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Published online by Cambridge University Press: 21 October 2015
From the perspective of what it does to earn a living, Singapore is made up of six main sectors. There is a sector with much government participation that produces goods and services for local consumption, a traditional entrepôt, a petroleum centre, an export platform for MNCs with some local participation, a business service centre which includes tourism, and an international financial centre. Singapore is highly industrialized in both manufacturing and services, and because of its remarkable international involvement, is deservedly called a global city. According to estimates made by Lloyd and Sandilands, 75% of Singapore's GDP was exported in 1982, and using similar methodology, the figure for 1985 was 71% (Lloyd and Sandilands 1986).
This characterization of Singapore's output makes imminent sense, given its comparative advantage. Singapore's strengths come from its location, its favourable business environment, its people's skill as traders, and its infrastructure investment. Singapore's weaknesses come from its small size, its relatively high wages, its relative under-investment in education, the underdevelopment of its domestic entrepreneurs, and the aging of its population.
Singapore's Strengths
Singapore's strategic location was discussed in Chapter 1, and nothing more need be added here — except to note that as Singapore's neighbours prosper, the positive spillover to Singapore also expands, making location a dynamic force for growth.
The favourable business environment was not provided by nature, but rather was an explicit policy decision, and resulted from strenuous efforts to bring it about. Fundamentally, it arose from, and was made possible by, the political stability of Singapore. Political stability has been purchased at considerable costs, including devoting resources to the armed forces. The extended tenure of the People's Action Party (PAP) has allowed policy formation with long horizons.
The business environment is made up of a number of factors. Singapore has achieved macro-economic stability, with an absence of high and variable inflation.
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