This article gives a brief overview of the structure of Singapore economy.
The growth of Singapore, since its independence in 1965 is a role model to other developing countries. In a span of forty three years, the nation has moved from a third world economy to a first world economy.
During the earlier stages of development, Singapore economy was characterized by weak economic fundamentals. Labor was unskilled and uneducated, unemployment was rampant and political turmoil in the region restricted Singapore's development. The global economy, however presented an opportunity for Singapore to leverage on and accelerate on the path of economic development.
The policy makers then decided to follow a strategy of export led industrialization. Deviating from established economic norms of the region during those times, Singapore allowed the entry of foreign investments and encouraged Multi National Companies to set base in Singapore, to bring in foreign technology, accessibility to markets and management expertise.
The Singapore Government was very clear about setting employment standards and established institutions to forge stronger ties between labor and management. The Government also took initiative to improve the physical infrastructure like transport and communication and soft infrastructure like business and legal systems.
Between 1965 and 1980, Singapore enjoyed a period of monetary stability and fiscal prudence. Combined with a proactive business environment and huge foreign capital inflow, the size of the manufacturing base doubled during this period. These factors enabled the economy to be insulated from the oil shock.
By the late 1970s, Singapore realized the need for economic restructuring. The country witnessed acute labor shortage. Increasingly Singapore faced stiff competition from other neighboring cost effective nations. To overcome the challenges faced by the economy, the policy makers decided to change the the economic structure from being labor intensive to capital driven and high value added industries.
To cater to the increasing demand for skilled workforce, Singapore improved the standard of its secondary and tertiary education. The three universities in Singapore, National University of Singapore (NUS), Nanyang Technological University (NTU) and Singapore Management University (SMU) have together provided the nation the necessary skilled manpower.