How Does a Country Become Rich?
|November 5, 2013||Posted by Staff under Economic Principles|
Singapore is one of only a handful of countries to have managed it in the past half century. A colonial outpost now has the third highest average income in the world. How did it do it? And why are social tensions now showing?
Singapore has more millionaires per capita than anywhere else in the world. One in six households are in the millionaire club. They come to this city-state by design. The government offers low taxes, raising their revenues through a property tax on the expensive, multi-million dollar houses of the ultra-rich. In return the rich spend – boosting the local economy’s shops, restaurants and even a Universal Studios.
It is a city-state with about five million people so the scale isn’t comparable to the challenges of a country.
That makes its ability to be a large manufacturer all the more surprising. Manufacturing accounts for more than one-fifth of the economy, which is a larger share than in Britain and the US.
Skilled workers also come from all over the world. Two out of five people in Singapore are foreigners. Bankers and others in the financial industry have moved to what has become the Switzerland of Asia.
For Singaporeans who are working in blue collar jobs, the arrival of lower paid foreigners creates social tension. There are concerns over congestion in public transport and housing.
Singapore made itself an internationally oriented economy and that has largely paid off for its people. Cracks are showing in the orderly facade — but for most people, their working lives have benefitted.