ABSTRACT
Singapore was once a British naval military base and a commercial trading outpost (Cahyadi et al., 2004). Today, Singapore is a large exporter of manufactured goods, a world port and an international finance centre (Lim and Pang, 1986), and is known as one of four ‘Asian Tigers’. From 1968 to 2010 Singapore experienced considerable growth. Singapore gained independence from Malaysia in 1965, three years before our analysis starts. When it gained independence, Singapore faced a myriad of uncertainties. Within the region, the Konfrontasi was ongoing and the conservative UMNO faction strongly opposed the separation, while Singapore faced the dangers of attack by the Indonesian military (Poulgrain, 1998). Domestically, the pressing problems were unemployment (with an unemployment rate of about 10 per cent), lack of adequate housing, a low education standard, and the lack of natural resources to exploit to spur economic growth. At the same time, Singapore had lost access to Malaysia’s raw materials and domestic market (Krause, 1987; Turnbull, 2009). Independence also meant Singapore had to change its development strategy. While initially Singapore attempted to use an import substitution industrialization (ISI) strategy – aiming to increase self-sufficiency by protecting local industries from foreign competition – it soon focused on producing labour-intensive manufacturing products for export (Lim and Pang, 1986). To do so, Singapore made itself more attractive to multinational corporations and international investors. The strategy proved very successful, and by 1978 the economy was growing rapidly and the unemployment rate had declined to 3.59 per cent.
