From Swamp to Singapore
Business Day (Johannesburg)
The country's strong economy combines historical accident and planned success
IN 1957, Ghana and Singapore achieved their independence from Britain. At the time, both suffered the disadvantages of colonial development, tying their economies principally to the needs of the colonial power rather than the local population.
Whereas Ghana depended on its cocoa plantations, Singapore's economy rested on the activities of the UK naval base and its activities as a trading house for Malaya and China. In both, the bulk of the populations did not have access to electricity, running water or other basic services.
By 1970, Ghana's per capita gross domestic product (GDP) was 250, Singapore's $950. Thirty years later, this had increased to $340 and nearly $25000 respectively.
Singapore's economy grew at 7,8% a year in the 1990s. Its transition from swamp land to hi-tech economy has been achieved by a combination of factors dependent on visionary political leadership and the development of talent, though not exclusively in the business sector.
Singapore's development is inextricably linked to one man, Lee Kuan Yew, the Cambridge-educated prime minister who dominated Singaporean politics from independence and personified its economic recovery.
The ingredients for Singapore's development included the role high quality public officials, Asian values of thrift, high savings and hard work, and the jettisoning of old prejudices including discrimination against women.
The vision and ideas of Lee Kuan Yew were institutionalised through a recruiting and developing a handpicked, well-remunerated and highly talented civil service. This reflected the prime minister's own intellect, a former ideologue turned ultimate pragmatist.
Local talent is bolstered by foreigners, more than 1-million of Singapore's total of 4-million.
Such has been the influence of the public sector, that Singapore epitomises a development state, where the production system was market-related and the distribution system more akin to a command economy. Fiscal rectitude has underpinned this approach, in spite of the importance of the parastatals in transforming the economy. Constitutionally, the government is forbidden from deficit spending.
Can the positive aspects of Singapore's experience be replicated?
It is not clear whether Singapore could, in fact, replicate its remarkable turnaround today. The global and local economic context has changed. In some ways it is more friendly towards development with globalised markets and capital opportunities. In other respects, it is more challenging, where today's generations are apparently less prepared to unquestioningly accept the sort of tough political leadership exemplified by Lee Kuan Yew.
The highlighting of Singapore's success should not overshadow its current economic challenges, in particular dealing with the global hi-tech slowdown and the emergence of China which, through its cheap labour and penetration of the technology manufacturing sector, is exporting deflation to East Asian states. But, with reserves of $120bn, Singapore can afford to spend its way out of recession, with a focus on biotech and optoelectronics.
While it is debatable whether Singapore could replicate its own experience today, there are nonetheless pointers for other states from its success, highlighting the type of conditions for reform and growth to take root.
First, there is a need for a holistic, "national" approach to attract investment, where provinces or local geographic areas do not bid against each other.
Second, the process has to be championed, given strong, decisive political leadership.
Third, there is a critical imperative for institutional expertise and memory to keep the growth process on a single, integrated track.
A fourth factor stresses the importance of providing the right environment into which multinational companies can plug into, with a constant policy and transparent legal environment.
Finally, like any model, the problem is not identification of the basic tenets, but its implementation and its political co-ordination. At its core, "the secret of Singapore's continued success" is its attraction of diverse talent carefully recruited, cultivated and nurtured.
Dr Mills and Hughes are respectively the National Director and Parliamentary Research Fellow of the SA Institute of International Affairs. This research is part of a 14-country study on Applying Global Best Practice
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