Living in Singapore for a couple years, I was awestruck by the immaculate efficiency, safety, cleanliness, and high standards of living in the country. I understand it has been a hub for international sea trade for centuries, but why is it only now that it has reached such high developmental status? Is it really just due to the policy genius of founding father Lee Kuan Yew?
/u/UNC-Patriot
Most pop-history attribute Singapore's success to strong government intervention in setting up an environment favorable to foreign investment as Singapore became independent in 1965, combined with its supremely strategic location between the Indian ocean and the Pacific ocean. This is to a large extent true, as the Singaporean government did and still do intervene in economic and social affairs. But Singapore already had a lot of things going for them going back to the colonial days. More on that below.
The Economic Expansion Incentives Act of 1967 recognized that Singapore needed foreign investment, rapidly and in large quantities. So they gave tax breaks and further encouraged re-investment in Singapore. The government aggressively pursued infrastructure projects around manufacturing and shipping, with cleaning up on slums, building of major roads, power plants, etc. You can still see this in the Jurong area today.
But Singapore also had a very good start dating back to the early 20th century and beyond. Singapore, Malacca and Penang were major free ports of British Malaya, so there was already significant infrastructure developed there. Singapore alone produced electricity in the same order of the rest of British Malaya, despite its miniscule size. Further, all the history in trade means Singapore had the right things needed to foster further trade: financial institutions and services.
In the 1910s Singapore was already well ahead of the rest of Malaya in terms of per-capita GDP, nearly even with Hongkong and even Japan. At the time of its independence, its per-capita GDP jumped from 50% higher to 75% higher than the Malaya it left behind. In the post-WW2, pre-independence days, economic competition between Malays and Chinese meant that the Malaya government encouraged investment by foreign firms as a means to check Chinese economic dominance.
So Singapore's rise owes not just to its post-independence economic and social policy, but also to its fortuitous position dating back to the colonial days.
Want to know more? N. Parziale wrote a blog entry that is well sourced. A. E. Booth wrote a fantastic book Colonial Legacies: Economic and Social Development in East and Southeast Asia, 2007.