Tilak SER SG50

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LESSONS OF SINGAPORE S DEVELOPMENT FOR OTHER DEVELOPING ECONOMIES TILAK ABEYSINGHE Department of Economics, National University of Singapore, Singapore [email protected] Published 14 July 2015 While Singapore is grappling with policy options to sustain its success over the next 50 years, the developing world is wondering what made it such a success so far. By looking at some developing countries that are stuck in a roller-coaster ride of economic development I highlight some policy lessons they can learn from Singapore s success story. In a nutshell, as pointed out by Singapore s economic architect, Dr. Goh Keng Swee, non-economic factors matter more than the economic factors for a successful take-off of a developing economy. The paper also highlights some com- plementary development strategies that are instructive to developing economies. Keywords : Non-economic factors; political stability; quality of governance; development strategies. JEL Classifications: O20, O21. 1. Introduction The developing world is looking at Singapore with a sense of wonder. Wonder it is when juxtaposed against the colonial background. 1 Figure 1 shows real lifetime labor income of Singaporean households at the 20th income percentile. 2 It is very clear that household income, especially at lower levels, stagnated during the colonial era, and rose spectacularly only after the early 1960s. Singapore had a target of reaching the Swiss per capita income level by about 2000, but surpassed the target earlier than predicted. As of 2011 Singapore s purchasing power parity (PPP)-based real per capita income at 2005 prices was US $51,600, about US$6800 higher than the Swiss level (Penn World Table Version 8.0, online). All other development indicators tell the same story. For example, the infant mortality rate, the best single indicator of development of a country, that was above 80 per 1000 live births in 1950 dropped to 1.8 by 2012 and now hovers around 2. In contrast, the infant mortality rate of Switzerland in 1950 was 31 and dropped to 3.6 by 2012 (Swit- zerland Statistics website). In 1965 only 2% of Singapore s resident labor force had tertiary 1 Singapore s British colonial period spanned over 1819 1959 with self-governance in 1959. Singapore joined the Federation of Malaya in 1963 and unwillingly separated and became independent in 1965. 2 Lifetime income is computed as the discounted present value at age 20 of labor income over age 20 64. See Abeysinghe and Gu ( 2011 ) for computational details. The Singapore Economic Review, Vol. 60, No. 3 (2015) 1550029 (13 pages) © World Scientific Publishing Company DOI: 10.1142/S0217590815500290 1550029-1
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education (universities and other tertiary institutions). This proportion increased almost at an exponential rate to reach 48% by 2012. In 1965 only 4% of the population owned and lived in public housing. This number increased to more than 80% by 2013 ( Singapore Yearbook of Statistics ).
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