Singapores Economy - Research Paper Example

Economic Development in Singapore al Affiliation Singapore is a small island in the south of Malaysia. In relation with other islands, Singapore is seen to be more urbanized. It has an area of 7232 square kilometers. Most of its land was reclaimed from its sea, hills and the neighboring areas. It is 15 meters above sea level on most parts of its territory and 165 meters above the sea level on Bukit Timah region that comprises of igneous rocks and granite (Bowen, 1993). Despite the absence of any natural lake, the country has good supply of water from its constructed reservoirs. Development is a dynamic process that needs fundamental transformation in different spheres of the country’s economy. It ranges from the traditional economy based on subsistence food production; development in any economy requires a dramatic mobilization of energy resources, an upgrading of rural agriculture and increased investment in the transport industry, education and human capital (Tremewan, 1994). The greatest problem in any economy is how to get started, making the required changes from the low levels of subsistence, and low savings to an economy that is generating surplus that can be invested and be devoted into the building of human capital and infrastructure. This has been witnessed in Singapore as it has been able to come up with the best strategies to use its resources to develop and generate surplus capital to invest in its development strategies. This development has been encouraged by its geographical and institutional characteristics which have made great contributions to the economy. Singapore’s economy is of a good reputation, and its stability in growth has earned the country the title “Asian tiger.” With a high dependency on exports, the country faces international crises. Its location serves as a distinct advantage, with 190 kilometers of a coastline feature which contains deep-water ports which have been there naturally. The Southeast Asia shipping routes are situated in the island itself and this serves to be of importance. Singapore, from 1989 relies on trade of goods and services and commerce. With the British East India setting base in the country with the aim of business, trade, domestic savings and foreign investment has played a vital role in growth of its economy. Traditionally, Singapore had a deficit in the merchandise-trade balance since food in part served as an import. This was offset customarily with a surplus poised on the service accounts. With other few countries in the world, Singapore has an international trade, in terms of domestic exports, re exports and imports, greater than the GDP i.e. in 1988; trade which amounted to $167.3 billion was three times that of GDP at $48 billion (U.S. library of congress). The Singapore government has reliably invested in education and thus as a result, the skilled workforce and the human capital have contributed to the economy being prosperous. Although Singapore flaunts agricultural produce which range from orchids or ornamental fish, the most relevant and sustainable sector is the manufacturing sector. 28% of the country’s GDP is generated from the sector with a fifth of the workforce shifting to it. Of importance is the petrochemical industry since the country imports a lot of crude oil used consecutively in the refinement of petroleum products. Among the high-end manufactured products from Singapore include the likes of consumer electronics and semiconductors, ships, transport equipment as well as machinery. It is of concern to note that the service industry plays also a great role in GDP creation. With 80% of 3.03 million workers shifting to the industry, 70% of the GDP is in the long last created. Singapore’s port being the busiest cargo ports worldwide, the country in this breathe boasts import and/or export trade with the likes of Hong Kong, Malaysia, South Korea, Saudi Arabia, Japan, Indonesia, China and the United States (InterNations.org). Singapore has insisted on the importance of trade as it is one of its major incomes generating activity which has increased its economic development. This has been made possible by the quality goods and services they offer to their trade partners (Bowen, 1993). Its major trade partners include Japan, United States, Netherlands, and Europe among other countries. In spite the ability to export a wide range of goods, Singapore also imports goods from countries such as Japan. The country has been doing quite well for the last few years as it tries to strike a trade balance between it imports and exports. Figure 1: Source: www.tradingeconomics.com Statistics of Singapore From the graph above, Singapore balance of trade between imports and export is represented on a half yearly basis. Again from the graph, it is evident that between July 2012 and January 2013 the balance of trade has not been that that much good. This could be due to such reasons such as downfall of currencies, political instability, poor terms of export and imports, low demand of goods, increased completion among other factors. However, between January 2013 and January 2014 there has been an increase in the balance of trade as compared to other years. This could be as a result of good terms of trade internationally, increased sales, political stability, technological advancements among other factors. Therefore, Singapore has been doing very well recently in its trades, enabling it to be among the most developed countries in the world due to its technological advancement and trade among other factors discussed below. The perception that the geographical location of a given country determines the level of economic development is true. However, people criticize this idea because they believe that this leads to racism and that this undermines the perception of equal opportunity among different ideas. Geographically, Singapore can be determined by the use of its location, latitude, climatic differences, natural resources and seismic effects and lastly the environmental stability (George, 2000). Climatic Condition: Singapore is characterized with tropical rainforest climatic temperatures and pressures, high humidity and abundant rainfall which average 2340 mm annually. This gives it a warm and wet climate. Its tropical climate attracts both leisure and business travellers. Due to this good weather, the country receives large number of tourists who bring a lot of wealth into this country in form of foreign exchange (Shatkin, 2014). The visitors enjoy many sites, the environment being green, and the moderate environmental conditions. Tourists have led to increased economic development, as they visit the abundance of parks, natural reservoirs and lush and tropical greens. The climate has enabled Singapore to plant 6% of its land with crops for food and for selling as well. This is important as it has enabled the country to create more jobs and more so, promote their economic development (Bowen, 1993). Natural Resources: At the North of Singapore city, we have two natural sites; The Bukit Timah and the central catchment area which has splendid Zoological gardens. This makes it considered a stopover on the way to Asian cities. It is evident that visitors seek out Singapore for a fascinating and satisfying vacation. In this process, the country receives a lot of money which are invested in the development of infrastructure. The country also has fish and deep water ports which are used as food and transport respectively. Low seismic activity: The state is safe from seismic activities. This involves tremors that are frequently experienced in different parts of the world, and when it happens it is of low magnitude, causing no harm (Wong, 1980). Such tremors are not witnessed in the country meaning a very low cost incurred on hazardous situations and instead, invested in developmental projects. Environmental stability: There are good environmental conditions due to increased number of trees covering about 50% of its land. This has led to the nickname, “garden city” leading to increased attraction of visitors, who bring a lot of money for the country. The incomes are later invested to different sectors. This has led to improved education, health and security in the country. Latitude: Good latitude has enabled Singapore to have easy access to markets fostering technological progress. In word of Adams Smith, productivity gains, gotten through specialization are the secret to the wealth of a nation. For these to be achieved, producers must have access to diverse market. Singapore has attained most of these requirements raising their competitiveness which ultimately gives them an edge in the international market (George, 2000). In addition, transportation costs are low in Singapore than in other countries, since the highest point is barely just 165 meters above the sea level. The implication is that Singapore transports its product within land and outside through water using their very busy port. The government spends relatively low amounts of money during the construction of its roads due to the country’s low attitudes, hence low cost. Modern economic growth taking off in any country is as result of such institutional factors such as essential natural resources, key technological insights, emergence of market-based institutions; including intellectual property and supportive political environment. The takeoff of Singapore -economic growth takeoff was not an accident but through a very rare event, which required recurrent developments all through centuries to its position today (Bowen, 1993). Singapore achieved this through the industrial revolution that took place in England and later spread to rest of the world. Industrialization spread to countries that had coals in the 19 century, such as Western Europe, Australia, New Zealand, United States, Japan among others which were major beneficiaries (Shatkin, 2014). This created the differences since at the end of 19th century; countries that had coal were far ahead of those that did not have. In this perspective, Singapore achieved its competitive edge. On the exhaustion of coal, Singapore was able to use wood as a source of fuel due to its large forests that it owned. The transport sector too developed. This involves water, land and air. Agriculture is the other factor that has led to development of the Singapore’s economy. It is worth noting that food is the first need of life and therefore can be said to constitute 80% of the consumption basket of subsistence household (The World Bank Group, 2013).The country enjoys and produces agricultural yields of more than the subsistence needs where the country’s population will struggle to produce food for their own consumption only. As a result, the country has been able to transport food to different parts of the country despite its high cost. Singapore was able to make a break -through on agriculture and has produced high productivity on agriculture and has enabled a release of the labor into non-food activities. This has given the country a chance to increase its productivity in other sectors of the community. Singapore, having a supportive environment, has been able to make wide moves (George, 2000). These includes; adequate soils, sunshine, water, animal health and topography and the availability of a range of manufactured input, improved seeds, fertilizers, irrigation and mechanical equipments for land preparation, plowing, seeding, harvesting, processing, transporting and storage of the farm products. With this, Singapore has grown its economy dramatically over the years. Urban-Rural and international trade is vital for agricultural development. This is so because, importing fertilizers and equipments from abroad, for the use in rural areas for cultivation is a cheap activity in this country. Trade is highly affected by the physical environment as well as the built-in infrastructure and transport technologies. Singapore has invested a lot on the infrastructure and transport systems making their products and services easily accessible. Singapore is an island, meaning that its access to the sea-based port has made it successful through increased economic development (Tremewan, 1994). This is due to the fact that the water transport does not require the construction and maintenances in finances, unlike the roads. Water-carriage is open to all kind of industry. Singapore has embraced the fact that the world economy is dependent on the systematic production of knowledge, with complex interplay of mass literacy, public education, industrial research and development, and public investments in science and technology. Having this in mind, Singapore has invested a lot in research which has made it wealthier and wealthier day in day out (The World Bank Group, 2013). The other factor is that its cities are well integrated to global trade and finance. This has led to improvement in their economy due to the fact that these cities are able to support their own hinterlands with growing markets, improved inputs, more extensive infrastructure and trade financing. This two way interaction between the rural and urban areas is very vital for a self sustaining positive environment. Public investment in infrastructure is very important on such areas as water, sanitation, roads, ports, and power grids (George, 2000). The good economy of Singapore has been made possible by the good balance of the above. It also has effective public health units in its urban areas that have played a great role in the prevention of spread of epidemic diseases. References Bowen, J. T. (1993). The global airline industry and economic development in Singapore. George, C. 2000. Singapore: the Air-Conditioned Nation. Singapore: Landmark Books. Koh, Gillian and Ooi Geok Ling 2000. State–Society Relations in Singapore. Singapore: Oxford University Press, Monetary Authority of Singapore, SGS. (n.d.). The Singapore economy (2014). Retrieved from website: http://www.sgs.gov.sg/The-SGS-Market/The-Singapore-Economy.aspx Singapore Minister of Foreign Affairs. Retrieved from website: http://www.mfa.gov.sg/content/mfa/media_centre/singapore_headlines/2012/201212/infocus_20121206.html The World Bank Group, (2013). Shatkin, G. (January 01, 2014). Reinterpreting the Meaning of the ‘Singapore Model’: State Capitalism and Urban Planning. International Journal of Urban and Regional Research, 38, 1, 116-137. The economy of Singapore. Retrieved from website: http://www.internations.org/singapore-expats/guide/16061-economy-finance/the-economy-of-singapore-16045 The worldwide governance indicators (wgi) project. Retrieved from website: http://info.worldbank.org/governance/wgi/index.aspx Tremewan, C. (1994). The political economy of social control in Singapore. New York: St. Martins Press. U.S. library of congress. 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