Furry Brown Dog

Dedicated to the memory of my canine friend…

Singapore’s policymakers catch up with economic reality

with 7 comments

Emblazoned on the front page of today’s Straits Times was the bold headline Grow Productivity, not just GDP: PM:

One must wonder if it were really that difficult for Singapore’s self-styled “able and successful” multi-millionaire ministers to reach this conclusion.  As pointed out in an earlier post, various economists, both influential (Krugman in 1994) and lesser known have argued likewise as early as the 1990s when labour productivity was still growing, whilst drawing annual wages a mere fraction of the ministers. Consider the following extract from the 1999 paper highlighted in that post:

It is generally agreed that rapid growth in Singapore derived from massive factor accumulation-“a mobilization of resources that would have done Stalin proud” (Krugman, 1994, p. 70). In a series of influential articles. Young (1992, 1994, 1995) demonstrated that from 1967 onward total factor productivity growth in Singapore was next to nil, and for significant parts of the period most likely negative. Using accounting methodologies somewhat different to Young’ s, Kim and Lau (1994) also found that Singapore’ s economic growth came chiefly from increased capital inputs; technical progress contributed little or nothing. Although modifying this result for recent years, Collins and Bosworth (1996) (pp. 138-41, 157, 167-69) concluded similarly. So too does a careful study by Rao and Lee (1995) for 1966-84, but the study also finds encouragement improved total factor productivity growth for 1987-94.’

Another exercise: try guessing when the following was written.

Improvement in productivity will almost surely mean an increase in competitiveness; but this relation does always hold vice-versa. Some countries can improve their national competitiveness by slashing nominal wages; and engineering a depreciation of its currency. These beggar-thy-neighbour expediencies, though may save jobs for a while, may invite retaliation. Trying to reduce nominal wages in every country will lead to higher unemployment without improving growth and competitiveness. Likewise is the case for competitive devaluation of currencies. Moreover, exports based on low wages or a cheap currency do not support an attractive standard of living. Only productivity allows a nation to support and enjoy high wages, a strong currency, and attractive return to capital. Productivity should the goal for growth and prosperity. According to Harvard Business School Prof Michael Porter, “Only if a nation expands exports of products and services it can produce productivity will national productivity rise” (Porter 2002: 25). Productivity is the goal, not exports per se.

Did you think it was written last year?  Or the year before?  Nope.  It was authored in 2004, some five years before an economic review committee reached the same conclusion. Yep the same economic review committee which Alex Au critiqued earlier (also see here) for being devoid of economists.

The importance of critical analysis and advice from economists cannot be understated. In fact, the Singapore Ministry of Trade and Industry’s own economists have shown in 2001 how Singapore’s GDP growth in since the late 1980s were increasingly driven by foreign labour and capital inputs coupled with the diminishing influence of total factor productivity growth:

Singapore’s policymakers and leaders have routinely dismissed or ignored invaluable advice from academics, listening only to those who largely concurred with their ideology (so much for pragmatism). In several cases, the government publicly rebuked or took (legal) action against dissenting opinions from academics, effectively stifling valid intellectual criticism.

Such acts have only engendered and promoted delusional and self-serving groupthink, created a virtual fantasy world where growth is always attributed to “far-sighted” government policies rather than the sacrifices of the Singaporean people.  As Lucky Tan puts it:

The thing that I really didn’t like about the NatGeo article on Singapore wasn’t just what MM Lee said about Singaporeans but also the myth perpetuated by the article. It gave all the credit for Singapore’s success to the PAP govt and much of it went to MM. The Singapore workforce that build the economy consisted mainly of children of laborers and coolies who grew up in the postwar years. A tough bunch similar to those in Japan, S. Korea, Hong Kong and Taiwan…all successful countries in their own right but we never hear people say S. Korea’s success is due solely to its govt or that the Japan’s LDP is singlehandedly responsible for Japan’s industrialisation. The PAP took away not just our rights and freedom, they also took the credit for the success of this country from the hundreds of thousands of hardworking citizens that formed the number 1 workforce in the world.

Now of course, Singapore’s ministers are finally begin to acknowledge reality. Hopefully for Singapore, it’s not too late.


Written by defennder

January 27, 2010 at 1:16 AM

7 Responses

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  1. Linked under ‘Economics’. Thanks. Last post in.


    January 27, 2010 at 3:02 AM

  2. […] up with progress! – The Secret Political Blog: The PAP imitates the Reform Party – Furry Brown Dog: Singapore’s policymakers catch up with economic reality – Sgpolitics.net: A U-turn in PAP’s economic and population policies? We shall see. – Who Moved […]

  3. Thanks for linking.


    January 29, 2010 at 12:14 AM

  4. Dear blogger of Furry Brown Dog,

    Let me first apologise for leaving my request on your comments page, as I couldn’t reach you through any other way. I am a PhD candidate from the Communications and New Media programme at the National University of Singapore, and my research examines blogging and collective action. “Furry Brown Dog” came up in my sampling process and I am writing to you to seek your valued participation in a survey.

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    Without saying too much to bias your responses, my study concerns bloggers’ online usage, their social networks and their participation/non-participation in activism. Whether you have participated or have not participated in any activism activity, your responses will be vital in helping me gather empirical evidence on blogging and its effects.

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    There has been much talk in the media and in the parliament on the rise of blogging and online discourse. But do blogging really impact civic participation? How does it do so? Your responses to the simple survey will go a long way in contributing to the nascent field of research on blogging in Singapore.

    HOW can you help?
    The survey involves easy-to-answer questions (e.g. Yes/No, ratings of “1” to “5”) and will take only about 20 minutes of your time. Based on your preference, I can conduct the survey via email (or any other ways you prefer). Just send me an email and I will forward you the survey form.

    Please help!
    Bearing in mind the potential difficulties in getting an adequate sample for such a study, I would like to stress that every single participation counts. In addition, this study has been approved by the NUS Ethical Review Committee. You have my complete assurance that all your responses will be kept strictly confidential and your identity anonymous.

    Do visit http://www.fas.nus.edu.sg/cnm/research%20students/2006_grad_carol.htm for a brief write-up of my profile (please cut and paste if the link doesn’t work). Being a student with no funding support, I am bearing all research costs and appealing to your goodwill (and hopefully curiosity?) to take part in this study.

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    Carol Soon

    March 1, 2010 at 11:30 AM

  5. If you look at the rewards system for senior civil servants and government politicians, there is no incentive for them to adopt policies that will favour long term sustainable productivity growth over economic growth with productivity decline. Bonuses are based on GDP growth.

    Ironically, this government prides itself on long-term foresight.


    April 26, 2010 at 11:13 PM

  6. To the author of furrybrowndog.wordpress.com,

    Dear Sirs,

    I am a student at the university of Amsterdam. At this moment I am in the end phase of my study and have started to conduct research for my thesis to complete my master in political science. In my thesis and related research I aim at analyzing blogs in Singapore that focus on Singaporean politics, including for instance political issues, political system critics etc.

    I would be very grateful if you could send me the links of the most authoritative or well known and well regarded blogs writing about Singaporean politics you know next to your own blog. Maybe you have friends who also write on these matters. If you could forward my e-mail to them and ask them to respond to me, that would be great. Alternatively you could send me their e-mail address or url so that I can contact them myself.

    I have one more request. Is it possible that you would cooperate with me and that you answer some questions I will send to you? The questions will be about blogging in Singapore.

    Thank you very much for your help!

    Yours sincerely,

    Sarah Nienke van Voorthuisen

    Sarah Nienke

    May 2, 2010 at 6:26 PM

  7. Fox

    Yes I agree it’s highly ironic that the government would adopt such a Wall St approach to executive compensation for top civil servants and policymakers. In all serious consideration, this does not bode well for Singapore. In fact there’s probably good reason to believe that income inequality is worsening simply because those in charge of policy only have strong incentive to boost the salaries of the top earners in the country, rather than caring about median income earners in the country.


    July 5, 2010 at 3:53 PM

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