The establishment of Singapore as the petroleum centre for the Asia-Pacific is both a reflection and an outcome of the country's development as a “global city” (Lee Soo Ann 1984; Krause 1987a). The phrase is an apt one, given the city-state's extreme openness to the international economy, its modern infrastructure and amenities, and its cosmopolitan character. Classified by the World Bank as an upper middle income economy with a GNP per capita of US$7,410 in 1986 (World Development Report 1988), Singapore's standard of living (as measured by this basic indicator) is next only to Japan's in all of Asia. 1 Since the late 1960s, Singapore has on the average achieved one of the world's best overall economic performances. Singapore's outstanding achievements in economic development are well documented and, for present purposes, only the broader aspects need be delineated.

The Historical Experience

When Stamford Raffles founded Singapore in 1819, an island of 225 sq. miles, it was endowed with a vital natural resource — its location. Situated at the southern tip of the Malay peninsula astride the major gateway between the Indian Ocean and the South China Sea and possessing a superb natural deepwater harbour, Singapore underwent a logical development as port of call and entrepot for the surrounding region (Huff 1987). The development of entre- pot activities led to rapid urbanization and the establishment of a strong local banking sector. By the inter-war period, Singapore had developed into a fully fledged port and commercial city. It had also become the region's terminalling and distribution centre for petroleum.

When Singapore attained self-rule in 1959, it faced some of the classic problems of underdevelopment: rapid population growth, high unemployment, political instability, and unruly industrial relations. Entrepot trade and its traditional supporting services offered few opportunities for productively absorbing surplus labour. Given the constraints of size, import-substituting industrialization (ISI) based on a common market with Malaya was seen as the only solution to the development problems of Singapore (A Proposed Industrialization Programme for the State of Singapore).