The Extent of Singapore's Investments Abroad by Okposin Samuel Bassey;

Author:Okposin, Samuel Bassey;
Language: eng
Format: epub
Publisher: Routledge
Published: 1999-03-06T16:00:00+00:00

Conclusion

Singapore’s experience of economic development is undoubtedly a unique one because of its small size and strategic location as an entrepot for Southeast Asia. However, the development process has two major economic implications. Firstly, the fundamental importance of the state as the main architect of the country’s economic success since 1957. The state has been responsible for laying the ground for economic growth and actually guiding the overall process. By implication, this means that Singapore development was not as a result of a laissez-faire state. For though the economy is open to TNCs, it does not mean that the state is performing a passive role in the economy. Rather, it is the dynamic combination of the nation-based state and an internationally oriented market economy, which sets the centre stage for achieving development. It is such a state, intervening in the international economy on behalf of the “national interest”, that is called the developmental state in economic development literature.242

Secondly, Singapore’s economic transformation indicates the importance of FDI inflow for a country’s development. As noted, contrary to the simplistic assumptions of radical views, TNCs are largely responsible for the development of Singapore, not only through their investment and exports, but also through their multiplier effects on the economy as a whole.

On the other hand, excessive dependence on TNCs could result in slower pace of the country’s economic development. For instance, if the state wants to up-grade the economy to a higher stage of technological development and economy autonomy at a faster pace, it could encounter difficulties.243 Unless there is an autonomous, government-led effort in education and R&D, the TNCs will improve the quality of their productive lines only to a limited extent and according to the pace required by their parent company, not necessarily coincident with the host economy.

However, the continuous FDI inflow has resulted in the successful transformation of Singapore’s economy from that of entrepot trades to manufacturing-service activities. Success has also resulted in its loss of comparative advantage in labour intensive industries. The latter has been one of the prime motivators for labour intensive manufacturing investment abroad. This is what I turn to next.

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