Awesome chart by @TheEconomist summarizes Singapore's rise under Lee Kuan Yewpic.twitter.com/NQUFknhjUa
HT: @amolrajan— Erik Brynjolfsson (@erikbryn) March 22, 2015
Singapore Campaigns of the 70s/80s
17 Jan 2015 Leave a comment
in applied welfare economics, economic history, economics of regulation Tags: meddlesome preferences, nanny state, Singapore
With intensive usage of media, campaigns are launched to achieve certain particular goals, usually in a political, social or commercial sense. Sometimes, a campaign represents an era, and some of its posters go on to become iconic representations that are even remembered after decades. One of the examples is the United States’ “I Want You For U.S. Army” poster in 1917.
Campaigns are meant to have a long term impact. However, human errors, wrong judgement or a lack of foresight during the introduction of campaigns can sometimes lead to failures or even disasters to the country. In 1958, the new China launched the Four Pests Campaign in a bid to eliminate rats, flies, mosquitoes and sparrows. The sparrows were targeted because they ate the farmers’ grain seeds. In a short time, millions of Chinese were mobilised for the campaign. Sparrows, as well as other birds, were shot, with their nests…
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A tale of two cities – Hong Kong’s and Singapore’s different paths to prosperity
13 Oct 2014 Leave a comment
in development economics, entrepreneurship, industrial organisation Tags: Alywn Young, development economics, Hong Kong, industry policy, industry targeting, rent seeking, Singapore, tale of two cities, tyranny of numbers
Hong Kong and Singapore had different paths to prosperity. Alywn Young found that Hong Kong had made real productivity gains, but Singapore grew by a massive dose of savings and investment, including foreign investment.
For most of the post-war era, the Hong Kong government adopted a policy of minimal intervention. the government of Singapore has pursued maximalist policies involving widespread state participation in economic activity and aggressive industry targeting policies.
The share of investment in Singapore’s GDP rose from 9% in 1960 to 43% in 1984, while Hong Kong’s remained steady at about 20%. Productivity growth in the aggregate non-agricultural economy was a miserable -0.3% in Singapore and 2.3% in Hong Kong.
What does this mean in practical terms? Real consumption, real consumer spending, per capita in Hong Kong is 20% or more higher than in Singapore!
Hong Kong actually enjoyed their prosperity. Robert Barro explains this in a comment on Young’s paper:
In 1985, when Singapore’s per capita real GDP was 102% of Hong Kong’s, the consumption was only 70% of Hong Kong’s. To put it another way, Hong Kong’s per capita real consumption grew by 5.9% per year from 1960 to 1985, about the same as for GDP, whereas Singapore’s grew by only 2.8% per year, much less than GDP.
In terms of output per capita and output per worker, the growth of Hong Kong and Singapore are equally impressive. Hong Kong does much better in terms of productivity growth.
Hong Kong did not require as rapid capital accumulation as Singapore. Since capital accumulation is financed either by domestic saving or foreign saving, people in Hong Kong can afford to save less or borrow less from foreign economies. Saving less now means more consumption now.
In the case of Hong Kong, their living standards are far superior to Singapore’s. The government of Singapore wasted a good 20 to 30% of national income on industry targeting and compulsory savings.
Hong Kong experienced rapid total productivity growth, while Singapore experienced no improvement whatsoever in total productivity during its East Asian Tiger years. 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. Only productivity allows a nation to support and enjoy high wages.
On independence, Jamaica was rated a better prospect for economic development than Singapore!
24 Jun 2014 Leave a comment
in development economics, growth disasters, growth miracles Tags: East Asian Tigers, Jamaica, Singapore
Upon Singapore’s independence in 1965—three years after Jamaica’s own establishment as a nation—the two nations were about equal in wealth: the gross domestic product (in 2006 U.S. dollars) was $2,850 per person in Jamaica, slightly higher than Singapore’s $2,650.
Both nations had a centrally located port, a tradition of British colonial rule, and governments with a strong capitalist orientation. (Jamaica, in addition, had plentiful natural resources and a robust tourist industry.)
But four decades later, their standing was dramatically different: Singapore had climbed to a per capita GDP of $31,400 (2006 data, in current dollars), while Jamaica’s figure was only $4,800.
Both countries were ruled by political parties that were members of Socialist International.
Both countries had a Prime Minister who held office for a long time in the period after independence. Both countries had a father and son follow each other in short order as Prime Minister.
Utopia, you are standing in it! 
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