Singapore and its Economy

Economy

1. How DID Singapore achieve per capita income growth (in nominal US$$) of 9.7% annually for the past 42 years?

Singapore has enjoyed an increased income growth in its per-capita for the last 42 years. There was income growth due to the summation of several decisions and policies that Lee, the prime minister, undertook after taking control over the nation (Vierto & Thompson, 2008). Lee developed some essential aspects that help the nation's income growth. The first was the development of pro-business or foreign investment policies. All the new organizations were required to be exempted from tax up to 200 000 (Vierto & Thompson, 2008). These companies also experienced an exemption of 60% of claims of expenditure on purchasing equipment and training. This was vital in driving foreign investments and productivity in Singapore.

Additionally, the nation developed a saving-investment balance. It had a low personal income tax, but the people were forced to save up to almost 20% of their monthly income with the Central Provident Fund, which was tightly regulated (Vierto & Thompson, 2008). Therefore, withdrawals occur part by part after the official retirement age, meaning that the government holds vast sums of money for long-term investment to grow its GDP.

Singapore's income growth has also increased due to cultural and organizational arrangements. Secured independence exists by strengthening its defenses and gaining international recognition through getting a seat in the United Nations. The unemployment issue also existed, mainly solved by developing the Housing development board. The other reason for an increase in the growth in Singapore is the total factor productivity growth (TFP) (Vierto & Thompson, 2008). The TFP is the portion of O/P that is not explained by the amount of input used in the production process. The efficiency and intensity determine the level at which the inputs are utilized in production. The per capita income growth also rose due to the long-term policies and planning that the nation did. The government has been efficient in its policies to boost Singapore's economic growth (Vierto & Thompson, 2008). Thus, Lee steered Singapore through the crises it faced making it the most potent ally the United States of America had. He also turned Singapore into the globe's largest container port and made it part of the successful economic story.

2. Comparison to others? (e.g., Japan, USA)

Singapore has a higher per capita when compared to Japan. Singapore's national income per capita is more than $45 0000, and this nation has provided a business-friendly regulatory environment for its local entrepreneurs. Additionally, it is ranked among the most competitive economies globally. Many decades after independence, Singapore has developed from a low-income nation to a high-income one (Vierto & Thompson, 2008). Its GDP has been ranked among the world's highest since independence, which rose after the government underwent rapid industrialization. The economy in Japan could be termed a highly developed free-market economy. It is the third-largest globally, depending on its nominal GDP (OIs and manufacturing sector's growth in the USA and Japan, n.d). It is the fourth-largest depending on its purchasing power parity. Japan is presently ranked as the third largest economy in the world. Its current GDP is about $40 193, and the nation enjoys a volatile currency exchange rate, with its GDP measured in dollars and fluctuating sharply (OIs and manufacturing sector's growth in the USA and Japan, n.d). It shows that Japan is better to have higher growth than Singapore, but the kind of governance Singapore enjoys has benefitted it more and made it better. However, Japan has enjoyed substantial economic rankings and has continued to be among the best.

The USA has higher income growth per capita when compared to Japan and Singapore, and it is ranked as one of the best superpowers due to its economic success. The current per capita income in the United States of America is $68 309, which is higher than that of Japan and Singapore (OIs and manufacturing sector's growth in the USA and Japan, n.d). This is because the country has excellent economic performance, and it has continued to shift the fortunes of the local economies in the per capita income (OIs and manufacturing sector's growth in the USA and Japan, n.d). In addition, the country also has high labor income, capital consumption, and inventory valuation. This is because the income growth in the USA has been growing annually, the nation has a government that cares about the people's interests, and its workforce is made up of people who believe in the need to work hard.

3. Has the change in labor productivity helped Singapore? Has the change in capital intensity helped Singapore? What about total factor productivity?

The labor productivity in Singapore has increased. The rise has been due to the reforms undertaken since 1959 to transform Singapore and make it an attractive place for foreign investment (Vierto & Thompson, 2008). The labor unrest during the 1950s threatened Singapore's ability to attract foreign firms, and more action was needed (Vierto & Thompson, 2008). As a result, labor and trade unions were developed and advocated for labor strikes, which were everyday events in post-independence Singapore ("Economic growth and income inequality in China, India, and Singapore, "2016). The labor strikes were mainly to fight for the rights of the employees. The government regulated how the labor unions worked, and they nursed the interests of the workers were realized. Today, the government has created unique partnerships with businesses, increasing Singapore's labor productivity, income growth, and per capita income.

The capital intensity has helped Singapore in specific ways. First, it has benefited the city since its industries have intensified, making it easier for the nation to grow economically compared to other countries. Second, it has aided the nations since it has allowed for growth in most companies in terms of their labor and capital and even encouraged foreign firms to get attracted to Singapore due to its excellent business environment ("Economic growth and income inequality in China, India, and Singapore, "2016). Third, the capital intensity has helped the nation grow since many companies have been developing and paying taxes to the government, which has enabled it to continue growing. Fourth, the total factor productivity has also benefitted Singapore ("Economic growth and income inequality in China, India, and Singapore, "2016). The total factor productivity measures the joint influences of technological change, efficient improvement, reallocation of resources, returns to scale, and other factors that promote economic growth.

4. Now let's turn to Singapore's current strategy – a macro/micro package; Given their recent slow growth, what's the new strategy? Will it work?

Singapore's current strategy is a macro/micro package. The recent growth in the nation has been slow, and a new strategy is required. The strategy involves raising companies from the bottom, where the large companies finance the small ones and help provide enough resources for these companies to grow. It means that the large sectors in the country are responsible for guiding the smaller organizations to become big and better (Iswaran, 2015). The larger ones can help small businesses to grow and become more successful. The strategy is expected to succeed since mentorship is crucial in industries. It helps reduce the rates at which some sectors are more successful than others. The strategy also involves the government partnership with the small companies to make them successful (Iswaran, 2015). The strategy will work since it may attract foreign investors after seeing that the government is focused on ensuring its nation succeeds by supporting other companies and urging more small-scale enterprises to grow since they will get the funds and a friendlier and convenient environment where they can work without any government interference (Iswaran, 2015). The strategy will also work since it will encourage creativity among business owners. The people will become more creative in creating startups since they are assured of support from the larger companies and the government.