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PECULIARITIES OF ECONOMIC DEVELOPMENT OF SINGAPORE
A.I. Tkachenko, student A.E. Kalinina, student
Saint-Petersburg state university of economics (Russia, Saint-Petersburg)
DOI: 10.24411/2411-0450-2019-10505
Abstract. The article discusses the reasons for the economic growth of Singapore, the main economic indicators. The authors believe that the model of the Singapore economy is the integration into the world community under the leadership of the domestic demand and focus on innovative development of the country, the use of nanotechnology
Keywords: economic model; investments; structure of the economy; modernization; innovative economy.
A modern development of countries is characterized by the dramatic increase of un-evenness of the socio-economic development and by the growth of share of developing countries in the global economy. One of the countries, which have achieved a qualitative change of the socio-economic status in a short period, is Singapore.
The modernization of Singapore economy (1959-1990) was carried out with the attracting of foreign investors, and this allowed Singapore to become a technological civilization, financial and trading centre of South-East Asia. Russian and foreign researchers recommend using the unique experience of Singapore in practice of other countries.
Macroeconomic indicators of Singapore The economic model of Singapore is a developed market system, which depends on export, especially in spheres such as consumer electronics, information technology, pharmacy and financial services.
The economy of Singapore is one of the most open economies; also it is free from corruption. The stable prices are maintained and per capita GDP is one of the highest in the world.
From 2010 to 2016 GDP on the criterion of the purchasing power parity (PPP) increased by over 25 per cent. The main reason of the decline in GDP in 2015 was falling demand for export commodities of Singapore caused by the economic slowdown of lead trading partners, first of all of China. Therefore, decline in industrial production of Singapore amounted to 3.5 per cent.
Foreign trade plays a huge role in economic development of Singapore: it provides the majority of the income of the country. Through the import Singapore satisfies the needs, which occur due to the lack of national natural resources. Export helps to sell more than half of the product on the global market, to form foreign earnings as the basis of the socio-economic development.
Singapore is a major player in the international trade. According to the data of the World Trade Organization for 2016, the country took the 13 th place in the world in export volumes and the 16th in import volumes.
The export of Singapore in 2016 amounted to 353300 bln of dollars, and import - 297 bln of dollars. The main partners of Singapore in export and import are showed in Table 1.
Table 1. Trading partners of Singapore
Main customers of export from Singapore Main importing countries of Singapore
China (13.7%); China (1.2%);
Hong Kong (11.5%); Malaysia (11.2%);
Malaysia (10.8%); USA (11.2%);
Indonesia (8.2%); Japan (6.3%);
USA (6.9%); South Korea (6.1%);
Japan (4.4%). Indonesia (4.8%).
In Table 2 there is an expanded commodity structure of export and import of Singapore.
Table 2. Foreign trade of Singapore
Key products exported by Singapore Key products imported in Singapore
- Electrical machines and electronic equipment (6th place in the world, 33% of export); - equipment and mechanical devices (9th place, 17%); - mineral fuels, oils, petroleum distillates (13th place, 15%) etc - Electrical machines and electronic equipment (5th place in the world, 27% of import); - mineral fuels, oils, petroleum distillates (10th place, 24%); - equipment and mechanical devices (10th place, 16%) etc
The main items of import of Singapore coincide with the main items of its export. This demonstrates an advanced stage of country's specialization.
In Table 3 the macroeconomic indicators of Singapore are reflected, these include the unemployment rate and the inflation rate.
Table 3. Unemployment and inflation trends in Singapore for 2010-2016
Year Unemployment rate, % Inflation rate, %
2010 2.2 2.8
2011 2.0 5.2
2012 2.0 4.6
2013 1.9 2.4
2014 2.0 1.0
2015 1.9 -0.5
2016 2.0 -0.3
The unemployment rate in Singapore has been within 2% for many years. The inflation in 2016 was -0.3%, that is, the country found itself in the position of deflation - an overall induction in the price level.
Sound policies, respect for the rule of law, highly developed economy of Singapore allowed this country to become the international centre for a lot of branches of industry. For instance, in 2016 17 Singapore companies have joined the list of 2000 biggest public companies of the world under the version of Forbes magazine (DBS Group Holdings, Oversea-Chinese Banking Corporation (OCBC), Singtel United Overseas Bank, Wilmar, etc).
Singapore has the second highest development of the financial market in the world. According to the report of the World Economic Forum 2015-2016 about global competitiveness, the strengths of Singapore are access to credit (4th place) and sustainability of banking system (4* place).
In recent years the government of Singapore has paid close attention to the technical development of the country. We are going to list the main priorities in sphere of scientific research formulated by the National Research
Foundation: biomedical science; technology for protection of the environment and water treatment: clear water and pure energy; interactive and digital media.
Singapore is a world leader in innovation. Global Innovation Index (GII) is used for assessment of the level of innovation in different countries. GII is a weighted amount of evaluation of two groups of indexes:
- disposable resources and conditions for implementation of innovation;
- achieved practical results of implementation of innovation.
Thus final Index is a ratio of cost to effect, which allows making an object assessment of the effectiveness of effort made for development of innovation in different countries.
GII includes 7 indicators:
- institutions
- human capital and research
- infrastructure
- development of market level
- development of business level
- results in field of science and technology
- results of creative activity
Global Innovation Index of Singapore is reflected in Table 4.
Table 4. Global Innovation Index of Singapore for 2013-2016
Year Index value Place in the world
2013 59.4 8
2014 59.2 7
2015 59.36 7
2016 59.16 6
These figures demonstrate that Singapore is one of the leaders in list of countries which pay close attention to scientific and technological development.
The analysis of causes of the economic growth of Singapore has shown that focus on innovative development of country is in the
centre of economic model (Table 5). Singapore spent about 2% of GDP on research and development in 2012. This puts Singapore at the same level as knowledge-intensive countries like Denmark (3.1%), Taiwan (3.0%), Germany (2.9%), Switzerland (2.9%), Austria (2.8%) and USA (2.8%).
Table 5. Factors of innovative development of Singapore
System of education and retraining of personnel The State pays up to 90% for education and retraining of personnel. Business of Singapore can employ the right specialist from abroad and then present a bill for a fee to the State.
State support Creation of programs which contribute to further development: "Plan of development of science, technology and entrepreneurship 2015" - five-year plan announced by the Agency for Science, Technology And Research (A*STAR) in 2011 "Plan of development of research, innovation and entrepreneurship 2015" - five-year plan which establishes key strategies of Singapore in research and development for implementation of the long-term strategy of becoming knowledge-intensive, innovative and entrepreneurial economy. National Framework for Research, Innovation and Enterprise (NFIE) - national program of development of innovation and entrepreneurship in Singapore. It is administered by the National Research Foundation, Prime Minister's Office.
Investment attractiveness Strategically advantageous position of Singapore at the intersection of the main sea routes and developed industrial society gave the country disproportionate economic importance in SouthEast Asia in comparison with country's small size. Singapore is a state maximally oriented on the use of new technologies at all levels of economy. Singapore is one of the most integrated in global economy states.
Authors underline the features of the economic model of Singapore:
- A friendly tax policy, which attracts foreign entrepreneurs. A company's income is taxed at the same rate of 18%. Meanwhile it doesn't matter if this company is local or foreign. As for an income received from the foreign sources and not transferred in Singapore, it is not taxed.
- Singapore is the second in the world in ease of doing business. You have to pass 3 procedures to register your company, and they will take 2.5 days. The cost of registration of business is 0.6% of per capita income and a minimal authorized capital is 0.
- Government assistance and a huge amount of incentives to businesses. Preferential credit programs for small business operate in Singapore. They imply special loans, credit insurance and distribution of grants.
- The training and retraining program, which was pointed out before (table 5).
- Absence of corruption, and fight against the corruption was the basis of the modernization of country's economy.
- Some limitation in media. Local open broadcast, cable broadcast and print media in fact are closed for foreign firms. Section 47 of the Television and Radio Broadcasting Act restricts foreign capital of television companies on domestic market of Singapore to 49% or less.
- The lack of the centralized system of public procurement. The procurement is made by selected ministries, agencies and bodies provided for by law. The policy is formulated by the Ministry of Finance, which seeks to ensure openness and fairness of the public procurement.
Conclusions:
-Economy and Business- The economic model of Singapore is in- the economic stability attracts more and more tegration in the world community with the foreign entrepreneurs.
leading role of domestic demand and the ori- - Significant investment in new knowledge
entation on the innovative development of the and technology plays an important role in country. economic growth, which helps Singapore to
- Analysis of the economic development stay on the top lines in country ratings for of Singapore has illustrated that the country many indicators.
continues its quick development. - The experience of economic develop-
- A favorable investment climate, the lead- ment of Singapore can be used in practice of ing places in ratings of economic freedom and other countries.
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ОСОБЕННОСТИ ЭКОНОМИЧЕСКОГО РАЗВИТИЯ СИНГАПУРА
А.И. Ткаченко, студент А.Е. Калинина, студент
Санкт-Петербургский государственный экономический университет (Россия, г. Санкт-Петербург)
Аннотация. В статье анализируются причины экономического роста Сингапура, приведены основные экономические показатели. Авторы приходят к выводу, что модель экономики Сингапура представляет собой консолидацию в мировое сообщество при ведущей роли внутреннего спроса и ориентации на инновационное развитие страны.
Ключевые слова: экономическая модель; инвестиции; структура экономики; модернизация; инновационная экономика.
