Yes, I agree that a huge part of Singapore’s economic success has been built on the government’s ability to ensure macroeconomic stability as well as build long-term growth. To ensure macroeconomic stability, fiscal policy, which is the usage of government expenditures and taxes, and monetary policy, which is the changing of interest rates and quantity of money in the economy, and supply-side policies, that look into the strengthening the production capabilities of companies, have to be implemented by the government. To build long-term economic growth, there has to be an increase in real GDP growth which is seen in an increase in 2 sources: aggregate hours and labour productivity. Aggregate hours are the total number of hours worked by employees, which are affected by population growth. But to increase real GDP per person, labour productivity is essential and dependent on 3 factors: physical capital growth, human capital growth and technological advances. The remarkable growth of Singapore from a small fishing village to the bustling cosmopolitan city that it is today is largely due to the efforts of the government. Being one of the eight high-performing Asian economies (HPAEs), Singapore’s astonishing change in GDP per capita from 1960–85 was ranked fifth in the world. This was due to the government’s strategic promotion of export-oriented industrialisation, rapid accumulation of capital and labour, and attracting foreign direct investments (FDI). After the 1973 oil crisis, the Singapore government shifted focus from labour-intensive industries to high-tech manufacturing and high value-added services and after the worldwide recession in 1985, Singapore government restructured into a developed nation, focusing on quality of ... ... middle of paper ... ... of Business and Management, vol. 9, no. 4, pp. 373-388. Gerlach, S. & Gerlach-Kristen, P. 2006, Monetary Policy Regimes and Macroeconomic Outcomes: Hong Kong and Singapore, Rochester. Hilsenrath, J. E. 1999, A Decade of Change --- Time to Ease Up: Singapore has thrived with a government that is both hands-on and business-friendly; But the formula may be wearing thin, New York, N.Y. Khuong, M.V. 2011, "Sources of Singapore's Economic Growth, 1965-2008: Trends, Patterns and Policy Implications", ASEAN Economic Bulletin, vol. 28, no. 3, pp. 315-336. Lam, N.M.K. 2000, "Government intervention in the economy: a comparative analysis of Singapore and Hong Kong", Public Administration & Development, vol. 20, no. 5, pp. 401-418. Wood, J.H. 1992, "Monetary Policy in a Small Open Economy: The Case of Singapore", Economic Review - Federal Reserve Bank of Dallas, , pp. 25.
Some economists blame the Federal Reserve’s inaccurate monetary policy. The easy-monetary policy since 2001 was deviating from the Taylor rule. (Alex, 2013)
Xingzhong, LI Daokui David YIN. "The International Monetary System in the Era of Post-Financial Crisis: What Policy Options Does China Have?[J]." Journal of Financial Research 2 (2010): 005
The term Monetary policy refers to the method through which a country’s monetary authority, such as the Federal Reserve or the Bank of England control money supply for the aim of promoting economic stability and growth and is primarily achieved by the targeting of various interest rates. Monetary policy may be either contractionary or expansionary whereby a contractionary policy reduces the money supply, reduces the rate at which money is supplied or sets about an increase in interest rates. Expansionary policies on the other hand increase the supply of money or lower the interest rates. Interest rates may also be referred to as tight if their aim is to reduce inflation; neutral, if their aim is neither inflation reduction nor growth stimulation; or, accommodative, if aimed at stimulating growth. Monetary policies have a great impact on the economic stability of a country and if not well formulated, may lead to economic calamities (Reinhart & Rogoff, 2013). The current monetary policy of the United States Federal Reserve while being accommodative and expansionary so as to stimulate growth after the 2008 recession, will lead to an economic pitfall if maintained in its current state. This paper will examine this current policy, its strengths and weaknesses as well as recommendations that will ensure economic stability.
Economic growth focuses on encouraging firms to invest or encouraging people to save, which in turn creates funds for firms to invest. It runs hand-in-hand with the goal of high employment because in order for firms to be comfortable investing in assets such as plants and equipment, unemployment must be low. Hereby, the people and resources will be available to spur economic growth.
Comparative advantage means that an industry, firm, country or individual are able to produce goods and services at a lower opportunity cost than others which are also producing the same goods and services. Also, in order to be profitable, the number in exports must be higher than the number in import. From the diagram we seen above, Singapore is seen to have a comparative advantage in some services. The services are Transport, Financial, business management, maintenance & Repair and Advertising & Market Research, etc. These export services to other countries improve the balance of payment. On the other side, Singapore is seen to have a comparative disadvantage in some services. The services are Travel, Telecommunications, Computer & Information,
The Social Studies Help Center (n.d.). Monetary and Fiscal Policy. Retrieved November 5, 2011, from http://www.socialstudieshelp.com/eco_mon_and_fiscal.htm
The dramatical change to pro-business policies attracted more and more foreign investors to create or move its manufacturing plant to Malaysia, result in its export being larger than that of import into the country.
Smaghi, L. (2009, Aprl 28). Conventional And Unconventional Monetary Policy. Speech at the International Centre for Monetary and Banking Studies (ICMB), Geneva. Retrieved from http://www.bis.org/review/r090429e.pdf
Dornubusch, Rudiger. Macroeconomics. USA. McGraw-Hill Publishing Company. 1990.
...Furthermore, benefiting from globalization, Singapore established itself as the premier global financial hub. As such, it was successful in attracting Multi-National Corporations (MNCs) and Foreign Direct Investments (FDIs). Quoting a study by the National University of Singapore (NUS), “Globalization was the primary centrifugal force that led to the success of the financial industry in Singapore”. (NUS, 2004)
Singapore as a country has had various transformations throughout its history, however the period 1950 and 1970 was quite critical. Much of these changes had a lot to do with the development of trade and manufacturing. This is without forgetting the financial sector where the intention was to come up with a financial hub that could be used in economic development. Looking at the case of Singapore, we would say that it is a productive economy with a very high market competition. This observation has been further clarified by the Swiss International Institute for Management Development, going with their report that they released in the year 2001 (Chellaraj & Mattoo, 2009). In this study, we intend to evaluate the case of political economy of development in Singapore and examine the tensions between the state and various economic institutions. In additions to examining this institution, we would also like to examine how these variables have contributed towards the attainment of favorable growth rates and economic prosperity.
Singapore had exported 200.7% of GDP goods and services in year 2012 and this is equivalent to $435.8 billion. 178.5% of GDP of goods and services has imported to Singapore in year 2012. From these data, Singapore is highly demand on importation and exportation for the economic growth.
In conclusion, it is my belief that there is a bright future for Singapore and every other country that allows the freedom of choice for their people. After all it is the people that make a nation, not the governing-few. The governing-few work for us, we do not work for them. And in reality, that is not only true for countries, but states, cities, companies, and industries.
Salehzedah, Zohre and Henneberry, Shida Restagari "The Economic Impacts of Trade Liberalization and Factor the Case of the Philippines." Journal of Policy Modeling v24.
The increase in population have both pros and cons on the effect of Singapore’s economic growth and standard of living. High population growth rate cause difficulty for countries to raise or maintain its current standard of living. As higher population means competition over household, foods, healthcare, and education. Government needs to pump more money to