THE MYTH OF SINGAPORE GROWTH: MAGIC POLICIES OR CHEAP LABOUR?
”You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time” – Abraham Lincoln, 16th president of US (1809 – 1865)
*Illustration showing the close correlation in rate of population growth to Singapore economic growth (1979-present) … there is no magic policy, just pure labour/workforce rise in numbers!
This article is in response to Tradehaven’s post on https://tradehaven.net/2013/01/16/wealth-the-fallacy-of-singapore-property-written-for-my-friends/ … for many in Singapore or around the world wondering in amazement at the phenomenally high rate of economic growth and the associated rise in stock market levels, as well as the strength of the SGD. Perhaps, it is opportune to consider if there was ever a magic bullet solution or the innovative effort of some policy maker(s) in this island state that has given rise to these supposedly wonderful economic results including the sky-high property prices!
Perhaps, all these optically successful economic accomplishments are just plain and simple due to ever increasing rate of population growth, i.e. cheap labour. Firstly when Singapore started on the road to industrialisation when its unskilled labour force was cheap and plentiful which was then replaced by the cheap and plentiful labour force from Malaysia, then Thailand, then Philippines and Indonesia, then India and Blangadesh, then China. See the above chart illustration if you do not believe it, on the close correlation between ‘rate of population growth’ and all the symbols of economic success !
This ”hidden” success of Singapore had been looked at before starting in 1992 by M.I.T. professor Alwyn Young http://www.nber.org/chapters/c10990.pdf, with a shorter summary by Paul Krugman here http://kaahlsfiles.com/thesis/thesis%20papers/1%20High/SS10475lecture8.pdf. Indeed, looking back 31 years later from 1992 when these papers were written into the present day. It is pretty obvious today even to many discontented layman that Singapore was simply throwing more and more cheap factors of production (basically labour) as it can to derive the economic growth and at little growth in productivity. Now you know why the Singapore government has always been exhorting the populace to be more productive!
Unless you envisage an even faster growth to 6 million or 8 million population in Singapore and with rising rate of population growth (*which is supposedly to have slowed on orders by the Singapore top honchos!). It is as good as it gets in sunny and humid Singapore unless the old dog learn new tricks ….
*Asianmacro is a beach bum managing his own wealth. Besides deciding what to have for lunch (or hitting the gym sometimes), he is mostly found listening to loud music while trading and investing for himself. While every care has been taken in preparing the information in and/or materials, such information and materials are provided “as is” without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials. The opinions expressed do not constitute investment advice and independent advice should be sought where appropriate. In no event will Asianmacro be liable to you for any direct or indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials attached herewith. Asianmacro may already have or intend to have a trading or investment position in the financial instruments or products referred to in this communication. This is not intended as an offer or solicitation for the purchase or sale of any financial instrument and Asianmacro may also have interests different from or adverse to your interests.