Singapore: A Story of Growth

Credit: Chuttersnap

Singapore may very well be the most significant demographic and economic success story of any country the 20th century. From 1984 to 2018, the city-state’s GDP rose from USD $20 billion to USD $377 billion. This level of growth is rarely seen anywhere else in the world , and certainly not in the timeframe of just three decades (with the exception of a handful of smaller East Asian nations known as Tiger Economies). By 1995, Singapore had an economy boasting twice as many manufactured exports as Brazil, and generating wealth 10% the size of China’s GDP while being home to an amount of people equivalent to 0.25% of China’s population. Even compared to its peers, however, Singapore is more of an exception to the rule of free market economics and democracy. The same political party (People’s Action Party, or PAP) has more or less been in power since 1959, with Lee Kuan Yew leading it for thirty years following undesired Singaporean independence. So how exactly did this small, relatively undemocratic city-state achieve such a significant presence on the world stage to become so wealthy?

After independence from the British in 1957, Singapore became one of the 14 states that constituted the nation of Malaysia. Singapore, however, was unique in that it was far more multi-ethnic than the rest of Malaysia, being home to people with origins in India, China, and Indonesia. As such, it quickly found itself at odds with the Malaysian government’s policies of granting special rights for ethnic Malaysians, with riots even breaking out in 1964. As such, Singapore was expelled from Malaysia after a mere 23 months - becoming the only nation in the world to achieve independence against its will.

Lee Kuan Yew, “The Father of Singapore”. Credit: Encyclopedia Britannica

The early post-independence years were difficult for Singapore. Trade with Indonesia had significantly declined due to the riots, British military withdrawal left thousands unemployed, and the idea of “Singapore” as a standalone nation had not taken hold in the minds of most. But Singapore’s geographic location is extremely favourable, being located immediately astride one of the world’s most significant shipping lanes. Furthermore, identifying that the small size of the population and overall lack of natural resources posed an obstacle, the PAP instead turned to creating a more economically open society, attracting money from overseas by eliminating nearly all tariffs and encouraging international competition to take place. Today, the corporate tax rate in Singapore for all businesses is currently at 17%, with income tax rates sitting at a maximum of just 22%.

Perhaps more importantly, however, is that the Singaporean government (and, by consequence, mainly the PAP) closely monitors where and how incoming finances are spent. This trend, however, is the key to Singapore’s success. Government expenditures focus closely on two sectors: education and healthcare. Singapore spent an estimated USD $13 billion on education in 2021, and an estimated USD $11 billion on healthcare in the same year, with about 3% of each budget being also spent on respective improvements and development. The effects and outcomes of these expenditures are clear: Singapore ranks 5th worldwide in life expectancy, 9th in the world for education quality, 6th for healthcare quality, 8th for GDP per capita, 11th for human development, and 7th for overall safety.

To put it in perspective: by attracting investment from abroad and spending it on critical infrastructure that people need, thus maintaining political stability, the Singaporean government has successfully achieved the above figures within just one generation.

TAI Score: Degree 0. Economic growth in Singapore has provided a colossal improvement to the quality of life for the average Singaporean in an unusually short amount of time. While somewhat non-democratic practices and corruption remain salient, this has not stopped businesses from pursuing their fortune in the city. There is little for threat assessors to keep an eye out for at this time.