Singapore’s Economy

Research Paper on Singapore’s Economy

1 Introduction

Singapore is a small, multicultural and wealthy city-state located of the nip of southern Malaysia with an open and trade driven economy. Due to its geological location, the country faces an absence of natural resources which are essential raw materials for most productional countries hence limiting the country from being production focal. But local exports, particularly in electronics, chemicals and services including Singapore's position as the regional hub for wealth management provide the main source of revenue for the economy, which allows it to purchase natural resources and raw goods which it lacks.(Economy of Singapore, 2017)

Due to Singapore’s corporate tax rate being the third lowest in the world at just merely 17 percent easily making it the best country in the world to do business. Singapore has a highly developed market economy, based historically on extended entrepôt trade. Along with Hong Kong, South Korea, and Taiwan, Singapore is one of the original Four Asian Tigers, but has surpassed its peers in terms of GDP per capita.And as having a skilled workforce, this has helped in attracting huge multi national corporations like Google to set up headquarters in local grounds.

2 Production Output Performance analysis

2.1 GDP

Gross Domestic Product (GDP) is one of the most common primary indicator used to gauge the country’s state of economy. It represents the total monetary market value of all final goods and services produced over a specific period of time.

2.2 GDP Growth Rate

Referencing the chart shown above, Singapore as a country has been experiencing a steady and positive GDP growth rate throughout the years. Only with the exclusion of the late 2000s global financial crisis in year 2008-2009 when the global financial services firm; Lehman Brothers Holding Incorporation filed for bankruptcy causing global markets to immediately plummet and a systemic risk was triggered.

Following that Singapore’s economy growth fell to its lowest of a -0.6% gdp growth rate in 2009. However, as you can see from the above chart, Singapore managed to rebound back from the crash and in 2010 managed to accomplished its highest recorded over the years by reaching a GDP growth of 15.2% in its total economy, 29.7% in the manufacturing sector, 7.5% in the construction sector and 11.7% in the services producing industry.

Since then, Singapore’s economy growth has seen a steady average of 4.1% between 2011 to 2013. The contribution of such immense growth are mainly due to the establishment and completion of two Integrated Resorts (IRs) in Singapore in 2010, namely Resort World Sentosa and Marina Bay Sands, giving a huge bloom of job opportunities in the tourism and casino sector. In 2010, solely the IRs had contributed $3.7B to the economy. (Integrated resorts add 37b economy, 2017)

2.3 GDP Per Capita

GDP per capita is calculated by taking the total monetary output of a country, which is the GDP and dividing it by the number of people in the country. It is usually utilized when comparing countries as it shows the relative performance of the country itself.

Referencing the table rankings above, Singapore was ranked the first in the world in terms of GDP per capita at USD $56,532, greatly leading ahead of Norway by USD$5,000 at 2nd. Giving the relative conclusion that on average, a Singaporean in Singapore earned $56,532 that annuum.

And based on the table indicated, we can see that at 9th place is Canada whose GDP per capita is at $38,640, greatly falling behind compared to Singapore.However one of the main contributing factor to Canada’s low GDP per capita is due to the fact that the formula for it includes population size. Adding on, in 2010 Canada’s population was 34.01 million whereas Singapore only had a quarter of that at 5.077 million population size and if we were to compare solely the GDP of both countries in 2010, Canada stood at USD 1.613 trillion dollars(Data worldbank 2017) whereas Singapore stood at a measly USD 236.4 billion. This study clearly shows the limitations of comparing two countries via GDP per capita as the population gap is drastic, and only the productivity of a country can be seen. And due to the different wage gaps of the people in a nation, the GDP per capita is not a good indicator of how wealthy the people or the country is.

2.4 Government Measures - GDP

The Singapore government have many policies and boards in place to ensure the growth of the country’s economy, one such board is the Economic Development Board( EDB) it is Singapore’s primary agency that formulates and implements policies to attract foreign investments.(Singapore’s Economic Policies and Key Government Agencies, 2017) And when foreign investments comes into the local shores, it creates jobs in those industries, increasing the production output performance and the tax they pay will increase the wealth income of Singapore further.

There is also the JTC Corporation(JTC) as the main objective of forming the organization is for it to superintend the planning and development of industrial parks in Singapore to promote growth of key target industries, strategically targeting the industries that Singaporean workforce have the skills in hence further appealing to foreign investors and Multi-National Companies. For example recently, JTC developed the Biopolis, Tuas Biomedical Park and the Medtech Hub as to create jobs within the biomedical industry for the huge incoming of local graduates within that field.

3. Labour Market Analysis

3.1 Types of Unemployment

There are 3 main types of unemployment, starting with Frictional Unemployment , Structural Unemployment and Cyclical Unemployment.

Frictional unemployment is categorize when its only 1% of the population being unemployed. This occurs in a natural economy occurrence whereby the unemployment rates are caused mainly by workers leaving their old jobs and have yet to find a better or more compatible company to work for.

Examples for this unemployment includes fresh graduates who are transiting from full-time students to workers, and this can take up to 3-6 months of being unemployed before they are able to find a job that fits their needs and suitability. Another example would be housewives attempting to re enter the workforce which might