The foreign dimension of Singapore’s economic growth : the role of foreign multinationals and labor on Singapore’s economic growth since the 1960s

Abstract

Singapore’s growth from its independence in 1965 to present day is truly remarkable. Much of the country’s economic success is due to the policies and strategies implemented by the Singaporean government and its agency the Economic Development Board (EDB). These include active promotion and targeting of foreign multinationals (MNCs) to invest in the country, a dynamic sectoral allocation of industries, and a shrewd use of both skilled and unskilled foreign labor. As foreign investment into Singapore has increased throughout the years, so have the amount of foreign laborers in Singapore. The government has always had an open-door policy for foreign skilled workers aiding Singapore to achieve its goals of industrialization and subsequent upgrading. With economic growth, the need for lowskilled foreign workers also emerged to maintain the country’s competitiveness. These workers would help to keep wages low, fill in labor shortages, and do menial jobs that Singaporeans would increasingly refuse to do. The aim of this paper is to show how foreign MNCs, skilled labor, and unskilled labor have intertwined in Singapore’s growth story, and the extent to which this foreign dimension has contributed to the story. The story begins in the early 1960s when Singapore first made the push for foreign MNC operations to invest in Singapore, but the authors’ analysis will mostly focus on the period post-1980 where data is more available on foreign MNCs and labor.