There are a few reasons, some are matters of geography others are decisions made by the Singapore government. I will go through them.
1st is the decision to make English the national language, this was done due to the tri-racial makeup of Singapore with the majority been Chinese with large minorities of Indian and Malay people. To prevent anger and resentment from the the other two it was decided English would be the language which made it easier for foreign businesses to set up in Singapore. Another reason is that like Hong Kong Singapore inherited the British legal tradition which lead to law that was similar to the UK which again made Singapore a good place to do business.
Another reason is a simple one of geography Singapore lies at the head of the Malacca Strait which is one of the worlds most important water ways which transports over 25% of the worlds cargo. Because of this the British heavily invested into Singapore building it up as a port.
This building can be seen from the very earliest days of Singapore In 1823, Sir Thomas Stamford Raffles, described as the “Father of Singapore,” officially declared Singapore a free and open port, forever cementing the nation’s status, and, one could argue, its future. In a report to the Bengal government, collected in his letters, he wrote, “First, I have declared that the port of Singapore is a free port, and the trade thereof open to ships and vessels of every nation, free of duty, equally and alike to all.” This concept was novel—to open a port free of duty—and later, in a letter to merchants of Singapore, he further asserted “that Singapore will long and always remain a free Port, and that no taxes on trade or industry will be established to check its future rise and prosperity, I can have no doubt."
This is mostly as a result of pre independence decisions but the Peoples Action Party that has ruled Singapore since independence played a key role in ensuring Singapores success. As economic historian W.G. Huff writes in The Economic Growth of Singapore, the PAP coordinated with Dr. Winsemius’ U.N. Technical Assistance team to embrace an aggressive development strategy, pairing a hands-off approach to regulation with a hands-on approach to recruiting foreign corporations. “The Singaporean model,” Huff writes, “carries the lesson that an extensive role for the government can be combined with free trade.”
Rather than shun foreign capital, Singapore welcomed it with tax concessions and temporary import tariffs. The plan was simple: foreign firms would bring capital, technology and skills, and Singaporeans would learn. Eventually, they would be able to replicate the business practices brought to Singapore by foreign companies. This can be seen today in the large number of Singapore companies known around the world Singapore Airlines, UOB, DBS. These companies were founded using Western Knowledge and expertise but Singapore quickly learned from them and replaced them with Singaporeans. The government also heavily invested in education allowing Singapore to quickly move from manufacturing industries in the 1960s to the far more profitable service and financial industries in the 1980s. They followed the same path as three other countries that went through the same process, Hong Kong, South Korea and Taiwan. All followed a similar path and rose from been very poor countries after WWII to been incredibly wealthy by the 1980s.
Bibliography
Brand Singapore Nation Branding After Lee Kuan Yew, in a Divisive World
Singapore an Unlikely Power
The Four Asian Tigers: Economic Development & the Global Political Economy
Asia's Four Little Tigers: A Comparison of the Role of Education in Their Development
First time posting, and it’s on mobile. Hopefully this makes sense.
I can’t speak in-depth on Singapore specifically, but I can provide an overview answer. I would look to a more qualified historian to explain how this relates to your question, but I do have some general thoughts that I believe are worth sharing.
As a matter of fact, the circumstances you frame as being detrimental to development are seen by many political scientists as advantages. This seminal paper from Doner et al describes a set of ironically fortuitous characteristics for state-building, dubbed “systemic vulnerability.” They argue that a lack of natural resources, limited (though not necessarily zero) access to international aid, and existential security threats inspire otherwise impoverished nascent states to develop strong institutions to foster growth as a means of financing security forces to protect themselves. The three examples cited in the paper include Taiwan, which was cutoff from meaningful US aid, lacking in natural resources, and is ever-threatened by the PRC, and the ROK, which is similarly threatened by the DPRK and lacking in any major natural resource. Singapore is the third example they cite, which is actually considered by some to be a weak point in their argument as they never faced any sort of existential threat. There was, however, some degree of Chinese interference in their internal affairs, which they hold to be sufficient.
So why mention systemic vulnerability? Well, it does expand upon a relevant phenomenon in political science known as the “resource curse.” Nation-states with abundant natural resources are consistently more autocratic, less wealthy, and less stable. The most famous case studies focus on the Middle East bloc of oil exporters, where over-reliance on the fruits borne of a single state-owned industry leaves other sectors of the economy underdeveloped. Often this is intentional, as it disables potential political rivals from finding a profitable niche in the local economy. Equatorial Guinea is perhaps the most acute example of this; the state-owned petroleum industry offers ample funding for domestic security forces and there is little need for political elites to strive for anything more economically.
Perhaps Jordan- which by all accounts is resource-poor - would be a great inverse example, as the abundance of foreign aid from the US and Israel provide revenue which would otherwise leave the state in a precarious and destitute economic standing.
tl;dr: A hungry state will try harder to feed itself. A lack of resources is great incentive to build strong institutions.
Citations/further reading:
Doner, Richard F., Bryan K. Ritchie, and Dan Slater. “Systemic Vulnerability and the Origins of Developmental States: Northeast and Southeast Asia in Comparative Perspective.” International Organization 59, no. 2 (2005): 327–61. http://www.jstor.org/stable/3877907.
Medeiros, Evan S., Keith Crane, Eric Heginbotham, Norman D. Levin, Julia F. Lowell, Angel Rabasa, and Somi Seong. “Singapore.” In Pacific Currents: The Responses of U.S. Allies and Security Partners in East Asia to China’s Rise, 1st ed., 159–88. RAND Corporation, 2008. http://www.jstor.org/stable/10.7249/mg736af.15.
Ross, Michael L. Review of The Political Economy of the Resource Curse, by Terry Lynn Karl, Jeffrey D. Sachs, Andrew M. Warner, and D. Michael Shafer. World Politics 51, no. 2 (1999): 297–322. http://www.jstor.org/stable/25054077.
Singapore made radical changes in it’s society between 1960 and 1990, going from a third world country to one of the highest GDP per capita countries. This was largely spearheaded by it’s leader Lee Kuan Yew. In his autobiographical book, “From Third World to First”, he gives an inside view of the country’s transition and his role in it.
There were 3 lynchpins that were key to it’s rise:
In the 1960s, Singapore was in a precarious security state. The relationship with Malaysia was very tense and could have led to eventual war. Meanwhile, the British, which oversaw Singapore as one of its colonies, was in the process of withdrawing their forces. For Lee, “security was [his] main concern, for without it there would be no investments”. During the development of the Singapore Armed Forces, civilian leadership ensured that they had financial and manpower oversight over the military. There were also tough negotiations with the British on the terms of their withdrawal.
Singaporeans, had historically had a bias against joining the armed forces. To counter these traditional prejudice, Singapore held send-off ceremonies for the recruits from community centres in every constituency. Eventually, the cultural bias against joining the armed forces was broken down.
With it’s security stabilized, Singapore was now in a place to focus on it’s economy. In the 1960s, they initially began partnerships with Taiwanese and Hong Kong entrepreneurs, but these were small-scale, low technology enterprises. Lee then pushed a two pronged strategy to 1) leap frog the Southeast Asia region economically 2) Create “first-world” oasis in a “third-world” region. The first strategy meant instead of being a low-skilled source of regional labor, they would build relationships with American multinational companies and encouraging foreign direct investment. The second strategy meant ensuring the local infrastructure in security, health, education, telecom, and transportation would be a high domestic priority.
Singapore’s Economic Development Board was critical in attracting high value investments. In it’s early days, the EDB officers would make sales calls to American corporations, sometimes calling on 40 or 50 companies before getting one to visit Singapore. Interest from American companies in Singapore investment grew significantly throughout the 80s, fueling Singapore’s economic rise.
Again, culture was important to success here. Unlike many developing countries, Singapore was able to counter the “brain drain” effect. The Economic Development Board employed “some of the brightest of our graduates, mostly from universities in America, Britain and Europe”.
Lee had an economically conservative worldview, and battled with union leaders and workers, especially early during his tenure. His party suspended habeas corpus and detained opponents without trial. Lee was critiqued by domestic opponents and some international observers for his authoritarian approach, but he argued it was necessary to keep the country cohesive.
He opposed capital gains taxes, welfare and guaranteed wages, but encouraged home ownership. Despite this, he strongly believed in wealth redistribution to the people. Wealth distribution was done based on asset enhancement (for homeowners, for example), instead of consumption subsidies. According to Lee, “if we had not redistributed the wealth generated by our people competing in a free-market economy, we would have weakened Singaporeans’ sense of solidarity”.
With Singapore’s rise and shared economic prosperity, Lee’s policies and his party remained extremely popular. Singapore’s GDP per capita has continuously risen from the beginning of it’s reform to today, and is now one of the richest per capita countries in the world.
A complete answer to this question would take up volumes, since everything, from education to social cohesion, affects the economy. In this answer I will focus on the development of what is to me the (rather unique) heart of Singapore’s early growth model - what might be called ‘authoritarian state capitalism’.
‘Capitalism’ because prices and wages are ostensibly determined by market forces, rather than the state, and the economy runs on cash instead of coupons or barter.
‘State’ because the state could and did intervene heavily to direct the economy at all levels, from determining allocation of capital to creating state monopolies to influencing wages.
And ‘authoritarian’ because the state was not beholden to any interest groups, and was thus able to pursue its own economic priorities without objection.
Singapore’s growth model changed in the 1980s and has changed again in the last 20 years. Not only has the global economy changed, the state has been forced to incorporate a broader range of views in its decision making. In this answer I’ll focus on the period between 1965 (Singapore’s independence) and 2000, and just dip my toes very briefly into some of the criticism offered in the last 30 years.
1965 - 1984 BUILDING AN AUTHORITARIAN STATE
Let’s first look at the ‘authoritarian’ part of the model.
At the moment of independence, Singapore’s political landscape was dominated by the People’s Action Party (PAP) headed by Lee Kuan Yew (for too many reasons to go into here). From 1966 to 1981, the PAP won ALL the seats in Singapore’s parliament. This allowed it to enact economic policy without any political opposition.
For example, state unemployment benefits were essentially non-existent. The PAP rationalised that earning a living was an individual responsibility. Failing that, an individual’s family was responsible for supporting him on their income. The role of the state was to simply to grow the economy to the point where getting a job became easy.
In a democracy, such a stand might be opposed by another political party, advocating on behalf of the unemployed. However, given the PAP’s total dominance of parliament, there was no such thing in Singapore.
The PAP’s dominance also allowed it to give itself wide-ranging powers to sell its economic aims to the population. The narrative which the PAP pushed had three main points:
The PAP utilised their control of the country’s mass media to successfully push these three points. At the same time, using those three points as justification, it also moved to eliminate or co-opt interest groups that under normal circumstances would have a say in economic policy.
A good example is the labour movement. In 1968, Minister for Foreign Affairs and Labour, S. Rajaratnam, introduced the Industrial Relations (Amendment) Act in parliament. He called the bill an attempt to
… rationalise employer-employee relationship with a view to attracting new investments and increasing the efficiency of trading and industrial enterprise.
The bill was thus overtly intended to be employer-friendly. It included a list of management functions over which unions would have no power to negotiate, including the promotion, recruitment, retrenchment, dismissal and reinstatement of employees, which I daresay sounds pretty baffling to most unions. It also stated that industrial action could only be carried out with the permission of the secretary-general of the National Trades Union Congress (NTUC). The NTUC was a strong supporter of the PAP, and even today, the secretary-general tends to be a prominent PAP member.
As with all other bills, the PAP’s total dominance of parliament made its passage a foregone conclusion. The passing of the bill and the co-opting of the Singapore labour movement gave the state a much freer hand in managing the economy. Since the bill’s passage there have been just 2 major strikes in Singapore, only one of which was sanctioned by the NTUC in 1986. The official line is that under normal circumstances, the NTUC prefers to work with the government and employees to try and hammer out deals rather than taking confrontational action.
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