Economic Development in Case of Singapore

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Economic Development in case of Singapore

Professor Zarylbek Isalievich Kudabaev

Janybek Sabitov, Isa Mukambetov

American University of Central Asia

This essay intends to provide a short history and background of Singapore that will lead into an explanation of the main economic strategies, which Singapore has implemented ever since it claimed self-governance. More importantly, this report offers a comprehensive account of Singapore’s economy from the 1960s to the present, highlighting the different challenges that Singapore came across, as well as the variation of strategies that Singapore’s government has used. The essay will conclude by briefly summarizing the lessons and significance of Singapore’s metropolitan economic strategies, which can be useful to other developing nations in the world and also what can Kyrgyz Republic learn from Singapore experience. Because right now, in my point of view, we are still inheriting from experience of Russian Federation which is negatively affect also on our economy. As you know, since independence, we did not have our own model of economic growth. As a result, we just simply copied from Gaidar reforms with mistakes which negatively effect on other CIS countries. What are the results? The main macroeconomic indicators showed bad results. In this case, I want just to show that the government of Kyrgyz Republic needs to consider the experience of other successful countries like Singapore. You still see that we are inheriting from experience of Russian Federation in nowadays. That is one of mistakes of our government. In this essay I will show why Singapore’ main strategies in human capital and investment help to be one of the best competitive countries in the world and why Kyrgyz Republic needs to learn strategies of development of investment climate from Singapore. That is an idea of this essay.    

Singapore has a highly developed trade-oriented market economy and it is located in Southern - East Asia. Singapore's economy has been ranked as the most open in the world, 7th least corrupt, most pro-business, with low tax rates (14.2% of Gross Domestic Product, GDP) and has the third highest per-capita GDP in the world in terms of Purchasing Power Parity (PPP). APEC is headquartered in Singapore. So here it is represented the main indicators:

Area: 719 square km

Population: 5.5 million (2016)

GDP (per capita): $82 762  

GDP (nominal) : $452.7 billion 

Growth rate: 2.9%

Unemployment rate: 2%

Currency: Singapore dollar

HDI: 0.912 very high

Gini: 46.4 high

Singapore has a highly developed and successful free-market economy. It enjoys a remarkably open and corruption-free environment, stable prices. Fifty years ago, the city-state of Singapore was an undeveloped country with a GDP per capita of less than US $320. Today, it is one of the world's fastest growing economies. Its GDP per capita has risen to an incredible US $60,000, making it the sixth highest in the world based on Central Intelligence Agency figures. The economy depends heavily on exports, particularly in consumer electronics, information technology products, pharmaceuticals, and on a growing financial services sector. Over the longer term, the government hopes to establish a new growth path that focuses on raising productivity. Singapore has attracted major investments in pharmaceuticals and medical technology production and will continue efforts to establish Singapore as Southeast Asia's financial and high-tech hub. For a country that lacks territory and natural resources, Singapore's economic ascension is nothing short of remarkable. By embracing globalization, free market capitalism, education, and strict pragmatic policies, the country has been able to overcome their geographic disadvantages and become a leader in global commerce. Singapore is today ranked among the world’s strongest and most competitive economies. Forty years ago, it had a very different economy. It was beset with acute housing shortage and severe unemployment. The Economic Development Board (EDB) has played a key role in developing Singapore’s economy, creating wealth and jobs for the population. Established since 1960, the EDB is Singapore’s one-stop and lead government agency for planning and executing economic strategies to enhance Singapore's position as a global hub for business and investment. The EDB seeks to facilitate and support both local and foreign investors in manufacturing and services sectors to develop and expand new business opportunities, especially capital-intensive, knowledge-intensive and innovation-intensive activities. Later on, I will consider each stages of economic growth by details and the results each of them.

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These graphs show the indexes of economic freedom of Singapore. It shows a ranking of country based on government regulation on wealth – creating activity. Metrics that an economic freedom index evaluates include international trade restrictions, government spending relative to GDP, occupational licensing requirements, private property rights, minimum wage laws and other government – controlled factors that affect stability of the society. The ideas of economic freedom are strongly associated with healthier societies, cleaner environments, greater per capita wealth, human development and poverty elimination.  

For example, property rights and freedom from corruption are enforced (90% and 92%). In 2015, the World Bank ranked Singapore first in enforcement of contracts and 24th in registration of property. Commercial courts function well, but the government’s overwhelmingly successful track record in court cases raises questions about judicial independence. Singapore is one of the world’s least corrupt countries, although the power of deeply entrenched political elites continues to raise concerns.

Government spending around 91.3 % in freedom index. The top individual income tax rate has been raised to 22 percent. The top corporate tax rate is 17 percent. The overall tax burden equals 13.4 percent of total domestic income. Government spending has amounted to 18.2 percent of total output (GDP) over the past three years, and budget surpluses have averaged 3.3 percent of GDP. Public debt is equivalent to almost a full year’s GDP.