CAPITAL FLOWS AND ECONOMIC GROWTH IN SINGAPORE

Abstract

Most studies have analyzed either the effects of foreign direct investment on the economic growth of Singapore; or the impact of regionalisation on the Singapore economy. Only a few studies have integrated the two issues for discussion and analysis. In this paper, an attempt is first made to analyze the effects of foreign direct investment on economic growth. The qualitative analysis is based on Dunning's Eclectic Approach, while the quantitative analysis is derived from a mathematical model which has been developed for the purpose of this study. The qualitative analysis has revealed results which are consistent with other studies, and the result of the model has suggested a few interesting points which are worth exploring for future research. Secondly, the relatively new trend of regionalisation is introduced to examine the effects and implications this concept might have on Singapore's economic growth. As the regionalisation drive in Singapore started only recently, there is insufficient data to conduct a quantitative analysis. Therefore, only a qualitative discussion is provided. The paper then summarises the mam findings and concludes with the challenges which Singapore might face in the years to come.