I'm interested in learning more about the contributing factors in Singapore's rise to wealth. I realize there are probably many, many factors, but I'm looking for an overview. Maybe someone could point me in the direction of a website or a book on the topic for more details?
(I'm not sure if "third world" and "first world" are the appropriate terms)
Singapore sits on one the most important waterways in the world. The straits of Singapore and Malacca control trade through Asia to the Suez Canal and eventually Europe. By the time of independence it already had the third highest per capita income in Asia. The state led drive for industrialization and the establishment of Singapore as a major financial center. This included a major education initiative and making English the national language. Additionally the government promoted FDI, and encouraged entrepreneurship. A big part too is the general lack of corruption, lee Kuan yews government was never corrupt. A good climate for business helped as well. Ease of doing business in the country let the economy prosper. It's embrace of free market capitalism coupled with responsible government let the country ascend to being one of the wealthiest countries on earth
It's worth noting that Singapore's growth from the 1960s to the 90s was comparable to that of Hong Kong or Taiwan, and only a bit ahead of South Korea (World Development Report, 2000-2001). Which is to say that its growth was pretty spectacular, but not unique.
To view Singapore as a triumph of free market capitalism is a mistake. The state has been heavily involved in promoting growth in Singapore, through direct intervention and ownership, education and training, control of labour & political rights and social policies (perhaps most importantly in housing).
I'd summarise Singapore's key advantages as follow:
I'm looking at a reading list on the Asian Tigers and don't see anything specific to Singapore. It's too long since I studied this for me to recommend any books. The most famous source covering Singapore is probably the World Bank's The East Asian Miracle. As you might expect from the World Bank, it's views as distinctly mainstream, but even if you disagree with the analysis there should be some good data in there. A lot of the development discourse focuses on that report, for and against. There used to be a good collection of material online from Nouriel Roubini, but that seems to have been taken down now.
Just being pedantic, but remember that "third world" meant "not aligned with one of the two superpowers".
I don't have a neat explanation, but I'd like to chime in to criticize a couple of the standard explanations that are commonly given, in this thread and elsewhere.
-- "It's easier to run a small country". This is frequently brought up, and yet when Singapore received its independence, most international observers worried that the city-state was too small to be economically and politically viable. This should make us very suspicious; because Singapore is small, and has been successful, it's all too easy now to cook up glib explanations attributing its success to small size. But if Singapore had collapsed, we could have cooked up equally glib (and probably more obvious) explanations for the opposite!
The small size of Singapore imposes some dramatic handicaps, particularly in terms of national security. For instance, Singapore feels compelled to have an annual military budget about the same size as Poland's, a country with seven times its population and adjacent to a semi-hostile superpower. And Singaporean males are required to undergo two years of military conscription, with all the attendant losses in economic productivity.
-- "Its location is great". Singapore's great location for trade is certainly the main reason for its founding back in the 19th century. But it's tricky to link this to the country's post-independence graduation "from third world to first", which relied a lot on industrialization.
Under the British, Singapore had benefited from its location (i) as an entrepot for regional trade in plantation crops and natural resources, and (ii) as the host of major British military bases overseeing imperial possessions in Southeast Asia. These roles became problematic post-independence, as Malaysia and Indonesia tried to develop their own ports and the British withdrew from the bases (estimated at 20 percent of the local GDP) in 1971. Post-independence Singapore was able to use its location to its benefit, but only by switching to other roles. For example, it brought in oil companies to establish offshore refineries, and repositioned its port facilities for transshipment, thus benefiting from the export-led economic rise of Japan (and later China). But relying on port activities alone would not have provided enough employment for its population; for that, Singapore relied on an FDI-led industrialization program in the 1960s-1970s.
Economic strategy & forward-thinking govt policies, as compared to its neighbours. While most of the other newly-independent SEA states were focused on Import-Substitution Industrialisation (ie. development of light manufacturing industries & using nationalistic policies to boost growth of domestic industries), Singapore moved rather quickly on to Export-Oriented Industrialisation, by the 1970s. It was the first in the region to foray into more 'value-added' industries such as electronics, hence it was able to establish niches that were not yet occupied by the surrounding countries that were still more reliant on agricultural exports & oil exports (eg. Indonesia, Philippines, Thailand). Also helped that the govt was a lot more open to foreign investments as compared to other SEA states that engaged in protectionistic policies in the 1960s. Later on in the 1980s and up until now, Singapore moved towards scaling further up the economic chain by positioning itself as a regional leader and hub in the area of IT, communications, and so on. I believe that one of the government's key guiding policy is to always anticipate future devt and then try to stay one step ahead of the curve.
Corollary policies such as education that focused on developing human capital and skill (ie. large focus on STEM, set-up of polytechnic institutions that encouraged locals to develop skills relevant for skilled industries) also helped increase productivity and so on.
And yea, relative lack of corruption in the government and a very conscious effort to maintain transparency in economic dealings. Not to say that Lee Kuan Yew's government did not do its fair share of shady things, such as imprisoning and undermining the opposition, but its core team, nicknamed the "Old Guard", was remarkably clean. This is a group of capable British-educated young people who fought hard for their country's independence, basically founded its independent state, and oversaw its subsequent development for the next decades, so by layman's logic, it is believable that they were genuine in their efforts. LKY himself has a sound reputation for being incorruptible (he purportedly turned down CIA bribes in the 60s for a serious amount of dough http://i.imgur.com/zQLhgcr.png). So anyway, you contrast this with the cronyism that Sukarno, Suharto, Marcos and the likes engaged in, and you can see how the lack of corruption boosted the competitiveness of the industries (ie. no bailouts of weak companies) and attracted foreign investments.
