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From Third-World Country to First: What We Can Learn From Singapore

Singapore is one of the most economically advanced countries in the world. It possesses the reputation of being a commercial hub for high-tech manufacturing and financial service within Southeast Asia. In 2019, Singapore ranked #11 in the Human Development Index measuring standards of living. To put this in comparison, the US is #17. Also, according to the Observatory for Economic Complexity, Singapore ranked #6 globally; with Singapore exporting $301 billion worth of integrated circuits, gas turbines, and medical technology.


However, this wasn’t always the case. Singapore, fresh off the heels of WW2, was an underdeveloped, underpopulated, and under-resourced city-state with little prospect of competing with other Asian countries. However, through aggressive business and exports, it was able to make the jump from 3rd world to 1st world in a generation.


Brief History


Singapore is located off the tip of Malaysia near Indonesia. Its position guards the lucrative straits of Malacca, an avenue for much of Asian trade. Singapore was formerly a part of the greater British colony of Malaya. Singapore remained free of conflict until WW2 when Japan invaded Malaysia, which culminated in the Battle of Singapore and the occupation of the city in 1942. Post-WW2, Singapore began demanding self-administration, with Britain treating them as a separate crown colony and eventually granting them self-governance in 1953.

Eventually, with the independence of Malaysia and Singapore, the People’s Action Party led by Lee Kuan Yew approved a merger plan with Malaysia in 1963. However, ethnic conflict between Singapore’s large Chinese and Indian population and Malaysia’s natives led to a mutual agreement for Singapore to be a separate country.

Singapore, apart from its location, was severely disadvantaged. On top of ethnic tensions, Singapore lacked natural resources such as fuels or metals. Its main resource was fishing, as only 0.8% of Singapore’s land was arable. Furthermore, it had a meager and underskilled population of 1.8 million vs Malaysia's 9 million, Indonesia’s 95 million, and Myanmar’s 23.2 million.


Overarching Goal


These unique challenges presented a unique goal for Singapore to reach. One of the keys for a country to acquire wealth is to maximize its exports and value. Many 3rd world Asian countries resorted to manufacturing clothes, consumer products, and cheap items. Yet Singapore’s meager resources and population meant that it couldn’t compete with other Asian countries in producing these goods. Singapore could dedicate all its resources to making clothes and basic electronics and it would never rise above the crowd nor improve its standard of living.

Singapore had to craft a knowledge-intensive industry that exported complex goods like circuits, pharmaceuticals, and biotechnology. It's through exporting high-value goods that it can punch above its weight in a region with millions of unskilled laborers.


The Changes


In order to make this leap from exporting fish to exporting plane turbines, Singapore needed an effective government to quickly optimize its available resources. The virtually one-party system government and supervisory leadership of Lee Kuan Yew created an authoritarian government that could quickly pass effective policy. Singapore is notorious for its austere laws, with a death penalty for drug dealers, caning for vandalism, and a prohibition on chewing gum. Yet Singapore is still corrupt-free, being the 3rd least corrupt country according to the Corruption Perceptions Index, and sports a meritocratic bureaucracy whose employees are handsomely paid.

With this centralization, the government started a voracious hunt for foreign investment, talent, and knowledge. They soon discovered that the best source of competent businessmen, talented workers, and advanced technology is from foreign corporations such as Hewlett-Packard or General Electric. These efforts led to Singapore ranking #2 in Ease of Doing Business in the world, with only 5 days needed to register a business and minimal taxation on corporations. On top of that Singapore’s stable and hyper-efficient government set it apart from unstable regions like Indonesia, India, and Malaysia. These efforts made Singapore a haven for foreign corporate investment.

As a result, the flow of researchers, money, and human resources helped kickstart Singapore’s high-tech industry. While other country’s companies had to slowly develop their skilled workers and knowledge, Singapore already borrowed years of development from US companies and was already capable of producing circuits, computers, and high-value goods.

In addition, Singapore’s favorable immigration policy was important. Singapore possesses accessible visas and citizenship for skilled workers across Indian, China, and other ASEAN countries. In fact, there’s a scholarship for students in ASEAN countries who can complete their education for free in Singapore granted that they remain employed in Singapore for 2 years. This influx of bio researchers, scientists, and engineers further helped Singapore get its industries off the ground.

Finally, Singapore possesses a strong education system. Ranking #2 in the world in PISA scores, an international assessment of the scholastic performance of 15-year-olds across several countries. Singapore also offers strong scholarships from Secondary school to Ph.D.’s. In fact, Singapore spends almost 20% of its national budget on education. Singapore also boasts multiple avenues for students, with higher-education routes for accomplished students and polytechnical colleges for less accomplished. This system better maximizes Singapore’s creation of skilled laborers.


The Caveats of Growth


Yet Singapore possesses several advantages that make its policies more effective for itself. Firstly, Singapore is extremely small, with an area of 719 square kilometers. In comparison, Hong Kong is 1,108 square kilometers. This enables Singapore’s government the ability to micromanage every facet of Singapore to optimize economic growth. Additionally, Singapore’s small size makes its Authoritarian government work, a much larger country may not be easily disciplined or overlooked. Finally, Singapore’s competitive environment breeds academic issues. Singapore’s academic streaming in secondary school has been a contributor to the class divide and student anxiety. These factors must be accounted for in policy approaches.


Conclusion


Singapore has cemented itself as one of the jewels in the Southeast Asian crown and is an example of what the region could become in the future with the right approach. Countries can acquire prosperity by making themselves more attractive to foreign investors. By doing so, countries can start borrowing the expertise, knowledge, and funds necessary to kickstart their own high-value industries and crawl out of the trap of low-value exports. Yet this sounds better on paper than in practice. Singapore’s effective government and lack of corruption can be attributed to its small size and authoritarianism. Larger countries with more diverse populations and unrulier factions may be hard-pressed to effectively solve corruption and optimize their economy. Additionally, there’s the question of whether an authoritarian government is a price we’re willing to pay for a prosperous economy.

Despite this, Singapore’s transformation from an impoverished country to a prosperous one serves as an inspiration for other world leaders. Its history, practices, and policies should be examined and weighed to better figure out how we can create a more promising world for everyone.

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