Overview of Singapore Economy

The top rankings is the world
Singapore rose from a sleepy colonial city in the 60s, (when it got independence,) to a bustling, cosmopolitan city with a vibrant economy in the 90s. It is also been hailed as one of the most competitive economies in the world, where it is easy to do business.  It has also been honored as the number one country in the world to do business. In this matter, it is far ahead of even New Zealand and Hong Kong. 

Surprisingly, the tiny island state ranks third in the global competitiveness report prepared by the World Economic Forum; in this report Singapore comes just after Switzerland and Sweden, which occupy the top two spots.

Huge influx of FDI and MNCs in the 80s

The boom in the manufacturing sector in the 70s, led four small economies to explode and these were South Korea, Hong Kong, Singapore and Taiwan.  Consequently, it attracted huge FDI and multinational companies in the island state.  It became the steppingstone for Singapore to grow as one of the most advanced and technology oriented economies.  Tourism grew in Singapore as the byproduct of industrial revolution, as more and more business persons poured into the city.  Therefore, hotel industry grew parallel to manufacturing sector.

Third fastest growing economy
 
Recently, Singapore was ranked as the third fastest growing economy in the world with a GDP growth rate of as high as 14.5%.  Singapore is one of the best examples of a mixed economy, where the free market is complimented by the government controlled factors of production, such as capital resources, labor and land.  This is called famous Singapore Model of economy.

The Singapore Model

There were obvious reasons for the development of the Singapore Model.  First of all, for a tiny country like Singapore, it became inevitable to integrate its economy with the external markets to boost its capacity and avail the global resources.  But, the unexpected events and the upheavals in the global markets exposed the vulnerability of this tiny country, which was largely dependent upon foreign capital, foreign companies and foreign resources.  The rulers of Singapore therefore developed a mixed model, in which the government had an active role to protect its industries and economy.  The government encouraged homegrown industries to survive and thrive, so that they can meet the demands of the global markets.

Singapore Inc.

Interestingly, Singapore is also referred to as Singapore Inc., the concept where the country seems to run as a corporation rather than a country.  The government has its interference in housing, media, and transportation, apart from social policies, which is seen as supplementary activities for the development of economy.  So, it is natural that the city state is called Singapore Incorporation.

An inspiration for many countries

Singapore Model has been a tremendous success so far.  Singapore Model has been an inspiration for many other states, both big and small, such as Dubai, Qatar, Bahrain, India, China, Thailand, Malaysia, Mauritius and Denmark.  It is because of this model that Singapore successfully survived the 1997 Asian financial crisis and global recession of 2008. 

The best country to do business

It still has AAA credit ratings and it also has the honor of being the only Asian country to have such ratings by the international agencies like Standard & Poor’s.  It is also been awarded the second freest economy in the world and has the reputation of one of the most corruption free states in the world.  You can start a business in Singapore in just three days as compared to the average 34 days in other global locations.  Singapore is blessed with highly skilled workforce, excellent infrastructure, favorable tax structure and the most conducive environment for the companies to grow and do business.

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