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Can the Singapore development story be copied elsewhere?

singapore_rafflesBy Donald Low

There are various people and international organisations pointing to the Singapore development story and saying that developing countries should copy or mimic it if they want to succeed. This line of thinking, in my view, is quite misguided.

Learning about, and from, Singapore’s experience is certainly possible and desirable – that’s one of the reasons many international students and public officials come to the Lee Kuan Yew School of Public Policy and the Civil Service College. But learning is not the same thing as copying or mimicry.

My central argument is this. I don’t think the Singapore model can be copied, certainly not in its entirety. I don’t even think that key aspects of the Singapore model can be copied or replicated to any meaningful extent. And even if it turns out that some important aspects of the Singapore model can be copied, I’m not sure the outcomes would necessarily be desirable.

Let me suggest to you three reasons why I don’t think the Singapore development story can be copied elsewhere.

Unusual Beliefs

The first is unusual beliefs. At the heart of the Singapore model is a set of beliefs and worldviews that are extremely unusual. This makes the Singapore system of governance not amenable to mimicry or replication elsewhere.

In my book Hard Choices, I argued that governance in Singapore was premised on the idea of Singapore’s inherent vulnerability. This national obsession with vulnerability has legitimised a number of quite unusual policies and practices. When people talk about the new normal in Singapore, let’s be clear that the contrast is not with the old normal, but with the old abnormal. The abnormal practices borne out of Singapore’s vulnerability paradigm include:

  • An extreme form of elite governance to guard against populist, myopic or demagogic politics;
  • A strict, mostly academic, meritocracy to sieve out the best and brightest (partly to rejuvenate the ruling elite);
  • A state paternalism that, at the same time, insists on individual responsibility;
  • An aversion to state welfare and a general indifference to inequality (at least until recently);
  • A high degree of scepticism about the appropriateness of ordinary democratic arrangements for Singapore; and
  • A belief in the possibility and desirability of social engineering.

Each of these beliefs, I would argue, is quite unique to Singapore and is implemented to an extent that is seldom seen elsewhere. Collectively, they create a very unusual ideological setting against which any of Singapore’s policies and practices must be understood. Trying to copy any of Singapore’s policies without an understanding of this larger ideological context is to commit a basic fallacy in thinking that policies in one environment can be grafted onto a different operating environment and be expected to produce the same results.

green and economyUnusual Context

But you may argue that governments elsewhere do not need to copy the Singapore government’s unusual beliefs to copy its (mostly) successful policies. You may say that developing countries should mimic Singapore’s free trade policies, its model of export-led industrialisation through multinational corporations, its status as a financial hub, its long-term urban planning practices, its rule of law and the (relative) absence of corruption, its macroeconomic and financial stability, its public housing program, its healthcare financing policies, or any of the policies in Singapore that are lauded internationally.

The second reason why I think that Singapore’s model can’t really be copied elsewhere is that the conditions that enabled many of these policies to be successful are, on hindsight, quite unusual. These conditions are now changing quite profoundly, and are becoming less relevant for the future – both for Singapore itself and for developing countries.

Export-led Industrialisation

Take our success with export-led industrialisation as an example. While this strategy was highly successful for Japan and the East Asian Tigers, it is a far less effective strategy in a world where every emerging economy now welcomes foreign investments.

More importantly, in a world where developed countries are less able and willing to be the world’s consumers, export-led growth has probably run its course as the surest way to prosperity. Six years after the global financial crisis, demand in the developed world remains extremely weak. Larry Summers has suggested that we are likely to see a prolonged period of “secular stagnation”. Emerging economies, which were resilient immediately after 2008, now face slow growth and debt problems of their own. They are also far too reliant on fickle capital inflows and commodity booms.

Conceivably, China and India may one day take the place of the developed world as the world’s consumers. But the in near to medium term, this is unlikely. Indeed, China’s success with export-led industrialisation over the last thirty years has made it far more challenging for other developing countries to find a foothold in manufacturing. Meanwhile, as Dani Rodrik has argued, many industries that were previously the growth escalators for developing countries – such as garments, textiles, steel and electronics – are likely to face shrinking global markets and over-capacity.

In short, the effectiveness of relying on exports to drive growth was always highly context-dependent, and the context today for developing countries that are beginning to industrialise and are looking to exports to drive growth is a far less benign and propitious one.

lawRule of Law, Zero Corruption

What about the rule of law, zero tolerance of corruption and the sanctity of contracts as things which developing countries should copy from Singapore? It’s certainly true that these qualities mattered hugely for Singapore. They are essential if you want to be the trade and financial centre of your region.

But for most emerging economies, being a trading and financial hub is neither a realistic nor appropriate economic ambition.

By definition, there can be only a few hubs in a network. Existing hubs enjoy significant advantages of economics of scale, network externalities, and the cumulative advantages conferred by their histories as hubs. The best examples of these advantages in Asia are Hong Kong, Singapore and Shanghai – which all started life as (British colonial) port cities. Their current hub status, to a large extent, is a result of that history.

For most emerging economies, the appropriate model they should look to isn’t port cities like Hong Kong and Singapore, but the successful industrialised Asian countries of Japan, South Korea and, to some extent, Taiwan. None of them succeeded because of rule of law or zero corruption. Or look at China today: you can go very far even if you didn’t have rule of law, clean government and the sanctity of contracts.

Public Housing

What about public housing – arguably Singapore’s greatest policy innovation? Does that offer a useful model for developing countries and cities?

The idea of the state providing subsidised housing is not unique to Singapore – many cities in the developed world have this; they just call it social housing.

What is unique to Singapore is the extent of state involvement in the provision of housing, the proportion of Singaporean households who own and live in publicly developed flats, and perhaps most importantly, the fact that public housing in Singapore is the de facto welfare state. Instead of cash transfers, the state provides citizens an asset transfer. Instead of providing public pensions, the state tells you that your flat is your primary form of retirement security. Can this unique asset-based welfare state be a model for other cities?

HDB corporate video websiteIt’s certainly very innovative in the sense that no other government in the world uses public housing as the primary form of redistribution, and as a substitute for pension and welfare provision. It’s very innovative, but it’s also quite useless as a piece of advice to developing countries and cities grappling with housing shortages. Very few other governments have the legislative or institutional capacity to develop publicly financed housing on such a large scale, e.g. Land Acquisition Act, the CPF system of forced savings that encourages (even induces) high rates of home ownership, and a professionally competent HDB. The ones that do have compulsory land acquisition powers – for instance, Chinese provincial and local governments – tend to use those powers to enrich themselves. So in many Chinese cities, local governments expropriate land from farmers, sell the land to real estate developers, who’d then develop housing and commercial facilities on a purely commercial basis. The increase in land values is pocketed by the local governments, not returned to the people in the form of subsidised housing.

But that doesn’t mean Singapore can’t teach a world a thing or two in housing. Although Singapore’s public housing policies are highly context-dependent and largely irrelevant for the rest of the world, HDB’s engineers and architects can be extremely useful to city governments that want to develop new residential neighbourhoods for their people. So Singapore can’t teach the world how to run public housing system, but it can teach the world how to build low-cost flats quickly. In short, the policymakers are quite useless, but the engineers, architects and planners may be of some use yet.

Success usually sows the seeds of failure

Finally, you may argue that what other countries or cities ought to copy from Singapore isn’t our beliefs or our specific policies – both of which are unique to Singapore and are highly context-dependent. Instead, it’s the principles of pragmatism, flexibility, and constant adaptation that are worthy of emulation and mimicry.

I agree these are extremely valuable characteristics for governments to acquire. Indeed, I would say they are the most important attributes a government can have. But I’d also be inclined to say that Singapore does not represent a role model for these qualities.

I said earlier that Singapore’s success derives a great deal from its status as a trade, financial and logistics hub. And I also said that this was largely a function of our history. We began life as a British were a port city: we were an entrepôt, an intermediary, a trading hub, and more lately a financial centre. Even though we were quite successful in industrialisation, this was driven largely by foreign multinational corporations – and to some extent, by the large government-linked companies that Singapore had inherited from the British.

I’d leave you to reflect on the consequences of our high reliance on foreign investments and foreign labour. But it’s very telling that the architect of our “industrialise through MNCs” strategy – Goh Keng Swee – always thought that the strategy was a self-limiting one. For him, MNCs were a short cut to industrialisation, not a long-term strategy.

This is what Goh Keng Swee had to say about Singapore’s growth model in 1972:

“There have been no studies, to my knowledge, of the relative dependence of these countries on foreign investments as an instrument of economic growth. My own subjective impression is that this dependence is strongest in Singapore and that the participation of national entrepreneurs in promoting industrial development is smaller here than in the other countries… Not only is Singapore more dependent on foreign entrepreneurs than are Hong Kong, Taiwan and South Korea, but her position is probably unique in that she is now dependent on a continuing supply of foreign workers to sustain growth… This, then, is the setting against which we have to consider our long-term problem of income distribution… The question we must answer sooner or later is this: ‘When do we stop growing?’ Or to be more precise, at what point do we stop importing foreign workers and cease to encourage foreign entrepreneurs and capital in Singapore? Because of our limited land area, industrial expansion together with the concomitant population expansion will produce overcrowding to increasingly uncomfortable limits.”

1972 was also the year when S Rajaratnam, another of Singapore’s first generation of leaders, delivered his famous Global City speech.

“But times are changing and there will be less and less demand for the traditional type of entrepôt services that Singapore has rendered for well over a century.  Its role as the entrepôt city of Southeast Asia, the market place of the region, will decrease in importance. This is because Singapore is transforming itself into a new kind of city – a Global City.”  

“By linking up with international and multinational corporations, Singapore not only becomes a component of the world economy, but is offered a short cut to catch up or at least keep pace with the most advanced industrial and technological societies. By   plugging-in in this way, we can achieve in twenty to thirty years what otherwise would have taken a century or more to achieve.” 

Rajaratnam too believed that our MNC strategy was a short cut. And like Goh, he recognised the limits of the Global City vision he articulated. At the end of that very speech, he said, “…I have dealt largely with the economic aspects of Singapore as a Global City.  But the political, social and cultural implications of being a Global City are no less important….The political, social and cultural problems, I believe, would be far more difficult to tackle.  These may be the Achilles' Heel of emerging Global Cities”.

Singapore’s foreign capital-led growth model and S Rajaratnam’s vision of Singapore as a Global City worked well for Singapore in its first few decades as an independent country. But it is hardly a model today for other countries, or even for Singapore as she enters her second half-century as an independent country. As both Goh and Rajaratnam foresaw, the development model of the first few decades was always a short cut that was probably not viable in the long haul. In terms of both space and time, the ideas that made Singapore a success story in its first fifty years – what I call the Singapore Consensus – would eventually run into seriously diminishing, if not negative, returns.

Donald Low is the lead author of Hard Choices: Challenging the Singapore Consensus. This article first appeared on his Facebook page. We thank Donald for allowing us to republish it.