Singapore is a small country, so the little one roams the island in just one hour. Despite its size and lack of natural resources, Singapore's 5.6 million people receive one of the world's highest incomes, ahead of countries such as Germany, France and Japan. How, then, did this small group become so rich? Singapore does not have resources like coal or oil but it has something that countries can afford, land.
The island is located in the middle of an important trade route linking Asia and Europe. This was the main reason why the British decided, back in 1819, to set up a colony in Singapore. Location is not everything though. There are several neighboring countries that could use their territory, but they have not been very successful. That’s because there are other ingredients that go into this rich Singapore recipe. I am at the Raffles Hotel, which is one of the highlights of Singapore's colonial history. Unlike some of its neighbors, who wanted to separate themselves from their colonial history, Singapore maintained close ties with Britain, even after independence in 1965. That decision announced to the world that Singapore was open for business. That is important because we now know that trade helps to grow and expand the economy. But back then, it was not uncommon wisdom. Singapore, Hong Kong, Taiwan, and South Korea are known as four Asian tigers, which have grown rapidly since the 1960's.
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Their rise is due to exports, industrialization and more importantly, major government interventions. This was especially true in Singapore. Workers' strikes were common on the island in the 1960's, despite the fact that people had high-quality job opportunities. In addition, with the housing crisis, Singapore is home to one of the world's largest slums. So how do you build a more efficient workforce to attract investment? Yes, he is giving them something to work for, such as their house, which is why one of Singapore's first established government agencies focused on building affordable public housing. While only nine percent of the population lived in public housing in the 1960s, that number stands at more than 80 percent today, adding to the great rights of employers and strikes became very rare.
At the same time, the government attracted foreign investment through tax incentives, boosted the economy and reduced unemployment, which dropped from an estimated 14 percent in 1959 to 4.5% in the 1970s. In the 1980s, Singapore was a regional manufacturing facility, and was the world's largest manufacturer of hard disk drives. But today, production accounts for about 20 percent of Singapore's GDP. Look at Singapore's growth in GDP. You can see two large surges, one starting in the late 80s and the other at the beginning of the new millennium. Surprisingly, Singapore has an adownturn thanks for that. You see, in 1985, Singapore entered its first post-independence economic situation, prompting the government to launch new initiatives. State-owned enterprises such as telecommunications were designed to be privately owned to make them more competitive. Then, at the turn of the century, the financial and insurance industry was liberated. That openness helped to increase the share of services from only 24 percent of GDP in 1985 to more than 70 percent in 2017.
International companies began setting up regional headquarters in Singapore. That attracted very large players, which increased Singapore's attractiveness to companies and its GDP. Now, Singapore is considered one of the world's easiest places to do business. Singapore is credited with transforming itself from a prosperous state to a prosperous economy. But do most Singaporeans feel rich? No, not exactly. Two very important reasons? The high cost of living and inequality. For five years in a row, Singapore has been named the world's most expensive city, ahead of New York and London. This is due to the tax on cars, which makes Singapore the most expensive place in the world to buy and use a car. It is the third most expensive place on Earth to buy clothes. But personal care, household goods, and domestic assistance in Singapore are often more expensive than in other big cities. While Singapore is rich in GDP percapita, the monthly salary is $ 3,270. That doesn't sound too bad, but about 20 percent of the compulsory savings account. You can use that account to pay off debts, housing and education, but it restricts purchasing power. You may have heard of the Crazy Rich Asians movie, set in Singapore.
And no wonder. Because Singapore has an estimated $ 184 billion, which makes it really a world of insane rich. That's good news. But Singapore also has a much higher level of inequality, compared to other developed countries. Let's look at the coefficient of Gini, which is the scale used to calculate the inequality, when zero is the most equal and one is the smallest. Singapore’s Gin coefficient, after tax and cash transfer calculations, was 0.356 in 2017. That was worse than countries like the United Kingdom, Japan, Korea and Germany, although it was doing well, like the United States. Is that number so bad? That question had books like these flying on the shelves. The think tank sparked a public debate over segregated social classes, after discovering that on average, Singaporeans living in public housing have less than one friend living in people’s homes. The government has called inequality a national priority, but it remains to be seen whether the problem can be addressed.
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