The Economic Concept And Models Economics Essay

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Reasons for choosing the article on Singapores Productivity Growth was simple; which other Country has been so successful in such a short time like Singapore. Looking at the Gross domestic product (GDP) of the country, even from the early years of the country, it has been growing constantly.Everything that has been doing in the past would affect the future and it is very evident that Singapore Economic Growth is due to the right decisions made by the government early on in the starting years. This report will try to explain what Singapore has done to make life easier for its people.

In the 1960s to the early 1980, Singapore was a country that had focus its attention on labour intensive industries.

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Data taken from the World Bank.

Producing labour intensive products would not boost the economy as the prices of the products would steadily increase as the country moves forward with progression. Doing economies of scale in Singapore would not benefit investors in other countries as the investor would be able to find other countries that were able to do the products at a cheaper price; this was when the Country slipped into recession.

To counter this issue, Singapore made it easier for foreign talents to enter Singapore's job market to boost the economy. Singapore also moved away from a labour intensive industry to a service industry; and had her people re-trained to suit the ever evolving economy.

In a sense, Singapore's approach to its economic growth are from labour productivity growth, the factors are as follows:

Physical capital growth

Human capital growth

Technological advances

Physical capital growth

In industries around the world, it is a trend that industries nowadays have moved away from focusing on solely the human touch and integrated technology in the process of producing goods. So the physical capital that is referred to are tools, factories, and equipment that are used in the production process. In Singapore there is another physical capital that is focused on, physical infrastructure; having world class factory is useless when there are no proper roads available for the factory to ship items in and out. An example of this would be the Soviet Union. The Soviets built factories that dwarfed their Western counterparts and because of the inadequate infrastructure, they were often difficult to get to. This made distributing their output more difficult.

Human capital growth

Another factor that affect the productivity of the country is the human capital growth; this refers to the education, skills, and abilities possessed by an individual. In Singapore, education is made compulsory, workers are sent for skill upgrades to be kept up-to-date. This can be considered the source for increasing the labour productivity and technological advancement.

Technological advances

People are what give the society the technology advancements; being creative, innovative and inventive are some of the ways that people have made life easier and more productive. However, a developing country like China that does not have adequate laws on intellectual property will use the technology of other people to their benefit, using ready to use technology to their advantage. An example would be the Apple store that was not an actual apple store; copying the apple technology so well that even the employees of the branch thought they were working in an actual apple store. However, in the future there will be change in the trend for China because technology will not always move forward so quickly; once China start to develop their own technology, they would want to protect their own technology from being copied as well. But this will only come later in the future.

Economic concept and models

Coming back to the Singapore situation; the situation of Singapore is unique as it is a very young country and blessed with great minds with view for the country. Unlike other countries, Singapore is ran like a company rather than a country ; the government spend money to invite specialist to analyse the situation that it is in and how to turn it into a very successful country and that master plan was a great one as it was something that worked very well.

From being a country that emphasized on labour intensive industries, Singapore swung its attention to a more service based businesses. Singapore also moved away from using human resources and used more technology in its everyday factories processes. The infrastructure of Singapore was revamped with the introduction of the Mass Rapid Transport to better facilitate the ever growing labour force in Singapore. Highways and routes were improved to better the transport from end to end of Singapore. Even though a lot of money was spent improving the current infrastructure and the way factories were ran, this would in turn raise the productivity of the people.

The government main it a point to make sure education and relevant trainings are made readily available for its people; fact of the matter is that with more trainings, people tend to being more productive as they have the relevant skills to work and excel at what they do. Another country other than Singapore, where this is evident, is Japan. Japan is country that is considered to be technologically advance so even though it is handicapped by the lack of natural resources, the people of the country makes up for the resources that might be able to boost the economy. The issue that Singapore ran into was the fact that they had to change the mindset of its people from just working to providing services.

Conclusion

In Singapore, the government relates hiring low skilled workers to the low productivity rates and also states that if Singapore is able to bring down the number of foreign workers, it would increase the productivity of the country. This is true if Singapore is focusing on the Labour productivity instead of looking at the aggregate hours to increase the Economic growth of a country. Between the two options on increasing the Economic growth, Singapore feels that productivity growth will have a greater effect on the growth. This is because the only way to truly increase the real GDP , labour has to be more productive.

Even though Singapore is focusing on the productivity growth, it can be seen that the government still employs other methods of increasing the GDP growth of the country, changing the employment-to-population ratio by bring back the people who are not in the workforce, examples are housewives and retirees, back into the workforce. This will serve to drive up the aggregate hours. As shown below, the average age of workers still in the current workforce is very much higher than in the past.

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Singapore is a very robust country and has proven itself time and time again; having just turned 47, it is considered a very young nation but also very successful because of careful planning and execution.

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Resources

http://www.edb.gov.sg/edb/sg/en_uk/index/about_edb/our_history/the_1980s.html

http://www.asiaone.com/Business/News/My+Money/Story/A1Story20100129-195280.html

http://www.bloomberg.com/news/2012-08-28/imf-says-singapore-should-allow-temporary-rise-in-inflation-rate.html

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