Monday, March 13, 2006

Singapore - after decades of liberal trade and investment

Okay so I'm stuck here in Singapore on an eight-hour wait for my connecting flight. An airport display informs you of the following factoids:

Did you know that Singapore makes:
1/3 of all hard disks?
1/3 of all hearing aids?
20% of all photoflash lamps?
Oil and gas equipment?

About 26% of GDP is accounted for by manufacturing, of which nearly 40% is in electronics, 26.4% is in chemicals, 17% in mechanical engineering, and 7.6% in biomedical products.

Of course we all know that Singapore is a global transport hub. One-third of the world's oil passes through Singapore; it has the 3rd largest oil refinery hub; it has 50% of the world market for fast ferries. It is the world's number 1 in shipbuilding repair, cornering 20% of the world market. Changi airport exemplifies this excellence: all cargo is cleared within 13 minutes; the airport has been voted best airport by "Business Traveller" for the last 17 years.

Was this achieved because the government closed off the economy to foreign investment and trade? You gotta be kidding. It's one of the freest economies in the world, next to Hong Kong. One of the beauties of the market is how it identifies export winners in such detailed niches that no planner or economic model could possibly foresee. Well okay, a world transport hub, maybe; but friggin' hearing aids? Photo flash lamps?

Okay lots of people are complaining about the repressive political environment. However what is important is total freedom - economic and political. Some countries have lots of political freedom but place plenty of economic restrictions. Time to realize that these restrictions fall within a continuum of repression. So before we say in the Philippines fault Singapore for this and that, tell me, how long does it take for you to register your real property in the Philippines, grease-free, in the Philippines?


Anonymous said...

I initially had the impression that Singapore was not that free economically (due to government-owned businesses), but some studies disagree. The Index of Economic Freedom (by WSJ) ranks Singapore as #2, behind HK.


Amadeo said...

Indeed from that vantage point, it must be jealously enticing for the Philippines to follow in the footsteps of this most prosperous neighbor.

But one wonders confusedly how this can be feasibly achieved given the great gaps and differences of realities between the two.

Singapore is an island republic standing on less then 700 sq. kms. of land and possessing a population of about 4.5 million.

While the Philippines possessing about 300,000 sq.kms. of land, already holds the reputation of being No. 13 or 12 in population size, at 87 million.

Governance alone is already a hellish task for our floundering republic.

Anonymous said...

Size has nothing to do with it. There are a lot of Singapore-sized countries that are doing pretty badly, while there are a number of Philippine-sized countries that are economically freer and more prosperous. I would argue that economic freedom has a stronger correlation with prosperity than country size.


Anonymous said...

I'm not convinces that Singapore is a model for liberal trade and investment. Yes, there is a lot of economic freedom, in the sense that there is fewer barriers to trade. But this ignores the large degree to which the goverment intervenes in the economy. Look at the GLCs, the state housing, the fact that the government makes plans for broadly planning where to go in the next phase of development. Planning by the state had a lot with it being where it is now economically, but I think this will subside slowly, and may already have began. First world countries depend more on innovation rather retreading worn paths for further growth, though that is a perfectly legitmate way for LDCs to grow quickly.