CHANGING PATTERNS OF SINGAPORE'S COMPARATIVE ADVANTAGE IN MANUFACTURED EXPORTS TO DEVELOPED COUNTRIES AND DEVELOPING COUNTRIES

Abstract

In recent years, there has been a phenomenal growth of manufactured exports from the developing countries especially from a subgroup called the Newly Industrialised Economies (NIEs). Studies done by economists, like Bela Balassa, seem to conclude that this phenomenon is due to a changing comparative advantage to a shift in the composition of output and a change in the export pattern of these countries. As she has been classified as one of the NIEs, Singapore is taken as an example to verify such a dynamic comparative advantage. Singapore's trade pattern, particularly of manufactured exports, is analysed in the hope that her areas of comparative advantage can be identified. The rise of domestic manufactured exports, reflects the growth of export industries such as electrical machinery, appliances and apparatus including electronic parts and component industries and non-electrical industries over the last two decades. This in turn reflects the success of Singapore's industrialisation as she switched from import substitution to export orientation and she restructured her economy into the production of higher value-added goods. Using Bela Balassa's "revealed" comparative advantage index, this study has shown that there is a shift in exports towards capital goods and goods of higher value-added components. In conclusion, it is thus true that Singapore's comparative advantage in manufactured exports is changing in recent years, vis-a-vis developed countries and developing countries, from industries that are labour-intensive and low skill-intensive to industries that are capital-intensive and skill-intensive.