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Sunday, August 29, 2010 By

Joseph Stiglitz: Government helped Singapore boom

Jospeh Stiglitz, who won the Nobel Prize for Economics in 2001, attributes the success of Singapore and other East Asian economies to government intervention. In his book, Freefall, he writes:

Government has played an especially large role in the highly successful economies of East Asia. The increases in per capita incomes there during the past three to four decades have been historically unprecedented. In almost all of these countries, government took an active role in promoting development through market mechanisms. China has grown at an average of 9.7 per cent per year for more than thirty years and has succeeded in bringing hundreds of millions out of poverty. Japan's government-led growth spurt was earlier, but Singapore, Korea, Malaysia, and a host of other countries followed and adapted Japan's strategy and saw per capita incomes increase eightfold in a quarter century.

Of course, governments, like markets and humans, are fallible. But in East Asia, and elsewhere, the success far outweighed the failures.

Filed Under: Books, Singapore Tagged With: , , , , , , , , , , , , , ,
Tuesday, July 20, 2010 By

Singapore economist compares Singapore with China

State-owned enterprises or government-linked companies (GLCs) are taking a bigger and bigger share of the economic pie in both Singapore and China. And, in both countries, labour gets the lowest share of the national income in the form of wages.

So says Singapore-born Linda YC Lim, a professor of business strategy at the University of Michigan, in a paper which asks: Why do East Asians save so much?

One reason is high property prices. Then again, "Some economies—Singapore, Malaysia, Hong Kong—have forced-saving schemes or national “provident funds” with high rates of mandatory contributions out of earned income."

Nevertheless, there is a growing income gap between the rich and the poor. It is the high income earners, GLCs and multinationals that are thriving in "corporatist" Singapore, she adds.

Unlike in other East Asian countries, domestic consumption in Singapore fell from 46.3 per cent of the gross domestic product (GDP) in 1990 to 38.6 per cent in 2007 and in China from 50.6 per cent  to 36.4 per cent, says Lim. Private consumption and wages are probably held in check in Singapore by the presence of a large and growing foreign workforce which, like the multinationals, wants to send money home, she adds.

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Filed Under: Singapore Tagged With: , , , , , , , , , , , , , , , , , , , , , , , ,
Thursday, April 8, 2010 By

Singapore lagged behind East Asia as a whole

The Singapore economy lagged behind East Asia as a whole at the end of last year. Taiwan, South Korea, Indonesia, Thailand, Malaysia all grew more than Singapore in the fourth quarter. And so, of course, did China. Only Hong Kong and the Philippines posted weaker growth. This chart is based on the World Bank report released this week.

WorldBank-Real-GDP-Growth2

Download the report from the World Bank to see how the Asian economies performed against one another in various ways. See how the Singapore foreign reserves, stock market and exports compare with the other Asian economies.

Filed Under: Singapore Tagged With: , , , , , , , , , , ,
Wednesday, February 3, 2010 By

Bamboo network around China: Samuel Huntington

Professor Tommy Koh in the Straits Times today noted a difference between Singapore's Minister Mentor Lee Kuan Yew and his former deputy, the late S. Rajaratnam, the country's first foreign minister.

Raja, as he was known, "saw himself simply as a Singaporean and not as a Ceylonese Singaporean or an Indian Singaporean." wrote Prof Koh. "Minister Mentor Lee, on the other hand, saw himself first as a Singaporean, and second, as an ethnic Chinese proud of his cultural roots."

This sense of ethnic and cultural identity, and how it is reshaping the world, is the theme of Samuel Huntington's book, The Clash of Civilizations and the Remaking of World Order. Published in 1996, after the fall of Soviet communism, the book looks at the growing importance of race and religion in international affairs.

This lies behind the rise of China, according to Huntington. It has become an economic giant with generous help from overseas Chinese investors. He quoted Minister Mentor Lee on how they were drawn together by their common culture and ancestry.

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Filed Under: Books, Singapore, World Today Tagged With: , , , , , , , , , , , , , , , , , , , , , ,
Tuesday, January 26, 2010 By

What China expects from East Asia: Samuel Huntington

China wants East Asian countries to be open to Chinese immigration and promote the use of Mandarin, Samuel P Huntington wrote in The Clash of Civilizations and the Remaking of World Order.

China is on its way to becoming the dominant power in East Asia, he wrote in his book, published in 1996, the year before Hong Kong passed from Britain to China. And the process has been largely peaceful, he noted, apart from territorial disputes in the South China Sea, where — after the Sino-Vietnamese war in 1979 — the two countries again clashed off the Spratly Islands in 1988.

Huntington wrote:

With rare exceptions, such as possibly the South China Sea, Chinese hegemony in East Asia is unlikely to involve expansion of territorial control through the direct use of military force. It is likely to mean, however, that China will expect other East Asian countries, in varying degrees, to do some or all of the following:

  • support Chinese territorial integrity, Chinese control of Tibet and Xinjiang, and the integration of Hong Kong and Taiwan into China;
  • acquiesce in Chinese sovereignty over the South China Sea and possibly Mongolia;
  • generally support China in conflicts with the West over economics, human rights, weapons proliferation, and other issues;
  • accept Chinese military predominance in the region and refrain from acquiring nuclear weapons or conventional forces that could challenge that predominance;
  • adopt trade and investment policies compatible with Chinese interests and conducive to Chinese economic development;
  • defer to Chinese leadership in dealing with regional problems;
  • be generally open to immigration from China;
  • prohibit or suppress anti-China and anti-Chinese movements within their societies;
  • respect the rights of Chinese within their societies, including their right to maintain close relations with their kin and provinces of origin in China;
  • abstain from military alliances or anti-China coalitions with other powers;
  • promote the use of Mandarin as a supplement to and eventually a replacement for English as the Language of Wider Communication in East Asia.

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Filed Under: Books, Singapore Tagged With: , , , , , , , , ,
Friday, January 1, 2010 By

Happy New Year in Singapore’s flagging economy

The Singapore economy has shrunk for the first time in eight years, contracting 2.1 per cent in 2009. The economy grew 0.6 per cent in the third quarter only to end in worse shape than in 2008, when the gross domestic product rose merely 1.1 per cent.

This is only the fifth time the economy has shrunk, according to Statistics Singapore records going back to 1960.

The economy last shrank in 2001, when GDP fell 2.4 per cent, but it bounced back, growing 4.1 per cent the following year, when Senior Minister Goh Chok Tong was still prime minister. The other lean years were 1985, when GDP fell 1.5 per cent; 1998, when there was a 1.4 per cent drop; and 1964, when the economy shrank 3.8 per cent.

Will Prime Minister Lee Hsien Loong mastermind another economic rebound? The official forecast is 3 to 5 per cent growth this year.

But the economy seems to be running out of steam, growing only 3.5 per cent in the fourth quarter compared with the same period last year after double-digit gains in the second and third quarters. The economy
grew 21.7 per cent in the second quarter compared with the first
quarter and 14.2 per cent in the third quarter compared with the second
quarter, according to the Ministry of Trade and Industry’s third
quarter report released in November.

That was how the economy ended up growing 0.6 per cent in the third quarter compared with the previous year. But a weak fourth quarter has pushed the economy back into the downward spiral that has plagued the rest of the year.

East Asia as a whole has been growing much faster than Singapore, according to the Asian Development Bank. The December issue of the Asia Development Monitor says:

The combined gross domestic product (GDP) of the 10 largest economies in emerging East Asia grew 5.0% year-on-year in the third quarter of 2009, well above growth rates in the previous three quarters.

That was well above Singapore's 0.6 per cent third quarter growth. China's phenomenal 8.9 per cent third quarter growth boosted East Asia as a whole.

But Vietnam, Indonesia and South Korea also did better than Singapore, as this chart shows. It's taken from the Asia Development Monitor.

ADB_GDP

The five other nations are Malaysia, Taiwan, Hong Kong, Thailand and the Philippines. The green bar shows third quarter performance and the orange bar, first quarter. The only exception is Indonesia, where the orange bar indicates second quarter performance because that's when the economy bottomed out, says the report.

Filed Under: Singapore Tagged With: , , , , , , , , , , , , , , , , , , ,
Monday, December 28, 2009 By

Tharman: We want private investment, not tax hike

Tharman_N509 Singapore Finance Minister Tharman Shanmugaratnam acknowledges Singapore has an unemployment problem. That is why Singapore doesn't want to raise income taxes — "certainly not corporate income taxes" — because "our key objective should be to see private investment grow, as the basis for long-term growth", he tells the International Monetary Fund's Finance and Development magazine.

He emerges as the odd man out among the Asians interviewed in one respect. He says growth will continue to depend on exports, which is true for Singapore, while others see the need to transform their economies. They are Ajith Cabraal, governor of the Central Bank of Sri Lanka; Shuli Hu, a leading Chinese journalist; Yung Chul Park from Seoul National University; and Raghuram Rajan, professor of finance at the University of Chicago and economic adviser to the Prime Minister of India. Read the interview here.

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Thursday, November 5, 2009 By

Tharman: Once upon a time in the West…

Tharman_N509 Singapore Finance Minister Tharman Shanmugaratnam knows his history.

While praising the "uniqueness" of Indian democracy, he defended the East Asian model by pointing out that democracy used to be limited in Britain and America too.

"It was not until 1930 that Britain got Universal Suffrage. The US did not get Universal Suffrage until 1965," he said.

He was referring to the 1965 Voting Rights Act which made it easier for Southern blacks to register to vote after the 1964 Civil Rights Act ended racial discrimination.

Britain gave the vote to women from the age of 21 only in 1928. Only older women, from the age of 30, had been allowed to vote in Britain since 1918. 

Mr Tharman recalled: "In Britain, before the Reform Act of 1832, only 1.8 per cent of the adults had the vote. After that Act, 2.7 per cent got the vote. After the Second Reform Act of 1884, 12.1 per cent got the vote."

But while democracy was limited, there was stability, economic growth and the middle class grew, he said.

Neatly, from there, he segued to the East Asian model. "A group of men (usually men) centralised power, planned in the long term interests of the country and executed those plans quite smoothly. Some of these countries did not hold elections…

"But, on the whole, the countries progressed. People received education, were empowered, the infrastructure developed, the economies grew steadily."

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Filed Under: India, Singapore Tagged With: , , , , ,
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