Economic Structure, Performance, and Policy

Singapore is a city-state of 2.6 million on 618 square kilometres. Historically it has developed as a major port at a nodal point between the Indian Ocean and the Pacific world, and as the commercial centre of a rich primary producing region. Since the late 1960s, Singapore has rapidly industrialized, largely as an export manufacturing base. It has also developed as an international financial centre. Further, the range of services associated with its traditional trading and transport-cum-communications activities has been greatly expanded and modernized to serve the needs of its new activities and its changing linkages to the world and the region. In this transformation, GDP growth averaged 9.3 per cent between 1965 and 1985, and GNP per capita reached US$7,420 in 1985.

Manufacturing, contributing 24.9 per cent to GDP in 1986, is the most important sector followed by financial and business services (21.6 per cent), commerce (17.0 per cent), and transport and communications (14.3 per cent) as shown in Table V-1. The distinguishing feature of the Singapore economy however resides not in its sectoral composition but in its external orientation and extent of foreign participation. Direct exports constituted 61 per cent of manufacturing output in 1984; and of these 82 per cent were by foreign-owned establishments which also accounted for 53 per cent of manufacturing employment, 63 per cent of value-added and 71 per cent of gross output. At a macro level, the extent of Singapore's external dependence can be gauged by the trade/GDP ratio which stood at 276 per cent for Singapore in 1986 compared with only 189 per cent for Hong Kong. The extent of foreign participation in Singapore can be seen from the fact that, in 1986, the “share of resident foreigners and resident companies” accounted for 23.3 per cent of GDP.