Jake's View | Singapore and its manufacturing make an uneasy fit
Domestic production never took root in the city state; it was driven by foreign investors who sent their money back home overseas
Singapore’s central bank unexpectedly eased its monetary stance, adopting a policy issued last during the 2008 global financial crisis, as economic growth in the trade-dependent city state ground to a halt.
Business, Bloomberg, April 15
You get the sense here of listening to the smooth comforting voice of pilot Lee Hsien-loong telling the passengers not to worry. It’s just a mild spot of turbulence.
The real trouble for Singapore, however, is much more deep-seated. It stems from a decision many decades back that the city should not put all its eggs in one basket and must therefore encourage a manufacturing as well as a regional services economy.
Singapore is not really suited to manufacturing. It is too wealthy and has too little land, labour and manufacturing infrastructure. But any industry can be made to work for a while if government is willing to give it a push, which the Singapore government did with generous concessions to foreign investors. As a result, manufacturing was a bedrock of the economy for many years.
Singapore is not really suited to manufacturing. It is too wealthy and has too little land, labour and manufacturing infrastructure
But it never really took root. Domestic manufacturing investment has always been tiny. It has always been foreigners and they were fair weather friends. They just sent their earnings back home.