Linda Lim: Singapore’s Economic Growth Model – Too Much or Too Little?
Hi everyone,
My first post centres around Linda Lim’s article on Singapore’s economic growth model. I chose this article because I think it should be one of those pieces that make us feel uncomfortable.
Basically, she argues that our growth model has been premised on “doing more of the same” government policies, which may be losing relevance or are no longer able to bring about the kind of growth that Singapore has been experiencing. For example, in light of the current global economic crisis and the mounting public debts that countries such as the US have to support in light of massive stimulus packages, Singapore’s EDB model of attracting MNCs to locate here through tax incentives here may no longer work because those countries will want to minimise any unnecessary leakages from their respective economies. Already, we have seen the US and OECD countries trying to “clamp down” on “tax havens” like Singapore.
In addition, she also uses the logic of comparative advantage and competitive advantage to demonstrate why a resource-constrained city-state like Singapore cannot “too many things at the same time” because that will just result in inflation and thereby an erosion of the economic advantages we have managed to carve out in the first place.
While these issues may not be all so directly related to trade in terms of the actual flow of goods and services, the assumptions that she questions are related nevertheless and have interesting implications for us to consider. For example, can Singapore really “go local” and be less reliant on trade? If so, to what extent and what can we do to make that happen?
The two questions that she has left me pondering, amongst other things, are these:
(i) Given the increased complexity of the global economy (compared to say 10 – 20 years ago), should Government regulate and manage the economy more or less (bearing in mind the rise of a possibly more politicised global economy)? Assumption here being that less Government control means more a responsive economy.
(ii) If Singapore had to adopt a different economic growth model, what would that model look like? How different or in what ways would it be different from the present? Assumption here being that ‘different’ means we “go local”.
You thoughts pls.
Full article can be downloaded here: http://www.fas.nus.edu.sg/ecs/scape/doc/24Oct08/Linda%20Lim.pdf
Ian Bremmer during his visit said we are moving into a non polar world, one not dominated by a weakened USA, nor an unprepared BRIC. Yet in this near future, global commons issues like climate change, energy … demand a coordinated response. So what we see will be plenty of geopoliticking and interference of government into economic spaces previously left to the private sector. In that near future, I see a firm public sector hand to be more useful. I actually see this as quite a ‘confirmed’ trend.
For SGP to have an alternative economic growth model … often we assume it means going local. Using the film industry’s history, Cathay and Shaw Brothers really launched the Malay film industry when Singapore and P Malaysia was a single entity ie domestic market that was large and deep enough. When both separated, the studios died. Likewise, when southern Johor and Singapore can truly integrate into a unified market of 10 million (infra, laws etc are stitched together) then going local makes sense.
Just finished reading the book ‘billions of entrepreneurs’ by Khanna of HBS where he compared India’s thriving entrepreneurs to China’s thriving state entrepreneurship, China after the Cultural revolution had effectively erased its entrepreneurs, and FDI was a quick, steroid way of ramping its economy up. Singapore’s choice is similar.
But that’s looking backwards. Looking forwards … I mean, we read from what Citibank wrote last week that to tap on China’s domestic market, it’s hard to be in mfg, even if you are in niche (Japan yay!), for HK and SGP, the prognosis is to focus on exportable, yet un-outsourcable and highly branded services … which we all know the answer to include healthcare and education. I think to a large extent that will be true to tap on India’s market too. ASEAN that’s been true for a while.
For me that’s the known knowns. I’ll like to explore the unknown unknowns on top of that. hah hah, it’s 1am ish, too late to write intelligbly. ttyl.
chorpharn
June 24, 2009 at 1:23 am