Singapore trip notes (part 2)

In Singapore you come to realize that this is the ultimate frontier of the world economy – the country is faced with a plethora of challenges and constraints that it has to constantly monitor, evaluate and deliver an effective response. It also has to devise long-term plans of how these challenges are to be met and most importantly it has to be at the cutting edge of innovation not only to surmount these limitations, but also to stay in the lead of the global competitive race. Hence the innovations in urban planning and smart city development in the face of the spatial constraints and rising population. In the environmental sphere Singapore is exposed to risks of climate change and rising sea levels – something that necessitates a systemic incorporation of sustainability into the economic policy framework. The lack of natural resources leads Singapore to innovate in ways that advance the realization of the human capital potential, while also building up reserves in the sovereign wealth funds (most notably GIC and Temasek – the total size of assets under management in these two sovereign wealth funds is well above USD 1 trn – several times higher than the country’s GDP). These multiple constraints are transformed from weaknesses into strengths, with Singapore serving as a prime example of the flip side of the “resource curse” paradigm. As per Toynbee’s “challenge-response” dictum, in the case of Singapore, the economic development is built around new challenges being met with the response of “continuous innovation”.   

Efforts to overcome such constraints as spatial limitations are visible everywhere in Singapore – the architecture and urban planning seek to balance the overarching sustainability principles with the need to accommodate a rising population and an expanding economy. In this respect, one of the insights from the visit to the local museum concerned the fact that nearly 25% of the total area of Singapore was reclaimed from the sea, with the land area expanding to more than 725 square kilometers from around 580 square kilometers in 1960[1]. In terms of the absolute size of reclaimed land area Singapore is in the top 6 in the world (China, the Netherlands and South Korea are in the top 3), while in terms of the relative size of the reclaimed land area as a percentage of total land it is in the top 3 (Bahrain is a leader with nearly 50%)[2]. Along with the Population White Paper (2013) targeting a further expansion in Singapore’s land mass to 766 sq km by 2030 one of the longer term projects aims to create an island (to be called Long island) that will include large tidal gates and pumping stations to prevent the flooding of the eastern coast of Singapore[3].

In a setting characterized by the emergence of ever new challenges and vulnerabilities long-term planning becomes a necessity rather than a luxury for Singapore. The country’s long-term plan covers a period of up to 50 years and is revised every 10 years. The Master Plan translates the long-term plan (the Concept plan) into detailed implementation plans that are carried out in the next 10 to 15 years[4]. Long-term planning appears to be a key feature of the state apparatus working closely with businesses to achieve quality outcomes in the priority sectors of economic development. Civil servants operate in line with business standards and principles (at least more so than their counterparts abroad) – this was the impression from the meetings with Singapore’s officials in charge of assisting businesses to launch operations and build partnerships in Singapore. My overall impression from these meetings was that the civil servants were young, energetic, open and easy to understand from the perspective of business development.

As a result of superior governance practices Singapore occupies leading positions in the global rankings of competitiveness, digital development and environmental policies. Most recently, the University of St. Gallen placed Singapore at the top in the 2024 Elite Quality Index (EQx)[5] – a ranking that shows the degree to which country elites are geared towards value creation rather than redistribution of resources. As stated by the authors of the ranking, “countries scoring comparatively high in the EQx have elites that create more value than they capture. Such countries increase the economic pie and can expect higher levels of economic and human development”[6]

With governance being so advanced in Singapore the question that comes to mind during the trip is: why does the current system of global governance in the world economy not allow for a more prominent role for small open economies such as Singapore? Indeed, the current landscape in global governance is characterized by creeping gigantism with the dominance of the largest economies in Bretton Woods institutions such as the IMF as well as the emergence of such “gargantuan clubs” as the G20, G7 and the BRICS-5. The world economic architecture could use a bit less sky-scrapers (particularly as seismic shifts are rippling through the world economy) and rely a bit more on architectural finesse and stability/sustainability for a change. Rather than size being the key criterion in building the edifice of the world economy, should it not be about the quality of countries’ economic policies and their success in modernization that serves as the guiding principle in designing the new contours of global governance?  

There may be several ways for small open economies such as Singapore to play a more active role in the global economic architecture. One is through the creation of a horizontal platform for regional integration arrangements (perhaps as a separate regional engagement group in the G20) – something that is currently absent in the system of global governance. Singapore is one of the leading forces in ASEAN and could play a palpable role within such a “regional” layer of global governance on issues that are of critical importance to its development (climate change and the coordination of environmental policies) and to the global economy. Another pathway to raise the weight of successful modernizers such as Singapore in international decision-making would be via creating a global platform for small open economies that share common goals and economic governance principles – apart from Singapore in Southeast Asia, such a global platform could include United Arab Emirates (UAE) in the MENA region, Switzerland in Europe and Uruguay in Latin America. A third option could combine the first two pathways, whereby each of the members of the small-economy platform could bring on board their respective regional integration blocs in promoting key policy initiatives – MERCOSUR in the case of Uruguay, the Gulf Cooperation Council (GCC) on behalf of the UAE, EFTA in the case of Switzerland and ASEAN in the case of Singapore.    

Creating venues for countries such as Singapore to deliver a greater contribution to the global community may prove instrumental in spreading the high-quality economic practices across the global economy. For Singapore it may be a way to advance those key themes in the global agenda that are critical for the country’s longer term sustainability and viability – this relates in particular to the global response to climate change and the risks of rising sea levels. My previous visit to Singapore took place nearly 10 years ago and at the time I noted the significance of the country’s success of economic development for other economies in the region and elsewhere in the world economy – these observations remain valid today as before: “Singapore’s story of success … points to the possibility and need for the existence of different models of development – rather than the world converging to one single framework of economic policy-making, economic success for the global economy and its members can only come from the divergence of economic models that are designed to be tailor made to the specific circumstances of the respective countries… In the end Lee Kuan Yew’s key legacy is that it is not the simplistic replication of leading countries’ blueprints, but rather the innovation and boldness to follow one’s own development path that constitute true and lasting success in economic modernization”[7].

Yaroslav Lissovolik, Founder, BRICS+ Analytics

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