Government policies and the growth of the manufacturing sector in Singapore

Abstract

A number of studies have attempted to identify the factors that have contributed to rapid economic growth in four Asian economies-Hong Kong, Singapore, South Korea and Taiwan. It is well known that a single model of economic growth cannot explain the growth experiences of these countries. In addition, important differences in the role of government have been identified by a number of studies. For example, the government of Hong Kong adopted a policy of minimal intervention whereas the government of Singapore pursued a policy of maximum intervention. Accordingly, Singapore's economic system has been labeled as state directed capitalism where growth is the result of accumulation of inputs like capital and labor. Empirical studies have shown that the contribution of technological progress in Singapore from 1970-1990 is approximately zero at best. This has resulted in an increase in spending on education during the 1990s. This paper examines the impact of government policies on the growth of the manufacturing sector in Singapore and attempts to estimate the impact of foreign investment and government spending on education from 1980-2000.