Singapore model

The Economic Development Board had been set up in 1961 to formulate and implement national economic strategies, focusing on promoting Singapore's manufacturing sector.[13] Industrial estates were set up, especially in the district of Jurong, and foreign investment was attracted to the country with tax incentives. The industrialization transformed the manufacturing sector to one that produced higher value-added goods and achieved greater revenue. The service industry also grew at this time, driven by demand for services by ships calling at the port and increasing commerce. This progress helped to alleviate the unemployment crisis. Singapore also attracted big oil companies like Shell and Esso to establish oil refineries in Singapore which, by the mid-1970s, became the third-largest oil-refining centre in the world.[11] The government invested heavily in an education system that adopted English as the language of instruction and emphasised practical training to develop a competent workforce well suited for the industry.[1]

Furthermore, Singapore used its advantageous geographical location to increase its attractiveness to foreign capital through subsidies, focusing on the development of export trade and labour-intensive industries. The continuous growth of foreign direct investment had promoted economic development and created more employment opportunities for Singaporeans. The vigorous construction of public housing flats throughout the country by the Housing and Development Board (HDB) has not only realized "home ownership", now among the highest in the world, but also strongly stimulated the domestic consumer market. As Singaporeans lived and work in peace and contentment, it helped expanded the accumulation of state capital, and along with the Central Provident Fund (CPF), has formed a unique virtuous cycle of economic development.[1][2][14]

As the 1970s came along, the economic situation of the region and the world were changing. Although policies were adjusted later, the basic model however did not significantly change and had stayed resilient, though it was gradually improved on the original basis. Between 1974 and 1985, the economy continued to improve and had entered a rapid development track, and Singapore began to develop process manufacturing on the basis of trade re-exports dominating the economy. Singapore Changi Airport was opened in 1981 and Singapore Airlines was developed to become a major airline, and aviation was envisioned to be a major industry for the city-state.[15] Furthermore, the Port of Singapore became one of the world's busiest ports and the service and tourism industries also grew immensely during this period. However, the problem of shortage of domestic labour resources due to its low population appeared, and economic growth had depended to a large extent on labour. The government at that time decided to adopt an immigration law to solve the problem of labour shortage, and on the other hand, it restricted the growth rate of local labour costs by increasing the CPF contribution rate for employers.[14][1][2]

During the last two decades of the 20th century, in response to problems such as overheating of real estate investment and excessive growth of labor costs, Singapore vigorously developed the service industry and regarded the service industry as the "second engine" to promote economic development, especially the rapid development of the financial and information services industry.[16][1]

The 1997 Asian financial crisis brought about tremendous changes in the international situation. Although Singapore was significantly less affected, the original development model exposed potential challenges, and Singapore's economic policies was ultimately adjusted to mainly focus on the use of mature economic systems to actively develop knowledge-based economic industries and encourage national innovation entrepreneurship, which the government strives to create a good environment as well as in other aspects. Today, Singapore has now turned into a developed regional and global financial and information hub, giving it the ability to absorb and radiate trade and finance.[17][2]

During Brexit negotiations in the United Kingdom (UK) in light of the country's withdrawal from the European Union (EU), former Chancellor of the Exchequer Philip Hammond, inspired by the economic policies of Singapore, coined the phrase "Singapore-on-Thames", alluding to the River Thames that flows through Southern England and into London. It is meant to describe a prosperous post-Brexit Britain in becoming a meritocratic low-tax, free market economy that could out-compete the over-regulated eurozone.[21] This view was also supported by other British politicians, including Prime Minister Boris Johnson and his cabinet, who also mentioned his intention of turning the country into the "Singapore of Europe".[22]

However, the success of emulating the Singapore economic model was met with some skepticism, who felt that the United Kingdom could not implement it adeptly even if they had tried, due to cultural and geographical differences.[23][24] German chancellor Angela Merkel highlighted that a "Singapore-style" United Kingdom would pose an "economic threat" to the EU.[25]