GITAM DEEMED TO BE UNIVERSITY
GITAM SCHOOL OF BUSINESS
BENGALURU 2024-2026
MASTER OF BUSINESS ADMINISTRATION BY
VAISHNAVI S (2024203874)
PADMINI REDDY R (2024203912)
SHREENIVASAREDDI (2024203938)
Macroeconomics
“Case study: Sing the Song of Singapura –the David among Asian Goliaths”
Submitted to:
Dr. Senthil Kumar JP
GITAM
(Deemed to be university)
Introduction
Singapore, a small island nation with limited land (725.7 sq. km) and a dense population, has
defied the odds to become one of the world’s leading economies. With a nominal GDP of
$337 billion (2020) and per capita income of $59,164, it ranks among the richest and most
competitive countries globally.
Upon gaining independence in 1965, Singapore faced numerous challenges: ethnic divisions,
unemployment (13.5%), poor infrastructure, and economic stagnation. Despite losing its
hinterland to Malaysia and British troop withdrawals in 1968, Singapore’s leadership under
Lee Kuan Yew adopted a free market, corruption-free, and infrastructure-driven
approach, contrary to other post-colonial economies.
To compensate for a weak private sector, Singapore established state-owned enterprises (e.g.,
HDB, EDB, PSA, PUB), later managed by Temasek Holdings, which still plays a significant
economic role. The country’s strategic pivot from labor-intensive industries in the 1960s to
capital-intensive, high-tech sectors in the 1980s and beyond enabled it to integrate deeply
into global value chains (GVCs).
"Even with setbacks such as the 1990 oil crisis and the 1997 Asian Financial Crisis, Singapore
reformatted, opened up to foreign investment, negotiated trade agreements, and maintained
its government lean. These actions allowed it to become a world hub for electronics,
petrochemicals, manufacturing, and services.
By accepting the globalization, the export-led to the more growth in the (28% of GDP),
and foreign investment, Singapore ensured rapid development while gradually reducing state
control over the economy. However, its labor policies have drawn criticism for being
unfriendly.
Q1. What are the economic achievements of Singapore?
Singapore's economic achievements are remarkable, especially given its size and lack of
natural resources:
• High GDP & Per Capita Income: Nominal GDP of $337 billion and per capita income
of $59,164 (8th richest in the world in 2020).
• Global Rankings:
o 1st in Global Competitiveness Index for 7 consecutive years.
o 2nd in Global IT Report and Ease of Doing Business Index.
o 1st in ICC Open Markets Index and GVC factory participation in Asia.
o 4th in least corruption and #3 in FDI inflows (UNCTAD).
• Export Leadership: Among the top 10 exporters of manufactured goods; world’s
largest exporter of integrated circuits (36% of total exports).
• R&D Investment: Spends 2.2% of its GDP on research and development.
• Transformation into an FDI hub: Successfully attracted massive FDI due to stable
governance and infrastructure.
• Economic Diversification: Advanced in electronics, petrochemicals, services, and
high-tech manufacturing.
• Sustained Growth: Maintained an average growth rate of 3% over the last decade,
with historical growth of over 12.5% in earlier decades.
Q2. How did Singapore transform itself from a small fishing community into
a hotshot FDI destination? Outline the factors.
Several strategic steps contributed to Singapore’s transformation:
• Visionary Leadership: Lee Kuan Yew’s leadership rejected populist and socialist
models and prioritized economic pragmatism.
• Infrastructure Development: Built world-class infrastructure, including transport,
housing, utilities, and communication systems.
• State-owned Enterprises (SOEs): Created effective SOEs like HDB, EDB, PSA,
TAS, and PUB to jumpstart development.
• Temasek Holdings: Centralized management of government-linked companies, which
helped stabilize and grow the economy.
• Labor Policy: Initially adopted labor-intensive technology; later shifted to capital-
intensive, high-value industries.
• Education & Human Capital: Invested heavily in skill development and education.
• Political Stability & Clean Governance: Low corruption and efficient bureaucracy
attracted investors.
• Open Economy: Liberal trade policies and multiple FTAs ensured seamless integration
into global trade and value chains.
Q3. How did government policy support Singapore’s miraculous growth?
Do you think we lack such a focused political vision in your country?
Government Policy Support:
• Proactive Planning: The government made bold and well-timed shifts in policy —
from labor-intensive to capital-intensive production.
• Strong Institutions: Established effective state-run organizations and later allowed
them to transition to the private sector.
• Regulatory Reforms: Maintained ease of doing business, low corruption, and
transparent legal systems.
• FDI Focus: Rolled out incentives, created SEZs, and welcomed foreign investment.
• Export Orientation: Singapore reoriented its economy to focus on global value chains
and high-tech exports.
• Crisis Response: Acted swiftly during crises (e.g., British troop withdrawal, Asian
Financial Crisis) with adaptive policies.
Do we lack such vision?
Yes, in many countries (especially developing ones), the political focus is often fragmented
due to short-term electoral goals, bureaucratic inefficiencies, corruption, and lack of continuity
in policy. In contrast, Singapore’s leadership had a long-term, non-populist approach with a
clear national development agenda, something many nations struggle to replicate.
Q4. Outline the role of exports and FDI in Singapore’s growth story. In the
NY equation NY = C + I + G + (X - M), do you think the foreign trade sector
played an important role in Singapore’s growth?
Role of Exports and FDI:
• Exports: Made up 28% of GDP. Singapore is a major exporter of electronics,
particularly integrated circuits (36% of exports). WTO ranks it in the top 10 exporters
of manufactured goods.
• FDI: Played a crucial role in industrialization. Ranked 3rd globally for FDI inflows and
10th in outflows (UNCTAD).
• Trade Agreements: Numerous FTAs and WTO membership helped reduce trade
barriers and promote international trade.
• Global Value Chains: Singapore actively participated in GVCs, both in goods and
services, which strengthened its export economy.
In the national income equation:
• C (Consumption): While domestic consumption is stable, it is relatively small due to
a modest population.
• I (Investment): High levels of investment, especially from foreign firms, are a
significant growth driver.
• G (Government spending): Focused and efficient spending on infrastructure and
human capital.
• X (Exports): Exports form a major share of GDP. Singapore is a leader in re-exports
and high-tech goods.
• M (Imports): High as well, due to re-exporting, but net exports remain positive.
Contribution of Foreign Trade and FDI:
• Trade accounts for more than 300% of Singapore’s GDP.
• Over 7,000 MNCs operate in Singapore, contributing to employment, technology
transfer, and capital inflow.
• Export-oriented manufacturing and services like finance, logistics, and ICT dominate
the economy.
• FDI has been central in developing high-value industries like biotech, aerospace, and
green technologies.
Conclusion:
The Singapore’s economic journey will start from a struggling post-colonial fishing village to
a global economic powerhouse is a remarkable case of visionary leadership, strategic policy-
making, and disciplined governance. Faced with monumental challenges at independence—
including high unemployment, ethnic tensions, and lack of natural resources— the country
defied conventional development strategies and instead built a free-market economy led by
the state-owned enterprises and through consistent investment in infrastructure, education,
technology, and international trade integration, Singapore transformed into a high-income,
innovation-driven economy. Despite external shocks like the British troop withdrawal, oil
crisis, and the Asian financial crisis, Singapore showed agility in reforming its economic
policies to maintain competitiveness. Today, while it enjoys a strong global reputation for
ease of doing business, low corruption, and export excellence, it continues to face criticism for
its labor policies. Nevertheless, Singapore stands as a testament to how strategic governance,
openness to trade, and adaptive planning can turn limitations into enduring strengths.
