THE DEFENCE SECTOR'S CONTRIBUTION TO THE SINGAPORE ECONOMY : PAST TRENDS AND FUTURE OUTLOOK

Abstract

The defence expenditure in Singapore is one of the largest in Southeast Asia. Correspondingly, its defence sector is also relatively large. The contribution of the defence sector to the economic growth of Singapore is certainly quite large. This thesis seeks to examine several issues. Given the small size of Singapore, can it really afford such a high defence expenditure? Are resources being diverted from other sectors to finance such a high military spending? More important, what are the impacts of the defence sector on the economy? Is there an empirical long-term relationship between military expenditure and economic growth in Singapore? Lastly, what is the future outlook for the defence sector's contributions to the Singapore economy? For a small country, Singapore attracts a large amount of foreign investment, and many have attributed foreign investment as an important source of economic growth for Singapore. Is the peace and stability provided by the defence sector the main reason why foreign investors are attracted to Singapore? This issue and other contributions towards the economy by the defence sector are what the thesis examines.