Impact of Globalisation

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Globalisation involves the removal of trade barriers and the increasing integration between economies. Singapore had taken advantage of opportunities provided by globalisation by increasing world trade, strengthening economic integration, lowering costs and raising productivity. Singapore is a newly industrialised economy and one of the five founding members of ASEAN. Singapore, like many nations imports goods which include machinery and equipment, mineral fuels and chemicals, and exports goods such as machinery and equipment, pharmaceuticals and refined petroleum products to its various trading partners like Malaysia, Hong Kong, China and Indonesia making it the 14th largest exporter and 15th largest importer. Figures 1-4 demonstrate the imports and exports by commodity. Singapore has a GDP of $274.7 billion and a growth rate of 1.8%. Its current unemployment rate is 1.8% and its inflation rate is 4.5%.
Globalisation has increased international convergence in Singapore as its economy integrates within the global realm and starts moving in sync with another economy. For instance, if an economy is experiencing an upturn in economic growth, it may influence other economies to experience a similar result. Singapore displays international convergence by adopting certain reporting methods to attract investors from well-situated corporations, increasing the levels of trade and Foreign Direct Investment (FDI) between different economies. FDI involves direct investment in foreign assets/businesses by which they own a significant part of the business. Figures 5 and 6 illustrate Singapore’s FDI outside of its economy as well as the FDI of other countries in Singapore which depicts the mutual benefit experienced by Singapore and the countri...

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...s adopted a policy aimed at managing the exchange rate and ensuring low inflation as a basis of sustainable economic growth. Since the policy is mainly centered on the management of the exchange rate, rather than interest rates or money supply, the exchange rate is the most effective tool in maintaining price stability and plays a major role in lowering inflation as it consists of both the expansionary monetary policy as well as the contractionary monetary policy which are used to manage the level of inflation so that it suits the need of the population in purchasing goods and services as well as ensuring the businesses are making a profit.

Globalisation has a dominating power over all countries in the global realm. Singapore has taken advantage of opportunities provided by Globalisation to enhance its economy, making it the second preeminent economy in the world.

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