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Economic Growth Relationship : the Case of Singapore This document is downloaded from DR‑NTU (https://dr.ntu.edu.sg) Nanyang Technological University, Singapore. Examining the defence industrialization ‑ economic growth relationship : the case of Singapore Kuah, Adrian W. J; Loo, Bernard Fook Weng 2004 Kuah, A. W. J., & Loo, Bernard F. W. (2004). Examining the defence industrialization ‑ economic growth relationship : the case of Singapore. (RSIS Working Paper, No. 70). Singapore: Nanyang Technological University. https://hdl.handle.net/10356/90544 Nanyang Technological University Downloaded on 25 Sep 2021 04:18:18 SGT ATTENTION: The Singapore Copyright Act applies to the use of this document. Nanyang Technological University Library No. 70 EXAMINING THE DEFENCE INDUSTRIALIZATION – ECONOMIC GROWTH RELATIONSHIP:THE CASE OF SINGAPORE Adrian Kuah and Bernard Loo Institute of Defence and Strategic Studies Singapore JULY 2004 With Compliments This Working Paper series presents papers in a preliminary form and serves to stimulate comment and discussion. The views expressed are entirely the author’s own and not that of the Institute of Defence and Strategic Studies ATTENTION: The Singapore Copyright Act applies to the use of this document. Nanyang Technological University Library The Institute of Defence and Strategic Studies (IDSS) was established in July 1996 as an autonomous research institute within the Nanyang Technological University. Its objectives are to: • Conduct research on security, strategic and international issues. • Provide general and graduate education in strategic studies, international relations, defence management and defence technology. • Promote joint and exchange programmes with similar regional and international institutions; organise seminars/conferences on topics salient to the strategic and policy communities of the Asia-Pacific. Research Through its Working Paper Series, IDSS Commentaries and other publications, the Institute seeks to share its research findings with the strategic studies and defence policy communities. The Institute’s researchers are also encouraged to publish their writings in refereed journals. The focus of research is on issues relating to the security and stability of the Asia-Pacific region and their implications for Singapore and other countries in the region. The Institute has also established the S. Rajaratnam Professorship in Strategic Studies (named after Singapore’s first Foreign Minister), to bring distinguished scholars to participate in the work of the Institute. Previous holders of the Chair include Professors Stephen Walt (Harvard University), Jack Snyder (Columbia University), Wang Jisi (Chinese Academy of Social Sciences) and Alastair Iain Johnston (Harvard University). A Visiting Research Fellow Programme also enables overseas scholars to carry out related research in the Institute. Teaching The Institute provides educational opportunities at an advanced level to professionals from both the private and public sectors in Singapore and overseas through the Master of Science in Strategic Studies and Master of Science in International Relations programmes. These programmes are conducted full-time and part-time by an international faculty from July each year. The Institute also has a Doctorate programme in Strategic Studies/International Relations. In 2004, it will introduce a new Master of Science in International Political Economy programme. In addition to these graduate programmes, the Institute also teaches various modules in courses conducted by the SAFTI Military Institute, SAF Warrant Officers’ School, Civil Defence Academy, Singapore Technologies College and the Defence, Home Affairs and Foreign Ministries. The Institute also runs a one-semester course on ‘The International Relations of the Asia Pacific’ for undergraduates in NTU. Networking The Institute convenes workshops, seminars and colloquia on aspects of international relations and security development which are of contemporary and historical significance. Highlights of the Institute’s activities include a regular Colloquium on Strategic Trends in the 21st Century, the annual Asia Pacific Programme for Senior Military Officers and the biennial Asia Pacific Security Conference (held in conjunction with Asian Aerospace). Institute staff participate in Track II security dialogues and scholarly conferences in the Asia-Pacific. The Institute has contacts and collaborations with many think-tanks and research institutes in Asia, Europe and the United States. The Institute has also participated in research projects funded by the Ford Foundation and the Sasakawa Peace Foundation. The Institute serves as the Secretariat for the Council for Security Cooperation in the Asia-Pacific (CSCAP), Singapore. Through these activities, the Institute aims to develop and nurture a network of researchers whose collaborative efforts will yield new insights into security issues of interest to Singapore and the region. i ATTENTION: The Singapore Copyright Act applies to the use of this document. Nanyang Technological University Library ABSTRACT This paper examines the process and political economy of defence industrialization in Singapore. It frames the emergence and evolution of Singapore’s defence industrial base in the broader context of both the development of the Singapore Armed Forces (SAF) and Singapore’s defence and strategic policy since independence. The first half of the paper traces the trajectory of defence industrialization, examining and problematizing the linkages between defence spending and economic development. This paper suggests that while defence spending has acted as a stimulus for economic growth, especially in the Third World, Singapore’s phenomenal post-1965 economic take-off seemed to occur independently of, even precede, any significant defence production, thus rendering highly problematic the direction and degree of causality between defence spending and growth. The second half of the paper offers a theoretical framework, which is used to examine the motivations behind Singapore’s defence industrialization, focusing particularly on defence production self-sufficiency, or autarky. It goes on to argue that there has been an evolution from mercantilist perspective in the 1960s towards a more liberal approach in the 1990s. Finally, this paper examines how Singapore’s pre-eminent defence firm, Singapore Technologies (ST), has responded to recent developments in the global defence industry, and how these strategic moves can be read as evidence of a shift from its initial mercantilist posture, and even as an abandonment of autarky. **************** Adrian Kuah is an Associate Research Fellow specialising in defence economics. Bernard Loo is an Assistant Professor specialising in war and strategic studies, and is concurrently the coordinator of the Revolutions in Military Affairs Programme. They are both from the Institute of Defence and Strategic Studies, Nanyang Technological University, Singapore. ii ATTENTION: The Singapore Copyright Act applies to the use of this document. Nanyang Technological University Library ATTENTION: The Singapore Copyright Act applies to the use of this document. Nanyang Technological University Library EXAMINING THE DEFENCE INDUSTRIALIZATION – ECONOMIC GROWTH RELATIONSHIP: THE CASE OF SINGAPORE∗ Introduction The relationship between defence and economic growth has typically been posed in terms of a ‘guns-versus-butter’ debate. Defence spending is often perceived as diverting valuable resources away from the civilian economic sector. Furthermore, high levels of defence spending impose financial burdens on a society that are unsustainable and may lead to economic instability or ruin. The flipside of the argument is that defence spending, inasmuch as it leads to secure states, creates an environment conducive to foreign investments and private economic activity, and thus provides the basis for economic development and growth. The case of Singapore seems to support the latter argument. The growth of the Singapore Armed Forces (SAF) against the backdrop of Singapore’s well-documented post-independence economic success suggests a positive and symbiotic relationship between defence and economic growth. Broad economic growth fuels the development of the SAF, which in turn underpins the stability and security provided by sound defence capabilities. The paper will examine this issue in two main sections. The first section focuses on the growth of the SAF during the 1980s and 1990s, a period of sustained economic growth interspersed with periods of economic recession, and examines Singapore’s defence-growth nexus. At first glance, the argument advanced in this section may suggest a positive relationship between defence and economic growth. On further reflection, however, this relationship may be more illusory, inasmuch as there were no serious military threats directed against Singapore. The second section offers a theoretical framework for understanding the interplay between defence industrialisation and economic growth in Singapore. The ∗ A version of this paper was presented at the Philippine Army Senior Leaders’ Conference, 18-19 March 2004, Makati City, Philippines. 1 ATTENTION: The Singapore Copyright Act applies to the use of this document. Nanyang Technological University Library framework draws on the two main theoretical traditions in the field of defence economics, namely mercantilism and liberalism. These theoretical traditions inform our understanding of the often problematic notions of defence and national security as ‘public
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