IFSA Network

Our Chapter’s Publications

What Makes Singapore So Wealthy?

Authors: Sharvi Sharma & Muskan Gupta
Published on: September 5, 2022

The city-state is grouped as one of the Four Asian Tiger economies for its economic boom since the rapid industrialisation of the mid-1960s. In just three decades from 1960 to 1990, Singapore’s income per capita increased by a factor of 28 from $427 to $11,864, a rate significantly above the East Asian & Pacific average in the same timeline of $148 to $2598. Inflation rates have also consistently remained well below world averages, while maintaining relative price stability. Thus, Singapore’s economic growth has been looked at as an exemplary case study for the ideal developmental process.

Post – Independence Singapore

In the decades after independence, Singapore apace developed from a low-income country to a high-income country. The Gross Domestic Product(GDP) growth within the city-state has been amongst the world’s highest, at a median of 7.7% since independence and prime 9.2% within the first twenty-five years.

After fast industrial enterprise during the Nineteen Sixties catapulted the island nation’s development flight, production became the most important driver of growth. Within the early 70s, Singapore reached economic condition and joined the ranks of city SAR, Republic of Peninsula, and Taiwan, a decade later as Asia’s freshly industrializing economies. The producing and services sectors continue to stay the dual pillars of Singapore’s high-value-added economy.

Within the most up-to-date International Bank for Reconstruction and Development Human Capital Index, Singapore ranks as the simplest country in the world in human capital development. Simplifying, a baby born these days in Singapore is half a mile as productive once she grows up as if she enjoyed complete education and full health. Besides sturdy financial backing from the government, the country continues to strengthen the intellect and adaptability of its personnel by providing continued education like the Skillsfuture initiative. Government expenditure on continued education can nearly double, to quite $1 billion yearly.

Reasons behind Singapore’s success –

Lee’s Legacy

Lee Kuan Yew. The name that echoes the nation’s success.

It is symbolic of the port city’s principles, values, and determination.

Good governance is something that can take anything to zenith or nadir, especially during the rebuilding of a nation from the rubble. It’s the ability of a country’s ministers and civil servants that plays a decisive role in developing a country. As soon as Lee’s government assumed office in 1959, 41 years since then they have brought Singapore to first-world status.

Lee was a pragmatic leader who instead of bending towards his political conscience took an approach that will bring good to all. At the time when it seemed politically correct to defy Americans and their multinationals, Lee went ahead to courteously welcome them into the nations. He saw them as an opportunity to glean their know-how, technology, techniques, expertise, and markets. Singapore rejected conventional wisdom in the face of rationality and pragmatism.

Lee very well knew the areas they had to improve on, and the PAP government in identifying these issues did not approach it frivolously for political gain but rather took a more plausible approach of complying with economists’ and policymakers’ suggestions. He pacified the communists to a great extent, as it hampered the prosperity of Singapore, and attracted various foreign businesses to the country by devising strategic policy measures and enticing them with various incentives as well. By adopting a holistic approach, the Singaporean government flourished not only in terms of economic growth but also grew in terms of the human capital index and standard of living. There was a complete transition in these areas in less than 40 years, the unemployment rate fell from 13.5% to 1.7% during 1959-1990, life expectancy rose from 65 years to 74 years between 1960 and 1990, and external trade rose from $7.3 billion in 1959 to $205 billion in 1990, etc.

These are only some of the anecdotes of how problems were tackled under the reign of Lee’s government. His stewardship of public administration through relevant and targeted public policy yielded Singapore spectacular results. For the nation, his contributions will stay invaluable for eternity and his legacy will be carried forward for generations to come. (Quah, 2018)

Effective Bureaucracy –

The second secret of Singapore’s success is that it has an effective public bureaucracy that offers efficient and well-tuned public service. The public bureaucracy in Singapore consists of 16 ministries and 64 statutory boards and has grown from 127,279 to 144,980 employees during 2010–2016. The World Bank defines government effectiveness because of the quality of public service provision, the standard of the bureaucracy, the competence of civil servants, the independence of government officials from political pressures, and also the credibility of the government’s commitment to policies. Singapore has performed well consistently on the planet Bank’s governance indicator of state effectiveness. Thus, it’s not surprising that Singapore is ranked first for presidential effectiveness in 2016. A comparative analysis of the role of the general public bureaucracy in policy implementation in five ASEAN countries has confirmed that Singapore has greater effectiveness thanks to its favourable policy clauses and its operative public bureaucracy. Focused meritocracy and streamlined training in Singapore’s public bureaucracy have resulted in an increased competence of the personnel in implementing policies.

Dethroning Corruption –

stay clean: dismiss the venal (yew, n.d., #)

Corruption is democracy’s biggest enemy as it holds immense power to erode trust, cripple economic growth, and promote inequity.

The lack of political will and the unproductive Anti-Corruption Branch (ACB) of Singapore contributed much to the nation being burdened by corruption. Police corruption soared in the nation as ACB was placed within the Criminal Investigation Department (CID) of the Special Police Force (SPF) itself. Hence, paving way for corrupt officers to exert their backstairs influence.

The very reason that anyone turns towards corruption is when they reach the tether of enduring their honesty and are greedy as well. This was the very reason for such rampant corruption practices at the hands of civil servants in Singapore. Sickening inflation, low-paid jobs, and scarcity of basic resources such as food, left them with no option but to trade in black markets. Besides, low probabilities of being caught by the government all so incentivized them to decay down further. So, how did Singapore go from such a decadent country to being ranked as the fourth least corrupt country in the world?

Unlike many countries in the world, Singapore was the one to learn from its past and the mistakes of its predecessors. As soon as the PAP (People’s Action Party) assumed office after independence it enforced the POCA (Proceeds of Crime Act) and overthrew the inadequate former act to curb corruption on the island. One of the major mistakes Britishers made was to place the Anti-corruption branch within the SPF and forgot the golden rule that “the police cannot and should not be responsible for investigating their deviance and crimes” The new government replaced ACB with self-governing CPIB and legally conferred sufficient regulatory powers, personnel and funding to them.

As the CPIB operates independently of the government’s sway, they can investigate anyone they assume of having potential corruption proclivity, whether any minister, police, or members of parliament, at their discretion. Anyone found guilty was charged with the same level of penalty or punishment as may be applicable regardless of position or power. Another factor that was taken into consideration was all cases ranging from petty corruption acts to big scandals were all viewed with an equal eye. This level of autonomy and perpetually rising efficiency allowed CPIB to uproot the evil of corruption from Singapore.

(quah, 2018, #)

Investment in Education and Housing –

The PAP government believed in the policy of nurturing the best and the brightest.

Education comes out as a golden ‘Trump-Card’ for the long-term future growth of the population in Singapore devoid of significant natural resources.

Former prime minister Goh Chok Tong observed that Singapore was blessed by its lack of natural resources because it was forced to develop its only resource: Its people. Rather put simply, Singapore, by investing heavily in education to enhance the skills of its population, has managed to steer the best pool of civilians to join and remain in bureaucracies and government through its effective policies of meritocracy and just payment of competitive salaries. The PAP government views education as “a national investment” and has increased government expenditure on education by approximately two hundred times from S$63.39mn in 1959 to $12,660mn in 2016. Consequently, the total number of academic establishments in Singapore has increased from 352,952 students in 1960 to 651,655 students in 2016, conjointly the accomplishment rate has also improved from 72.2 % in 1970 to 97% in 2016. Singapore’s intensive investment in education throughout the past fifty-seven years has increased the standard of its population as mirrored by the wonderful performance of its students in several competitive international skill arenas.

Source: (Hirschmann, 2021)

One of the significant hindrances in the economic development of Singapore, was the housing facility available, an aspect significantly transformed by constructive Government intervention Government housing served two purposes, specifically: It gave Singaporeans a sense of ownership towards their country, where their family and friends lived, and also a reason for them to stay in their country and serve it. When one hears of public housing, one imagines grimy stairwells, peeling, seepage-infested walls, and unloved and uncared-for public spaces — but these do not hold when it comes to Singapore. For the past 50 years now, Singapore has progressed— from bare concrete blocks to towering high-rises. Having been started in the 1940s, the Singapore Improvement Trust had built more than 20,000 flats by 1959. In 1964, the government initiated the ‘Home Ownership for the People Scheme’ to help citizens with a tangible asset within the country and steer the nation-building stint.

This push for home ownership has helped regulate the country’s economic, social, and political stability. In 1968, to assist more citizens to become rightful ‘homeowners’, the government allowed the employment of the Central Provident Fund savings for the deposit, and to service the monthly real estate loan instalments. This, coupled with other schemes and grants set forth over the years, has made home ownership highly accessible. (Lee, 2021)

Worked towards developing tourism and trading ports –

The Singapore Tourism Board (STB), a statutory board under the Ministry of Trade and Industry of Singapore champions the development of Singapore’s tourism sector, one of the country’s key service sectors and economic pillars, and overlooks the marketing and promotion of Singapore as an inviting tourism destination. The tourism sector currently contributes 4% to Singapore’s Gross Domestic Product. Tourism plays an essential role in underlining Singapore’s status as a bustling global city that is the first preference for capital, businesses, and talent. This initiative has also enhanced the quality and diversity of recreational options for local residents and helps to create a sustainable environment that Singaporeans are proud to call ‘home’.STB strives to confirm that tourism remains a very important economic pillar through long-term strategic planning, and by forging partnerships, driving innovation, and ensuring excellence within the tourism sector. It continues to market Singapore’s multi-faceted appeal as a premier business and leisure destination and offers empowering and customised experiences.

Singapore is one of the world’s busiest and most strategically vital maritime hubs. Set on the southern extremity of the peninsula, 30km south-west of the Port of Johor in Malaya, the positioning processed 5 million Twenty-Foot Equivalent Units (TEUs) in a very year for the primary time in 1990, conjointly turning into the world’s largest instrumentation port. Four years later, it achieved the landmark of ten million TEUs annually and continues to grow by establishing its 1st overseas project in China. Today, the port attracts 130,000 vessel calls on average per year, whereas the maritime business is one of the largest contributors to Singapore’s Gross Domestic Product and has created a total of 170,000 jobs, a figure that’s set to grow once the Minister for Workforce, Josephine Teo discovered that 130,000 addition to jobs can be created within the aviation and maritime industry by 2025.

Source: World Bank Data Tourism exports growth

Walking towards prosperity

Did you know that Singapore is one of the top recipients of Foreign Direct Investment (FDI) in the world? (Sánchez et al., 2021).

Well, the fact that makes it extremely worth noticing is that Singapore is only a small island country with a population barely touching the 6 million mark and possessing minimal natural resources of its own. So, how did it reach such an enormous level of success? (Home, n.d.)

First things first, Singapore has always valued FDI in absence of the natural bounties. Hence, making it into an attractive destination for foreign companies was highly crucial to paving its path to riches. Its good governance has played a major role in alluring FDI into the country.

The ease of doing business in any economy makes it an appealing investment for business owners as they can operate without much hassle from the country’s government or its judicial system. Singapore fruitfully caters to such needs of not only domestic businesses but also foreign ones. It only takes a day to incorporate a company in Singapore. The country also boasts of its status as it ranked at 2nd position in the world bank ease of doing business index (Quah, n.d.). The Government has also taken stern measures to alleviate corruption, rendering the political system clean and nurturing a strong legal system all of which instilled a sense of security within businesses. Other than this highly stable economy, good international relations, good tax incentives, etc., all together play a big role in making Singapore a global hub for investments.

The country is built on the back of large MNCs investing in its manufacturing businesses. For a long while, it has transitioned from low-skilled manufacturing to high-skilled manufacturing of semiconductors, aerospace engineering, electronics, etc. Despite the country appearing as a highly developed economy well known for its finance, it will be surprising to know that more than 20% of its GDP is yielded from the manufacturing sector.

Though Singapore is a country with sparse opportunities to exploit nature, it has a rather optimistic outlook as it has converted its people into its resources. It highly values its people and promotes their continuous development. In line with these concerns, Singapore has made a National Wage Council which focuses on maintaining good relations with three primary stakeholders that are businesses, government, and trade unions. Its cardinal role is to ensure that the wages of workers only rise with their productivity. It proportionately enhances a country’s productivity.

Another key factor not worth missing out on is how Singapore receives the benefit of high FDI pouring into its economy. It does not just take cash from large MNCs but also takes training and development for its people. The government has set up various technical schools and has been paying for these companies to upskill its workforce. The education system of the island is worth eulogising as it renders children who are born today 88% as effective as they can be, by the time they turn 18. Not to forget Singapore has also ranked number 1 in the human capital index, as per the World Bank 2020 HCI report.

Source : IMF Blog


Based on our analysis, we can conclude that Singapore, after working through-and-through, on its human capital and making efficient use of its minimal resources, has been able to establish itself as a developed nation. In our opinion, we believe that great leadership and effective policy making can rightly contribute a lot towards the uplifting of a nation.




  1. Home. (n.d.). YouTube. Retrieved August 17, 2022, from https://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?name_desc=false&locations=SG
  2. Board, S. T. (2020, April 21). Annual Report on Tourism Statistics | STB. Singapore Tourism Board. Retrieved September 4, 2022, from https://www.stb.gov.sg/content/stb/en/statistics-and-market-insights/tourism-statistics/annual-report-on-tourism-statistics.html
  3. Hirschmann, R. (2021, October 28). • Singapore: government total expenditure on education 2020. Statista. Retrieved August 18, 2022, from https://www.statista.com/statistics/624666/government-expenditure-on-education-in-singapore/
  4. Lee, G. (2021, November 10). Why is AI an obsession for business insiders? Verdict. Retrieved August 17, 2022, from https://www.ship-technology.com/analysis/why-is-ai-an-obsession-for-business-insiders/
  5. Sánchez, C., Matei, S., & Howell, K. (2021, December 16). The World’s Top Recipients of Foreign Direct Investment. IMF Blog. Retrieved August 17, 2022, from https://blogs.imf.org/2021/12/16/the-worlds-top-recipients-of-foreign-direct-investment/