BY I A N LIM Ian Lim is a current exchange student at the Wharton School, University of Pennsylvania.
The Merlion is an imaginary creature with the head of a lion and the body of a Àsh, and is used as a mascot of Singapore.
WORLD CLASS BUSINESS HUB I magine an island nation in Southeast
tariffs and quotas as a knee-jerk solution to
Asia spanning only seven hundred square
create and protect domestic companies. Instead,
they embraced the virtues of international free
resources– no agriculture, minerals, or water
trade, creating an export-oriented industrial
It was a ﬁshing village in the 18th
policy that now features 50 double taxation
century, colonized by the British in the 19th
avoidance treaties and 18 FTAs with 24 bilateral
century, and declared independence in 1965.
partners. Net exports form 21.1% of GDP.
You might not think much of it, especially in
An aggressive industrialization policy was
the shadow of growing economic behemoths
implemented to move up the value chain. Foreign
like China and India.
multinationals were incentivized to set up offices
Yet this tiny nation - Singapore - has
in Singapore, bringing foreign expertise, training,
achieved world class stature, ranking among
and employment to Singapore’s young economy.
the top ten most desirable locations to live and
iIcome and corporate taxes are among the world’s
work. It boasts political stability, no corruption,
lowest, below 20%. The Jurong marshland area
and vibrant industries in ﬁnance, manufacturing,
was cleared and designated an industrial hub
for these new companies. Competition from
How did Singapore transform from an
Chinese low-cost manufacturing and Indian
economic backwater to the world’s fourth most
low-cost service industries forced Singapore’s
affluent society? How did it become a global
government to constantly innovate and attract
research and development hub with a previously
advanced industries, including ﬁnancial services,
uneducated workforce? What lessons are we
life sciences, and pharmaceuticals.
taught from this experiment in state building?
The Singapore Story – How to Build a Nation 1. Visionary, competent, and pragmatic political leadership
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2. Geographical location is Singapore’s greatest “natural” asset It is said that “geography is the mother of history.” Singapore capitalizes on its strategic
In 1963 Singapore tried to merge with the
location at the Straits of Malacca, arguably the
Malaya. Political differences in 1965 would have
busiest waterway in the world, and key link
the deal fall apart; it was a blessing in disguise.
between Asia and Europe. 50,000 vessels,
With its small population and domestic
a quarter of the world’s trade, pass through
market, Singapore could not survive as a mere
here each year, making Singapore the busiest
transshipment hub. Yet the government avoided
transshipment port in the world.
I N T E R N AT I O N A L B U S I N E S S R E V I E W
FA L L 2 0 1 0
11/27/2010 3:13:24 PM
Fall edition of the IBR magazine at the Wharton School.