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CHANGING LANES the Evolution of the E&E Industry in Singapore

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CHANGING LANES the Evolution of the E&E Industry in Singapore CHANGING LANES The evolution of the E&E Industry in Singapore July 2016 S.W. Fleuren 3590011 H.I.N. Janssen 3707172 Master Economic Geography Department of Human Geography and Planning Faculty of Geosciences Utrecht University Dr. L.M.J. van Grunsven Preface This report is the product of an extensive research done in Singapore between March 2015 and August 2015. It is part of the finalization of our Master’s program at the Utrecht University. The subject of this thesis was proposed by our professor in the Netherlands, Leo van Grunsven, and his research partner at ISEAS Yusuf Ishak Institute in Singapore, Francis Hutchinson. The research subject is the evolution of the electrical & electronics industry in Singapore and is part of a larger research project about the evolution of the E&E industry in Southeast Asia. Preparations for the fieldwork started back in the Netherlands in February 2015, when we commenced with the theoretical framework and the background of the subject. The structure of the research brought up some difficulties, as initial plans to conduct surveys in order to collect data on the firm-level appeared to be unsuccessful. This proved to be challenging, but was solved by changing the point of view of this research. We would like to thank our teacher, professor Leo van Grunsven, for his professional and social commentary, advice and guiding during the research and for visiting us in Asia. We would also like to thank our local supervisor, professor Francis Hutchinson, for his advice during our stay in Singapore. Also, we would like to thank all the employees of ISEAS, who were helpful with their insights and have provided us with the help needed to conduct this research. Finally, we would like to thank all Singaporeans who helped making the research and stay in Singapore very exciting. Utrecht, July 2016 Bas Fleuren and Hjarald Janssen 1 Table of Contents Preface .................................................................................................................................................... 1 1. Introduction ...................................................................................................................................... 5 1.1 Research questions ..................................................................................................................... 6 1.2 Relevance ..................................................................................................................................... 7 1.3 Methodological approach .......................................................................................................... 8 1.4 Structure ....................................................................................................................................... 8 2. Theoretical framework ................................................................................................................. 10 2.1 Industrial evolution .................................................................................................................. 10 2.1.1 Branching ............................................................................................................................ 12 2.1.2 Factors influencing the branching process ..................................................................... 12 2.1.3 Intra-industry branching .................................................................................................. 13 2.1.4 East Asian ‘development models’ ................................................................................... 14 2.2 Strategic coupling ..................................................................................................................... 15 2.2.1 Strategic coupling: definition and framework .............................................................. 15 2.2.2 Networks of MNCs ........................................................................................................... 17 2.2.3 Strategic coupling in East Asia ........................................................................................ 18 2.3 Regional assets and environment........................................................................................... 19 2.3.1 Local innovation systems and business ecosystems ..................................................... 21 2.3.4 Local innovation systems for emerging economies ...................................................... 23 2.4 Industrial upgrading ................................................................................................................ 23 3. Context ............................................................................................................................................. 25 3.1 Industrial development of Singapore: a brief history ......................................................... 25 3.1.1 The role of the government and its institutions ............................................................ 28 3.2 Locational assets and drivers of evolution ........................................................................... 29 3.2.1 Local supply base .............................................................................................................. 30 3.3 Labour, skills, wages and availability ................................................................................... 30 3.3.1 Educational levels .............................................................................................................. 30 3.3.2 Labour migration & foreign talent .................................................................................. 31 3.3.3 Wages .................................................................................................................................. 32 3.3.4 Singapore’s regional headquarters strategy .................................................................. 34 3.4 Technology, R&D and innovation ......................................................................................... 34 3.4.1 R&D and innovation ......................................................................................................... 35 3.5 Infrastructure, connectivity and quality of life .................................................................... 36 2 3.5.1 Quality of life...................................................................................................................... 36 3.6 Foreign direct investment........................................................................................................ 37 3.7 Regionalisation ......................................................................................................................... 39 3.6.1 SIJORI region ...................................................................................................................... 40 3.6.2 Chinese-Singaporean relations ........................................................................................ 41 3.7 Conceptual model .................................................................................................................... 42 3.7.1 Expectations ....................................................................................................................... 43 4. Methodology .................................................................................................................................. 45 4.1 Research design ........................................................................................................................ 45 4.2 Definition of the E&E industry ............................................................................................... 45 4.2.1 Historical evolution of the SSIC related to the E&E industry from 1990 to 2014 ..... 47 4.3 Information sources ................................................................................................................. 49 4.3.1 Additional data sources .................................................................................................... 51 4.3.2 Taxonomy of branches ...................................................................................................... 52 4.4 Data analysis ............................................................................................................................. 54 4.4.1 Upgrading........................................................................................................................... 55 4.5 Methodological limitations ..................................................................................................... 56 5. Evolution of the E&E industry .................................................................................................... 58 5.1 Evolution of the E&E industry until 1990 ............................................................................. 58 5.2 Evolution of the E&E industry 1990-2014 ............................................................................. 59 5.2.1 Number of firms ................................................................................................................ 63 5.2.2 Entry & exit ......................................................................................................................... 64 5.2.3 Nationalities ....................................................................................................................... 66 5.3 Conclusion ................................................................................................................................
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