Peculiarities of economic development of Singapore

A modern development of countries is characterized by the dramatic increase of unevenness of the socio-economic development and by the growth of share of developing countries in the global economy. One of the countries, which have achieved a qualitative change of the socio-economic status in a short period, is Singapore.

The modernization of Singapore economy (1959-1990) was carried out with the attracting of foreign investors, and this allowed Singapore to become a technological civilization, financial and trading centre of South-East Asia. Russian and foreign researchers recommend using the unique experience of Singapore in practice of other countries.

Macroeconomic indicators of Singapore

The economic model of Singapore is a developed market system, which depends on export, especially in spheres such as consumer electronics, information technology, pharmacy and financial services.

The economy of Singapore is one of the most open economies; also it is free from corruption. The stable prices are maintained and per capita GDP is one of the highest in the world.

From 2010 to 2016 GDP on the criterion of the purchasing power parity (PPP) increased by over 25 per cent. The main reason of the decline in GDP in 2015 was falling demand for export commodities of Singapore caused by the economic slowdown of lead trading partners, first of all of China. Therefore, decline in industrial production of Singapore amounted to 3.5 per cent.

Foreign trade plays a huge role in economic development of Singapore: it provides the majority of the income of the country. Through the import Singapore satisfies the needs, which occur due to the lack of national natural resources. Export helps to sell more than half of the product on the global market, to form foreign earnings as the basis of the socio-economic development.

Singapore is a major player in the international trade. According to the data of the World Trade Organization for 2016, the country took the 13th place in the world in export volumes and the 16th in import volumes.

The export of Singapore in 2016 amounted to 353300 bln of dollars, and import – 297 bln of dollars. The main partners of Singapore in export and import are showed in Table 1.

Table 1. Trading partners of Singapore

Main customers of export from Singapore	Main importing countries of Singapore
China (13.7%); Hong Kong (11.5%); Malaysia (10.8%); Indonesia (8.2%); USA (6.9%); Japan (4.4%).	China (1.2%); Malaysia (11.2%); USA (11.2%); Japan (6.3%); South Korea (6.1%); Indonesia (4.8%).

In Table 2 there is an expanded commodity structure of export and import of Singapore.

Table 2. Foreign trade of Singapore

Key products exported by Singapore	Key products imported in Singapore
-    Electrical machines and electronic equipment (6th place in the world, 33% of export); -    equipment and mechanical devices (9th place, 17%); -    mineral fuels, oils, petroleum distillates (13th place, 15%) etc	-    Electrical machines and electronic equipment (5th place in the world, 27% of import); -    mineral fuels, oils, petroleum distillates (10th place, 24%); -    equipment and mechanical devices (10th place, 16%) etc

The main items of import of Singapore coincide with the main items of its export. This demonstrates an advanced stage of country`s specialization.

In Table 3 the macroeconomic indicators of Singapore are reflected, these include the unemployment rate and the inflation rate.

Table 3. Unemployment and inflation trends in Singapore for 2010-2016

Year	Unemployment rate, %	Inflation rate, %
2010	2.2	2.8
2011	2.0	5.2
2012	2.0	4.6
2013	1.9	2.4
2014	2.0	1.0
2015	1.9	-0.5
2016	2.0	-0.3

The unemployment rate in Singapore has been within 2% for many years. The inflation in 2016 was -0.3%, that is, the country found itself in the position of deflation – an overall induction in the price level.

Sound policies, respect for the rule of law, highly developed economy of Singapore allowed this country to become the international centre for a lot of branches of industry. For instance, in 2016 17 Singapore companies have joined the list of 2000 biggest public companies of the world under the version of Forbes magazine (DBS Group Holdings, Oversea-Chinese Banking Corporation (OCBC), Singtel United Overseas Bank, Wilmar, etc).

Singapore has the second highest development of the financial market in the world. According to the report of the World Economic Forum 2015-2016 about global competitiveness, the strengths of Singapore are access to credit (4th place) and sustainability of banking system (4th place).

In recent years the government of Singapore has paid close attention to the technical development of the country. We are going to list the main priorities in sphere of scientific research formulated by the National Research

Foundation: biomedical science; technology for protection of the environment and water treatment: clear water and pure energy; interactive and digital media.

Singapore is a world leader in innovation. Global Innovation Index (GII) is used for assessment of the level of innovation in different countries. GII is a weighted amount of evaluation of two groups of indexes:

– disposable resources and conditions for implementation of innovation;

– achieved practical results of implementation of innovation.

Thus final Index is a ratio of cost to effect, which allows making an object assessment of the effectiveness of effort made for development of innovation in different countries.

GII includes 7 indicators:

– institutions

– human capital and research

– infrastructure

– development of market level

– development of business level

– results in field of science and technology

– results of creative activity

Global Innovation Index of Singapore is reflected in Table 4.

Table 4. Global Innovation Index of Singapore for 2013-2016

Year	Index value	Place in the world
2013	59.4	8
2014	59.2	7
2015	59.36	7
2016	59.16	6

These figures demonstrate that Singapore is one of the leaders in list of countries which pay close attention to scientific and technological development.

The analysis of causes of the economic growth of Singapore has shown that focus on innovative development of country is in the centre of economic model (Table 5). Singapore spent about 2% of GDP on research and development in 2012. This puts Singapore at the same level as knowledge-intensive countries like Denmark (3.1%), Taiwan (3.0%), Germany (2.9%), Switzerland (2.9%), Austria (2.8%) and USA (2.8%).

Table 5. Factors of innovative development of Singapore

System of education and retraining of personnel	The State pays up to 90% for education and retraining of personnel. Business of Singapore can employ the right specialist from abroad and then present a bill for a fee to the State.
State support	Creation of programs which contribute to further development: “Plan of development of science, technology and entrepreneurship 2015” – five-year plan announced by the Agency for Science, Technology And Research (A*STAR) in 2011 “Plan of development of research, innovation and entrepreneurship 2015” - five-year plan which establishes key strategies of Singapore in research and development for implementation of the long-term strategy of becoming knowledge-intensive, innovative and entrepreneurial economy. National Framework for Research, Innovation and Enterprise (NFIE) – national program of development of innovation and entrepreneurship in Singapore. It is administered by the National Research Foundation, Prime Minister's Office.
Investment  attrac tiveness	Strategically advantageous position of Singapore at the intersection of the main sea routes and developed industrial society gave the country disproportionate economic importance in SouthEast Asia in comparison with country's small size. Singapore is a state maximally oriented on the use of new technologies at all levels of economy. Singapore is one of the most integrated in global economy states.