The Typical Course of Singapore Model

The economic development of Singapore is always inseparable from the influence and intervention of the government, which is due to its unique background. When Singapore became independent, the situation it faced was very severe and full of difficulties, which were mainly manifested in the following aspects: (1) the economic base was backward; Limited domestic market; Education is not universal; High unemployment rate; Racial conflict; No social and housing security; Facing external threats.

The reality of poverty and backwardness forces Singapore to take attracting foreign investment as the core strategy of economic development. Attracting investment from rich countries is not only to get rid of the crisis of survival as soon as possible, but also for their own security. How to attract foreign investment was the biggest challenge facing Singapore at that time. Singapore's approach is: the government encourages foreign investment to settle down in the form of subsidies. Facts have proved that this practice is effective. But where does the subsidy money come from? On this issue, Singapore has made its own unique contribution: to solve the source and accumulation of national capital through the compulsory implementation of the central provident fund for personal savings. The Central Provident Fund not only provides subsidies for attracting foreign investment, but also provides financial support for the construction of government housing units (equivalent to affordable housing in China).

At the beginning of 1965 ~ 1973, Singapore took advantage of its superior geographical position to increase its attraction to foreign investment by means of subsidies, focusing on the development of entrepot trade and labor-intensive industries. The sustained growth of foreign direct investment has promoted economic development and created employment opportunities; Vigorously building government housing has not only realized "home ownership", but also effectively stimulated the domestic consumer market. Even if people live and work in peace and contentment, it will also contribute to the expansion and accumulation of the national capital, the Central Provident Fund, and form a unique virtuous circle model of economic development.

With the change of the situation, although the policy was adjusted later, the basic model has not changed, but it has been gradually improved on the original basis. For example, during the period of 1974 ~ 1985, with the improvement of economic situation and the track of rapid development, Singapore began to develop processing industry on the basis of trade entrepot, resulting in a shortage of domestic labor resources, and economic growth depended largely on foreign hired labor. On the one hand, the government at that time solved the problem of labor shortage by enacting immigration laws and using cheap foreign workers, on the other hand, it restricted the growth rate of local labor costs by increasing the contribution rate of the central provident fund.

From 1986 to 1997, in order to solve the problems of overheated real estate investment and excessively high labor costs, Singapore has vigorously developed its service industry, taking it as the second engine to promote economic development, especially the rapid development of financial and information services, making Singapore a regional financial and information center, enabling it to absorb and radiate trade and finance.

After 1998, the Asian financial crisis brought about great changes in the international situation. Facing the rise of China and India, as well as the high cost of land and labor, the original development model has encountered challenges. The adjustment of its economic policy mainly focuses on using the mature economic system, actively developing knowledge-based economic industries, encouraging citizens to innovate and start businesses, and the government strives to create a good environment.