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Show SACRIFICING DEMOCRACY IN THE NAME OF PROSPERITY: THE TRADEOFF BETWEEN POLITICS AND ECONOMICS IN SINGAPOREAN DEVELOPMENT Nick Barker Lastly, 1969 saw the tightening of welfare eligibility criteria, which when combined with the decreasing unemployment rate (it dropped from 8.9 percent in 1966 to 7.3 in 1968, and to 6.0 in 1970 (Huff 1994, 291)) meant that Singapore's welfare spending drastically declined. The numbers receiving welfare subsidies fell from more than 22,000 in 1966 to less than 11,000 in 1970 (Turnbull 1989, 305). The policies had the intended effect on investor confidence: "when it became clear that Singapore leaders had totally abandoned socialism, direct foreign investment poured into the country" (Haas 1999, 23). Singapore's export oriented strategy was a success because it "wed Singapore's human capital with foreign investment, all under the umbrella of governmental supervisory bodies" (Haas 1999, 42). The new economic policies were responsible for the huge influx of FDI into Singapore's manufacturing sector. While the 1967 increase in FDI grossed $64 million, after the move to export promotion, increased education and infrastructure spending, and the new labor and welfare policies, Singapore posted a 1968 increase of $151 million. This continued with a $146 million increase in 1969, which was then doubled by 1970s $395 million increase (Huff 1994, 416). The results of these increases can be seen when looking at Singapore's growth rates. Table 1 Real Annual Average Growth Rates in Manufacturing (Excluding Petroleum) 1960-67 1967-73 Direct exports 10.4% 31.8% Output 12.0% 22.7% Value added 12.2% 26.7% Source: Huff 1999, Table 11.10 In addition, Singapore's average annual real GDP growth rate increased from 5.7 percent over the period 1960-1966 to 13.6 percent from 1966-1969 (Huff 1994, 302). INCREASES IN SOCIAL WELFARE It was through this spectacular economic growth that the government was able to make leaps and bounds in social welfare. Beginning in 1964, the Housing and Development Board sold apartments on favorable terms to low income citizens, and as a result of the improving economic situation, many middle class citizens were able to purchase their own homes. "Slums, squatter shanties and dilapidated kampongs in the outskirts of town gave way to new townships of modern housing estates," with their own "shopping centers, schools, markets, clinics and recreational facilities" (Turnbull 1989, 303). In 1968 the Environmental Health Act was passed to curb pollution and to promote cleanliness in physical surroundings. Infrastructure and public utilities were expanded to provide for the growing population: "by the early 1970s nearly 95 percent of the population had a piped water supply and in 1980 the whole island was linked to the main sewerage system" (Turnbull 1989, 303). Health standards were raised, and by the 1970s Singapore's infant mortality and life expectancy rates were better than some Western industrialized nations. Diseases such as smallpox, cholera, diphtheria and polio had virtually disappeared as a result of public vaccination and immunization programs. To curb population growth, the Singapore Family Planning and Population Board was established in 1966. Beginning in 1972, it promoted a two-child family policy (supported by tax incentives and penalties), liberalization of abortion laws, etc. The birth rate declined drastically, and for a time Singapore had a zero population growth-rate. By the 1980s, however, officials were reevaluating their stance as the birth rate fell below the replacement level. In 1978, Singapore adopted new policies to bring in even more FDI and help open up the economy to more international business. "All restrictions on capital flows.. .were abolished, as were capital gains taxes, inheritance taxes, and wealth taxes. Foreign companies operating in Singapore were granted major tax relief," and "the government issued a solemn promise that no foreign company.. .would be nationalized" (Lingle and Wickman 2000, 64-5). This shift had huge effects on the locational advantages Singapore afforded to foreign investors/firms: the free flow of capital boosted investor confidence and lowered risk, while the new personal tax policies gave individual portfolio investors incentive to put their money in Singaporean firms. The new business tax policy meant that firms could operate at lower costs in Singapore than elsewhere. Additionally, education reform was undertaken to ensure human capital improvements and further entice investment. When taken together, these policies contributed to a nearly ten-fold increase in foreign investment in Singapore between 1978 and 1981 (Lingle and Wickman 2000, 65). This abundance of foreign capital led to explosive growth in the export sector: merchandise exports nearly doubled from S$23 billion to S$44 billion, with manufactured exports seeing the same trend (Huff 1994, Table A.3). As a result of continuing economic success, Singaporeans enjoyed an ever-increasing standard of living. From 1960 to 1990, the average annual rate of real GDP growth was 8.7 percent (Huff 1994, 14). According to the 'rule of seventy-two,' incomes would double about every eight years: meaning that in 1990, the average Singaporean enjoyed a real income almost four times as high as her 1960 counterpart. From the early 1960s to 1995, Singapore's per capita income rose from less than US$2,000 to about US$25,000 (Lingle and Wickman 2000, 55). By 1994, this rapid increase had put Singapore's standard of living ahead of its former colonial master, Great Britain, in terms of per capita income (Lingle and Wickman 2000, 55). Considering these vast improvements in welfare, it's not hard to imagine the trust the Singaporean people put in the government and the PAP especially. Indeed, "the leaders' dexterity in exploiting good fortune and turning set-backs into opportunities, which had won them the early battles, 10 |
