Singapore is defined as one of the high-income countries across the world. Although it is not considered an OECD country, Singapore exhibits rapid economic growth and a high literacy rate of 95% (The World Bank, 2012). Singapore’s main strategy of trade consists of importing raw materials and processing them into manufactured products which is then exported to other countries. At the same time, the country faces the challenge of an aging population. Singapore displays a high human development index indicating high standards of living which revolves around high well-being and low child welfare. Thus, this makes Singapore a more developed country (MCD).
Singapore has experienced tremendous growth within the last decade. It shows an increase of over 70% in the years 2001 to 2010. Its GNI per capita, PPP has grown from $32,780 to
$55,790. As well, Singapore’s GNI growth has risen from-0.95% in 2001 towards 15.75% in
2010 (The World Bank, 2012) – the highest to date and to be recorded by the World Bank.
The growth Singapore experienced lead to a reduction in poverty. Relative poverty in Singapore is measured as a Singaporean having below half of the median per capita household income
(Long, 2012). The current GDP per capita (PPP) is at US$57,936 (The World Bank, 2012), so relative poverty exists if a Singaporean earns US$28,968. As a result of growth, there is an increase in the number of high income households from 2005 to 2007, placing more people above the relative poverty line (Dhamani, 2008). However, this negatively affects the distribution of income and results to higher income inequality, as the richest 20% has significantly higher income in comparison to the poorest 20%. In 1990, the ratio of the income
of the richest 20% compared to the lower 20% was 11.4:1, and in 2000, this ratio increased to
20.9:1. This can be measured by the Gini coefficient where 0 indicates income equality and 1 indicates high income inequality. Data shows that Singapore had a Gini coefficient of 0.44 in
1990 and increased to 0.52 in 2005 as shown in Appendix 1, indicating a spike in income inequality (TREMERITUS, 2009).
Political and Social Factors
The main political factor contributing to the rapid growth in Singapore is the successful compulsory savings policy enforced by the government for all working Singaporeans and permanent residents. Through the Central Provident Fund (CPF), Singaporeans must make contributions on a monthly basis for three accounts: Ordinary, Special, and Medisave. Singapore has various taxation strategies such as the goods and services tax (GST), progressive income tax and a withholding tax. Particularly, the withholding tax enforces non-resident entities conducting business in Singapore to make additional contributions to the government.
The government strategies provide funds for the government to continuously improve social factors such as health care, education, and research and development, leading to growth (Central
Provident Fund Board, 2012).Therefore, the political enforcement of CPF has a cause and effect relationship with the social factors that influence growth in Singapore. Singapore has an adult literacy rate of 95% (The World Bank, 2012) and a very skilled workforce. The government allocates approximately 19.3% of the annual budget to education (Ministry of Finance, 2006), with a focus on providing financial assistance to the poor, offering instruction in various languages, and reducing the student/teacher ratio. All of these factors lead to a more productive workforce and ultimately growth in the country. The highly skilled, corruption-free and
transparent economy in Singapore has attracted thousands of investors overseas, further contributing to a rapid growth rate.
Import & Exports
Due to the fact that Singapore does not