Technology In Historical Time In Singapore

Technology In Historical Time In Singapore

Singapore is one of the best examples of economic success. It has consistently attracted the attention of researchers.

In the second half of the XX century, Singapore demonstrated one of the most successful examples of rapid economic development to the world. This occurred together with Taiwan, South Korea and Hong Kong in the family of the Asian Tigers.

Naturally, the success of the city-state was conditional due to a number of factors. However, it is essential that a leading role in industrialization of the country was played by a direct foreign investment and some multinational companies.

Accordingly, they have made a special contribution to the transformation of the economic structure of Singapore, the employment of its citizens and improvement of their skills. As well there were some changes in the technology transfer, the introduction of collateral management, marketing and other features. This eventually led not only to the economic and income growth, but to the more qualitative economic developments. And that, above all, manifested in the technology.

It should be noted that in contrast to the early 90s, the collapse of the socialist camp and disintegration of the Soviet Union had caused the transformation of economic ideologies and policies in the number of countries. Such states included central and eastern Europe as well as the former Soviet Union. This collapse triggered the free trade and movement of capital in the 60s of the XX century. Singapore had chosen the policy of “open doors” and opened the borders to the foreign capital. Anyway, this was not the most popular model of economic policies and strategies. At that time, many countries maintained the policy of industrialization through the import substitution. This meant, though being not limited to, the development of selected industries in the country and their protection from the high import taxes. In most cases, the foreign capital was subject to the state control and the selection of foreign direct investment being in line with the development priorities of the country.

After the end of the World War II, Singapore returned under control of the United Kingdom. In February 1942, Japan invaded the island; and it was released from the control in September 1945. During 1959 elections, the party “The National Action” won, and Singapore became a self-governing entity within the United Kingdom. In August 1963, Singapore declared its independence from Britain and joined the Federation of Malaysia. In 1965, due to the number of differences, it left the Federation. Since that time, it has started its independent existence.

To analyze the economic growth of Singapore, one of the most important factors is the government’s approach after the independence. As a main way to tackle the unemployment, the Cabinet of Singapore marked the industrialization of the country. Namely, the requirements towards industrialization and the commitments made by the Government in this direction have become a basis for the economic growth in Singapore. These were followed by the use of different mechanisms in the economic policy in line with the challenges of the given period. During its stay in the Confederation, the country was following the policy of industrialization through the import substitution. After the achievement of complete independence, it had chosen the policy of “open doors” and the dependence on exports. This was the so-called industrialization being export-oriented. It was natural basing on the small size of the country and its domestic market. Basing that industrialization began in the 1960s, mainly to solve the problem of unemployment, in the early XXI century, the government of Singapore considered a strong industrial base as a leading force for strengthening the capacity in science and technology as well as logistics and operations management.

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First of all, it should be noted that for decades the country has shown a significant increase in its GDP. In the 60s, an average growth of Singapore’s GDP was 9.3%; then, 8.9%, and in the 80s– it was 7.5%. In the last decade of the XX century, it reached 7.6%. In general, the average GDP growth rate for the period from 1961 to 2007 had been 8.1% triggering the growth of GDP per capita from $ 2,820 in 1970 to $ 42,983 in 2005.

At the same time, a special attention should be paid to the changes occurring from the 60s, to the structure of GDP divided into economic sectors including, above all, the remarkable growth from the early stage of development of the relative share of industry.

There was also a growth in the financial and business services by the 80s. This was due to the country’s aspiration to become a financial center in the region. The above object set a number of successes in the policy of industrialization and achieved impressive results in this direction.

According to the preliminary data from the Ministry of Trade and Industry of Singapore in 2011, a leading position as a share of industrial sector of the country is the production of computer, electronic and optical equipment (31.7%). Then it is followed by oil (19.2%), chemical products (14.5%), machine settings (8.1%), pharmaceutical products (8.0%), transport equipment (5.6%) and metal products (3.1%).

According to the Global Competitiveness Report of 2011-2012 of the World Economic Forum, Singapore is standing on the 3rd place in the world after Switzerland and Sweden. The country is being at the highest stage of development. It has an economy growing through its innovation.

As noted above, industrialization has been identified as the only tool to save the country. The next step was to determine how and in what ways this process had to be implemented quickly and efficiently. The government opted for the foreign direct investment and multinational companies. Many such firms had the focus to achieve the creation of new businesses, employment, a technology transfer and for other purposes.

Accordingly, the country’s economic policy was aimed at creating a favorable investment environment to attract multinational investors. Singapore had made a substantial progress in this direction; this is evidenced by the impressive growth of the country’s accumulation of foreign direct investment (“Inward FDI Stock”).

At the same time, we need to pay the attention to the process of qualitative development of its economy. The MIT Professor Po Kam Wong identifies four stages of the national system of innovation in Singapore:

  •  The phase of industrial shock (from 1965 to the mid of 70s) is characterized by a high dependence on the technology transfer by multinationals and the development of labor-intensive industries;
  •  the phase of strengthening local technological capabilities (from the mid of 70s to late 80s) is characterized by a rapid growth of the local capacity in the area of process technologies driven by multinational companies producing some new and updated operations;
  •  the phase of the applied research expansion (Applied R&D) starting from the late 1980s till the late 90s being characterized by the rapid expansion of applied research for the multinational companies as well as the basis of new public research institutions;
  •  the phase of transition to high-tech manufacturing and mainly for the research (in the late 90s), which is characterized by the emphasis on the ability of local technological innovation, the creation of new local high-tech enterprises and the development of science-based industries.

As we can see, during almost all stages of evolution of the economic development, multinational companies play a leading role. Here, it should be noted that since the early 90s of the last century, the annual commitments on a net foreign investment in the industrial sectors of Singapore exceeded $2 billion. During the decade, except the fixed ones being lower in 1998, the investment was characterized by an impressive growth.

Obviously, the structural changes of economy, a technological change and the transition to the high tech production gave the further impetus to the foreign (and local) capital for the consideration and realization of new investment opportunities.

Singapore on various ratings, related to the protection of investments, their regulation and role in the transfer of technology is a part of leading countries of the world. According to the index of business in 2012 of the World Bank, in terms of the protection of investors, Singapore is on the 2nd place in the world. The investors’ protection index is 9.3 by a 10-point scale.

At the same time, according to the Global Competitiveness Report, the country is on the 1st place for the promotion of foreign direct investment in the legal regulation and on the 3rd place concerning the role of FDI in the technology transfer.

It should be said that there are few countries in the world where the foreign trade plays such a large role in the economy as in Singapore. The foreign economic policy, which interests are being the first, is directly associated with the concept of “global cities”. For Singapore, with its specific economic situation of the city-state, it is necessary to be established in the world economy and establish itself in the global market by achieving a favorable attitude from the side of both regional and extra-regional states. In this island republic, all requirements for raw materials and fuel and most of food needs are satisfied by imports. Through the trade in the world market, half of products of its economy is sold. The whole economy is subject to the interests of foreign trade and maritime.

Singapore is an example of successful development of the so-called “spot” zones, which are oriented at the export of products. A liberal export-import regime in Singapore allows us to consider this state actually as a unified export production zone.

The realization of industrialization in any country involves the development of a more or less active government policy and its implementation. For Singapore, which has emphasized the industrialization through the foreign direct investment, the definition of public policy and its effective implementation have been crucial. In the beginning of the “open door policy”, a major motivation for investment in the country was the cheap labor for multinational enterprises. The process of economic development and, consequently, increasing labor costs, such factors of the improved infrastructure, the availability of the skilled labor force and other issues had appeared being a direct result of the government policy.

Along with this, Singapore government was very concerned about bringing to the country some manufacturing processes with a high added value of multinational corporations. Also, it was applied for these incentive mechanisms and actions aimed at improving the number of factors of location. The most significant values of Singapore’s Government approach were given by an advisor of the Economic Policy Group (in Singapore), Peter Wilson, and a former associate professor of the National University of Singapore, Gavin Peebles. They stated that, “An important characteristic of the party “Popular Action” was a pragmatic politicy, that is, the policy that is not coming from the ideologies, but promote economic growth”.

The above policy should be considered as one of important factors contributing to the economic success in Singapore. Indeed, based on the complexity of realization of parts of the industrialization policy (as it is the development of foreign investment, trade, competition, a fiscal and financial sector, a monetary segment, the technology and innovation, education, professional skills of its workforce, the use of public procurement, etc.), it is not possible to fully follow the principles set out in the framework of the economic ideology.

In Singapore, based on the market economy and the private enterprise building of the country has gone in parallel with the competent government participation.

Moon and Ing explain of the “economic miracle” of Singapore by the following key factors: some market-oriented economic policies and export, impressive investments in the human, physical, social and development-oriented government. The participation of state in the economic development requires significant skills and expertise of bureaucracy in the direction of policy and its implementation.

After obtaining the independence in 1965, the country had to simultaneously solve many problems. One of them was corruption.

However, the activities in this direction had started even earlier. Meager budget of the country did not allow the government to undertake a costly campaign. The first step was to changethe law. In 1960, the Law on Prevention of Corruption (ROSA) was adopted. It had two objectives: to neutralize the corruption-capacious articles and to make the penalties for bribery tougher. Prior to this, a special body had been created, the Agency for Combating Corruption (ABA). The director of it was reporting directly to the Prime Minister. But before the adoption of the ROSA, the work of agency did not bring some tangible results.

Since the second half of the 1980s, the government began to work on the “quality” of bureaucracy. The salaries of officials were highly raised. After that, it was done every few years. This should have kept them from taking bribes. Now, the salaries of senior officials of country are calculated basing on their average earnings in business and reach $ 20-25 thousand per month. As for parliamentarians, the public takes an initiative with disbelief. However, the Prime Minister Lee Kuan Yew publicly had justified its feasibility.

The government planned to make the work of officials not only paid, but also respected. In Singapore, at the state level, a principle of meritocracy is being preached. The path is opened for the most intelligent, progressive-minded and capable people. The Agency for Anti-Corruption is responsible for this. The recruitment begins at school; then, the future elite is being led. They receive help while entering the university; they are sent for the study and training abroad. Besides, their progress is encouraged. So gradually, the bureaucracy personnel is being updated by the properly learned and trained cadres; many of them join the ranks of Agency. All this is against the background of the strong pressure of corruption. As a result, the level of corruption in Singapore has decreased in many times (it had the 5th place in ranking the perceived corruption Transparency International in 2006).

The local bureaucracy is one of the most efficient ones in the world. And it is the highest paid income of officials being higher than of the officials equal to them in the status of employees in the U.S.

But the real political system in Singapore is closer to authoritarian rather than to purely democratic. Singapore is even called as the modern police state being due to the lower degree of personal freedom of citizens and having the very strict laws. Despite the regular elections, a radical change of leadership did not happen. An official form of government in Singapore is a parliamentary republic.

It should also be noted that the rapid economic prosperity of city-state, almost devoid of the mineral and natural resources, was largely due to the rational combination of modern forms of organization and management of social traditions in the Asian society. The common features of culture in the East Asian countries and Singapore, in particular, include such as:

  •  The respect and unquestioning submission to authority;
  •  A high level of education (according to the International Organization estimations, the intellectual level of young Singapore is the highest one in Southeast Asia);  – The great zeal and diligence (Singapore differs by the highest culture in the world duration of the work week; in average, every citizen of the country works about 2,200 hours per year. These are 234 hours more than in the U.S. and 660 hours more than in Germany);
  •  The team spirit and the sense of community;
  •  Close family ties.

Singapore official ideological doctrine, developed in 1988 by Lee Kuan Yew and Goh Chok Tong, is aimed at creating a modern enlightened nation and a developed society (i.e., the nation of excellence). The major developers of ideology have argued about such traditional values of the Singaporean society as the high morality, solidarity, the sense of duty and responsibility. As a main criteria of the social and political development are put ahead of such attitudes and orientation as rationalism, efficiency, a strict hierarchy of authorities, the impartiality and objectivity of management as well as equal opportunities and possibilities.

On the basis of official ideology in Singapore, the following principles are listed below:

  • The priority of public interest over the interests of an individual;
  • The family as a fundamental unit of the society;
  • Consensus and not confrontation;
  • Social harmony and religious tolerance;
  • The country’s place in the international transfer of technology.

It is interesting that Singapore has become a “modern” society, avoiding the westernization. Despite the rapid industrialization, the majority of population of Singapore celebrates the major religious holidays. The variety of religions exists in Singapore reflecting a huge range of nations and nationalities living here.

Speaking of Singapore, we should mention the existing system of education available there. Singapore is the country, the education system of which is remarkably isomorphic. Education has a strong and even traditionally national basis; though at the same time, it focuses on the international labor market and training of the world-class specialists. With the rapid socio-economic development of Singapore in the last decades, education here has remained the most conservative institution. This institution has been able to successfully get used to the agricultural and industrial revolutions around the world, to the decline of religious influence as well as to adopt a new print and audio-visual technology7. There is no doubt that it will respond to the equal success to the challenges in the global economy, while remaining rooted in the national values.

A rapid pace of development in the scientific and knowledge-based industries in Singapore has gradually transformed this city-state into a modern technopolis. It will combine science, technology and the traditional national culture, in which a new community of creative and well-rounded people is being created.

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