Modern Economic Development Concepts

Abstract

The chapter provides a concise review of the major theoretical contribution to economic development since the Second World War. Backed by the Harrod–Domar growth model, economic development strategies in the 1940s till 1960s were much dominated by the debate between balanced growth championed by Ragnar Nurse and Rodenstein-Rodan and unbalanced growth led by Albert Hirschman. Unbalanced growth doctrine favors using the limited resources to develop identified strategic sector which will then pull and push other sectors to support and achieve overall growth. The unbalanced growth approach somewhat jived with theories based on economic dualism associated with researchers like Arthur Lewis, John Fei and Gustav Ranis. The basic dual economy theory explains how an agrarian economy with no modern industrial sector is transformed into a mature industrial economy. The idea of development as transformation from primitive traditional society to one characterized by high mass consumption was skillfully described by Rostow’s book in 1961. By the end of the 1980s, new theories that have substantive impact on economic development were propounded by academics and researchers in field of business strategies, urban planning and spatial economics. Many of these have neoclassical economics foundation and also have derived insights from increased spatial interdependence and competition attributed to globalization and availability of new communication technologies. New concepts like competitive advantage, agglomeration economies and global value chain become increasingly familiar in development economics.

Appendix: Main Economic Plans and Reports for Singapore

• 1. The Singapore Economy: New Directions

Published in February 1986

The Economic Committee was convened in April 1985 to review the progress of the Singapore economy and to identify new directions for its future growth. The work of the Committee is published in this comprehensive report. The Executive Summary outlines the causes of recession and policy changes recommended, future position and new directions, and highlights the fundamentals, strategies and key policies for Singapore.

• 2. The Strategic Economic Plan: Towards a Developed Nation

Published in December 1991

The report sets out the strategies and programmes for Singapore to realize the vision of attaining the status and characteristics of a first league developed country within the next 30–40 years. The report is divided into two parts: Vision & Strategies and Implementation. There are six chapters in Part I, providing an overview of the economic landscape. It includes economic plans of Singapore, the vision, key macros strategies and two areas of specific interest, namely, industrial strategy and economic resilience. Part II iterates the strategic thrusts mentioned in Part I, in conjunction with the respective programmes identified to support the objectives of the strategic thrusts. There are a total of 8 strategic thrusts and 17 programmes.

• 3. Committee on Singapore ’ s Competitiveness Report (1998)

Published in November 1998

The report summarizes the Committee on Singapore’s Competitiveness (CSC)’s assessment of Singapore’s economic competitiveness in the short term and over the next decade. Although the CSC was formed in May 1997 with the aim of assessing Singapore’s longer-term competitiveness, the onset of the economic crisis in July 1997 necessitated a critical re-examination of Singapore’s competitiveness in the light of major changes in the external environment. The CSC’s recommendations are presented in three parts. Part I focuses on immediate actions to enable the Singapore economy to weather the crisis. Part II looks beyond the crisis and proposes strategies to position Singapore for the eventual recovery. Part III contains the detailed sectoral plans for manufacturing, finance and banking, hub services and domestic businesses.

• 4. The Manpower 21: Vision of Talent Capital

Published in 1999 by Ministry of Manpower

The Manpower 21 blueprint seeks to transform Singapore into a country known for its talents, ideas and capital flows. The Singapore of the future will thrive on innovations and knowledge exchanges, encouraging further innovation among its people and attracting creative visitors to its shores. Our workforce will be transformed into prized intellectual capital with the necessary skills, knowledge, experience and capability to enhance Singapore’s global competitiveness.

• 5. Reports of the Economic Review Committee

Published in February 2003

The report of the Economic Review Committee reviewed policies related to taxation, wages, CPF and land; promoting entrepreneurship and internationalization of Singapore companies; upgrading and growing the manufacturing sector; developing services sector; growing domestic enterprises; developing our human capital and helping Singaporeans to respond to changes and take advantage of new opportunities.

• 6. Science and Technology Plan 2010

Published in January 2006

SINGAPORE is at an exciting phase of growth as we face new challenges to sustain economic growth and prosperity. While we will continue to build on our existing strengths of an efficient workforce, clean government and world-class infrastructure, we need new strategies to differentiate ourselves and develop peaks of excellence in selected areas where we can build a sustainable comparative advantage. We should leverage on our tradition of excellence in science, mathematics and technology to grow a strong base of scientists, researchers and technologists who will provide the leadership in the next phase of knowledge and innovation-driven growth.

• 7. Report of the Economic Strategies Committee

Published in February 2010

To sustain Singapore’s development as well as ensure that growth is inclusive, the Economic Strategies Committee (ESC) recommended seven strategies for the next decade. They aim to make skills, innovation and productivity the basis for economic growth and for a broad-based increase in living standards for all citizens. They also aim to make Singapore a distinctive global city and an endearing home.

• 8. Research, Innovation and Enterprise 2015

Published in 2011

Research and Development (R&D) is an important part of Singapore’s economic strategy. It is a source of innovation and value creation. Since the first National Technology Plan in 1991, our investments have supported the transformation of Singapore’s economy by upgrading existing industries and catalyzing new growth areas.

To further boost research, innovation and enterprise (RIE), the Singapore government will invest $ 16.1 billion over 2011–2015. The RIE2015 Plan sets out Singapore’s key R&D strategies, to support our long-term vision to be a research-intensive, innovative and entrepreneurial economy like Sweden, Finland or Israel.