FOREIGN INVESTMENT AND THE ECONOMIC DEVELOPMENT IN SINGAPORE

Abstract

The economic transformation of Singapore during the past 3 decades is impressive. In just 30 years, Singapore has been transformed from an economy which relied mainly on entrepot trade to an economy which is diversified into a wide range of manufacturing, financial and service activities, and is now being regarded as a "total business centre". Unemployment, which was a serious problem thirty years ago, no longer exists. In fact, Singapore has been so successful that many developing countries are trying to learn from its model of economic growth. Among the many factors that have contributed to this success, foreign investment has played a rather crucial role. Since the attainment of self-government in 1959, foreign investment has been actively encouraged to spearhead economic growth. Foreign investment has allowed Singapore to gain quick access to foreign technology, expertise and markets, making it possible for the economic transformation of Singapore to take place in such a short period of time. Being a small country, Singapore had to depend on foreign MNCs to bring in capital funds to broaden its economic base and to upgrade the technology and skill content of its industries. The continuous investment inflow demonstrates investors' confidence in the Singapore economy. Singapore's well-developed infrastructure and telecommunication system, its strategic location, its social and political stability , and its disciplined and deligent workers make it an attractive investment location for foreign investors. The Singapore government has to be commended for Singapore's success in attracting foreign investments. It has played an active role in investment promotion and in creating a conducive investment climate for foreign investors. In this Academic Exercise, we will study the role played by foreign investment in the various stages of Singapore's economic development. We will also be looking at Singapore's foreign investment policy and the characteristics of foreign investments in Singapore. Issues such as whether foreign investment will still be encouraged for Singapore's future economic development will also be discussed.