influences other prices through regulation and state-linked enterprises.

Trade, finance and investment are also show great results in terms of freedom index. Trade is extremely important to Singapore’s economy; the value of exports and imports taken together equals 326 percent of GDP. The average applied tariff rate is 0.0 percent, and most sectors of the economy are open to foreign investment. The efficient and well-developed financial sector is highly competitive. The government continues its ownership in the sector but has steadily been opening the domestic market to foreign banks.

Summarizing all these indexes of freedom, we can say that macroeconomic policy and a stable political and legal environment have been the keys to Singapore’s continuing success in maintaining a strong and dynamic economy. As you can see on the first graph, summing up all the indexes we get 87,8% which shows great results so the people satisfy economic situation in comparison with Kyrgyz Republic which is 59,6%. Well-secured property rights promote entrepreneurship and productivity growth effectively. A strong tradition of minimum tolerance for corruption is institutionalized in an effective judicial framework, strongly sustaining the rule of law.

Singapore’s openness to global trade and investment and its transparent and efficient regulatory environment encourage vibrant commercial activity, and the private sector is a prime source of economic resilience and competitiveness. However, state ownership and involvement in key sectors remain substantial. A government statutory entity, the Central Provident Fund, administers public housing, health care, and various other programs.

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STAGES OF ECONOMIC DEVELOPMENT OF SINGAPORE AND GDP GROWTH

This graph shows Singapore’s economic strategies and how the GDP was growing up since interdependence from 1960 to 2000 years and can be summarized into three 5 categories:

- LABOUR - INTENSIVE

- SKILL - INTENSIVE

- CAPITAL - INTENSIVE

- TECHNOLOGY – INTENSIVE

- KNOWLEGDE – INTENSIVE

Together, these five factors contributed to the high level of economic achievements that Singapore has enjoyed for the past four decades. Yet, a variation of these five factors was specifically used in the different periods from the 1960s onward. In the early period, Singapore used its sufficient physical infrastructure as well as the semi-skilled workforce to attract foreign investors to the island. From the 1980s, due to the increasing pressures on the labor market, Singapore could not maintain the low wages of its workforce. As a result, Singapore switched its strategies into establishing a modern ‘info structure’ as well as a dynamic high-skilled workforce to enable Singapore to become the financial and business hub of the region. The government has adopted different policies to suit the different needs of the Singaporean economy, which would attract continuous foreign investment and thus, maintaining Singapore’s economic excellence. In the next pages I will consider each of the stages and highlight different changeless and results.

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But firstly before I will start considering, I want just mentioning one of the key thinkers in twentieth century Development Studies was W.W. Rostow, an American economist and government official. Prior to Rostow, approaches to development had been based on the assumption that "modernization" was characterized by the Western world (wealthier, more powerful countries at the time), which were able to advance from the initial stages of underdevelopment. But then he proved that Singapore can also be the best example that can be applied to Rostow stage of development and he showed that he grew in this way. It is represented on the graph as you can see here. The next paragraph I will each stages of development of Singapore by details.

I STRATEGY (1960 - 1964) – LABOUR INTENSIVE

The main challenge for Singapore in its early years was to overcome its high unemployment problem. The Singapore government understood that the only way to increase employment was through extensive growth in its manufacturing industries. But in its early years, there was little capital needed to finance the growth of the manufacturing sector otherwise the problem will not be solved. The role of the Singaporean governmental institutions was crucial at this time. Early in its self-governance years, the Singapore government asked the United Nations to send economic advisors who had been working in countries which had similar conditions to Singapore in 1960, especially in terms of size and economic stage. Dr. Albert Winsemius, a Dutch industrialist who had previously advised Portugal and Greece, advised the government of Singapore. One of his first initiatives was to establish an institution that would take overall care in establishing easy foreign investment on the island. The institution was to provide a one-stop general and procedural information to the foreign investors about investing in Singapore. This was to ease the transfer of investment into the country by allowing foreign investors to bypass a lot of government bureaucracies. The Economic Development Board (EDB) was established in 1961 with the main purpose of attracting foreign capital to enter the Singapore market. This was at a time when many firms in the developed western economies were coming under the threats from the expansion of many Japanese firms. EDB officers went around the US and other countries in Western Europe, promoting Singapore as the right place to build low-cost manufacturing bases for the big corporations. Singapore was politically stable with a great workforce who spoke English fairly. Moreover, EDB give ‘pioneer’ status to foreign corporations, with tax benefits up to a period of five years. As a result, most foreign investors found that their production costs were lowered by about 20%. Soon, many foreign corporations