Why is Singapore so rich? | CNBC Explains

Summary

This video explores Singapore's remarkable economic rise, despite its small size and lack of natural resources. The country's strategic location, strong government intervention, and focus on exports helped transform it into a global financial hub. Singapore's public housing initiatives and labor reforms further attracted foreign investment. However, the video highlights challenges like the high cost of living and growing income inequality, despite the nation's wealth. While Singapore boasts many millionaires, the gap between rich and poor has become a national concern. The video concludes by addressing the ongoing debate about inequality in the country.

Takeaways

• 🗺️ Singapore's strategic location at the center of a key trade route between Asia and Europe has been pivotal to its economic success.
• 🏙️ Despite its small size and lack of natural resources, Singapore has one of the highest average incomes globally, surpassing countries like Germany and Japan.
• 🇬🇧 Singapore's post-independence relationship with Britain signaled openness to global business, which was crucial for its economic growth.
• 🐯 The 'Asian Tigers', including Singapore, grew rapidly from the 1960s due to exports, industrialization, and significant government intervention.
• 🏢 The Singaporean government's early focus on affordable public housing played a critical role in building a disciplined labor force and reducing labor strikes.
• 📉 Singapore's first post-independence recession in 1985 led to economic restructuring, including the privatization of state-owned companies to boost competitiveness.
• 💼 The liberalization of service industries in the late 20th century attracted multinational companies, increasing Singapore's GDP and establishing it as a business hub.
• 💼 Singapore is now one of the easiest places in the world to do business, which continues to attract investment and contribute to its wealth.
• 💰 While Singapore is rich in terms of GDP per capita, high living costs and income inequality mean that not all residents feel wealthy.
• 🏦 A significant portion of Singaporeans' income is directed into a mandatory savings account, which affects their purchasing power despite high average incomes.

Q & A

How long does it take to drive across Singapore?

It takes just an hour to drive across the island of Singapore.

What is one of the key factors contributing to Singapore's high average income?

Singapore's strategic location in the middle of an important trade route connecting Asia to Europe has been a key factor in its economic success.

Why did the British establish a colony in Singapore in 1819?

The British established a colony in Singapore in 1819 due to its strategic location on a key trade route, which was beneficial for trade and commerce.

What term is used to describe Singapore, Hong Kong, Taiwan, and South Korea's rapid economic growth since the 1960s?

These four economies are collectively known as the 'Four Asian Tigers' due to their rapid growth fueled by exports, industrialization, and government intervention.

What was one of the first actions taken by the Singapore government to build a disciplined labor force?

One of the first actions was to focus on building affordable public housing, which provided workers with a stable living environment and incentives to work.

How did the Singapore government attract foreign investment in the past?

The government attracted foreign investment by offering tax incentives, which helped grow the economy and ease unemployment.

What significant change occurred in Singapore's economy from the 1980s to the present?

Manufacturing, which was a major part of Singapore's economy in the 1980s, now only accounts for about 20 percent of its GDP, with services like finance and insurance growing to over 70 percent.

How did Singapore's first post-independence recession in 1985 affect its economic policies?

The recession prompted the government to privatize state-owned companies and liberalize service industries, making them more competitive and attracting more foreign investment.

Why has Singapore been named the world's most expensive city for five years in a row?

Singapore's high cost of living is largely due to taxes on cars, making it the most expensive place to buy and run an automobile, and high costs for other goods and services.

What is the Gini coefficient and how does Singapore's Gini coefficient compare to other developed countries?

The Gini coefficient is a scale used to measure income inequality, with zero being the most equal and one being the least. Singapore's Gini coefficient was 0.356 in 2017, indicating a higher level of inequality compared to countries like the UK, Japan, and Germany, but lower than some others like the United States.

What measures is the Singapore government taking to address the issue of inequality?

The government has recognized inequality as a national priority and is working on policies to tackle it, although the effectiveness of these measures is yet to be seen.