Singapore has a small territory, no natural resources, and a poor, unskilled workforce. Prime Minister Lee Kuan Yew and Finance Minister Goh Keng Swee script a development strategy with the state as principal investor in an export-oriented free-market system. Mandatory contributions to the Central Provident Fund support retired and disabled workers and provide a rainy-day cash supply.
Lee Kuan Yew's government expands Singapore's manufacturing and industrial base, invests heavily in education and housing, and aggressively courts foreign corporations with strong technologies. State-run boards oversee industrial financing and development and construction of government housing. Gross domestic product (GDP) grows an average 12.7 percent.
The 1973 oil crisis ignites a global recession that slows Singapore's explosive growth. The 1979 oil crisis creates the worst recession since the 1930s. But Singapore's GDP grows an average 8.5 percent annually, and unemployment is zero. The government identifies financial services as a key growth market and invests accordingly.
Portfolio management, foreign exchange, and other such financial and business services join manufacturing as major economic engines. Singapore is Asia's third most important financial center after Tokyo and Hong Kong. Government targets computer technology and electronics as the next phase in Singapore's industrial development.
In 1985 slumping petroleum, shipbuilding, and electronics sectors send Singapore into its worst recession. The government responds by freezing wages, lowering taxes, and reducing Central Provident Fund contributions. By 1988, Singapore records the world's highest rate of annual economic growth (11 percent) and highest savings rate (42 percent of income).
Singapore's National Productivity Board unveils its Productivity 2000 initiative which calls for adapting work and management styles to meet future challenges such as stiffer trade barriers, more competition for foreign investors and markets, and the need to invest more in technology.
Manufacturing and services continue to power Singapore's export-oriented economy. Tourism and transportation are also important. In 2000 per capita GDP exceeds that of Canada, Britain, and the United States. Still bullish on globalization, Singapore launches initiatives such as the Jurong Town Corporation which builds and manages factories and industrial parks for foreign firms.
Fast-paced growth causes shortages in skilled labor, and a global recession cools demand for Singapore's exports. In October 2001, the government announces a $6.2 billion economic stimulus package, including tax cuts and increased spending on infrastructure. The economy comes out of recession but stumbles again in early 2003 as fear of the SARS virus, and the virus itself, spread through East Asia.
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