ASSIGNMENT QUESTIONS

1. What was Singapore’s economic strategy between independence and the late 1970s?
Outline the critical policy choices to realize this strategy.

Singapore’s economic development strategy between independence and therefore

the late 1970s is direct investment in economy, particularly the manufacturing sector.
By 1970 its holding amounted to 1 / 4 of all equity investment within the economy, its
enabling the government to channel large amount of capital to sectors it deemed
important.

Savings

The government expressly tried to bear on terribly high savings rates, so as to stimulate
capital accumulation and finance investment. From a negative rate in 1960, Singapore's
domestic savings grew to eighteen of gross domestic product in 1970.

Fiscal and monetary policy

The government maintained the interchangeableness of the dollar. The fastened rates
set by the financial Authority of Singapore from 1965 to 1973 (S$3.06 to the U.S.
greenback from 1965-71, and SS2.82 to US$1 from 1971- 73) were getting ready to the
rates that might have prevailed while not controls. After 1973, the currency was allowed
to float.

Labor and immigration policy

The government National Wages Council set levels for wages, wage will increase, and
fringe advantages. to boost the investment climate for foreign companies, Parliament
barred unions from negotiating promotions, transfer, firings, and dealing conditions
when 1968. High pct gaseous throughout the Nineteen Seventies and Eighties, work
rules were step by step relaxed. throughout a similar amount, the purposeful
 composition of the labour pool altered. an outsized contingent of foreign staff was
admitted to Singapore starting within the early Nineteen Seventies, once labour
shortages began to seem. Trade and foreign investment Government policy within the
space of trade stood in relief to its interventionist perspective on different matters. keep
with its exempt history, Singapore when independence maintained terribly low tariffs
on all merchandise and levied no capital gains tax. there have been no restrictions on
entrance to and exit from the Singaporean economy for foreign investors, or on return
of financial gain and capital.

2. What caused Singapore to shift its strategy as it entered into the 1980s? Why was
Singapore able to continue improving its prosperity?

Singapore is able to sustain its success and become the highest rates of growth in the
world. Standing on the dais near Goh was the man largely responsible for this success,
Lee Kuan Yew. As the nation's first prime minister after independence, Lee had guided
Singapore around each obstacle and through each phase of growth. In doing so, he had
exercised a degree of central control rarely seen in successful economies. In 1985 a
deep recession with declining 1.4 % real GDP was accompanied bya sharp rise in
unemployment, weak external demand, low profit and much reduced investment in
manufacturing. The 1979 overambitious wage policy impact the structural deficiencies
in the economy, growth of labour productivity hadn’t keep pace with the rising wages,
which had seriously eroded the nation’s cost in Asian Economies. The Economic
Committee recommended ;
a) The government lessen its extensive managerial and development role to allow
the private sector more freedom
b) Flexibility in wage setting and reduction of the mandatory CPF contribution in
order to stimulate domestic demand
c) Scalling back the mandatory contribution to the social security fund to 35%
from its peak at 50% in 1984-1985

The economic recovery had been begun by the end of 1986, which was sustained in
1987, when the real GDP growth rate of 9.8% and in 1988 high export growth and
domestic led to 11.5 % real growth. The fast growth in 1989 and 1990 was by the
 manufacturing sector ( led by electronics components ) grew by 9% and financial sector
grew by 15%, accounted for 28% of GDP and employed 11% of labour force.

The strong world trade growth assisted impressive performance of Singapore

such as :

a) The manufacturing sector led by electronic component grew by 9.5% in 1990

b) Singapore had become Asia’s 3rd most important financial center
c) Singapore also was the world’s third largest oil-trading center
d) Chiangi airport was voted the world best airport for the third straight year
e) Singapore airlines named the best airline in the world and profitable

3. Why did Prime Minister Goh put forward the Next Lap plan in 1991?

In the early 1991 Goh’s new government issued a long range plan called “ THE NEXT
LAP” which the plan plotted long run social and economic goals. During the 1990’s,
the Singaporean government implemented a number of policy initiatives motivated by
the experiences of recession in 1985 and following up on the vision set out by “NEXT
LAP” as follows ;
a) EDB set the goal of attracting world class companies to carry out HQ activities
by 2010.
b) PSB was formed to identify and nurture promising SMEs to become Asian
MNSc
c) The “Thinking School, Learning Nation” program was launched to transform
education system.
d) Research centers and advanced training programs were launched in a number
of area

4. Why did the Economic Review Committee (ERC) modify the Next Lap strategy in
2003? How was Singapore able to continue its success?
5. What is Singapore’s competitive position in 2009?
6. What recommendations would you make to the new Economic Strategy
Committee?