Mil:tlllwxCIf 'IE_'1,l ,, jXS |.fiX 5!ii-______=ie.r
...... % RMi iJE; ______
1 SE.DI rl n= D~~~~~~~~9 111
Public Disclosure Authorized EaiMi
.>~ ~ ~ ~ ~ I'~ ~ GJlN~ l f ______1..MFg
EIIn~~~~~g-km...... w
DI[, t_i _ :... . . _ _ _,, 3,i,, _i ii_i4i_.
Ji T T. Public Disclosure Authorized
iS~' ~ ~ I I' ' I A' 4,,,,1,,',I |n~~1 A _ _~ -- =V Public Disclosure Authorized
strsjsi li l1le > flill julj 11' ; 1Ci1:llil 3E 81 gt¢W4t jtlu l--:-:------
.. ~ ~ . = ~1 _ .. _
.. ._ ...... UU....N...IIEIHI. _=__ft!JII!tl lEIIIUh_.,,,_B=I,iJJIIhUEIlJU ,__=IIII3EUIUIIIflII!1I...... z==_ Public Disclosure Authorized ,~ _.=~ ~ _ _ _== = ,, THE LESSONS OF EAST ASIA
Singapore Public Policyand Economic Development
Teck-Wong Soon C. Suan Tan
The World Bank Washington, D.C. Copyright © 1993 The International Bankfor Reconstruction and Development/THEWORLD BANK 1818H Street, N.W. Washington, D.C 20433,U.S.A.
All rights reserved Manufachtred in the United States of America First printing October 1993
The-findings,interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank,to its affiliatedorganizations, or ;,o members of its Board of ExecutiveDirectors or the countries they represent. The World Bank does not guarantee the acCuracyof the data included in this publication and accepts no responsibilitywhatsoever for any consequenceof their use. Ary maps that accompany the text have been prepared solely for the convenienceof readers; the designations and presentation of material in them do not imply the expression of any opinion whatsoever on the part of the World Bank,its affiliates,or its Board or member countries concerng the legal status of any country, tenitory, city, or area or of the authonrtes thereof or concerningthe delimitati of its boundaries or its national affiliation. The material in this publication is copyxightedcRequests for permission to reproduce portions of it should be sent to the Office of the Publisher at the address shfownin the copyright notice above. The World Bank encourages dissemination of its work and will normally give permission promptly and, when the reproduction is for noncommercial puiposes, without asking a fee. Permission to copy portions for classroom use is granted tfrough the Copyright Clearance Center, 27 CongressSteet, Salem, Massachusetts 01970,U.S.A. The complete backlist of publications from the World Bankis shown in the annual IndexofPb)ficatons, which containsan alphabetical title list (with full ordenng nformation)and indexes of subjects,authors, and countries and regions.The latest edition is availablefree of charge from the DistributionUnit, Office of the Publisher, The World Bank, 1818H Street, N.W., Washington,D.C 20433,U.S.A., or from Publications, The World Bank, 66, avenue d&ita, 75116Paris, France.
ISSN: 1020-0924
Teck-WongSoon is senior lecturer in the Departmnt of Economicsand Statisticsat the National University of Singapore. At the time of writing&C Suan Tan was an econonmistin the International Trade Division of the World Bank's IntemrationalEconomiucs Department
Library of Congress Cataloging-in-Publication Data
Soon, Teck-Wong. Singapore : public policy and economicdevelopment / by Teck-Wong Soon, C Suan Tan. p. cmL - (Ihe Lessonsof East Asia) Includes bibliographical references. ISBN0-8213-2612-0 1. Industry and state-SLngapore. L Tan, C Suan (Choo Suan), 1945- . L itle. IL Series. HD3616.S423S66 1993 338.95957-dc2O 93-30940 cm CONTENTS
FOREWORD ...... v ACKNOWLEDGUIENTS...... D ..... E...T...... S... . vii ABOUTSNGAPoRE ...... ix EXECUTIVES UMMRY Y...... xi
1. DEFINING SUCCESS .. 1...... I Stnuctur Change andSuccess ...... I The Re-ExportEconomy and WorldTrade ...... 5 Economic Preonditions for Success ...... S
IL INDUSTRLALPOuICY ...... 8 PhaseI: Labor-ntewive Import-Subsuion (1959-63) ...... 8 Phase U: Labor-IntensiveExport-Oriented Manufctring (1966-73) ...... 10 Phase m: First Aempts to Upgrade (1973-78) ...... 12 Phase IV: Economic Restructuring(1979-84) ...... 14 Phase V: Ranwchmetad Further Diesificaion (195-1990) ...... 17 What Consttae Singapores IdusariPlicy?P ....o...... 18 m. GOVERNANCEAND INSTU TUTONALFRAMEWORK ...... 19 The Civil Service ...... 19 Statutry ...... M StadOwned Enterprses (SOEs) and Govenmno-Linked Corporatins (GLCs).. 22 Economic DevelopmentBoard ...... 25 Drastic nof Govement Agencies ...... 27 Integating and CoordinatingMechanisms ...... 28 Tnpartite Arrangemes ...... 28
Iv. DESIGNAND IMPLMENTATION OF VITAL POLUCJS ...... 29 hfluence of the Leadership's Characteristics ...... 29 Vita Policies ...... 30 Costs and Benefits of Policy Changes ...... 39
V. POLICY CONCLUSIONS ...... 40 The Role of Govnment ...... 40 Lessonsfrom Japan and Other IndustrializedCountries ...... 43 Relationshipbetwen Devel-opmentSuccess and SocialnAui ...... 43 Policy Lessons from Singapores Experience ...... 44
BBLIOGRAPHY ...... 51
... FOREWORD
Policymakers everywhere are searching for lessons from East Asia's enormous success in economic development A number of recent cross-countryand thematic studies have sought to identify and analyze the policies behind this success. Among them is The&ar: Asian Mirack, a recent World Bank publication, which draws in part on the Lessons of East Asia projecL Study tms, including in- country nationals, examinedin some depth the experiencesof the highly successfulEast Asian economies and the public policies underpinningthem.
Several clear contributionsemerge from this set of country studies. The research:
e Highlights considerable variation in approaches within the group of East Asian economies. For example, some economieschose a substantialdegree of government intervention; others did not. The studies dispel the notion that there is a single or uniform East Asian model of success.
v Demonstrates that a core set of good economic policies - such as macroeconomic discipline, outward orientation, and human resource development - laid the foundationfor East Asia's success. Pragmatic policymaking- understood as being nonideologicaland reversible - seems to be at the heart of these policies and merits replicationl
* DDispelssome of the myths about the more idiosyncratic interventions, such as "picking winners' in industry, which sometimes produced the desired result and somctimes did not. Because presence or absence of institutional features seems to have affected the outcomes of these interventions, applications to other regional conexts must be approached cautiously. A dominant finding of the studies is that serioas diversions from macroeconomicequilibrium were largely avoided, even by strong interventionists. At the same time, the later generationof industrializerswere more successful when they avoided these industrial policies.
A question not easily answered is why East Asian governments adopted fundamentally sound policies and were apparently able to achieve beter results from their active policies and to incur lower costs from errors. In this connection, the studies touch on such dimensionsof policymakig as the role of the state, leadership, and the bureauraacy. k is one thing to describe the institutional featr accompanyinga succesful episode, however, and quite another to know why and how those feaus came about. For instance, why did East Asian leaders apparendtl hold themselvesmore accountablefor economic performance than has been the experience elsewhere? How did the governments manage to gain sufficient national consensusto put difficult policies into effect? These aspects of political economy cannot be ignored. Our analytic tools, however, are severely limited in penetrating these issues, in assessing their impacts, and in assigning credit to them. These country studies are only one step, altough a significant one, in deepeningour understandingof the experience of East Asia. It is hoped that they will prompt additional work on the institutionalfoundations of rapid growth.
Gautam Kaji Vice President East Asia and Pacific Region
v
-7.. . . ACKNOWLEDGMENTS
This paper and all the papers produced as part of the country studies project have benefited from the insights and observations offered by discussantsand commentatorsat a conferenceheld at the East-WestCenter in Honolulu, November 19-21, 1992. Tbe participants includedthe followingregional and country experts: Duck-Soo Han, Hal Hill, ChalmersJohnson, Wolfgang Kasper, Hyung-ki Kim, Paul Kreisberg, Chung H. Lee, Manual Montes, Seiji Naya, Takashi Nohara, John Page, TambunlerthchaiSomsak, Wanda Tseng, Wing Thye Woo, Ippei Yamazawa, and Zainal Aznam Yusof. The papers also benefited fiom a Bank-widereview of the project in August, 1993.
The country studies team included Amar Bhattacharya, Leung Chuen Chau, Scott Christensen,Carl Dablman,David Dollar, KIimKlhwan, Saha DhevanMeyanadtan, Mad Pangestu, Peter Petri, Ismail Salleb, Ammar Siamwa'la, Teck-Wong Soon, C. Suan Tan, and Vinod Thomas. The country authors would like to acknowledge fruitful dialogue with our country counterparts and the analytic work prepared in World Bank country departmentsas part of Bank economic and sector work. The country studies were edited by Rupert Pennant-Rea. The project assistant was Jason Brown. This project was undertaken with the support of Lawrence H. Summers, Nancy Birdsall, John Page, and GmttamKai, Callisto Madavo, MarianneHaug, and Vinod Thomas
Danny M. Leipziger Country Studies Director
vii ABOUT SINGAPORE
'U*at madeSingapore differentin the 1960sfom nost oUtercounes of Souast Asia wwStha shehad no xeopoic hangoWvrfromcolonialism...... We have never suferedffrom any n dibitions borrowingcapL!, know-how, managers, engtneers and marking capabeite Far fom imig ti esty offoreignmanagers, engineers and bankers w encouragethem to come.- fe KuanYew
1Wherfornvade orindusry, Singaporehsfound by eperienceta thefite entrprise ystem, intlligenty szqported,gives her thedegree offlexbiiwy which has ensured her swviw andproperity, throughher abdlty to adeptquikly to dcangingarcumhta tces. - Go Kng Swe
'We drawsustenance not onlyfromthe regionbig also from theinteronal ecnmic systemto Uhdc was a Gloal Cltybelong and which will be thefinal arbier of whetherwc prosper or decn.' - S. Rajaratm
'The PAP (People'sActon Party)anlost certait becameth onlysocialst party in the world pursuinga capit polcy of fire nterpnse on the economicplane, for thepurpose of spendingthe money durs eand accordingto its sociastprimapes.' - Albert MInsemisss
* Dr. AlbertWinsemius, the leaderof the UNMission to Singaporein 1960-61to assistthegovernment in drawing up the blueprint for Singapore's industrializatiDn,was subsequently retained by the governmentas an adviserfor 22 yearsuntil 1984.
ix EXECUTIVE SUMMARY
Development Strategy and Macecnomic Performance
In the three decades foilowingself-rule in 1959, Singaporehas tansformed itself from a resource- poor maritimecenter into a dynamic, industrializedeconomy. Real GDP growdtaveraged 8.2 percent from 1960 to 1990. The city stae now enjoys a mare economic structure, with the modern service sector accoundng for a larger share of GDP than manufacturing. Poverty has all but disappearedand social indicators are among the highest in the region. At the macroeconomiclevel, Singapore's developmenthas been charactrized by its stabilityand the continuingimportance of investmentand trade. Inflation has been modest and the balance of paymentshas remained in surplus. The value of trade has typicallybeen around three times GOP and the share of gross domestic investmenthas remained above 30 percent since the 1960s.
Owing to its lack of resources, Singapore is a re-export economy. As the economy developed, re-exportingactivities have evolvedfrom simple processingand repackagingto the transformingof inputs into higher-value outputs. Following a brief experiment with import-substitutionin 1959-1963,the economy's dependenceon imported inputs has led to a stress on free trade. Nevertheless,the state has playedan importantrole in promotingthose industries that it foresaw as major exportearners. Beginning in the late 1960s,the governmentfavored the developmentof labor-inteLsivemanufacuring, particularly light electronics and textiles. As the labor surplus disappeared, a plan for industrial upgrading was launced in the mid 1970s, putting greater emphasis on capital- and skill-intensiveactivities. Extemal supply shocks led to a phase of restructuring in 1979484,which was notable for the state's attenpts to attract high-technologyinvestments through its support of large wage increases and human resource developmenL Singapore experienceda severe recession in 1985, prompting concem at the declining competitivenessof manufacturing. In response, the state has sought to reduce labor costs and further diversifythe economy's structure towards higher-valueproduction.
Throughout its efforts to promotethe developmentof various sectors, the state has pursued a fairly consistent industrialpolicy. This policyhas had two main elements. First, the stte has soughtto create an environmentconducive to the growth of private enterprise, among both indigenousand foreign investrs. Second, it has intervened through the market to guide private sector development and has established "govermment-linkedcorporations" (GLCs) where private investors have not responded to financialincentives. Apart from stablemacroeconomic policy, the favorableenvironment has been based upon public investmentsin human capital and infrastructureand the maintenanceof good labor relations. ASealy as 1960, the governmentintroduced a five-yearplan for educationwhich emphasizedthe study of technicalsubjects. Joint government-industhytrahiing centers have been establishedby the Economic DevelopmentBoard (EDB) in collaborationwith MultinationalCorporations (MNCs). Infrastructure policy has concentated on developingefficient transport and communicationsnetworks. Senior trade union leaders have been brought into government to establish a consensus in support of economic strategy.
Singapore's investnent incentiveshave been more generous than thoseofeired by other developing nations, reflectingits choice of MNCs as the vehiclefor launchingthe industrializationprocess. The state has allowed foreign companiescomplete ownership of their investmentsin almost every field. Initially, tax exemptionswere offered for incrementalcapital expenditures, interestpayments and profits; and for as long as 20 years to export producers. As a result, there was a surge in foreign direct investment (FDI), beginning in the late 1960s and concentratedin light manufacuring.
As the economy developed, the state has engaged in broad industrialtargeting to encouragethe transformationfrom labor- to skill-intensiveactivities. Incentiveswere made conditionalon investments being above a certain size. In the early 1970s, irdustries with the desired level of tedmaologywere offered a completetax holidayfor five years. The EDB intensifiedthe investmentpromotion effort by establishinga networkof 22 overseas offices and extendingincentives to service industries. By the early
xi 1980s, these policies were paying dividends-as FDI1expanded in computers,finance, electronics, machinery,printing and pharmaceuticals. By the late 1980sthe notionof Singaporeas a totalbusiness centerproved successful as severalMNCs set up headquartesin the city-state.
The statemitnsan extensivedirect involvement in the economy,through its statutoryboards and GLCs. In 1990, the public secor accountedfor 18 percentof totalemployment. Statutory boards are de facto extensionsof the civil service,supervised by the ministriesand answerableto parliament but with autonomyin the day-to-daymanagement of their operations. There is a statutoryboard in almost every socio-economicfield, includingpublic housing,transport and education. 'They have remaine profitableand generatelarge opeamtingsurpluses. GLCs wereestablished for strtegic reasons (defense-related)or wherethe privatesector was slowto invest(hospitals and medical services). GLCa tend to be largeand earnbetter returns than local private sector companies (but less thanforeigni-invested enterprises). They competeboth on the domiesticand internationalmarket and face,a hard budget contrant,asillustrated by the closureof someGLCs in the early 1980s. Governanc and hainsituionalframework Singaporehas beneitted from social and politicalstability and the close relationshipbetee governmentand the civi servce. Throughoutthre decadesof rapideconomic growth, the sameparty has pursuedconsistent development goals, basedon an unchaging philosophy.From Lee Kuan Yew to Goh ChokTong, Singapore~sleaders are of similarintellectual mold and share a commonvision- The buremaucacyis staffedwith skilled technocrats and managers who are activelyinvolved in policydesign and enjoyhigh status and benefits. Politicalautonomy has providedthe governmentwith the flexibilty to dhangepolicies and to reorganizeagencies that have not beeneffective.
The governmenthas succeededin maintaninga broadconsensus in supportof its strtg.Sca stabilityhas been aide by a anuber of policiesthtw address equity issues. The vast majorityof people live in publichomsing and employerspay mandatorycontributions into the state pensionfund on behalf of their emmployees.At a higher leve, businessand labor representativesare involvedin the policy- makingprocess, and the formerare consultedfrequently by bureaucrats. The,governmental system in Singaporeplaces great emphasison the centraldirection of policyand the maintenanceof stronginter-agency connections. The PrimeMfinister and Cabinetare responsiblefor controllingand coordinatingthis system; assistedby a small group of senior civil servantsand governxmetappointees who each hold severaldifferent jobs. High-rankingpublic officials double as governorsof GLCsand statutoryboards, providingcommunication channels between management and the supervisingministers. The governmentexerises contrl through a combinationof formal and informalprocesses, always working to ensurethat organizationsact in accordancewith broader national objectives.
The EDB, a statutry boardunder the Ministryof Finance,has an all-embracingresponsibility for promotingdevelopment. Initialy, its core functionwas to attractinvestmient. Divisions such as finance, industrialfacilities and technicalconsulting provided specialized services to powtenilinvestors. To stimulateindustrial development, the EDBmade subsidizedloans and, where appropriate,took direct equityinvestments. As its fiunctonshave grownin scale and complexity,several of its divisionshave been hived off into separateorganizations. Singaporehas often been comparedto a corporate-stat becauseof the extenive role of the statutoryboards and GLCs.
xii : 0~ ~ ~ ~ ~ ~ ~ ~ ~ 1
-L DiTNG SUCCESS
In November1990 Lee KuanYew handed over the PrimeMinistership of Singaporeto GohChok Tong. In the three decadesfollowing self-rule in 1959the first generationleaders, as epitomizedby Lee Kuan Yew, Goh Keng Swee and S. Rajaratnam,had transformedthe island-statefrom a "basket economy"'into one of Asia's four newlyindustrializing 'mini-dragon' economies. In keepingwith the centralrole playedby a well-definedstrategy between 1959 and 1990,the secondPrime Minister set out his agendain The NextLap (1991)and The StrategicEconomic Plan (1991). The first documentplaces humanresource development at the centerof the continuingdevelopment effort and soughtthe people's support for the new leadership'sefforts to raise living standards. The second documentoutlines the elementsof a science-,technology- and R&D-basedstrategy to transformSingapore into a developed nationon a par withWestern Europe and the UnitedStates in 30 years' time.
Boththe politicaltransition and the economicplatform reflected the two ingredientsthat havebeen crucial to Singapore'seconomic performance: social and politicalstability, coupledwith the moral authorityenjoyed by the first generationleadership. Our studywill attemptto identifythe natureof the interactionbetween economic growth and politicalconditions, to see if there are policylessons for other developing countries.
Section1 reviewsSingapore's 30-year developmental experience and structuralchange and brings into focus the underlyingphilosophy and rationalethat influencedpolicy design and decision-making throughoutthe period. Section2 discussesthe variousdevelopmental phases that Singaporehas been throughduring the last 30 years. By referenceto the strategicframework, the rationalefor the major economicpolicies adopted at the beginningof each developmentalphase and the need for subsequent policy adjustmentswill become clear. Section 3 looks at the institutionalframework for policy implementationand formulation.Singapore's public sector agencies comprise not only the govemment Ministriesand Departments(that is, the civilservice proper) but also a large numberof statutoryboards and state-ownedenterprises (SOEs) that are generallyreferred to in Singaporeas government-linked corporations(GLCs). UnlikeSOEs in manyother developingcountries that are usuallyinefficient and ineffective(Klitgaard, 1991), these SOEshave been successfuland profitable.
Section4 analyzesthe designand implementationof vital policies,dealing particularly with how regulationswere designedin a free marketcontext to encouragesavings and boost long-termgrowth. Section 5 concludesby placing public policy and the role of governmentin the wider domestic internationalcontexts. The sectionanalyzes the sourcesof growthand pointsto the importanceof timing for interventionsby the state. It offers some potentiallyuseful lessonsfor other small, resource-poor developingcountries.
Strutral Chane ad Surce
Over the 30-yearperiod, there havebeen 5 phasesof development:
PhaseI: Labor-intensive,import-substitution industrialization (1959-65); PhaseII: Labor-intensive,export-orientation industrialization (1966-73);
1 In a 1967 report in the Far Eastem Economic Review, David Bonavia concludedthat independent Singapore had no future and that the "only sensible answer is a fresh accommodation with Malaysia to restore the natural economic relationship ...." -2 -
Phasem: First Attemptto Upgradethe Economy(1973-78); -PhaseIV: Economic.Restructuring(1979-1984); ;PhaseV: Retrenchmentand FurtherDiversification (1985-1990).
In constantSingapore Dollar terms, 2 GDPincreased 10-fold fiom $5 billionin 1960to $53 billion in 1990. Giventhe highlevel of foreignparticipation in this growth,the indigenousGDP is muchlower and witha wideninggap overtime. In 1966(when its data first becameavailable), indigenous GDP was $6.7 billion,some 91 % of the corresponding$7.4.billion for GDP. By 1990,the indigenousGDP of $36.5.billionamounted to only64% of totalGDP. Between1960 and 1990,per capitaindigenous GDP increasedalmost 4-fold from $3455to $13,150. This is significantlylower than the 7-fold increasein per capitaGDP from $3068to $21,100over the same period.
Table 1 highlightsthe main dimensionsof structuralchange over the period, and showshow economicopenness has been a permanentfeature. Trade has typicallybeen around3 timesthe GDP. Anotherstriking feature is the triplingof gross domesticinvestment within the first decade,to 33% of GDP; by 1980, its share had reached41 % of GDP. The sectoralshares of GDP show the declineof primaryactivities, from 3.3% in 1960to a negligible0.4% in 1990. Despitethe counter-cyclicalnature of constructionactivity, its contributionto GDP has remainedat about 10%. The shiftingimportance of manufacturingand servicesis seenfrom the rapidgrowth in manufacturing'sshare, from 19%of GDP in 1960 to nearly 30% in 1980, followedby a slight declineto 26% for 1990. Trade and transport serviceshave maintainedtheir shareat about30% of GDP,while financial and other serviceshave risen from30% of GDP in 1970to 38% in 1990.
Soundmacroeconomic management and fiancial prudenceaccount for the absenceof external debt. The balance of paymentshas been solidly in surplus and foreign reserves have grown. Macroeconomicstability is manifestin relativelystable prices throughout the period. With the exception of the 1973-78period of high oil prices, prices (as measuredby the GDP Deflator, Consumerand WholesalePrice Indices)increased on averageby barely4% a year.
One of Singapore'searliest successes was in family planning. The populationrose from 1.6 millionin 1965to only 2.6 millionin 1990. But with the postwar"baby boomers" growing into adults fromthe 1960sonwards, the labor force expandedalmost 10-fold, from 162,000to 1,524,000in 1990. The growthslowed down, though,to only I '6 percenta year dudng phase V, as comparedwith the averageannual 30% increaseduring phase II. (All detailsare in the Appendixtables.)
.Othersocio-econonic indicators include the impressive-recordof publichousing. The numberof peopleliving in owner-occupiedpublic flats rose from 9%.of the populationin 1970to 92% in 1990. An additional7% live in rentedpublic flats. Literacyrates (amongpeople above 10 years of age)rose from 72% in 1970 tD 90% by 1990; and studentenrolment ratios increasedfrom 80% (for prmary schools)and 43% (secondary)in 1970to an averageof 93% for bothgroups in 1990. Better quality educationis also reflected in the significantdeclines in student-teacherratios at both primlaryand secondarylevels.
.~~~ *.. .
, '-f ~ ~ V . I I -
2 Unlessotherwise specified, all Dollar.amounts refer to SingaporeDollars.
- AS -. - * . ; . . -; .. - - .: -, - . -,, .. : : .. ., : - - - ,~~3-
Table 1: Stucural Changein Singapore, 1960-1990 1°<9ro 1970 1980 1990 9GDP
ECnomic 0oenneSS Tot Trade 356 210 370 327 Exports 164 82 165 1SS IDports 192 130 205 172 Gross Donmstic InveShment 10 33 41 38
Gross National Savings
Private .. 76.3 55.4 53.8 b CPF .. 22.1 30.0 n.a.
Non-CPF .. S4.2 25.4 na.
Public (Government) .. 53.7 44.6 46.2
Sectoral Shares Agriculture.Fising & Quarqing 3.3 2.5 1.3 0.4 Constuction 11.5 11.7 8.9 6.7 Manu1Ncturng -19.2 25.4 28.6 26.1 Trade & TransportServices 30.6 30.9 30.0 28.5 Finwcial & OtherServices 35.4 29.5 31.2 38.3
Payments Balance & Reserves(Mml)
Overa Balanceof Payments .. 184 663 5431
ForeignExdcmge R ves .. 1012 6567 27748
Sources:Yearbook of Sttfistics,IMF International Finance Stafistics.
£ For 1974. b For 1988. aFor 1966.
Someof the main featuresof the developmentalphases were:
* growth in privateconsumption, from $4.1 billionin 1960to $26.3 billion between1960 and 1990;
* changesin the patten of privateconsumption. Shares for fbod and clothingdeclined; those for rent and utilities, transport and communicationsincreased sligbdy; those for Fumiture and -4-
HTouseholdEquipment and Medical Services were broadly stable; and there were signifit in:reases for Recreation and Education, and Other Goods and Services;
1 sharp rise in domestic savings,, from 10% of GDP in 1965 to 40% in 1985, a year of recession;
* slowdown in the rate of foreign capital inflow in the 1980s, from 13.8% of GDP in 1973 to 0.1% in 1985;
* a steep rise in gross fixed capitl formation (GFCF), from 17% of GDP in 1965 to 42% in 1985; and
* balanced growth in the secondary and tertiary sectors, with higher sectoral shares of employment in manufauring in the earlier phases giving way to growth in Services from phase IV.
Figure 1 illustrares the time paths for the sectoral shares of GDP. Over time, the share of construction and utilities (referred to as 'Overheadsr) has remained fairly stable, except for the eady 1980s. The rise in manufctrng continued through the early 1980s, until the high wage policy and global recession precipitated a decline. In contrast, the rise in the share of Financial and Business Services is more gradual. Significandy, the share of Commerce and Transport services dedcied continuously,-toabout 17% in 1990.
Figure 1: Changing Secoral Compositionand Economic Development
e ManuhacCurng a Ccmerure a Financmal G uuSfless Sces - Overneasm 30
20-
15 1
LO0 10-AExcoExurt skns E_ c
- imaart OrientarlOn Lntullve all ti SUasticU=C I Lc r nge Hign wag| 1 -
C~Lanotr ntensXvc Inc -rase aiY nsn Y 60 s2 64 rs6 sh 70 741 7r 75 O0 i8a e6 as so Yer -5-
The Re-Export EFonomyand World Trade
The opennessof the economyand the role of internationaltrade are reflectedin the high Trade/ GDP ratioof 200-350%. The impactof the 1970soil price hike is reflectedin the highestannual average growthrates for trade valuesduring this period. Despitepersistent current account deficits, continuous capital inflowshave ensuredgrowing balance of paymentsurpluses, from $1 billion in 1973to $9.9 billion in 1990. Officialforeign reserves have increasedat a similarpace, from $5.8 billion in 1973to $55.8billion in 1990, equivalentto about5-8 months' worthof imports. Historcally, re-exportshave been an integralpart of Singapore'sentrepot trade. But export- oriented activities have evolved from those based on simple processing and repackagingto the transformingof inputs intohigher-value outputs. SinceSingapore has virtuallyno naturalresources, all exportsrely on importedinputs and are thereforere-exports. Uloydand Sandilands(1988) thus consider Singaporeto be 'A Re-ExportEconomy (that) is an inteationally tradingeconomy in which imported inputsare used in the productionof someor all export-productionactivities." The result is a highTradet GDP rato by internationalstandards, with export-ledeconomic growth hinging on how muchvalue is addeddomestically.
A re-exporteconomy has several implicationsfbr overallgrowth. The Dixit-Grossmanmodel (19...) of a re-exporteconomy shows that free trade and capital-intensificationwill jointly raise the value-addedcontent of tradablesthat use intermediateinputs. Becauseof the absenceof a domestic resourcebase, exportgrowth in any sectorentails increased imports of intermediategoods as well as of finalgoods. Thus exportgrowth enhances production efficiency and exportcompetitiveness. These gains are then fed back into the domesticsector via their impacton the pricesof tradables(other exportables) and nontradables(such as labor and infrastructure).
Tradedata showsthat Singapore'sshare of worldtrade has beenrising continuously,from 0.7% in 1965to 1.8%in 1990. Tradeis concentratedin commoditiessuch as Beveragesand Tobacco(SlTC 1),Petroleum Products, Oil Bunkers,Chemical and MedicalProducts, and PlasticMaterials (SITC 3 for MineralFuels, Lubricantsand RelatedMaterials), Animal and VegetableOils and Fats (SLTC4) and OfficeMachines, Industrial Machines, Electric Motors and Resistors,TV sets and radios, Electronic Components,Ships, Boatsand Oil Rigs (SlTC7 for Machineryarid Transport Equipments). In these commodities,Singapore's share of worldtrade averagedabout 2.5% in 1990.
Economic I1enonDms for Success
Of the four 'mini-dragon'economies, Singapore is the smallest. In 1959/60,it covered582 square kilometersand had a populationof about 1.6 million. It also differedfrom the other 'dragons' in the virtualabsence of an agriculturalsector, natural resources, and industrialtradition and entrepreneurship. Normally,these factors wouldhave been considereda great handicap. But Singapore'spolicymakers tmnedthem into an advantageby actingon the simplepremise that ...... p..:opleare Singapore'sonly productiveasset," (Goh, 1977:81).
In retrospect,the governmenthad little choice but to look to industrializationas a meansto generateemployment for its growing labor force. While the decisionto use foreign investment, particularlythat from the MNCs, waspragmatic, its outcomewas by no meanscertain - especiallyin -6-
view of the tumultuousperiod precedingindependence? A hospitablestable environmentwas thus recognizedto be a necessary,but insufficient,condition for attractingforeign investors. Developingan efficientinfrastructure that wouldlower operationalcost was essentialfor transformingSingapore into a competitivebase for MNCs.
At the same time, the governmentrecognized the need for a competentbureaucracy to help implementits policies. It also understoodthe vital importanceof industrialpeace. Havingwon its politicalmandate in 1968- pardy becauseof the speed with whichit solvedthe housingproblem for the lower incomegroup - the governmentwas able to begin mobilizinglabor's support for good industial relationswhen it shiftedto export-orientedindustrialization.
From the start, it was clear that the governmentwould have few qualmsabout interveningto supplementand/or reinforce market forces. Althoughsuch interventions do not alwayslead to the desired results, in Singapore'scase they were designedso effectivelythat they createdthe preconditionsfor success. This emphasison the design of economicpolicies and governmentintervention will be a recurringtheme of this paper.
The strategicframework the govermnentused has consistedoft (a) definingthe constrained economicgrowth objective fimction; (b) identifyingthe two 'engines of growth' to be used; and (c) settingthe criteriafor policydesign
To implementthis fimework requiredother strategicdecisions:
* choiceof MNCsas the vehiclefor launchingthe industrializationprocess;
* identifyinggovernment interventions to enhanceindustrialization; * minimizingdomestic uncertainties and maximizinginvestor confidence in Singaporethrough macroeconomicstability;
* freemarket orientationand opennessfor competitivesourcing of inputs (includinghuman resources), rapid tansmnissionof external changes and minimal scope for rent-seedking unproductiveactivities; and
* facilitatingthe evolutionof entrepottrade via intensificationof internationaldivision of labor.
Figure 2 providesa schematicpresentation of the guidingframework. More details on the rationale underlyingthis frameworkare in Section5.
For detailsof the politicalstruggles during this period, see Bloodworth(1986), Chan (1971)and Rajaratnam(1966).
X ;- ;- ; ' - = - 1iguire 2: StninmafyAif SItraegic Franmewukfitr lsCOomknicDMvcPiliCIl
DflintsLong-Tenn Constrained growth OI11*livet*uriJ
| Indusiniliuliou| ,) | ~~Crilerillfor | _____ avcnincill Iireni
Multiniklional Curpnratklns Tnotctle Cumrsnip BZicll6 a-
$~~~~~~~~~~~~~~~~~~~~~~~18,1 ie k nierv i 2 arowill itiHnalhollatsctklilllu | KInainesof_ E a Imiusiriml ln(eiarfioost Capital Policy DevelurnenISuraleqy _ Trade Accumublitlon - __ Investmenll'tilicy MacrocciliiunicStiillilily linmigrsliiiii rolicy wofI.i ~Physical lunul__ I!coniiiiiiil icrumcs ._ World. apitol Iluat . Wovesllicy Iarngsl,ce,l, lAccumultlion CCUU _Al Deveopment DircctGOvrmnant I Iousiilg& SocialScFvi,es lnvetsntieltGLtca .. __.__
lnsliluliunrlDuilding llunun ResouicaDuevlilinnenl DureaucracyBulilding Industlisl Usliles
SkillsDevetop nrml Business& SciencePaiks Fund ._ __ Infiornuilon Dissemination
SocialConsensus Ulliildiig -8-
IL INDUSITAL POLICY
'ThisSection discusses the evolutionof Singapore'sindustrial policy over the five developmental phases. It is worthnoting that apart froman initialfive-year plan (Stateof SingaporeDevelopment Plan, 1960-64),the goverment did not produceany morefive-year plans. However,this does not mean that it has not practicedplanning. It took a flexibleapproach to planning,one that did not dependon a rigid time frame.
In viewof its opennessand vulnerability, Singaporehas always emphasized the needfor continuous monitoringof its externalenvironment, with policybeing refined as and when needed. However,the governmentusually ensured that any majormodifications to its developmentalstrategy were thoroughly explained. Althoughthe details of somepolicy changesmight appear drastic (or draconian)to some observersand critics,these changeswere, on closerexamination, well-coordinated and designedto work twards achievingthe government'slong-run objective for economicgrowth.
Phase Labor-Tntasire TDport-SIbstNIiO 0959-3
Initial Conditions. WhenSingapore attained self-government in 1959,its social, economicand politicalenvironment was not vastlydifferent from those of other formercolonial countries. It was an underdevelopedThird World countrywith widespreadpoverty, low levels of education,inadequate housingand health facilities,and high unemployment.These problemswere compoundedby rapid populationincreases, and the complexitiesof its ethnicmix. ButSingapore had two potentialadvantages: its hard-workingpeople, and its geographiclocation. Reflectingthese endowments,the maineconomic activityat the time wasentepot trade, and the servicessupporting this trade (suchas banking,regional shipping,warehousing, transportation and some intermediateprocessing industries). Unfortunately, entrepottrade was assessedto have "very limitedpossibilities for expansion"(State of Singapore DevelopmentPlan, 1961-64).
Under such dismalconditions, the People's ActionParty leadershipthat assumedpower in 1959 had little choicebut to looktowards industrialization as the basisfor providingjobs. However,the small sizeof the domesticmarket was a handicap,so the newgoverment consideredit essentialto expandthis marketthrough economic and politicalunion with Malaya into the Federationof Malaysia. During this initialphase of development,the idea of Singaporeas an independentnation was not evencontemplated. Even so, its governmentmade a firm and early commitmentto providethe peoplewith decenthousing, basic medicalcare, and better education.
In becominga memberof the Federation,Singapore was assuredof a reasonablylarge hinterland which could be protectedby tariffs and quantira ve import restrictions. Thus, like most developing countries,Singapore based its initial industrializationstrategy on import-substitution.Because of its severeunemployment at the time, the governmentsought to attractlabor-intensive industries.
Policy Responses. To improvethe dismalhousing conditions of the people, the government establishedin February1960 a newhousing authority. The Housing and Development Board (HDB) was giventhe objectiveof buildingand providinglarge-scale subsidized housing. The HDB was to embark on a mass housingprogram. The governmentalso introducedin 1960 a Five-YearPlan in education whosemain features were: (a) equaltreatment for the fourstreams of education:Malay, Chinese, Tamil and English;and (b) emphasison the studyof Mathematics,Science and Technicalsubjects.
. : . -9 -
Thesetwo featuresare instructive.The first reflectedthe realityof a multi-racialsociety, and the second reflectedthe early realizationof the types of educationand trainingrequired for industrialization.As a first step towardsachieving these aims, the governmentembarked on an acceleratedschool building program,aiming to providea placefor every school-agechild in Singapore(Soon, 1988).
ln 1961the governmentestablished a secondstatutory board, the EconomicDevelopment Board (EDB),to centralizeall industrialpromotional activities. To ensure success,the EDB had amplefunds and strongpowers (a) to grant loansor advancesto, or subscribeto stocks, shares, bondsor debentures of, industrial enterprises; and (b) to acquire .... land for the purpose of industrial sites. These powers enabledthe EDB to provide capitalto enterprisesin need of assistance,to investdirectly in industrial ventures,and to establishindustrial estates furnished with all the requiredfacilities-power, water, gas, roads, railways,and even a deep sea port. The EDB was also able to provide some discretionary incentives;the main one was the "pioneersts" award,introduced in 1959, which gave five-yeartax holidaysto labor-intensivecompanies.
EconomicOutcomes. The anticipatedbenefits of the merger with Malaysiadid not materialize. Instead,after Singaporejoined Malaysiain 1963,severe internal political difficulties were encountered, as well as an exteral challengearising from the confrontationwith Indonesia's President Sukarno.
In the initialphase, Singapore'sachievements were modest. Manufacturingshare of real GDP increasedfrom 16.9 percentin 1960to 19.1 percentin 1965,which was considereddisappointing after the prodigiousefforts of the govermmentand the EDB. Real GDP grew at an annualcompound rate of 5.7 percentduring this period, a fair achievementgiven the economicslump of 1964. The total inflow of foreigninvestment during this periodwas S$157million, not a large amountbut still indicatingsome successin attractingforeign companies, particularly those aimingfor the expandedMalaysian market.' However,even though 21,000 new jobs werecreated in manufacturing,unemployment was still estimated to be well over 10 percent.5
Suchmodest achievements led economistsand othercommentators to suggestthat this wasa period in whichSingapore's policies were ineffecfiveand unsuccessful.Young (1991:27), for example,noted "that the failure of Singaporeanpolicies at this time is typifiedby the fate of the 17,000acre Jurong IndustrialEstate, createdto attract foreigninvestment" Despitesuch assessments,it is importantto realize the significanceof this period in layingthe foundationsfor Singapore'slater success. Strong institutionswere established,including the two strongeststatutory boards, the HDB and the EDB.
Substantivesocial overheads were also developedduring this period, as can be seen fromthe rise in the constructionshare of real GDPfrom 5.4 perceutin 1960to 9.4 percentin 1965. Thegovernment also boostedthe capacityof educationaland traininginstitions. Withoutall these initialefforts, it is doubtfulwhether Singapore could have survivedthe crisis it faced in the mid-1960s.
Ryokichi (1969) noted, for exanple, that n.,. the anticipatedformation of the Federation of Malaysia during 1962-63 ... was a very important motivating factor, not only in bringing manufacturersto Singaporebut also in increasingthe size of plant and equipment." No officialunemployment figure was published.Yoshinara (1976) cited an unemploymentfigure of 12.3percent from Blake, DJ., "Employmentand Unemploymentin Singapore,' in Chalmers, W.E., CriticalIssues in IndustrialRelations in SinganoregDonald Moore Press, 1967. - 10-
PhaseIL Labor-hatessivcExport-Odented Manufacturin (1966-73)
Changes in Environment. Singapore'sdifficulties with the Federation of Malaysiaproved- intractable,and resultedin independencebeing trust upon it in 1965. This reducedits accessto the Malaysianmarket. A furtherblow camein 1967when the Britishgovernment announced its intention to withdrawits militarybase in Singaporeby 1971. This threateneda further loss of investment confidence,an impendingrecession and a worseningof the unemploymentsituation.
AMthoughthe situationseemed dire, the Singaporegovernment's policy initiativesduring the previousphase had alreadybegun to bear fruit:
* The government'ssuccess m tacldingthe housingproblems led to its strongcredibility with the people.
* The heavy investmentin educationand vocationaltraining was beginningto produce a substantialpool of semisklcledworkers.
* The EDB had developedseveral industrialestates, the largest on reclaimedswampland at Jurong. These estates offered industrialsites with excellent physical infrastructureat subsidizedrates.
* The EEDBhad also developedits organizationalcapability and had accumulatedconsiderable experiencein investmentpromotion. k was also enteringinto joint-ventures with investors, the first of whichwas Jurong Shipyard, ajoint venturebetween the EDB and a Japanesefrm
Singapore'smain economicproblem remained high unemployment,so its main development priorityhad to be job creation. Withoutaccess to the Malaysianmarket, the governmenthad little choice but to abandonimport substitution as its growthstrategy. Industrializationbehind tariff wallswas clearly. not a feasibleoption for a smallcity-state with no raw materials. Instead,the governmentswitched its investmentpromotion efforts to labor-intensiveexport-oriented manumfactring.
PolicyResponses. The Singaporegovernment acted quickly to implementits new approach. In 1967the EconomicExpansion Incentives Act providednew tax incentivesfor investmen&
* tax relief was allowedin certn circumstancesfor incrementalincome resulting from capital expansion;
* a 90 percentremission of tax profitswas allowedto appmvedenterprises for periodsof up to 15 years;and
* tax exemptionswere allowedon intereston foreignloans, royalties,Imow-how and technical assistancefees.
Theseincentives, though similar to thoseoffered by manydeveloping countries at the time, weremore generouson average.
Cited in Gob (1973). - 11 -
Though fiscal incentives and the efforts of the EDB did much to help the new strategy, what was even more critical was the government'ssuccess in obtainingpublic support for its policies. At the 1968 general elections the PAP won all 58 parliamentaryseats. Seizing upon this success, the government introducedseveral policy initiativesthat, with hindsight, translated the economicpreconditions created in the previous phase into economic success. With industrial stoppages widespread at the time, the governmentacted swiftlyto promote better industrialrelations. The EmploymentAct of 1968 abolished some discriminatorypractices, rationalizedpay structuresby doing away with abuses on overtime, and reduced retrenchmentbenefits. In the.same year, the Industrial Relations (Amendment)Act removed a big source of friction between labor mid managementby placing matters such as promotions, methods of recruitment,transfers, task assignmentsand retrenchmentfirmly within the prerogativeof management and not subject to negotiation. These legislativechanges resulted in a transformationof the role of trade unions, which had hitherto taken an adversarialand confrontationalstance.
The PAP governmenthad already strengthenedits relationship with the union movement by including six central committee members of the National Trades Union Congress (NTUC) as pariiamentarycandidates in the 1968 general elections. Buildingon the changes in industrial relations, the NTUC held a seminar on 'Modernizationof the Labor Movementr in November 1969, at which the Prime Minister persuadedthe union movementto shed its rle as "a combat organzation ...... for class war, and to accept the interests of the nation (NTUC, 1970). One of the key recommendationsof the seminar that was subsequentlyput into practice related to the promotion of tripartism involving the govnment, employers and labor for the purpose of achievinghigher productivity, greater efficiency, and faster economicgrowth. These measures laid the foundation for a close relationshipbetween the unions and the government, which came to be called the "PAP-NTUCsymbiotic relationship." Ihe promotion of tripartism and industrial peace must surely be regarded as an important componentof industrialpolicy.
In the cause of investmentpromotion, the governmentreorganized the EDB in 1968, hiving off several of its.functions to other agencies and statutory boards (see Section 3). The government also continuedto stress the developmentof human resources and physical infrastructure. It intensified its efforts to improve telecommunication,port and air services. And, to promote macro-economicstability, it raised the contributionrate to the Cental ProvidentFund (CPF), a pension scheme establishedby the British Colonialgovernment in 1955,to 25 percentof workers' wages. This increasedthe amount of real savings available for non-inflationaryfinance.
Economic Outcomes. These policy initiativesprompted a surge in direct foreign investnent, particularly after 1967. In m, investmentcommitnents during 1968-73totalled more than S$2.3 billion. The bulk came from the United States,which replacedthe United Kingdomas the largest source of fbreign investment. Most of the early US investments were in petroleum refineries and electronics. Singapore was also fortunate that political uncertaintiesin Hong Kong resulted in some textile and garmentplants moving from there to Singapore. These investmentsgenerated a large increase in industrialemployment and exports. The number of workers in radios, televisions,semiconductors and other electronicdevices rose from 1,611 in 1966to 44,483 in 1973. In textiles and clothing, the number of workers increasedfrom 2,459 in 1966 to 35,012 in 1973. These two industries alone generated more than half the total growth of about 147,50Din manufacturingemployment during this period.
Ihe goverunmentwas able to seize fresh opportmities. Thus, when the Bank of America (BoA) proposed to sec up a foreign currency unit in Singapore similarto its Eurocurrencyunit in London, the govermnentresponded by tax-exemptingthe interestderived from nonresidentdeposits in these units, that came to be called Asian Currency Units (ACUs). BoA's entry was followed by a rapid successionof - 12 - other banks, mainly foreign, and this resulted in the phenomenalgrowth of the so-called Asia Dollar Market (ADM). The subsequentexpansion of financialservices provided economicdiversification, and also facilitatedthe inflow of foreign investmentby making financial resources more readily available. Indeed, it was the growth of the ADM that provided the impetusfor Singapore's aspirationsas a regional financial center.
Real GDP grew at an impressive 13 percent a year from 1966 to 1973, with the share of manufacturingrising sharplyfrom 16.0 percent to 22.3 percent. Direct exports as a percentage of total sales in manufacturingrose from 43.3 percent in 1966 to 53.9 percent in 1973. Gross domesticcapital formationas a percentageof GDP rose rapidly, from 21 percent to 40 percent in 1973.
Am M: First Attempts to Upgrade (173-78)
With the attainment of full employmentin the early 1970s, labor surplus was replaced by labor shortage. This created the need to import large numbers of workers from neighboring countries? Singapore also experienceda sharp decline in the inflow of foreign investmentfrom S$708 million in 1972 to S$376 million in 1973.
In such changed circumstances,the governmentmaintained its long-term growth objective, but modified its economic strategy. It moved its investmentpromotion efforts away from labor-intensive manaufactudngindustries, and sought instead to upgrade and restructure the economy, putting greater emphasis on quality, skills and technologicalcontent A two-prongedapproach to achieve this was announced by Hon Sui Sen (Hon, 1973), then Finance Minister: to intensify efforts to attract manufacturing industry (such as petrochemicals,machine tools, precision engineering, sophisticated electonics, office equipmentand machinery)and to assist existingindustries to upgrade their skill and technologicallevel
Hon (1973) also announced a ten-pointprogram designedto upgrade the skill and technological level of the entire manufacturingsector which includedthe followingpolicy initiatives: (i) a wage policy based on an orderly increase in cash wages, under the guidanceof the National Wages Council (which was established in 1972) to ensure the internationalcompetitiveness of wage costs in Singapore for medium- and high-technologyindustries; (ii) manpower development-intensifiedefforts to promote industrialtraining, includingallowing training expensesby medium-and high-technologyindustries to be amortized for tax purposes; (iii) an open-door policy for admitting qualified foreign engineers, technicians and other professionals, and skilled workers needed for the implementationof various medium-and high-technologyindustrial projects; and (iv) a special tax concession(five-year complete tax holiday) to industrieswith desired levels of technology.
7' It is only natural that once the pool of domestic unemployedworkers had been absorbed by the expansionof the manufacturingsector, inflowof foreign workers would follow. While detailed statisticsare not publishedon a yearly basis, the 1970 Census of Population showed a total of 72,590 noncitizen and nonresidentworkers in 1970, or about 11 per cent of the work force. - 13 -
EconomicOutcomes. This initialatemnpt to upgradethe economywas binderedby the first oil crisis in 1973,and the world recessionthat followedin 1974-76. Despitethis, Singapore'sreal GDP grew by 7.4 percenta year in 1974-79,compared with the developingcountries' averageof about 4.8 percent. The govermment'sefforts to attractinvestment achieved some success with the inflowof foreign investmentrecovering. However, economicgrowth was achievednot because of the upgradingof manufacturing,which actuallyshowed a declinein 1975. Indeed,during the two low years of 1974and 1975,growth came from constuction (reflectingthe investmentin infrastructure)and financialservices (as a consequenceof the expansionof the ADM). As notedby Goh(1980), economic upgrading slowed down as "fear of recession and its resulting unemploymentcause[d] the economyto cling on to labor-intensiveindustries," and kept wage inzreasesdown. Ironically,because of the low wages, manufacturingwas ableto grow towardsthe end of the 1970s,helped by the continuinginflow of foreign workersinto Singapore.
Discussion. That the governmentwas able to recognizethe need to upgradeand restructurethe economyso soon after achievingfull employmentis a reflectionof its perceptivenessto fundamental changesin the economicenvironment. The policy initiativesannounced in 1973were noteworthyfor being introducedat a time of prosperity- not out of desperation,as had happenedat the beginningof the previousphase.
With the stylizedstrategic framework in mind, it is easyto see that Singapore'sdependence on internationaltrade madeit determinedto remaininternationally competitive. This was reflectedin the measures to ensure orderly wage increases through the National Wages Council (NWC)- The establishmentof the NWCmight be regardedas a signalof the government'sreluctance to permitmarket forcesto determinewage increases. In the event,the NWCbecame a powerfil instrumentfor promoting the tripartismconsidered essential for industrialpeace.
Further, whileacknowledging the role of directforeign investnentin economicdevelopment, the governmentalso wanted to enhancethe human resources~::d supportinginfrastructure needed for a healthybusiness environment. In particular,it recognizedthe need to upgrade the skills of the entire workforce. Thus, this phasesaw the establishmentof a strongfoundation for industrialtraining. While the governmentcontinued to strengthenits educationalinstitutions, it also initiatedthe establishmentof the joint industry training centers through the EDB. These EDB training centers, establishedin collaborationwith MNCs, providedthe frameworkfor a highly successfulJoint Industry Training Scheme.
Althoughsome analysts, as well as the govemment, considerthis early attempt to upgrade industriallyas havingbeen abortedby the first oil shockand world recession,it was more a matter of importedlabor moderatingthe upwardpressure on wagesas well as the moveaway from labor-intensive industries. Without foreign workers, many of the labor-intensiveindustries would have shifted prematurelyout of Singaporeduring this phase. Withoutthe skilledwork force producedby the Joint Industrial Training Scheme, the MNCs would not have been able later to obtain the high quality supportingservices they required for the morecapital-intensive industries sought by Singapore.The rapid growthof the ADM oDntributedto the growthof the financialand businesssector, facilitated economic diversificationand resultedin Singaporebecoming a financialcenter. - 14-
TasM ][: Economi e (197944)
The environmentprevailing in the late 1970swas essentiallysimilar to that at the beginntingof the previousphase. The labor marketwas tight, and the inflowof foreign workerscontinued unabated.' For itspart, the govenmmentlaid stress on upgradingand restructuringthe economy.Success in attracting foreigninvestnent had causedthe economyto becomehighly dependent on foreignfirms, especiallyin manufacturing(see Table 2). Far from beingdisturbed by this, the govermmentsought to increasethe inflowof foreigninvestment. By this time, it had recognizedthat such efforts also requiredcontinual improvementsin infrastructureand the skillsof the workforce.
Table2: Shareof MajorityForeign-Owned Firms in Manuficturing,1980
ContributionTo: Percent
Gross Output 73.7 Value-Added 67.4 Employment 58.4 DirectExports 84.7
Source: Reporton the Censusof IndustrialProduction, 1980.
With the slowdownin the industrializedeconomies, it was expectedthat they wouldturn more protectionist,and provideless capitalto the rest of the world. Moreover,unlike the mid-1960sand the 1970s,when there waslittle competition for foreigninvestment, the Singaporegovernment expected other economiesto offer inducementsto MNCs.
In these circumstancesthe governmentsaw an increasingneed for economicdiversification. In its EconomicDevelopment Plan for the Eighties, releasedas an appendixto the 1980 BudgetSpeech (Goh, 1980),it stressedthat Singaporemust diversifiy: (a) its economicactiviiies, into new infonnation- based services,such as computer,medical, consultancy and warehousingservices; and (b) its markets, so as to reducethe threat of protectionismand expandits exportsto developingcountries.
The government'sviews on foreign investmentwere reiterated in no uncertainterms in this plan. It stressedthat Singaporewould not place unnecessaryburdens or restrictionson foreigninvestors: 'we cannotreserve nor demarcateareas for localbusinesses, nor compelforeign companies to combinewith local companies."The governmentre-affirmed its commitmentto allowforeign companies 100 percent ownershipof their investmentsin almostevery field.
In its assessmentof the previousefforts at industrialupgrading, the governmentconcluded that low wages encouragedthe inflow of labor-intensive,low-technology investnents and, as such, were an
* The 1980 Censusof Populationshowed that the number of foreign workers in Singaporehad increasedto nearly 120,000in 1980,an increaseof about50,000 since 1970.
Sk. - 15 -
obstacle to upgrading and restructuring. With this in mind, it decidedto institute "corrective" or nhigh" wage increases over the three-year period 1980-83, to be followed by market-oriented wage increases. The EDB would also intensify its investnent promotion efforts, through an extensive network of 22 overseas offices in the U.S., Japan and Europe. In an apparent attempt at industrial targeting, eleven primary and supportingindustries were designatedfor promotion: automotivecomponents, machinetools and machinery, medical and surgical apparatus and instmments, specialtychemicals and pharmaceuticals, computers, computer peripheral equipmentand software development, electronicinstrumentation, optical instrumentsand equipment(including photocopyingmachines), advanced electronic components, precision engineeringproducts, and hydraulic and pneumatic control systems.
Although these policy initiativesattracted much attention, the government's efforts in the area of education and industrial training received less publicity. In practice, both approaches were complementary: the EDB's success in attracting particular industries was predicated on the availability of suitablyskilled workers. These promotional efforts by EDB substantiatethe finding by an IMF study on foreign direct investments, which concludedthat incentivesper se were not directly significant for FIJI. Rather, they were important in drawing attention to a relativelyunknown place, and to provide the critcal mass of investors needed to spur growth and development (IMF, 1985).
Economic Outcomes. The economy responded positively to the various policy measures. The EDB's efforts helped to induce a large inflow of foreign investments in the desired industries. Net investmentcommitments in 1980-84 averaged S$1.7 billionper annum, Ledby strong expansion in new, higher value-added industdes such as computers, electronics, machinery, printing and pharmaceuticals. While real GDP grew at 8.5 percent per annum during this period, growth in manufacturing output averaged only 5.1 percent. The constructionsector, however, grew by a phenomenal 21.6 percent per annm and financial and business services sector by 11.3 percent.
Discussion. Given the heavy investment in manufacturingduring this period, the growth in its output was disappointing. Instead, the rapid development of financial and business services, with their productivity rising the fastest during this period, provided fiirther impetus to Singapore's aspiration to be a financiai centre. A growing consensus was beginning to form on the need for Singapore to accelerate the diversificationof its already well-diversifiedeconomy.
Although it is difficult to assess the full impact of the oil crises, it did harm the oil- and marine- related industries. In contrast, the costs of the high-wage policy of 1979-84 are clearly seen in the laclduster performance of manufacturing. Its profits were squeezedby the higher relative unit labor costs coming at the same time as a prolonged global recession, and hence reduced external demand. As Table 3 and Figure 3 reveal, productivitygrowth was maintainedthroughout 1979-84; but the return on equity investment fell from 1983, reaching a low in 1985. - 16 -
Table 3: Comparisonof AverageWage lacreases and ProductivityGrowth of AsianNICs, 1979-84(%)
Country Wage Increases Productivt Growth Nominal RPal
Hong Kong 12.9 1.1 3.9 Taiwan,China 15.2 6.6 4.8 Singapore 11.6 65 4.6 SouthKorea 17.7 4.1 3.9
Source: Table 2.2, Reportof die EconomicCommittee, MII.
Fgure 3: Retum on Equity Investment 18'
12-
1-
4- I0
C * 2-\ / ';. ; - '- , - ,.:-. :
O-*9s0 198 19E 19 tSq lse111w18 1987 198B 111 - 17 -
PhaseV: Rand EFuther Diversificaton (1965-190)
Singaporehad itsfirst severerecession in 1985,when real GDP declinedby 1.6 percent. Coming after a longperiod of rowth, the recessiontook the governmentby surprise. The EconomicCommittee, establishedunder then-Mimisterof State for Trade & IndustryLee Hsien Loong, concentratedon the immediatetask of gettingout of recession. The Committeeconcluded that changedglobal demand had createdstructural problems for severalkey industries,in particular,the oil-and marine-relatedindustries. It also noted a sharp rise in businessoperating costs, due to three main factors: (a) high labor costs resultingfrom the increasedrate of CPF contributionsand from rapid wageincreases continuing beyond the plannedthree years; (O)creeping rises in fees and chargeslevied by the PublicUtilities Board, Port of SingaporeAuthority, Jurong Town Corporation,and other statutoryboards; and (c) the strengthof the Singaporedollar, as a result of the successin attractingforeign capital.
In such circumstances,the governmentmaintained its long-termgoal of economic growth. Recognizingthat there waslittle it coulddo aboutexternal conditions, it consideredthat Singaporewould have to deal with fundamentaldomestic problems. Thus, although it would have been politically expedientto improve internationalcompetitiveness through a weaker exchangerate for the Singapore dollar, the governmentchose insteadto seeka reductionin labor costs, and stuckto its strong exchange rate policy.
The employers' contributionrate to the Central ProvidentFund was cut from 25 percent to 10 percent. Such a move meant a reductionin workers' earningsby 12 percent I and would have been difficult to implementwithout the support of the NTUC. Through the NTEJC,the governmentalso soughtbacldng from the unions for two years of wagerestraint. That the union movementsupported the CPF cut and the wage restraint was a demonstrationof both the symbioticrelationship between the governmentand the NTUCand the government'ssuccess in securingconsensus on the measuresneeded to get Singaporeout of recession. At the same time, the governmentalso lowered tax rates, reduced chargesfor utilitiesas well as for internationaltelephone and telex services,offered rebates on site rentals in the industrialestates, and port fees, etc.
As in the earlierphases, the EDB intensifiedits effortsto promoteinvestment, particularly in high value-addedtechnology-based manufacturing. It establisheda S$100million Venture Fund to enable it to co-investin new technologycompanies - even overseas,when that would encouragethe transfer of teciology and investmentsto Singapore. The EDBwas also chargedwith boosting investment in service industries,which (apartfrom the financialsector, whichwas promotedby the MonetaryAuthority of Singapore)had hithertobeen left on their own. The EDBoffered incentivesfor servicessimilar to those for manufacturing,including pioneer status (tax holiday) and investmentallowances. And the EDB stressedthe notionof Singaporeas a TotalBusiness Center: the regionalheadquarter for the operations of MNCs in the Asia-Pacificregion.
As in the earlierphases, the government'sinitiatives were successful, leading to a quick economic recovery. Real GDP grew by 1.8 percent in 1986, then by almost 10 percentin each of the following four years. SeveralMNCs set up their operaionalheadquarters in Singapore.
9 Since employers'contributions are part of workers' gross earnings,the 15% fall in employers' contributionsresults in a fall in gross earningsby (151125x 100)%, or 12%. - 18 -
Nonetheless, the severity and unexpectednessof the 1985 recession prompted several attempts to study its causes. The government's official response was the Report of the Economic Committee. This vwasfollowed by Krause, Koh, & Lee, (1987) and Lim & Associates (1988). These studies looked particularly closely at the high wage policy. They questioned the overwhelming dependence of the economy on MNCs, as well as the dominance of the government in economic management. The contribution rates to the CPF were considered to be excessive, and despite the government's efforts, the studies also suggested that Singapore had under-invested in education. (These issues are considered in Sections 4 and 5.)
What Consiues Singapore's Industrial Policy?
The experienceof the five developmentalphases shows that the key elementsof public policy were:
* chioiceof industrializationas a developmentalstrategy, initially to create employment;
* reliance on the private se.tor, particularly foreign MNCs, to establish and run enterprises, though the government would step in should the private sector fail to respond;
* investment in human capital and infiastructure;
* consensus building, maintenance of good industrial reJations and the promotion of tripartism between government, industry and labor; and
* maintenance of a stable macro-economic environment through prudent fiscal and monetary policies.
The chief elements of industrial policy were the strategic interventions that were manifested through:
* liberal fiscal incentives, initially to begin the industrializaton process but later to encourage specific kinds of investments and activities; and
* industrial targeting via investmentincentives, which was modified over time to reflect the shift from lzbor-intensive, low-technology industries to skills- and capital-intensiveindustries.
Indeed, Singapore has now begun to embark on its next phase: to encourage investment abroad. While growth has hitherto been largely dependent on the inflow of foreign investment, future prospects depend also on the capacity to build up large stocks of foreign assets.
The most recent account of the govermnent's overall thinking comes in the Strategic Economic Plan (1991), which was drawn up after work by eight subcommittees comprising representatives from both government and business. The Plan, which favors the positioning of Singapore as a global city, is z reflection of the rational, incremental approach to policy formulation. It reiterates the various elements of the strategic framework: emphasis on attracting high-tech, knowledge-intensiveindustries; promotion of high-value innovativelcreativeactivities; investmentto enhancehuman resources; promotingteamwork and cooperation between labor, business and government. The one new element of the plan is the call for tL 'A" ationalization of local firms, to help them transcend the constraints of small size. - 19 -
HL GOVERNANCEAND INSTITUTIONALFRAMEWORK
Howevergood the policies,they are unlikelyto be effectivewithout good governanceand an appropriateinstitutional framework. This was recognizedat an early stage by the government,in an analysisby Goh KengSwee (Goh, 1983). He suggestedthat the fundamentalproblems with many developingcountries stem from inappropriatesocial and politicalinstitutions. He also notedthat it is essentialto haveas little corruptionas possible,but concededthat this was an issuewhich was unlikely to be raisedin polite circles.
Thepurpose of this Sectionis to examinehow goodgoverance has been achievedin Singapore, and the nature of its institutionalframework. Apart from the civil service itself, much of the government'spowers and activitiesare exercisedby statutoryboards. Thissection looks in detailat the EconomicDevelopment Board (EDB), and examinesthe majorreorganization of the MonetaryAuthority of Singapore(MAS) in April 1981as wellas the reviewof the educationsystem in 1979180.
The Cvil Service
The first generationof PAP leaderswere quickto see the civil service as a vital instument. Withoutits supportand cooperation,their objectivescould not be achieved.However, the civilservice had identifieditself with the BritishColonial government, so it wasnot particularlysympathetic to the goalsof the PAP government(Vasil, 1992:136). To correctthis bias, the PAP governmentset up a PoliticalStudy Center to raise the awarenessof civilservants about the problemsfacing Singapore. In openingthe PoliticalStudy Center in 1959,Prime Minister Lee KuanYew said:
"Mytheme to you todayis simplythis: You andI havevested interests in the survivalof the democraticstate. Wethe electedMinisters have to work throughyou and withyou to translateour plans and policiesinto reality. You shouldgive of your best in the service of our people."
ln recognizingthe valueof a competentbureaucracy, the PAPgovernment made it clearto the civil servicethat high standardsof performancewere expected; and it beganto appointincreasing numbers of youngerand highlyqualified Singaporeans on merit, replacingthe senioritysystem hitherto practiced by the BritishColonial government- The government placed particular emphasis on attractingpeoplewith technocratic-managerialskills, and introduceda scholarshipsystem to ensurea supplyof qualifiedyoung graduatesto the civilservice. At the sametime, it decidedsubstantially to improvesalaries and benefits in the civilservice so as to bringthem broadly into line withthe privatesector. Thegovernment sought also to ensurethat these competentcivil servants would not feel fiustratedwith the implementationof policiesand programs devised by politicians.It involvedthem actively in the formulationof policiesand accordedthem high status. The best civilservants were later encouragedto go into politics. In the wordsof S. Rajaratnam.. we involvedthem in somethingfar more challengingand satisfyingthan just beingcivil servants-building houses, roads, keep the city clean. They werebeing stretched. It did not take longbeifre we establisheda closelink between us and the civilservice. In fact, after the first two elections,the PAP becamereally an administration.It wasno longera party. Andthe civilservice becamea part of that" Vasil(1992:146). -20 -
Stautory Boards
Thepublic sector comprised not just the civi service,but a large numberof statutoryboards. Ow (1986)describes these boardsas follows:
"StaLutoryboards are autonomouscorporate bodies established by Acts of Parliament. As such, they are legalentities and fullyliable in law and do not enjoythe legalprivileges and immunitiesof governmentministries and departments. Statutoryboards enjoy a much greater degree of autonomyand flexibilityin their day-to-dayoperations and financial matters than the civil-serviceproper. However, the statutory boards are under the supervisionof their respectiveMinisters who lay down the majorpolicy guidelines and are answerableto the Parliament."(Ow, 1986:241)
Althoughstatutory boards are not uniqueto Singapore,they havebeen atypicallyeffective there. In the initialphases, they were oftengiven wide-rangingpowers. The first statutoryboard established by the PAP governmentwas the Housing& DevelopmentBoard. Its successis in sharp contrastto its predecessor,the SingaporeImprovement Trust (S1I), which was establishedin 1927 by the British Colonialgovenment. It built only 20,907 units '° between1947 and 1959, housingjust 8.8 percent of the population. The HDB, on the otherhand, quicklyprovided Singaporeans with housing standards much enviedby other developingcountries (Tan & Phang, 1991). As Table4 shows,the proportionof hoaseholdrowning the homes they occupiedrose from just under 60 percentin 1980 to 90 percentin 199\).
Table 4: Home Ownershipin Singapore,1980 and 1990
Type of Dwelling HomeOwnership (%) 1980 1990
HDBFlats 60.8 91.7
PrivateHouses & Flats 72.0 87.2
Others 46.1 63.6
Overall 58.9 90.2
Source: Departmentof Statistics(1991, Table 28).
so Table 2, (Yeh, 1975). -21 -
The successof the HDBand the EcoromicDevelopment Board led to the establishmentof other statutoryboards. Indeed, as noted by Ow (1986),there is a statutoryboard in almostevery important socioeconomicfield:
* industrializationand investment- EDB and the JurongTown Corporation (JTC), established as an offshootof the EDB in 1968 to take over from the EDB the developmentand managementof industrialestates;
* savings- the CentralProvident Fund (CPF)Board and the Post OfficeSavings Bank;
* infrastructure and essential services - the Public Utilities Board (PUB), the TelecommunicationsAuthority of Singapore(TAS), the Port of SingaporeAuthority (PSA) and the CivilAviation Authority of Singapore(CAAS);
* trade - the Trade DevelopmentBoard (TDB),which replacedthe Departmentof Trade in 1983;
* banking and finance - the Monetary Authority of Singapore (MAS), the Board of Commissionersof Currency,Singapore (BCCS);
* tourism- the SingaporeTourism Promotion Board (STPB)and the SentosaDevelopment Corporation(SDC);
* radio and television- the SingaporeBroadcasting Corporation (SBC);
* housing- HDBand the Urban RedevelopmentAuthority (URA)
* educationand training institutions- the National University of Singapore(NUS), the NanyangTechnological University (NTU), the SingaporePolytechnic (SP), the Ngee Ann Polytechnic(NP) and the Instituteof TechnicalEducation (hE;), whichwas established to take over the functionsof the Vocational& IndustrialTraining Board (VITB);
* publictransport - the MassRapid Transit Corporation(MRTC);
* promotionof informationtechnology, and scienceand technology- the NationalComputer Board (NCB)and the NationalScience and TechnologyBoard (NSIB); and
* taxation- the InternalRevenue Department was convertedin 1992to a statutoryboard, the InternalRevenue Authority of Singapore(WAS).
The flexibilityof these statutoryboards, particularlyin the recruitmentand promotionof their staff, has contributedsignificantly to their success.
Severalof these statutoryboards providedservices similar to those that could be providedby commercialenterprises- Indeed,the successof these boardshas resultedin their accumulatingsizable surpluses. As theyhave traditionally not been requiredto pay incometaxes or dividends,the government decidedin the 1987-88financial year to transferS$1.5 billionto the government'sconsolidated funds from four statutoryboards - PSA, TAS, CAASand URA. From that year also, statutoryboards were requiredto give 33 percentof thaeiroperating surpluses to the government,which is the incometax rate -22-
of private enterprises. The statutory boards have remained profitable, and continue to show large operating surpluses.1'
State-wned Enterpris (SOEs) and Government-linked Corporations (GILCs)
The goverment's participationin businessactivities was done largelythrough the statutoryboards and a large numberof state-ownedenterprises (SOEs). Sincethe initiativetoprivatize them (PSDC 1987, the SOEs have come to be referred to in Singaporeas government-linkedcorporations (GLCs). Including the statutory boards and GLCs, the government's participation in the economy is fairly extensive, providing almnost18 percent of total employmentin 1990 (see Table 5).
Table 5: Size of the Public Sector in Singapore (1990)
Sales Profits No. of Employees (S$ nn) (S$ mn)
SOEs and GLCs 9,237 2,119 83,700 StatutoryBoards 9,615 2,592 59,500 Government(mclude defense forces) - - 123,000
Totai 266,200
TOTAL WORK FORCE -1,516,000
Sources: EDB, A- gaalReports of StatutoryBoards, cited in Goh (1992).
The rationale for establishingSOEs and GLCs has been explainedby Goh (1992). In at least one instance, that of the Singapore Bus ServicesLtd (SBS), the government was obliged to get involved because the private transport companiesfailed to provide satisfactoryservices to the commutingpublic. In other instances, SOEs were established to cope with, or to take advantage of, major events in Singapore's history. These included the establishmentof SembawangShipyard to commercializethe British naval facility after Britain's military withdrawal. The attaiment of independenceprovided Singaporewith an opportunityin 1968to set up its own shippingcompany, Neptune Orient Lines, to take advantageof the Far East Freight Conference,a cartel of British and European vessel owners. As this grouping virtually monopolizedthe freight business between Europe and the Far East, it ensured steady profits for its members. Also at independence,it was necessary for Singapore to establish its own defense forces. Although much military equipment could be imported, the government decided to
The operating surpluses of ten major statutory boards (CAAS, HDB, JTC, MRTC, PSA, PUB, SDC, SBC, SingaporeTelecom (previouslyTAS) and URA) are reported in the annual Economic Survey of Survey, as about S$2.5 billion in 1991. -23 - establish a SOE to produce small arms ammunition. Later, several other enterprises related to defense were established. The EDB has also establishedseveral joint-venture companies, sometimesto show the government's commitmentto a project.
The cumulative effect of govermment'sdecisions to establish SOEs of one kind or another has been a large number of enterprises which, as suggestedby Goh (1992), can be analyzed in two tiers. First-tier companiesare set up by the government (with government usually as the sole shareholder) and funded from the development account. These are generally subsidiaries of one of three government holding companies, Temasek Holdings, Singapore Technology Holdings (for defense-related industries) and Health Corporation Holdings (for hospitals and medical services). Second-and lower-tier companiesare subsidiaries of the first-tier companies. GLCs are funded by the Government Holding Companies, but closed down if they are unprofitable. Since 1983, GLCs have started to be privatized to enhance the private sector in the country's future growth, not to raise revenue. In the main, GLCs have been established for strategic reasons (as in the assurance of pork supply for the domestic market) or where the private sector's inexperience resulted in slow investnents in those industries that the government thought were integral to its long-term development goal. Table 6 shows the breakdown of these companies in Singapore.
Table 6: State-OwnedEnterprises and GLCs in Singapore (1990)
Temasek Technology Corporation Holdings Holdings Holdings Total
No of Companies 39 5 6 50 No of SubsidLiaries 469 97 - 566 Capital (S$ bn) 9.1 1.0 0.5 10.6 No. of Employees 65,000 12,300 6,200 83,700
Sources: Holding Companies, cited in Gioh(1992).
The dominance and relative performance of the large GLCs have been analyzed by Low, SOon, & Toh (1989), using data from a credit information agency on the 500 largest Singapore companies. Despite incompletedata, the study revealed the extent of GLCs' involvement in the Singapore economy. Table 7 shows that only 4.4 percent of the 500 largest firms (or 22) were GLCs, but they accounted for 12.2 percent of sales, 19.5 percent of profits and 22.9 percent of the assets of the 500 firms. It is also worth noting that about two-thirds of the GLCs were joint-ventures. -24 -
Table 7: PercentageDistribution of Firms, Sales, Profits and Assets of Largest 500 Firms in Singapore, 1986
Finns Sales Profits Assets
Foreign 62.8 63.8 70.5 44.2 Singapore 37.2 36.2 29.5 55.8 GLC 4.4 12.2 19.5 22.9 Non-GLC 32.8 24.0 10.0 32.9 Total 100.0 100.0 100.0 100.0
Source: (Low et al., 1989).
Table 8 a;so shows that the GLCs are large and profitable. They have the highest average ratio of profits to sales (9.6 percent), comparedwith 4.9 percent for foreign firms and only 2.5 percent for non-CLC Singapore firms. However, in terms of profit to assets, foreign firms had the best return of 9 percent, comparedwith 5 percent for GLCs and only 2 percent for non-GLC Singaporefirms.
While the success of the GLCs is generally acknowledged,the reasons for their success have been widely debated. In general, local businessmenargue that GLCs have an unfair advantagebecause of their dlose links with the govermment However, Goh (1992) maintainedthat they are expected to operate on a competiive basis, just like private firms. Indeed, given the small size of the Singapore economy, the larger and more successfil GLCs have to competenot only within Singapore,but outside as well. Even in the defense-relatedindustries, economiesof scale dictate that they should not restrict their production to the domesticmarket. However, it is still possible that some GLCs have an inherent advantagein the domesticmarket, becauseof their connectionswith the public sector. The governmenthas shownitself willing to modify policies and regulationsin response to justified complaints, and it has tried to ensure fair competition. For example, in 1983traders complainedabout the monopolyof the Primary Industries Enterprise on the import of fresh pork from Malaysia;the governmentresponded by allowing the free import of pork, provided it met veterinary and public health conditions.
Table 8: ComparativePerformance of 500 Largest Firms in Singapore, 1986
Average Sales AverageProfits Average Assets Per Firm Per Firm Per Firm
Foreign 110.8 7.3 81.6 Singapore 106.0 5.1 174.1 GLC 301.2 28.8 603.5 Non-GLC 798.5 2.0 63.8
Source: (Low et al., 1989) 25 -
The govermnent's insistence that the GLCs stand on their own must have contributed to their efficiencv. Indeed, not all GLCs have survived Goh (1992). The first closure was in 1981, of John White's Footwear, which bad difficulties in exportingto the then Soviet Union. The second example was Singapore Textiles in 1985, which failed due to poor management. The defense related industries also fared badly when they ventured into high technology enterprises not related to the production of weapons. In general, it seems fair to argue that the GLCs, like the statutory boards, are successful largely because they have had to compete. Their competitivenessappears to stem from good management and their ability to recruit well-qualified and capable staff. Moreover, they provide a usefuil countervailingforce to the large MNCs (Low, et al., 1989).
It is worth noting one other source of concern. With the dominance of the MNCs in manufacturing, and the success of the statutory boards and the GLCs, some have argued that the indigenousprvate sector may be 'crowded out' (see for example, Krause et al., 1987). One response might be to allow smaller local enterprises to piggy-back on the statutory boards and the GLCs in their current drive to invest overseas.
Enomic Developmnet Board
The EDB was the second statutory board establishedby the PAP government in 1961.9 What is unique about it is that, unlike other statutory boards that were given one specific task, it has the all embracing responsibility of promoting economic development.
The establishment of the EDB was recommended by the 1960-61 UN Mission led by Albert Winsemius to help develop a blueprint for Singapore's industrialization. The approach and thinidug of the Mission were reflected, inter alia, in its areas of expertise: industrial sites, electrical equipment and appliances industries, metal and engineering industries, chemical industries, shipbuilding,shiprepaiing and shipbreaking industries (Chow, et al., 1990). With the agreement of the Singapore government, the mission went beyond its original terms of reference, and undertook a broad investigationto advise on economic policies and organization.
The Winsemius Report provided the basis for Singapore's first Development Plan. It made two particularly notable observations. The first was that Singapore did not lack entrepreneurs, but that they were mainly in commerce and not in manufacturing. This suggested the need for the government to participatedirectly to operate certain basic industries if neither foreign nor local enterprises were prepared to do so. However, said the Report, long-run government participation might harm the investment climate, unless it was true to commercial and market principles.
The second point recommended the establishment of a nonpolitical EDB, with divisions on financing, industrial facDities, projects, technical consulting, services and promotion. The Report recognized that the EB's core function should be the promotion of investment, and that it should eventuallyhand over its financing activitiesto an Industrial Development Bank. The Winsemius Report was accepted and its recommendationsimplemented almost immediately.
The EDB was established as a statutory board under the Ministry of Finance. Hon Sui Sen, who later became Minister of Finance, was its first Chairman. Lim Kim San, who was then Chairman of the Housing and Development Board (HDB), and later assumed several ministerial positions, was the first
12 The first statutory board to be establishedis the Housing and Development Board (H1DB). -26 -
Deputy Chairman.? Five other Board members representing banking, manufacturing, labor, the professionsand academia were appointed. In its early years, the EDB had technical advisers from the UN and the InternationalLabor Organization(ILO).
Even though investmentpromotion absorbed much of the EDB's energies, it put considerable efforts into other activities. Initially, it concentratedon the four industries identifiedin the Winsemius Report, namely, shipbuildingand repair, metal engineering, chemicals, and electrical equipment and appliances. As the EDB was establishedas a one-stopinvestment promotion agency, its various divisions providedtheir specializedservices to potential investors.
Apart from the Finance Division and the Project Division, the EDB also had a Technical ConsultancyServices Division (TCSD). The TCSD had three units. One was the Industrial Research Unit, establishedwith assistancefrom the New Zealand Governmentunder the ColomboPlan. It was the forerunner of the SingaporeInstitute of Standardsand IndustrialResearch (SISIR). The secondunit was the Light Industries Services (LIS) Unit, establishedwith seed money from the United Nationsto provide eension services to small manufacturersto modernize and expand. Parts of it were later re-groupedand centralizedunder the EngineeringIndustries Development Agency (EIDA), whichbecame establishedas a company under the CompaniesAct. The third unit was the Manpower Development Unit, which organized managementcourses in conjunctionwith other bodies such as the Singapore Manufacturers' Association, the University and the Singapore Polytechnic. These efforts were later handed over to the Singapore Institute of Management, which was set up in 1965. The Manpower DevelopmentUnit continuedto provide industrial training, and has been involved in several training centers and technical institutesin collaborationwith both the MNCs and foreign governments.
Other activitiesof the Technical ConsultancyServices Division include the establishmentof the National ProductivityCenter (NP and the Product and Design Center, which became incorporatedin 1967 as the Export Promotion Center. The Export Promotion Center was, in turn, absorbed into the InternationalTrading CompanyLtd (INTRACO)in 1968, whichwas establishedto boost trade with the centrally planned economies.
The most notablefeature of the EDB's early work was its emphasison developingits own abilities, without becoming a sprawling bureaucracy. By 1968, when UN assistance ceased, the EDB had developeda core of competentlocal staff. As its functions have grown in scale and complexity,they have been hived off into separate, autonomousorganizations. In 1968, with an economic crisis facing Singapore,the EDB reorganizeditself nd handed several of its functionsto new organizations:
(a) the Industrial FacilitiesDivision, includingthe Civil EngineeringBranch, was absorbed into a separate statutory board, the Jurong Town Corporation, which took charge of all the industrial estates;
(b) the Finance Division was transformed into the DevelopmentBank of Singapore, to serve as an industrialbank; and
23 The pattern of civil servants going into politicshas continued. The current Prime Minister, Goh Chok Tong, and some of the 'younger' or second-generationministers in the Singapore govemmentwere former civil servants. - 27 -
(c) the Export Promotion Center of the TechnicalConsultaney Services Division was absorbed into INTRACO, a goverrnent-owned trading company."
When the EDE was charged with promoting service industries, it had to coordinate with even more govenmmentdepartments: the Ministry of Health (medical care), the Ministry of Education (education services), the Monetary Authority of Singapore (financial services) and the National Computer Board (information services).
Drsic ieo on of Govemnent Agencies
Not all reorganizations of government agencies were as gradual and orderly as that of EDB. At least two important bodies have been drastically reorganized: the Monetary Authority of Singapore (MAS), and the Ministry of Education. Both reorganizations were initiated after extensive reviews in 1979/80by then-Deputy Prime Minister, Goh Keng Swee. While these reorganizationsseemed draconian at the time, they nonetheless resulted in organizations with an improved sense of purpose.
The Monetary Authority of Singapore. The reorganization in April 1981 of the MAS, a statutory board with all the functions of a central bank other than currency issuance, was surprising. It occurred after a period of rapid growth in the Asia Dollar Market, and the MAS was widely regarded to have been extremely successful in promoting Singapore as a financial center. Indeed, it was expected to absorb the functions of the Singapore Board of Commissioners of Currency (BCCS), to become a fully-fledged central bank. InILtead,it ended up transferring one major function, managing Singapore's foreign reserves, to a new organization, the Governmentof SingaporeInvestment Corporation (GSIC). Although the internal review of the MAS was never released in full, it seems to have emphasized the need to manage Singapore's foreign reserves more actively.
The reorganization of the MAS involved almost all the senior management either resigning or losing theirjobs. Lim Kim San, a former Cabinet Minister, became the new Managing Directcr. Senior bankers were seconded from the private sector, and other senior staff were recruited from abrOad. The reorganization cut the MAS's staff from 503 to 369. Its responsibilitieswere clarified, and it wvasgiven sufficientfunds to enable it to manage the Singapore Dollar.
The reorganization of the MAS did not imply that Singapore had dropped its goal of becoming a financial center, even though the new management insisted that the Singapore Dollar should not be internationalized. The MAS decided in 1984 to revamp the former Gold Exchange of Singapore, whose members were then engaged in questionablepractice, and to set up the Singapore International Monetary Exchange (SIMEX). With senior MAS managers serving in SIMEX initially, a mutual exchange arrangement was worked out with the Chicago Mercantile Exchange. SDMEX's subsequent growdt reinforced Singapore's aim of becoming a financial center.
14 Despite the EDB no longer being a one-stop agency, it has been successful in providing a wide range of services to potential investors and industry through the coordination of the various government agencies, i.e., a multi-agencyapproach. With its constant contact with industry and its several overseas offices, the EDB has served as the 'eyes' and 'ears' of the government and provides useful feedback to the government on changes in the business environment. In performing this role, it continues to maintain good relations with industry. 28 -
The Ministryof Education. Althoughthis reorganizationdid not result in the suddendepartre of seniormanagers, nevertheless almost all the Ministry'ssenior officials were replaced. The reportof the reviewxof the Ministryof Education(Goh & the EducationStudy Team, 1979)was publishedas a public documentand submittedto Parliament. It proposed the establishmentof a Feedback and MonitoringBranch to ensure that officialstook responsibilityfor decisions. It also recommendedthe strengtheningof the professionalstaff in the Ministryas well as the establishmentof a Curriculum DevelopmentInstitute of Singapore(CDIS). The new EducationMinister, Goh KengSwee, described the ministry's managementsystem that he inheritedin 1979 as 'dismal" and identifiedtwo major weaknessesin the 'managementculture": the "cultof obedience"and the "cultof secrecy.? He therefore set up the SchoolsCouncil, consisting of bchoolprincipals and senior ministryofficials. It works by circulatinga catalogueof MiniisterialCommittee Meeting (MCM) papers, whichare kept in each school libraryor staff commonroom. All principalsare free to submitcomments on any paper.
Inegraing and Coorddit M ihanis
Thynne(1989a) has observedthat the governental systemin Singaporeinvolves a concertedeffort to ensure coordinationand controlby the PrimeMinister and his Cabinet. It placesgreat emphasison the developmentand maintenanceof strong inter-organizationalconnections, and of centrallydirected policy and administrativeintegration. It is in this sense that Singaporehas been describedas an administrativestale. Coordinationis also achievedbecause a relativelysmall group of senior civil servantsand other governmentappointees each hold several differentjobs (Chan, 1975; Pillai, 1983; Thynne, 1989a)-
The coordinationand controlof statutoryboards and GLCshas beendescribed in detailby Thynne (1989b),from which the present discussionis drawn. In the case of statutoryboards, the Acts of Parliamentwhich established them usually enable the Mnisters in chargenot onlyto appointthe members of their governingboards and to directthem on theirpolicies, but also to requestand receiveinformation on their projectsand programs. In severalcases, permanent secretaries and other seniorofficials are on the governing boards, so they participate direcdy in decision making and act as channels of communicationbetween the boardsand their Ministers. In addition,ministers and board membersoften hold informaldiscussions before important questions of policyare consideredat the board level.
The same mixof formaland informalprocesses are also featuresof the arrangementswith SOEs and GLCs- Particularlynoteworthy is the fact thatthe chairmenof the three govermnent-ownedholding companieshave usuallybeen senior permanent secretaries. They are well placedto enhancethe capacity of the holdingcompanies, not just by coordinatingtheir main policies but also by ensuringthat company policiesare consistentwith broadernational objectives. Giventhe power of senior civil servants,it is vital that they shouldnot be temptedinto corruption. The govermment'sapproach has been to reward these civilservants with high status and income,while at the same timeinstituting tough actionsagainst anybodywho is foundto have abusedhis position.
Triparfite Arangs
The government'sapproach to tripartismis best seenthrough the NationalWages Council (NWQ), whichwas set up in 1972to avoidthe traditionaland potentially damaging 'free for all' wagenegotiations betweenemployers and unions. The NWC comprisedrepresentatives from the government,employers and the labor movement. However,it is not a statutorybody and its recommendationsdo not have the force of law. -29 -
While the obviousrationale of the NWC was to guide wage increases, its real value is that it providesa forum for frank and open discussions. In this way, the reconmendationsof the NWC are arrivedat by oDnsensusrather than by majorityvote. To achievea consensus,the NWCrequires fairly detailedinformation about the state of the economy,performance of companies,real wage increases, productivityincreases and various aspectsof governmentpolicy. This enables it to have an objective discussionabout wage increaseswithout the confrontationalelement common in traditional wage negotiations.Despite the NWCbeing regarded as a wageformulating body, it has actuallybeen involved in a widerange of subjects. Accordingto NWC(1992):
"The NWCover the years has addr' ised itself on variousissues, other than wageadjustments. Theseinclude the two-tierwage system, job-hopping, fringe benefits, CPF increases, exchange rate changes,income distnrbution, including intra-wage income distribution, the investmentclimate, productivityissues, the competitiveposition of the Singaporeeconomy, wage policyin economic restructuring,flexible wage system, extensionof retirementage, part-time workers, foreign workersand the trainingof workers. For example,it was the recommendationof the NWCthat broughtabout the establishmentof the SkillsDevelopment Fund, based on tripartite involvement and direction of the workers' training programs."
The success of the NWC as a tripartitebody has given the governmenta mechanismto obtain consensusand support for its economicpolicies. For exaample,it was through the NWC that the governmentimplemented its high wage policy in 1979,to force the pace of economicupgrading and restructLring.Following the 1985 recession,the NWCprovided a ready forum for the support of the government'sinitiatives for wagerestraint and wage reform.
The success of arrangementssuch as the NWC has since been replicatedin, for example,the EconomicCommittee set up in 198S,the varioussubcommittees or workinggroups which provided inputs to the Strategic EconomicPlan in 1991, and a wide range of sectoral Master Plans. Through arrangementssuch as these, the govemmentdraws upon the resourcesof the privatesector and ensures widespreadsupport for its policies.
IV. DESIGN AND IMPlEMENTATIONOF VITAL POLICIES
flIence of the Leaderips Chractersts
Throughoutthree decadesof rapid economicgrowth, one fundamentalfactor has been political continuity. The same party has pursued the same developmentgoals, on the basis of the smne philosophy.
Thisextraordinary continuity has been reinforcedby the personalcharacteristics of the top leaders. Theywere of similarintellectual mold, with acadeniicachievements (mainly in law and economics)from top Britishuniversities. Havingexperienced life under the Colonialgovernment and then the Japanese Occupation forces during World War H, they were determined to work towards Singapore's independence.They took politicalpower in the prime of their lives. They were intellectuallycurious; they had an understandingof globaltrends, a hard-headedpragmatism, a capacityfor hard work, and a belief in personaland professionalintegrity. Thus, the policiesadopted in Singaporecannot be analyzed and understoodseparately from the peoplewho were drivingthem. - 30 -
mi Policies Broadlyspeaking, there werefive groupsof policiesthat werevital to Singapore'sgrowth:
* Industrialand tradepolicy;
* Infrastructurepolicy;
* Humandevelopment policy, including education and industrialtraining;
* Laborand wagepolicy, including industrial relations and immigration; * Macroeconomicpolicy.
Section2 anayzed economicgrowth in termsof the 5 phasesof developmentand highlightedthe main elementsof policydesign and adjustmentsin eachphase. Thissection will focuson the essentialaspects of theseand otherpolicies, and their interdependence.
Industrialand TradePolicies. To encourageindustrialization, the govermmentinitially relied on variousincentives introduced in 1961: a 5-yeartax-exemption for newindustries qualifying for "pioneer" status,the protectionof the domesticmarket via the introductionof importquotas and extensionof import tariffs,public investment in establishingindustrial infrastructure (sites and factories),and the supplyof industrialutilities at subsidizedrates. To spearheadindustrialization, the EDB lent money at concessionaryrates and, where appropriate,took direct equity investments. Given the high unemploymentat the beginningof the period, and the lack of domesticindustrial entrepreneurs and experience,there were no restrictionsor qualificationson industrialinvestments. In 1963,accelerated depreciationallowances for pioneer industrieswere introducedin an attempt to raise industrial performance.
At the sametime, the government'sconcern with the longerterm led to the 1961Commission into educationreform, which laid the foundationfor diversifyingeducation to the technicaland vocational areas. The governmentalso decidedto send top studentsoverseas for training on bursaries and scholarships.
The 1965 shift in industrialpolicy towards export promotioninvolved 3 featuresthat were characteristicof all policydesign and implementation.First, the governmentgave consideration to those infantindustries that were established during the short-livedimport-substitution strategy and whichneeded timeto adjustto the newpolicy environment. Secondly, it selectedcertain industries in electronicsand marine-relatedactivities for promotion,and gave them preferential loans and/or EDB equity participation. Thirdly,it identifiedscience and technologyas the meansto createdynamic comparative advantage.
Thegovernment also respondedquickly to externalshocks. Whenaccess to the Malaysianmarket waslost, it promptlyraised protective tariffs to increaseprotection of the domesticindustries for a while. In the followingyear it beganphasing out protection,first throughremoving some quotas and gradually replacingothers with import tariffs. Later it reducedthe tariffs,believing that the industrieshad had enoughinfant protection and shouldby thenhave becomecompetitive. Its switchto exportpromotion involvedredesigning some policies, largely through the 1967Economic Expansion Incentives Bill. In additionto the "tax holidays"to new industriesunder the 1961Pioneer Industries ordinance, the Bill providedindefinite concessionary tax rates on exportprofits. This was to attract export-oriented
- -31 -
industries, encourage foreign investments and entrepreneurship. From 1969 onwards, trade was continuously liberalized, and by 1973, all quotas and almost all import tariffi were eliminated.
At the same time, the government boosted incentives for industrial investmentsby granting longer tax-exemptionperiods and lower tax rates. To compensate the infant industries whose tariff protection were withdrawn, it extended the original 5-year tax-exempt period by 10 years, and gave 20-year tax- exemption to all export industries. These long exemption periods reflected the policyrnakersview that it might take a decade or more for the new industrializationstrategy to take root. In the event, everything happened much sooner. By 1970, the tightening labor market prompted the Amendment Act of 1970, which reduced the generous tax incentives of the 1967 Economic Expansion Incentives Bill.
The government then switched to industrial upgrading and restructuring, favoring larger-scale industries so as to accelerate growth. The earlier incentives were now made conditional on (i) investments being at least S$1 billion (or S$150 million, if 50% of the paid-up capital came from Singapore permanent residents); and (ii) the discretion of the Ministry of Finance as to the kdnd of enterprise that would promote or enhance economic and technological development. Accelerated depreciation allowance also became restricted to larger investments. To accelerate industrial upgrading, the govermmentrevised the rules for tax relief (even for those industries still within the relief period), withdrawing it for those industries whose annual export sales were either (i) below S$100,000 or (ii) less than 20% of total sales.
The onset of higher oil prices from 1973 led to further policy revisions. In 1975, the government brought in a Capital AssistanceScheme and extra EDB loans to encourage specializedprojects of unique economic and technicalbenefit to Singapore and to assist SMEs in establishinghigh technologyindustries. To strengthen export promotion, it withdrewpioneer status concessionsfrom firms producing exclusively fDr the domestic market. It also restricted the type of industries qualifyig for pioneer status to: aircraft componentsand accessories, compressors, transformers, diesel and petrol etigines, electrical and portable tools, telephone exchange equipments, microwave equipments, magnets and magnetic materials, typewriters, cameras, watches and clocks, miniature lamps, and a large range of plastic raw materials.
A further round of policy reform took place in 1979. It was aimed at industrialupgrading as well as expanding into financial and other specializedservices. To encourage existing zdustries to invest in improving productivity, tax incentives were broadened to include tax-exemption of profits up to a predetermined level. This level was an approved percentage of fixed investment and was in excess of the normal capital allowances.
In the 1980sthe governmentsought to encourageincentives for manufacturingfim in introducing various fiscal schemes: (i) double-deduction,on a case-by-casebasis, of R&D exrc;nditures(excluding building and equipment); (ii) accelerated 3-year depreciation for all plant and machinery used for R&D; (iii) investment allowance of up to 50% of all capital investmentsin R&D facilities (excluding building costs); (iv) extension of existingindustry building allowancesof 25% and annual allowance of 3 % to new industrial building and other physical structures for R&D activities; and (v) capitalizationand writing-off of lump sum payments for manufacturing licensing for 5 years. -32 -
The 1985 recessionhighlighted the poor performanceand vulnerabilityof domesticsmall and mediumenterprises (SMEs). Manyclosed down, leading the governmentto introducea seriesof policy initiativesfrom 1986to try to bolsterthe SMEs.'5
The initiativesincluded drawing in the MNCsto help developthe SMEs. This has pavedthe way for the next stage of development- joint productdevelopment by the MNCs and SMEs.
This approachbegan in 1986, with the Light IndustriesUpgrading Program (LIUP). The EDB was againthe coordinatingagency, with MNCs and their subcontractor-SMEstaking part in the program. In 1989 the EDB launched the SME Master Plan, to renew and redevelop SMEs. Like earlier governmentinitiatives, it will usejoint public-privatesector collaboration to encourageand assistSMEs. As before,public assistance was pmvided through information, training facilities and concessionaryloans. SMEs could seek professionaland advisoryservices from universityacademics at concessionaryfees. `In design of programsunder the MasterPlan also benefittedfrom contributionsby the MNCs, larger firms and localchambers of commerce.To reinforcethese efforts, the governmentformed an Enterprise DevelopmentCouncil in 1990to provideideas and recommendations.The Councilcomprises Members of Parliament,CEOs of the majorMNCs, prominentlocal entrepreneurs,and academics.
UnlikeHong Kongand Taiwan,China, where indigenousSN:Es have been an integralpart of the industriallandscape, SMEs in Singaporehave emergedmuch later in the process. As a result, SMEs in Sing-.?orehave entereddirectly, insteadof gradually,into relativelyskill-intensive activities, thereby providinganother contrast to its Asian counterparts.
InfrastructurePolicy. Oncebasic housingfor the lowest incomegroup was providedin the mid- 1960s,the publichousing program was integratedinto the industrializationprogram. Guidelinesfor the designand locationof new housingestates, industrial estates, public amenities (such as schools,shopping and recreationalfacilities), and the publictransportation network were intendedto facilitateCt) more jobs for women; (ii) domestictransportation for the labor force as well as for goods (rangingfrom imported industrialinputs to finishedgoods for export); (iii) a reductionin pollution by noise and industrial effluence;and CQv)improved quality of life. Industrialestates were spread around the island,to minimize congestion. (For furtherdetails, see Chia: 1984).
Besidesensuring adequate domestic transport, the govemmenthas aimedto modernizeand expand port capacityby the early developmentof containerport facilities. Muchhas been doneto expandship-
IS The unsatisfactoryperformance of the SMEscan be seenfrom the followingstatistics pertaining to the situationof SMEs in 1987:
(a) while SMEs constitute about 90% of all small and medium establishmentsand 44% of employment,they contributeonly 24% of value-addedand 16% of direct exports; (b) only a third of SMEsare in the manufacturingsector, the majoritybeing in commerceservices trade; (c) the manufacturingSMEs contributeonly 1.1% of total manufacuringvalue-added and less than 1% of manufacturingoutput; (d) value-addedper worker in manufacturingSMEs averaged S$17,000 compared with $55,000per worker in MNCs and larger enterprises; (e) amongmanufacturing SMEs, the share of outputexported is only 4%, comparedwith 670%for the MNCs and larger manufacturingfirms. 4 t4 r -33 -
repairingand oil-rig constructionfacilities. Efficient airport facilities are now in place to boosttrade and help Singaporedevelop into a regional communicationsand financialhub. Resourceshave also been allocatedfor a full-fledgedfiber-optic telecommunications system that wouldlower costs and allowfor the future integrationof new telecommunicationservices and facilities,whenever these comeon stream.
Importantthough physical infrastructure is, it needsto be complementedby the developmentof a suitable"institutional infrastructure." Singapore'sgovernment has shown an awarenessthat, as the economyincreases in complexty,there is a growingneed for governmentbodies to be betterat managing their affairs and implementingtheir policies. Change cannot happen suddenly, not least because experienceis a vitalpart of any institution'seffectiveness. But the processof changemust be built into the way that the public sectoroperates.
Human Resourcesand DynamicComparative Advantage. As in industrialand infrastructural developments,Singapore's approach to human resource development(HRD) has been gradual and systematic,with flexibletiming of policychanges. The salientfeatures of its HRD strategywere based on severalconsiderations. First, althoughlabor was the country'smain asset, populationgrowth had to be constrainedbecause of limitedland. Secondly,skills were necessary for effectivetechnology transfer and industrialtake-off. Lastly, dynamiccomparative advantage in the longer term is relativelymore dependenton accumulatinghuman skills, not physicalcapital.
The design of an HRI strategywas initiallycomplicated by (i) the government'sinheritance in 1959 of an educationalsystem geared to lower-rung jobs in the Colonial administration; (ii) the need to provideernployment not onlyfor the existingnontechnical labor forcebut for the postwargeneration that was about to enter the labor marketin the 1960s;and Ciii)the multiracialpopulation and the different languagecapabilities of school-leaversentering the labor fbrce in the early 1960s.
Until 1959,the educationsystem consisted of predominantlystate schoolswhere English was the mediumof instruction(hereafter referred to as "Englishschoolsm), and Malayschools for the Malays. There were also some Chineseand Tamilschools, established privately to provide an educationin the vernacular. It was againstthis backgroundthat languagebecame an emnotiveissue, that was exploited during the independencemovement period and early years of independence. The immediatetask for educationalreform was thereforeto resolvethe issuesof languageand standardization.In recognition of the political realities, Malay was designatedthe national language. At the same time, economic modernizationvia technicalchange dictated that English be designatedthe officiallanguage. Vernacular Chineseand Tamilbecame second languages.
To start a convergenceprocess for the differentlanguage schools, the governmentbrought in a nationalPrimary School Leaving Examination in 1960for all schools. Gradualismwas both technically and politicallyexpedient, since languagewas stillbeing used as a politicaltool. In language,as in other socialareas, the governmentwas to acceleratechange after its landslideelection win in 1968.
After two Commissionreviews in 1961 and 1962, the commissionersrecommended providing technicaland vocationaleducation at the secondaryschool level, and creating technicalcolleges for Chinesesecondary school-leavers.'A The next majorinitiative in the HRD strategywas not until 1968,
16 Chineseschool studentsrarely qualifiedfor admissionat the time to the sole Universitywhere Englishwas the mediumof instruction. -~~~~~~~~~~~~~~~3
q -34- f~
whenthe govemmentextended the formaleducation system to includetechnical and vocationaleducation, and establishedjoint trainingschemes with MNCsand foreigngovernments.
Parallelto the industrialupgrading efforts of the early 1970s(phase m) and late 1970s(phase IV), these training schemeswere also upgradedby first being 'joint" with MNCs and then "joint' with the governmentsof industrial nations. The joint 'MNC-government"schemes resulted in the Tata- GovernmentTraining Center (Tata-GTC with India's Tata Iron and Steel)in 1972,the Rollei-GTCand Philips-GTCin 1973and 1975respectively. Joint government-government Training Schemes began with the Japan-SingaporeTraining Center in 1979 to promoteJapanese investment in Singapore. It was followedby the Japan-SingaporeInstitute of SoftwareTechnology (1979), the German-SingaporeInstitute (1980) and the French-Singapore Institute (1983). To coordinate technical training and to guide future activities,a Councilfor Professionaland TechnicalEducation was established.Its membersincluded the EducationMinister, the PermanentSecretary of the EducationMinistry, the headsof the two universities, Chairmenof the EDB and Public ServiceComnmission, and the DeputySecretary-General of the NTUC.
At the same time, the decline in populationgrowth enhancedthe value of skilled labor. she governmenttherefore set about reducingtih_ drop-out rates in primary and secondaryschools. The educationsystem was overhauledin 1979/80. By 1984, drop-out rates had fallen to about 7%, from about 30% in the 1970s. By 1986, almostevery Singaporeanchild was receivingat least 10 years of schooling(Soon, 1988). Despiteall theseefforts, a study of the 1985recession suggested that Singapore was not investingenough in education. More reformstherefore followed. Entry requirementsto pre- universityadmission were raised, and stricter standardsapplied to vocationaland technicalinstitutes, polytechniq(technical colleges) and universities.
Better schoolsand universitiesdo a great deal to raise a country'sskills, but they excludeadult workers. Hencethere was a complementaryemphasis on continuingeducation and trainingthrough the NWCand the SkillsDevelopment Fund. TheSDF was establishedto providefundsfor trainingworkers. Employersare requiredto pay a levy on the salariesof their employeeswhose monthly earnings were belowS$750. The levy was initiallyset at 2% of the employees'earnings, then raised to 4% in 1980. Over time, the SDFhas got involvedin assistingthe developmentof domestictechnological skills. For example,by 1984 it was introducingits fourthscheme, klown as the 'Initiativesin New Technologies", aimedat nurturinga nucleusof trainedscientists and professionalsfor industriessuch as automationand robotics, microelectronics,information technology, biotechnology,optical and laser technology, engineeringand materialssciedces, etc.
Wages and IndustrialLabor Relations. Anothervital elementin successfulindustrialization is harmoniousindustrial labor relations.Two factorsunderlie the design of Singapore'slabor policy: the absenceof an agriculturalsector and hence minimalproperty ownership for the bulk of people, and the politically-instigatedlabor unrest throughoutthe 1950sand early 1960s- In the 1967 EmploymentAct and the 1968 Amendmentof IndustrialRelations Act, 1 it was clearlyrecognized that fiscal incentives per se were insufficientfor attractinginvestments. To create a hospitableinvestment environment, the politicallydiverse trade unionswere consolidatedinto the NationalTrade Union Congress (NTUC). The
17 lThe1967 Act standardizedworking terms and conditionsby layingdown a 44-hourworkweek, limitingthe annual bonus to one-month'swage and provisionof retirementand retrenchment benefitsonly after 3-, and 5- yearsservice, respectively. The 1968Act pre-empted potential labor unrest and redefined labor-managementrelations by conferringmore managerial power to employers. 35 4- 4
"carrot-and-stick"approach to shared growth was launched through the 1969 NTUC Seminar on modernizinglabor, which helpedto win labor support for the govermnent'slong-term sategy. At the same time, several NTUJCcooperatives in basic consumergoods and services were launchedto help containliving costs and initiatethe shared-growthstrategy.
The creationof the NWC providedanother arm for consensusbuilding and policy coordination. Althoughthe NWC was formed when the labor marketwas tighteningand started with guidelinesto restrainwage increases,it was clearfrom its tripartitenature thatthe NWCwould also serve as a forum for a wider set of issues. This was vindicatedby the major policy switch in 1979from wage restraint to high wages, in tandemwith the revised goal of moving intohigher valued-addedindustrialization.
Becauseof Singapore'sattractive working environment and incentivesfor skilledlabor, immigrants camefrom manycountries - notjust ASEAN,but also SouthAsia and the westernindustrialized nations. The numberof immigrantsgrew sharplyin the early 1970s,when Singapore experienced severe shortages of skilled and unskilled labor. In 1973 migrantsamounted to over 12% of the total labor force. Conversely,with the expectedonset of the 1985recession, target dates were set in 1984to phase out all immigrantworkers from nontraditionalsources. (Therewere someexceptions, for the conuction and ship-repairingindustries where activitieswere counter-cyclicaland export-oriented,respectively.) And the levy "s collected from employersof imported unskilled labor not only provided a source of governmentrevenue but also ensuredthat immigrantsdid not detractfrom the government'slong-term strategyto boostvalue addedand wages.
MacroeconomicStability and FinancialControl. Macroeconomicstability has been crucialto the apparentease withwhich continuous policy adjustments have been carried through. Sincethe goverument was also aimingto developSingapore into a globalfinancial center, this enhancedthe need for currency stabilityand prudentialregulations. Because of the smallsize of the economy,the balancebetween those regulationsthat impingedomestically and internationallybecomes crucial.
Macroeconomicpolicy has been characterizedthroughout by low inflation,budget surplusesand a strongcurrency. Currentaccounts deficits in the earlieryears turnedinto currentaccount surpluses and growing external reserves. Continuousbudgetary surpluses (except for 1973fl4 and 1987/88)were obtained through a buoyant tax structure, capital revenuefrom governmentland sales, a policy of restrictingpublic expenditure by chargingall governmentservices (except public goods)at full cost, and by limitinggrowth of public sector employment.
Giventhe significantroles of publichousing, infrastructure development, labor and wagepolicies, and the compuilsoryCPF savings scheme,all these activitiesfal withinthe purviewof macroeconomic policy. Lee [Tsao] (1988)identifies 5 areas of macroeconomicpolicy: Ci)monetary and exchangerate policy;C(i) CPF and publicsector surpluses; (iii) publicsector construction; (iv) other fiscalinstruments, viz. taxation;and (v)labor policy. To illustratehowthese have beencoordinated, the interactionbetween
The levy was originallyintroduced under the CPF scheme but evolvedinto a separate levy on importedunskilled labor wo-kingunder work permits. Skilledand professionalforeign workers on professionalvisit passes are not subjectto this tax. This levy has increasedover time wit the rise of foreignunskilled workers. In 1992,the levy rate is S$250/monthfor domestichelpers and S$3001monthfor workers in other sectors. The levy is paid by employersand therefore easy to collect -36 -
die CPF fimds, moneysupply, exchangerate stabilityand the managementof externalreserves will be brieflyreviewed.
The effectof CPF contributionson the moneysupply stems fromthe investmentof CPF funds in governmentsecurities. This results in a sizablewithdrawal of moneysupply from the system, and a consequentrise in domesticinterest rates. The higherrates are likelyto result in more commercialbanks borrowingfrom offshorebanks or abroad,putting upward pressure on the SingaporeDollar. Giventhe size of the monthlycontributions (up to 40% of wages)to CPF, and the regularityof CPF purchasesof governmentsecurities, exchange rate stabilityhas beenmaintained by the MASselling Singapore Dollars. The foreign exchangeholdings from these Dollar sales are then banded over to the Governmentof SingaporeInvesunent Corporation (GSIC) for management.19 CPF funds have thereforeprovided much of the government'scapital for development.On average,about 40% of governmentexpenditures went into developmentprojects such as airport, harbors, highways, public housing, industrial estate development,water, sewerage,electricity and telephonesystems, schools and ti-versities (Lee ITsao], 1987;Seah, 1983).
In studying the record of price stability in Singapore, Grubel concludedthat "at the most fundamentaltheoretical level, Singapore'srecord of price-levelchanges is explainedby monetarypolicy. bIflationwas high followingperiods of excessmoney creation and low whenmoney supply more nearly equaled demandfor it" (Grubel, 1989:378). More recently,Teh and Shannugaratnam(1992) provide the backgroundto the evolutionof monetarypolicy and the managedfloat of the exchangerate in the 1980s. In the main,the choiceand effectivenessof monetarypolicy instruments were influencedby the high degree of opennessto wade and capitalflows. Since 1981, monetarypolicy has focrsed on an exchangerate policya!med at controllinginflation. The consequentappreciation of the nominalexchange rate during most of the 1980shas helpedoffset increasesin the foreigncurrency price of importsand dampenedthe effectsof wage increases. The industrialrelations and wageflexibility achieved through the NWC also benefittedthe exchangerate policy, since rigidityof nominalwages wouldhave caused a strnger impact on export competitiveness.(It should also be mentionedthat the labor and wage legislationsfrom the late 1960sengendered technical change, since technicalchange depends cruciaiy on the legal and institutionalframework and is thereforenot exogenous.Thus Grubel's(1989) argnment that the incomespolicies of 1974-79and 1979-84were redundant,since market forces would have brought about the same wage adjustments,seems to discountthe potential role of legislationsand institutionisin ehancing technicalchange.)
In their 1992study, Teh and Shanmugaratnamalso conductedmodel simulations of exchangerate impacts. The simulationsindicate that without the SingaporeDollar's appreciationduring 1988-91V inflationwould have averaged6% a year, insteadof the 3% it actuallydid. Furthermore,the lagged effects of a weak exchangerate in 1991 would cause the CPI in 1995 to be 25 percent higher than otherwiseprojected.
Much has been written aboutthe high and 'forced' savings rate in Singapore through the CPF scheme. In fact, the growth in domesticsavings stems not from the CPFper se but from a rising rate of participationin the labor force, three decadesof rapid economicgrowth, and the maintenanceof budgetarysurpluses. The CPF schemediffers from pay-as-you-gosocial security systems in that CPF is filly-fundedand individually-specific.Over time, the CPF schemehas also becomemore flexibleby allowingmembers to use their funds for various approvedpurposes, such as purchase of approved
v9 To date, GSIC'spolicy has been to investthese fundsabroad rather than locally.
44:- - 37- housing, medical and educational expenses and investment in securities. As a result, the gross CPF contributions increasingly overstate the extent of CPF savings. In 1989. gross CPF savings amounted tO 12.5%of GDP; but net CPF savings (gross CPF savings less withdrawals for various approved uses) was only 6% of GDP, which is less than the social security contribution rate in the EC. Figures 4 and 5 show the changing shares of public and private sector savings, and the decomposition of private savings into CPF and non-CPF savings.
Figure 4: National, Public & Private Sector Savings, 1974-1987 80-
70-
60-
So-
40- ~ ~ -
-.4 30-
1974 1975 176 1977 1978 1979 19S0 1881 1982 18 1984 195 1986 1987 1988 19S9 1990
-| - GNS/GNP- PU+c 9* Privat Percent
~~~& ~~ALt-&
Cn
(co
1 1 . ;S CD 'tt~~~~~~~~~~~~~~~~~se. .h.-..,.;. Atdi - 39 -
Casts and Benefis of Policy Changes
Despitebeing a small and open economyvulnerable to externalfactors, Singaporehas weathered the economiccrises and uncertaintiesthrown upon it. As this paper has emphasized, much of this success is based on a long-term development strategy aimed at boosting growth. However, there have been occasions when policy was reversed or corrected, and these deserve attention as well.
One examplewas the switch from import-substitutiontoexport-oriented industrializationfrom 1965 onwards, when policies were redesigned without prejudice to industries that had been establishedduring the import-substitutionphase. Nonetheless, some firms were closed during this period - which was socially optimal, since in the land-scarce (and eventually labor-scarce) economy, prolonged protection would bn-vebeen at the expense of overall growth. Another example involved the encouragenent in the early 1980s of domestic self-sufficiencyin pork. The govermnentset stringent standards for controlling pig waste, which was to be partially subsidized by a levy per pig slaughtered at an abattoir. Despite effluence treatnent by all farms, however, pollution by pig waste into the Straits of Johore remained at unacceptable levels. A review revealed that self-sufficiency was unwarranted, because the domestic rearing of pigs depended on imported feed. Moreover, the production cost of pork was considerably lower in nearby China, Malaysia and Thailand. The government therefore decided to phase out the pig farms in Singapore. Pig farmers were encouragedto take up alternative (and nonpolluting)farming, such as hydroponic agriculture. Farmers who had invested substmtially in effluent treatment were compensatedby the government to the tune of about S$150 million.
PPerhaps the biggest policy switch happened in 1985, when the government abandoned the high- wage policy it had adopted six years earlier. In a sense, the high-wage policy may be seen as a reward for the wage restraint accepted by labor during 1972-78. By the same token, labor's cooperative attitude during the renewed wage restraint in 1985/86 was in part due to the higher wages it had enjoyed in 1979- 85. Labor also recognized that lower wages would mean fewer lay-offs. In the event, retrenchment was minimal durng the 1985 recession.
Because the 1985 recession followed on the heels of the unorthodox high-wage policy, various studies have tried to assess the policy's contribution to recession. Otani and Sassanpour (1988) showed that wage increases played a small role. If relative unit labor cost (unadjustedfor exchangerate changes) had remained at 1980 levels during 1981-86, and all other exogenousvariables were kept at actual values, GNP would have been unchanged in 198485 instead of declining. Lim and Associates (1988) showed that, had the 1986 cost-cuttingmeasures been introducedin 1984, real GDP growth would have declined by only 0.5%, instead of the actual 1.6%. In their recent study, Teh and Shanmugaratnam (1992) indicate that the 1985 recession stemmed from the coincidence of 3 factors: (i) a loss of international competitivenessas the high wage policy from 1979, combined with the strong exchangerate policy from 1981, caused an increase in the real effective exchange rate; (ii) a fall in cyclical domestic demand with the ending of the construction boom; and (iii) a fall in cyclical external demand, especially in the electronics, ship repairs, petroleum refining, regional tourism and entrepot trade industries that were important to Singapore.
Perhaps the biggest benefit of the recession was that it demonstrated Singapore's vulnerability to the global enviromnent. The high-wage policy may also have been useful in helping to overcome some initial impediments to structural change. It ensured the deliberate creation of a critical mass of high- -40-
technology, knowledge- and skill-intensiveindustries and a basic level of manpower skills that made Singapore better poised for fiuturegrowth.?
Lee [Tsao]has pointed out the inconsistencyof having high wages and a strong SingaporeDollar (Krause et al., 1988) simultaneously. Because of the country's heavy dependenceon exports, and hence on global competitiveness,wages are crucial to economic performance. By maintaining a strong and appreciating dollar, wages in purchasing-power parity terms increased by more than the increases provided by the NWC guidelines. A more circumspectand gradual approach might have been to forego the stronk Dollar target during the initialphase of the high-wagepolicy.
V. POUICY CONCLUSIONS
The Role of Government
Government has been integral to Singapore's rapid industrializationand growth. Government interventions,while extensive,have been purposeful. By constantreference to the broad but well-defined strategic framework, policy consistencywas ensured withoutprejudice to flexibility. This is because the principles for when and how governmentshould intervene were, in a sense, checked by the framework. It also allowed policy to be fine-tuned, rather than changed through "flip-flops." Underlying the policy design was the government's basic philosophy that Singapore "must excel in business and whatever it attempts." Public policy must therefore always be "directed to the support of this pursuit of business excellence" (Goh, 1977:17). As Figure 6 shows, this strategy has many complementarycomponents. In Singapore's case, however, its essence has taken two main forms: MNC-led industrialization,in a stable socio-politicalsetting.
Through the MNC-basedindustrialization strategy, the govermment'srole was focusedon creating the conditionsto attract foreign investment. At every stage, it soughtto adopt policies that wouldboost product9vityand make Singapore a place where MNCs could climb up the value-added chain. This mvolvecit in, above all, infrastructureand education. The constantupgrading and expansionof physical infrastructuremay be viewed as an anticipatoryand cautious approachto ensure that resources are ready for the future. The predominanceof huge infrastructuralinvestments, with initial slack because of their "lumpy" nature, pardy accounts for the inadequacyof the Total Factor Productivity (ITFP)approach as used by Young (1991) in assessing investmentperfbrmance in Singapore.
The industrializationprogram also required considerableinvestment in human capital. Besides providing the requisite education and training infrastructure, the government chose a strategy of developingbroad-based basic skills that could be upgraded sequentially. By drawing lessons from the records of the various industrialapproaches to science and technologyin the United Kingdom, Germany and Japan, the government decided to ensure economic realism in the development of industrialskills (Goh, 1977). Hence industrializationwas to be initiatedthrough low-technologyproducts. A set of core industries with an associatedset of core skills would then lend themselvesto faster progress to higher levels of technology.
With this emphasis on physical infrastructure and human sklfls, Singapore has been continually well placed to attract MNCs. Again, its approach was deliberate. Goh Keng Swee has stated that "it
X We are grateful to Wanda Tseng of the IMF for this point
;.X : . -- -41-
wouldtake a veryobtuse economistnot to haverecognized war the electronicsindusry was in a state of dynamicexpansion in the mid-1960s"(Gob, 1992).The availability of low-cost but disciplinedlabor provided the basis for integrated circuits assembly,which became one of the first impetusesto Singapore'sindustrialization. As the electronicsindustry developed; so did Singapore'smastery of it, becauseof the government's increasingemphasis on science and engineeringin the curriculumof secondaryand teriary education.
Figure 6: Dynamics ot Development Strategy
Foreign Direct investment (Oomeshc investment later)
Industdalizaton G Free Trade
Employment Creation (sidled & Unskiifed)
Mor Knowledge-InlensIve .e Z,st Indusiralization P ReaJWages 8 Output(-Exports)
HigherSoecialization; LHigher Value-Added Output Domestc Savings Foreign Higher Profit I nS\ 56 ~~~~~~~~~Exchange I .\9 Eamings:tE Mor SkiN-ntnsv;'"a%esrvs;*x'Ski-,ntea.v -~5I5w Increased| Industrialtzabon r Reserves: Inlrastruelure Develowment HumanResource Development 4. Higher Public& \ Lower Costol ProdLdon- ~~~~~Privateinvestment: InaeasedLowr Compebthveness Cstf Podudon .GrwhcReEprs Gmowtnof Re-Exports: HigherProfits HigherWages & ' & + '¢ ^~~~~~~~~42-
. .. . - . .4. .
On its own, though1 MNC-ledindustrialization would not just have happened. It occurredin the contextof social and politicalstability, conditions that the governmenthas worked hard to foster and secure. Singaporeis situatedbetween the Straitsof Malaccaand the SouthChina Sea, right on the route of East-Westtrade- Becauseof the strategicand geo-politicalimportance of these waterways,politics has always been a major influenceon Singapore'seconomic well-being. Since 1965, the country's foreign policy has been carefullycrafted towards internationalcooperation to ensure economicand politicalsurvival. Concernwith domestic socio-political stability is reflectedin the firm disapprovalof domesticand foreigndetractors.21
Singaporehas onleother socio-politicalfeature that is worthnoting. The 3-year nationalservice that is compulsoryfor all male high school graduatesbefore they are able to enrol for their tertiary educationserves not only to provide defencetraining, but an awarenessof the geo-politicaland security issuesbehind the country'spolitical stance. Becauseof the significanceof domesticand regionalpolitical stabilityto the country'sdevelopmental effort, and its relianceon importedpotable water and imported labor, nationalservice provided another channelfor consensusbuilding among the young.
The governmenthas adopted a policy of nonalignmentand internationalismso as to preserve territorialintegrity and to have even-handedrelations with China, the SovietUnion and the UnitedStates. However,-until 1990 it did not have diplomaticrelations with China, despite the longstandingstrong commercialties betweenthe two countries. Reasonsfor this lacuna have variedover time. In the early 1970s, it stemmedfrom cautionthat -China'sgrowing international prestige might encourageChinese chauvinismin Singapore,which would havejeopardized the government'seffort to establisha cohesive multiracialSingaporean society. At the sametime, the goverment was concernedthat Singaporeshould not be seen as either a "third China" (afterTaiwan, China) nor the Chinese-originpopulation as a "fifth column"for China, nor as Overseas-Chineserather than as Singaporeans-
Politicalstability of the ASEANcountries after the mid-1960swas unambiguouslypositive for Singapore. This stability.notonly increasedthe confidenceof firms based in Singaporebut also enabled rapid growth of the ASEANcountries themselves(apart from the Philippines). Political instability elsewherein Asia benefitedSingapore, especially the uncertaintiessurrounding Hong Kong. Singapore also gained from its proximityto the Viet Nam war, becominga major supplierto South Viet Nam.
It was not just internationalpolitics that mattered;Singapore has also been affectedby various changesin internationaleconomic relations. For exampleSingapore's correction of the high-wagepolicy happenedto coincidewith the 1985 Dollar/Yenrealignment, which resultedin increasedexports to the UnitedStates, Singapore's largesttradingpartner. With growingprotectionism against Japanese imports, Japan reacted by transplantingsome manufacturingplants abroad. It altered its foreign investment philosophy to one aimed at re-orientiag the ASEAN countries towards Japan. With its higher
21 Instancesof this stanceare the 1971 terminationof a foreign correspondent'sstay becauseof his criticalreporting, and the 1976PAP resignationfrom the London-basedSocialist International (this is a loose federationof anti-cmmunistsocial democratic parties committedto the promotionof democracyand civil libertywith a charterthat rejects any form of politicalcooperation with parties of politicaldictatorships) upon refusalby the Dutch LaborParty to withdrawits motionto expel the PAP for allegedviolations of humanrights and detentionof politicalprisoners withouttrial (Vreeland,et al., 1977:105).
Jt~~t'-.~ - -- -- ;- : i - . -43- _4 3
technologicalbase, Singaporebecame an OriginalEquipment Manufacuring (OEM) base for Japanese industriesas well.
Teons from Japan and Other ed Countes
Singaporehad to design a developmentapproach compatible with its size, its lack of natural resources,and its socio-politicalobjectives. Initially,small countries with resource constraints (such as Switzerlandand Israel) were examinedfor lessonsin development.Subsequendy, as industrialization progressedand greater emphasis was placed on developingindustrial training programs and workerskills, Singapore'spolicymakers looked to countriessuch as Germanyand Japan for models that coud be adoptedand adaptedto suit its conditions.They cameup withtwo main oonclusions:first, scienceand technologymust be used selectivelyin accordancewith the giveneconomic reality; secondly, the attitude of workers in an industrializedsociety differs fumdamentallyfrom what exists in an entrepottrading center.
The importanceof economicrelevance in the choiceof scienceand technologywas based on the leadership'scomparison of postwareconomic growth in Britain,versus that of (West)Germany and Japan (Goh, 1977). As a victor country.British scientistswere able to build upon their advancedscience foundationand focus their energieson basic research,without paying heed to the relevanceof their researchto the county's industrialand economicneeds. The practicalapproach towards science and technologyadopted in Germanyand Japanwas in directcontrast. The defeat and lossessuffered by these two countriesand the need for postwarreconstruction possibly reinforced their pragmaticapproach in directingthe use, as well as development,of scienceand technologytowards economic ends. Fromthe start, the building of a domestic technologybase in Singaporewas directed specifically at its industrializationgoal.
Throughthis technology-mindedindustrialization strategy, Singapore's wages became explicitly linkedto industrialcountries' wages from 1972. Workercomplacency would be put underpressure, since the industrialupgrading strategy translates into a "catch-up'process not onlyfor the industriesbut also for theirworkers. The Singaporeanideal was to have a combinationof the best attributesof Germanand Japaneseworkers: Germanyindustriousness and skills,acquired through industrial training of a complex anddemanding nature; and Japaneseloyalty, capacity for hardwork and worker-managementcooperation.
As shown earlier, industrialefficiency has been reinforcedby an efficient and dedicated bureaucracy,and the cooperationbetween it and the privatesector. AlthoughSingapore did not have a role modelfor its bureaucracy,the samequalities have been significant in the economicsuccess of Japan, Republicof Korea and Taiwan,China. Grubel (1989)points out the similaritybetween the NWCin Singaporeand the tripartiteconsultative processes in Sweden.
telalionhip betwee Devpi t Sucess and Social Atttdes
Two featuresinfluenced the socialmakeup of the populationin 1959. One was entrepottrading, wbich had providedSingapore's economic livelihood for more than a century;the other was the new immigrantswho had comefrom soutieasternChina and southernIndia. Bothfeatures contributed to the socialattitudes that were receptiveto Thegovernment's developmental efforts.
The longtradition of trade and servicesassociated with an entrepotsociety produced openness and outward-orientationin the people's attitude, as well as an emphasison excellenceso as to remain internationallycompetitive. Interactionwith the industrializedcountries that were importersof raw .1X44_ * 4I2A
materials from, and exporters of manufacturedgoods to, Southeast-Asia mneantthat Singapore had had constant exposure to new ideas from the West. Furthenrore, the education system established by the Colonialgovernment produced an educatedand urbane group in society much aware of the development- and income-gapsthat existed between the developingand industrializedcountries.
As described by Hasan (1976), a 'transition syndrome' amongstmigrants lends itself to a positive approach to change and progress, since the initialdeparture fromrhome was motivatedby the search for better econonmicconditions. Sowell (1983) argues that this search, often coupled with persecution or political resentmentby the indigenouspopulations, reinforces the strong motivationof immigrants to do well in their new countries.
In the early 1960s, many of the new immigrants from China and India still identified with their home countries and planned to return once they became financiallysecure. But gradually economic improvements coupled with home ownership in Singapore led to the shifting of their allegiance to Singapore. By the early 1970s, these migrants had assumedfull identity as Singaporeans.
The immigrantswere also attractedby the changes taking place in Singapore's educationalsystem. Before 1959, education was seen as the route tD an administrativewhite-collar job, preferably in the officesof the Colonialgovernment and foreign trading firms. The educationalreform in the early 1960s, the establishmentof schools for technical training, and the growing employmentopportunities fom the 1960s in industries requiring technical skills caused the shift in the population's inclination towards scientific and technical training. Immigrantssaw this as being more meritocraticthan the old system.
Policy Iea w from Sgapore's Exprienc
Singapore's success shows that even the most unpromisingstarting-point need not stop a country from developing. What matters is a growth-orientedleadership, with a realistic strategy and intelligent policies. In more detail, four basic elementsare involved: (i) governmentwith a vision about long-term development;Cii) a stable and hospitableenvironment conducive to economicgrowth; (iii) a public policy that emphasizes investment; and (iv) the capacity for sustained accumulation of human and physical capital. Such an 'integrative approach to developmentin which a single policy has been made to serve a plurality of purposes inevitably introducesan element of artificiality into stricty analytical studies of specific policies." (Sandhu and Wheatley, 1991:viii)
Singapore's experience points to three crucial and general lessons: (i) the importance of sound economicpolicies, (ii) the reinforcementof sound policies with policy implementationby a bureaucracy that is run on meritocratic lines, and (iii) government's role in winning credibility within the state and with foreign investors. None of these is shrouded in mystery or workable only when applied in Singapore. The precise circumstancemay differ from country to country, but the broad outlines are clear. There is much to admire about Singapore's economicdevelopment; much to copy, too.
... . 5.. . AppendixTable 1: Singapore- Key EconomicIndiiators, 1960-1990 Indicalors 1960 1965 1970 1973 1978 1980 1983 1985 199)0
P?pulailon(m) 1.6 1.9 2.1 2.2 2.4 2.4 1.5 2.6 2.7
DPat 2915(cacr qcam (Sibn) . 5.0 6.6 12.1 17.3 24.1 21.9 36.6 31.9 17.1 Domuli Expods(SIm) 2.5 3.0 4.1 S.9 23.0 41.5 4U.2 50.2 95.2
ltAw FOnS('000) 162 SS7 693 Its 99S 1116 1206 1204 1516
Uuakbymmurnl (S) - 10.0 ui 6.1 4.6 3.6 1.3 3.2 4.1 2.0
aGDPPc11 I (1915-100) 41.9 44.6 47.1 59.1 74.1 17.0 1W.5 IW.0 uia.o CPi (1985-104 40.9 40.7 43.2 56.7 15.6 35.3 97.0 100.0 106.3
ODFCF(Stbn) 1.0 5.6 a.1 17.5 16.4 21.0 (aDFCFICDP)ailo (S) 9.7 16.7 32.5 24.9 35.7 40.7 47.5 42.2 37.9
aNS(s5m) (ONSIaDP)ntio (%) 29.1 34.0 46.1 40.1 40.5
OvermUalnce of Pyamrni (Stm) 1005.2 1511.5 2237.1 2942.0 9392.5
0CfihelPorug RsHrvI M(S$m) 5100.1 11400.0 19755.3 27030.0 5S791.2 Numberof MorAhslrImpars S.6 4.6 4.0 5.6 6.1
NoA: All dollarvaluauNrM tar Conrgnt1915 Dollar., ) Eimas. -46-
Appeudix Table 2: Siappo - Gwth Ra*nsof Key Ecouomig Imlijcl 1950-90 (% p..)
Indicawrs 195960-6 1965-72 1973-78 197944 1985-90 Populadion 2.CS 2.09 1.54 0.65 1.71 Labo Force 36.73 4.59 3.30 L.50
Euploy t . 21.2 4.05 3.0W 3.9 GOP (19851) 5.89 14.0 7.63 8.66 6.38 GNIP(19S) GOP. 98 (195) . 11.16 5.99 9.17 3.37 GNP. Indigzous (19S) *- 1035 63 9. i.9S Per Caita GOP . 9.93 6.W 8.02 4.59 Per Cspia adipouw CDP 4.38 3.55 1.63 Per Capia GNP PrC idigous GNP - 4.91 8.U . LNELATIO( RIATES GDP Dclhzo 0.71 2.29 5.99 5.38 1.45 Wf, ., , . .. 4.59 -i.23 CPI. 1.29 955 4.7Z 1.16 GDP SECRAL C;ROW[ GD FJZWAL 't '. -5.64 -5.93 -15.42 CooFLs Ub1u *- -3_30 6.35 -10.96 M -nufS i.. .. 0.43 - 6D 17 7zadc& Tzunu~rn~or *. *- 1.16 -1.89 0.08 Fade & 0modp v .. 0.19 2.33 :4 EMPLOYMENTSECrORAL GROwr Avic/F.bs. ,, 43.70 -1132 -11.09 CoWL& U1 .. .. -3.74 6.94 -s.44 Miuiacoarizzg.. .. -2.91 -o.42 1.09
Commcx'ne T _ - .0.56 1.99 -0. 4 Privue Cogsuopda Govcmreuc Consugpo,ia I:iomSsg 11.50 3261 2.17.40 DomnSavien L9S 10.1 29.62 14.32 14.20 6.29 DSIGDP 9.07 15.43 6.13 5.11 O03 rign Svs 4.49 33.60 3.05 9.43 2152.60 Forei~a Svgs 9S"' - 3.63 30.74 -4.12 2.65 -2046.10 FStGDP -1.91 1632 -10.59 -5.76 -11255 Gross Ftird Cap Fonn 1974 22.54 13.71 20.42 4.55 GFCPIGDP 13.01 11. 40.45 5.05 -4.99 Public GFCF/CFCF 4.07 -3.63 10. 0.4 4 -47 -
Appeadix Table 2: Sngpowe - Grow Rams of Key Ecozmic dic:ors. 1950-90 (5 p.a) ludicawu 1959160-65 1965-72 . 7-78 1979-84 195S-90 Privu GFCFIGFCF -6.66 -1.06 6.77 -0.99 2.67 Epom -1.96 10.6S 2.55 15.14 1ILS lmpoiu -0.34 13.57 2.4 13.64 10.99 Ez+ Imp -1.53 12. 24.09 14.2S 1I ExpIGDP 4.07 -3.3 10.2 0.40 4.07 Imp/GOP -6.66 --3.d3 6.77 0.99 2.67 Ezp + &WpIGDP .. -2.19 8.16 -0.40 2.75 - tocavailabl... bApoendix Table 3: Singapore- Indicatorsof LivingSlandiard in SelectedYears, 1960-1990 .,, Iltem 1960 1965 1970 1973 1975 1978 1980 1985 1990 ,:HOUSING hua,ootTolai Populsilun InPublic Flats (%) 35 43 54 6 713 84 17 .- Shuaeof AbovePopulatlon In Owner-Occupied Fut( 9 16 22 37 42 64 t0 ED;,CAllON ; Llwyrsw1 (%) tJ 72 73 78 83 34 16 90 StudentEnrtalmenu lclaio Primuy SI BS 1 Socandary. 41 50 71 79 79 92 93 StudeavTcacher Ratlo - Primry 33 30 30 29 30 29 30 26 26 -Seconduy 23 24 22 23 26 25 22 22 21
IIHALTH PtbCaplia Oovecnmunl Uxpendiuro on lealib (S$) 40 47 63 76 96 195 117 No,of P.sonuJionor 1522 1401 1395 1265 1222 972 753 No.of PersondDendls 5212 5362 3979 7217 6977 5137 400 N.o.of Perwonas/HosIUpWNW 301 273 249 244 2S2 156 274 j mLmEs * PetCapla WCblcUl/Y Consumpiloa (Kwhl) 219S 2530 3448 5270 PerCaplul Wew Consumption (Cubic mecw) It 90 104 120 TRANSPORT& COMMUNICATIONS No.oft pronalPublic Bum 7Q5 4S9 45I 401 371 293 285 No..ofPmonsJNivarl CA 15 12 16 17 16 12 l0 No.of Pnruonalrel 420 30S 25S 234 220 TalephonaalO0OPucaons 78 114 141 229 291 420 '80 bI CULTURE& RECREATION DAUyN ApperCitcubulonIlOOO Persona 200 202 198 227 255 279 J02 NibmlaLibray Membrs- Under12 yea old (1) is 9 22 26 29 49 35 Over12 yas old(%) 5 7 9 9 11 29 25 ENTERTAINMENT RadioA TVlIO Pugan. 76 IOS 124 150 165 111 217 ClnemsAuendmncolPom Is 19 17 9 S * 11*3:DaL pr- 1970not vallable, i Forpopulation aove 10 yeur. o sac. biEasimua. AppendixTable 4: SingaporeInilial Condlitins for EaciPhase, 1959-1990
Indcator .1.i9S9 1960 196S 1972 197J 1915 1990
T:amspon&Comval&ulclal-. .. 1I...... 16.4 ReoreationA Dducalon .. 6.1 ...... 1..A 19.1 Olwe oodA Svkca .. 17.1 ...... 20.7 25.1 (Rd) ua1a', lpudure Abhd ,. 1.6 ,. ,. .. 6.4 9.4 I ) No. Ituldsn>a'BEuidilItu, ay ,. 9.9 ,, .. ,, .. .923.5 30.4 OavummaCosumniAm (9bu, 1915$) . ,. ,. ,, .. .. 5.4 6.2 Oroa Fixed CapuuFrmuaina (lba. 1905S) - 20-.2 14.7 Savior am InavtAmsft Dmedll Svwlig ($Sb, 1595$) . .1 .7 5.0 3.t IS.6 25.4 Poreign SavilIg ($b. 1i15) .. .1 .7 2.4 1.4 .001 -3.9 of NaiPrlga Iboowing Foteignclald lhivmoma(1 .. .. ,5 .t .4 1.1 6.1 (DorabI Svlmgud .. .217 10.2 29.1 34.0 40.1 44.6 (PFraleg SavInRS/a13P) .. 14.0 10.3 13.1 S.3 0.1 -6.3 (OFCP/UDP) .. 9.7 16.7 34.9 35.7 42.2 37.9 Suaor Diuribuilon or oFcp(s) LA conAa,oa a hblW 0 .. 53.4 54.2 41.5 39.1 603 33.3 TrapB Uquipmomit .. 14.0 6.7 19.2 26.0 11.6 15.5 Mucbinay & Elulpmen .. 31.7 39.1 39.3 36.3 * 27.5 49.9 O*iarahlp DidgibLwlbof OfCP (S) Pblic Secdr .. 70.9 45.4 .. .. 35.5 11.4 PrivazSoctor .. 2.1 S4.6 .. .. 64.5 1*.6 aExoluta(b.t ,, 3I5 3.0 3.9 23.0 50.2 9S.2 Impnrt (Sb.) .. 4.1 3.2 12.5 29.6 51.1 109.1 Toa a (lba) .. 7.6 6.1 21.4 52.6 101.0 205.4 (uzpo bfD?)1 to 164 106 17 129 129 IS2 (lt.oraDP) 5 .. 192 134 123 lM 149 17S
(Tol TrndauIO ) 7 .. 354 240 210 295 27 327 Dashmagebe
ss,us- .. 3.06 1.06 2.46 2.21 2.2 1.t1
i available. AppendixTable 4: SingaporeInitial Conditionsfor EichlPhase, 1959-1990
Indicator 1959 1960 1965 1973 1971 ta 198 90
Transpon&Commuiculon1 . 12.7 . .1 .. 16.46.7 ReorsaonA Educaion .. 6.1 .. . 13.6 19.1 OlherGoade & S9evicu . 11.1 .. 20.7 2S7 () Resldentu'pex diWture Abroad . 1.6 6.4 9.4 (4Noa Rueidentisa eiMdUreLclly 9.9 23.5 30.4
OovcnmenlConsumitpto (lba. 195) . . . 54.5.4 6.2 GrouFixed Capi!&IFormulos (Sb. 1 3985S) 20.2 14.7 SavingseM lnveoimenl DomouicSmvlang (Sb, 1935) . -.1 .7 5.0 t.2 1536 25.4 Foreign Savl.^s($be. 393S3) .1 .7 2.4 1.4 .007 .3.9 or NHePotelpa Dotrowing ForeignDirec Inveamenta (Sb) 5 . .4 1.8 6.1
(DomenicSavinguGDP) .IP-2.7 10.2 29.1 34.0 40.1 44.6 (forelga SavlassODp) .. 14.0 10.3 13.145. 0.1 .6.8 (OFCP/CDP) 9.7 16.7 34.9 35.7 42.2 317.9 SectoralDiaribulion or uFCF (%) ConasuuctlonPublic Work 53.4 54.2 41.5 39.1 60.9 331 TruvportEulqpment 14.0 6.7 19.2 z6.0 11.6 15.5 Minhinery& EquIpmcn' 32.7 39.1 39.3 36.3 27.5 49.9 OwncrahIpDistilbution of OFCP(M) Publil Sector 70.9 45.4 35.5 K.4 PrivateSecto 29.1 54.6 64.5 31.6 ExpoiU(Sbn1. 3.5 3.0 439 23.0 50.2 9S.2 Impods(Sb.) .. 4.1 3.8 12.S 29.6 57.8 109.3 Tl Trod (Sb) 7.6 6.1 11.4 S2.6 103.0 205,0 ("aowDP) % .. 164 106 87 129 129 IS2 (mIporWCIDP)S .. 192 114 121 166 149 17S (TotadTrndc/ODP) S . 356 240 210 295 271 321 ExchanpRates Wusil . 3,06 3.06 2.46 2.27 2.2 13.1 . eavaIlable. -51 -
BIBLIOGRAPHY
Aw, Bee Yan (1991) "Singapore"in Papageorgiou,Michaely and Choksi (Eds.)Vol.2;
Blake,D.J. (1967) "Employmentand Unemploymentin Singapore,"in Chalmers(1967). Bloodworth,Dennis (1986) -he Tiger and the Trojan Horse TimesBook International. Sigapore.
Bryant, Ralph (1991) "The Evolutionof Singaporeas a FinancialCentre," in Sandhu and Wheatley (Eds.) 1991.
Chalmers, W.E. (1967) Critical Issues in Industrial Relationsin Singaoe Donald Moore Press, Singapore.
Chan, Heng Chee (1971)The Politicsof Survival.1965-1967, Oxford University Press, KualaLwnpur.
Chenery,H. & M. Syrquin(1986) "Typicalpattr of transformation,"in Chenery,H., Robinson
Chia, Siow Yue (1984)mExport Process and Industrialition: The Caseof Singapore,"in Lee (ed.) 1984.
Chia, Siow Yue (1986) 'Direct Investmentand the IndustrializationProcess in Singapore, in Lim and Lloyd (Eds.)
Chia, Siow Yue (1991) "Ihe Character and Progress of Industrialization,"in Sandbu and Wheatey, (Eds.) 1991.
Chow, Kit Boey, ChewMob Leen & E-lizabethSu (1990)One Partnershipin Development- UNDPand Singapor.eUnited Nations Association of Singapore.
Dixit, AvinashK. and G.M. Grossman (1982) "Trade and Protectionwith MultistageProduction," Reviewof EconomicStudies, 49 (October),583-94.
Dutta, M. (ed.) (1992)Asian Economic Regimes: An AdaptiveInnovation Paradigm. Vol. 4A, JAI Press Inc., Greenwich,Connecticut.
Findlay, Ronald (1991) "TheoreticalNotes on Singapore as DevelopmentModel." in Sandbu and Wheatley(Eds.), 1991.
Goh, ChokTong (1980) We Must Dare to Achieve"Budget Speech, 1980.
Goh, Keng Swee(1973) "lnvestmentfor Development:Lessons and Experiencesof Singapore,1959 to - - 1971," paper presentedat the Third EconomicDevelopment Seminar in Saigonon January 17, 1973. -52 -
Goh, Keng Swee (1977) "A socialisteconomy that works," in Nair, C.V.D. (Ed.), Socialismthat Works, Federal Publications, Singapore.
Goh, Keng Swee (1977) The Practice of Economic Growth Federal Publications, Singapore.
Gob, Keng Swee (1983) 'Public Administration and Economic Development in Less Developed Countries,' Harry G. Johnson MemorialLecture No. 4, Trade Policy Research Centre, London.
Goh, Keng Swee (1992) "MNCs brought jobs, sparked change,' The Sunday Times, August 23, 1992
Governmentof Singapore (1991) The Next Lap, Times Editions Pte Ltd., Singapore.
Grubel, Herbert G. (1989) 'Singapore's Record of Price Stability, 1966-84,' in Sandhu and Wheatley (Eds.)
Government of Singapore (1991) Singapore: TMeNext Lap. Times Editions Pte. Ltd, Singapore.
Hasan, Riaz (1976) 'Symptoms and syndromeof the developmentprocess" in Hasan (ed.)
Hasan, Riaz, (ed.) (1976) Singapore: Society in Transition, Oxford UniversityPress, Kuala Lumpur.
Hirono, Ryokichu (1976) "JapaneseInvestment," in Highes and You (Eds.).
Hon, Sui-Sen(1973) "The New Phase of Industrial Developmentin Singapore,"Address to the Singapore Press Club on March 23, 1973.
Hughes, Helen and ou Poh Seng (Eds.)(1969)ForeiLm Investnent and Industrializationin Sinranore, Australia National UniversityPress, Canberra.
IMF (1985)Foreign Private Investmentin DevelopingCountries, IMF OccasionalPaper 33, lItemational Monetary Fund, Washington, D.C.
Klitgaard, R. (1991) Adjusting to Realit, InternationalCenter for Economic Growth, San Francisco.
Koh, Ai Tee (1991) "Diversificationof Trade,' in Sandhu and Wheatley (Eds.) 1991
Krause, Lawrence B., Koh Ai Tee & Lee (Tsao) Yuan (1987) The Sing;ore Economy Reconsidered. Institute of Southeast Asian Studies, Singapore.
Krause, Lawrence (1991) "Governmentas Entrepreneur," in Sandhi-and Wheatley (Eds.), 1991.
Lee, Eddy (ed.) (1984) Export Processing Zones and Industrial Employmentin Asia: Papers and Proceedings of a TechnicalWorkshop, InternationalLabor Organization, Asian Employment Program (ARTEP), Bangkok. -53 -
Lee, KuanYew (1970)"The HarshRealities of Today," OpeningAddress to the 1969 NTUCSeminar on the Modernizationof the Labor Movement.
Lee, KuanYew (1978),Speech delivered to the 26thWorld Congressof the InternationalChamber of Conmerce in Florida, October1978.
Lee [Tsao]Yuan (1987a) *TheGovernment in MacroeconomicManagement" in Krause,et al.
Lee [Tsao]Yuan (1987b) 'EconomicStabilization Policies in Singapore,"in Rana & Alburo(Eds.)
Lim, ChongYah and Ow ChweeHuay (1971) "The Singapore Economy and the VietnamWar," in You and Lim (Eds.)
Lim, Chong Yah & Associates(1988) Policy Optionsfbr the SingaporeEconomy. McGrawHill, Singapore.
Lim, ChongYah and PeterJ. Lloyd, (Eds.)(1988) Singapore: Resources and Growth,OxfordUniversity Press, Singapore.
Uoyd, P.J. and Roger Sandilands(1988) "The Trade Sectorin a Very OpenRe-Export Economy,' in Lim and Lloyd (Eds.).
Mrwza,Hafiz (1986) Multinationals and the Growthof the SinraDoreEconomy, St. MartinsPress, New York.
MTI (1986) The SingaporeEconomy: New DirectionsReport of the EconomicCommittee, Ministry of Trade and Industry,Singapore.
MTI (1991) The StrategicEconomic P!an. EconomicPlanning Committee, Mnistry of Trade and Industry,Singapore.
NTUC (1970) Modernizationof the labor movement.National Trades UnionCongress, Singapore.
NTUC (1970) Why Labor must go Modern, Proceedingsof the 1969 NTIJC Seminar on the Modernizationof the SingaporeLabor Movement,Singapore.
NTUIC(19 ) Progressinto the 1980s,NTUC, Singapore.
NWC (1992) 21 Yearsof the NationalWares Council.Singapore National Printers, Singapore.
Ong, Yen Har (1970)"Future Directions of the SingaporeLabor Movement," in NTUC(1970).
Otani,Ichiro and CyrusSassanpour (1988) "Financial,Exchange Rate andWage Policies," in IMF Staff PapersVol. 35 (3:474-95),September 1988. -54 -
Ow, Chin Hock (1992) "DevelopmentStrategies, Economic Performanceand Relations with the United States: Singapore's Experience," in Dutta (Ed.)
Papageorgiou,Demetris, MichaelMichaely and Armeane M. Chokli (Eds.) (1991) LiberalizingForeign TrA, Basil Blackwell, United Kingdom.
Rajaratnam, S. (1966) "Democratic Socialism," Speech delivered to the Democratic Socialist Club of the University of Singapore on September 17, 1966.
Rana, Praduma B. & Flodan A. Alburo (Eds.) (1987) Economic Stabilization Policies in ASEAN Countries,Institute of Southeast Asian Studies, Singapore.
Ryokichi, H. (1969) "Japaneseinvestment," in Hughes, H. & P.S. You (3ds.) Foreign Investmentand Industrializationin Singapore. Australian University Press, Canberra.
Sandhu, Kernial and Paul Wheadey, editors (1989) Managementof Success - The Moulding of Modem -SingaporeInstitute of SoutheastAsian Studies, Singapore.
Seah, Linda (1983) "Sources of Finance for Economic Growth in Singapore 1965-75 with Special Reference to the Public Sector," Ph. D. Dissertation, Deparment of Economics & Statistics, National Universityof Singapore.
Soon, Teck Wong (1988) 'Singapore's New Education System: Education Reform for National Development," Instituteof SoutheastAsian Studies, Singapore.
Soon, Teck Wong (1991) "Private Sector Led Developmentthrough Direct Foreign InvestmenW"National University of Singapore (mizneo.)
Sowell, Thomas (1983) Te Economicsand Politics of Race - An InternationalPerspective, Quill, New York.
Stoever, William A. (1982) "Endowments, Priorities and Policies: An Analytical Scheme for the Formlation of Developing Country Policy toward Foreign Investment," ColumbiaJournal of World Business Fall 1982.
Syrquin, Moshe and Hollis B. Chenery (1989) Pattems of Developent - 1950 to 1983, World Bank. Discussion Paper 41, The World Bank.
Teh, Kok Peng and Thannan Shanmugaratnam(1992) "ExchangeRate Policy: Philosophyand Conduct over the Past Decade," in Public Policiesin Singapore, Low, Linda and Toh Mun Heng (Eds.), Singapore, Times AcademicPress.
Thynne, Ian (1989a). -The AdministrativeState," in Woon (Ed.)
Thynne, Ian (1989b). The AdministrativeState in Transition," in Thynne and Ariff (Eds.) -55 - lTynne, Ian and MohammiedAriff (Eds.) (1989), Privatization: Singapore's Eeiee In Perspective,Longman Press, Singapore.
Vasil, Raj (1992)Governing Singapore, Mandarin Paperbacks, Reed International (S) Ltd., Singapore.
Vreeland, Nena, B.G. Dana, G.B. Hurwitz, P. Just and R.S. Shinn (1977), Singgpgo,American University Foreign Area Studies,Washington, D.C.
Winsemius,Albert (1984) Speechto the GeneralElectric International Personnel Council Meeting in Singapore,19 June 1984.
Woon,Walter (Ed.) (1989)The SingaporeLegal System, LongmanPress, Singapore.
Yoshibara,K. (1976) ForeignInvestment and Domestic Response, Eastern Universities Press Sdn. Bhd., Singapore.
Young,Alwyn (1992) "A Tale of Two Cities:Factor Accumulation and TechnicalChange in HongKong and Singapore,"Sloan School of Management,Mrr (mimeograph). Distributors of World Bank Publico4ons AFICA. BOTSWWA ARCKI;NTA eMiddleEtOee KIENYA SOUTH bibs CaroeHbuh.SRL 4LShadfSlrtrt AhXidBoawDen(U Ld. Friinge Cr Quaran 1.... Mpno Strbt Oxlord Unive Wpe Cal G_Qima Ahka Plaids 165.41h FoarO&453t465 PA Box4S2U Sootlrn 1161 1ID BuenaAi FINLAND N Sebl POl Box Akatmdinen lrjakaupp- Cpe Tawn amO AUST1ALIA. PAPUA NEW GUI3NELa P.QBOx i KOREA. REPUBLICOF SF401P1 eCuWnkilO PanKafookCorpoadmi FuSuwbrSnuums II1,SOLOMONISLANDS, - VANUATU,AND WESTRNSSAMOA P.O. Box101. Kwmngwhaun 1n1mmatalSubscriptionsavS Doic41095 O-A.hnationSnens FRANCE Swoul P.ox 64b Wdtleho Rod World Bank PubUldons cighall 6 Jdwb2024 Mlh&mn3t3Z32nu h mdaedi1na MALAYA Vkcto 7S116 Pari UnivasityefMalabaCaapradve A Lied SPAIN AUSTRIA CERMANY P.O.Box 1127, Jalbs Panui BRn Muondl-P,nm bo, Could madCo UNO.VMag SO7WKala Lampur CautelloS CG_S31 Pbppeldefe Allo 55 200 Madrid 41Ot Wks -me0 D8i MEXCO INFOTEC Lbdua lilemidfAElCE BANCLADESB HONCGCONG.MACAO ApaerldoPostal22416- Caned*deCL39i lica industs DOmlpent a20M Lid. HOw ThlpasMS DF. CR10 Barcelona OAS) 464WyndhamSkleet AlaMceSodety WE HoustS, Road 16 WlnjingCsubc NEIHERANOS SRILANKAANDTIEMAID Boolabhp Ohanodi EVAte 2nd oaor DetLndeomnInGOrPtbhllkatlm l HIOIo Dhaka12W Centrl HOn; rDng P.. Box2C P.QEODX244 748OAEH _bg 104aS;raClallamPalasn A. CaShie Mawaih DOCAuV:r INDIA Pin Vew, It Flor llid PubiiS PrivsteLtd. NEWZEALAND ColomblI 1C0Agrabd &CmnerdalAra 71 MounttRoad JCONZ Ld. Chltagong,lO) Madr-600 002 PdivaMailallit914 SWEDEN New Market Forji* Itife 76. KDA.Aveme Ba8d a Aucland FriEzeFackhokidegst Bax Kulia 91I0 t Haed.al Mlar Rernpgas 12, i Ballad EStabe NICERIA S-13 27 Smdchal BELCWM B ay-40038 v JeanDe Lny lhn rCwsd Fw ed Ba;59mwwn RW = 13114 Ane All Road mvte Av. do Box 1305 1060BMusels New Oelhi- 110002 P. C S-171 25 ScA CANADA l7ChltlamejnA Annum 'IORWAY LeDiKuheur Calcuts--700072 Nan buhwmatianCe Caner SW llZZRAND CP.AS, 115D8Ampree BookDepamnent FagshltAm BoUd,erille, Quiebc Jayse Hoted Bulading PQ BoX6125 Eflrad L13raiu Payet 14SE6 t Mlun Road.Casdhlna NEW AG,6 Canpostalm321Z C 2 Lu BsgBaplor-560009 PAK AN In acICFSA- 3--1129laddpda Mitt BookAgmay Fersu&%l.eedm Payt AmericaVespudoNte 1165 Crm Road 6i5ShAhZa6*4?4A.ue.Anz Lbrairi Santiao HydeabH -510 RUOP. Box No. 729 SO*S de sAImuISIS LahMS40m Cas p _lenu Laanne CIUA FPauu Fib. 2nd Flor CFtlam Cair:s VrInal & Eoamom N.or halue aaugNavvanrn PERU Hose AhlAtdabhA-380009 Ediklwl De4aolo SA THAILAND PAblshiag Ceal DepartmenuStor &.DaPaSiDorgJl ApwUd3824 BeRg Psaab Houe Lisa 1 306SIlm Road IA AshMkMn Ba k COLOMIAU Luadnow-225 001 PHIUPPNS &kTOBACO, ANTICUA inlIsfe Lbi.. nbdIntiSbOOtBbkCSs TRNIWDAD ApfrdoAereo30 Cenal BazaarRoad Suits 1703.Clind 10 BARBUDA, BARBADOS, Bert 0.9 608BajNapr CoadowtniumuTo~r DOMINICA. GRENADA.CUYANA, Nap 40 mo AyIzAve_mHV dexa lAMACA. MONTSERAT, ST. &GRENADINES CentzedtEldouetdeODUflo INmONESiL M mfo Man ST.VINCENT AhiUnks(CEDA) PL Indira Limited SptemasStndIsUri.t 08P .542 lajan Borobudur20 POLAND 59WaiSave MAdki,hFltanOItttauPO. Usd81a IntemrnaitonalPtahlhingsuvlc Curep Jakrht 10320 ULnk3l/37 Trinad, West indi CYPRUS 00477Warzawa CantweofAppedbReah IRELAND TURKEY Cyp-Callege Covemu5entSuppE Agty FarsUIW*diISCSein Infold MmUIS 6. Duo;Q mSeEtl Eonl 4-S HarUrt Road IlSIJOmwb NMababheSak. P.O Box200s Dublh2 ULaOkiena3 Cag _o& Istanbu Nkiosa 0916WarmEawa, ISRAEL DENMARK YTorot Literatur Ltd. PORTUCAL UNITED KINGDOM Safiundeuaeuguar P.O.80oSmOSS u r irolmkLg. RO_nwwmAOIl1 TelAviVaISGD RuaDoCarm&70-74 PQ.I BOX3 OKIWO FuudLla3begC mvlwAU6sVUC14P 9ITALY Eglan DOMINICAN REPUBUC Llma ComtLsleasga Samni SPA SAUDI ARABII. QATAR Editon Tanil C. porA. VIa Durs DlCalaXba 1t1 JazlrBookSot VENEZUEA Restor.sn.hlrbda CaSica319 QaseisPostalesl PDO.B=X319 LiweladlEae, re Rlyzde A11ptAaEO1W ApartdodeCtmeoeZIO. 50125FI CaiO610-A Santo Domingo JAPAN SINCAPORE TAIWAN, ECWPTARAB REPUIUC OF an BSk MYANHMALBRILR Al Arss HOngo3.Csosaunkyo-km1n3 Ihcucs&e Publction AlCilaa Skeet Takyo Minat LAI Caio GiCdde Wheel Buln 4`4Xe1fmngrPuddlag.s0
~ i ^- --X - = - 5We1334
]_-e5,,_ ! ' .-.- . ' ' .-