Economics Essay Sample. Overview of the Selected Economy: Singapore

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Harvey Mudd College
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Singapore is one of the most admired economic growth miracles over the past five decades. The country has not only managed to create constant employment growth to a new full employment but has also been able to transform the nation from one of the most corrupt nations in the world to now among the top five ranking with regards to Transparency International. According to the IMF study, Singapore has ranked the richest nation globally. Many nations are aspiring to emulate Singapore. However, no state or city has been able to attain its economic performance. Notably, civil servants from different states have been sent to Singapore for training under the Singapore Cooperation Programme in collaboration with the World Bank. However, just like any other nation, it is coupled with several weaknesses, and the success has been progressive. It has a highly developed trade oriented market economy. It is pro-business with tax rates as low as 14% of its GDP (Ghesquiere, 2007). Furthermore, it has the third highest per capita GDP globally with regards to its purchasing power parity. Moreover, notably, government-associated corporations play an integral role in the nations economy which is owned by the sovereign wealth fund Temasek Holdings which has big shares in the majority of the biggest companys like the Singapore Airlines and Media Corp (Huff, 1997). The economic progression of the nation regarding different economic parameters is interesting and worth emulation and thus the reason for selection in this research. It is in this regard that this paper seeks to conduct an in depth analysis of Singapores economic performance from 2005 to 2014. In particular, the strength of its economy is going to evaluated based on its macroeconomic indicators such as its real GDP, real GDP growth rate, real GDP per capita, inflation rate and unemployment rate.

Production Output Performance analysis

Real GDP of Singapore

Gross Domestic Product (GDP) is the ratio of national income as well as the output of a specified countrys economy. It is equal to the total expenditure for all the nations goods and services that are produced within the country within a stipulated period. As of 2016, Singapores GDP was worth 296.97 billion US dollars. This is equivalent to 0.48% of the global economy. Singapores average GDP between 1960 and 2016 is 75.69$ billion. The countrys highest GDP was experienced in 2014 which was at 308.14$ billion while the least GDP was recorded in 1960 where it had a total of 0.70$ billion. However, the focus of this discussion is its GDP between 2004 and 2014. The table below shows Singapores GDP over the years;

Year GDP growth rate (%) STI

2004 + 9.2 2066

2005 + 7.4 2347

2006 + 8.6 2985

2007 + 9.0 3482

2008 + 1.7 1761

2009 0.8 2897

2010 + 14.8 3190

2011 + 6.0 2646

2012 + 1.9 3167.08

2013 + 4.1 3167.43

Singapore real GDP growth rate

The Gross Domestic Product (GDP) in Singapore in this year has expanded 0.4% this year (Ram, 2016). The average HDP growth rate of Singapore is 6.77% from 1975 up to 2017 attaining an all-time high of 37.2% in the first quarter of 2010. It also experienced the least GDP growth rate in 2008 which was at -13.50%. Singapores economy has been growing rapidly and had the highest GDP per capita in the world.

Singapore real GDP per capita

The GDP per capita in Singapore was last recorded at 8144.40$ in 2016 when adjusted for PPP purchasing power parity. Singapores GDP is equivalent to 458% of the global GDP. The GDP per capita PPP is essentially obtained by dividing the nations GDP product adjusted by purchasing power parity by the total population.


From the above graph it can be deduced that Singapore has had a steady real GDP per capita, except for 2008 when it was low mainly due to the global financial crisis. However, since then the per capita has been steady indicating that the Singapores economy is doing well.

Description and Performance Trends of the Economy

From the above table, it can be deduced that Singapore has had both high and low times regarding GDP. The slowdown in GDP for the year 2008 and 2009 were at +1.7% and -0.8% respectively is attributed to the global financial crisis (Tan, 2016). However, in 2010 as can be evidenced above, its GDP grew exponentially to 14.8%. However, this GDP slowed down in 2011 to 6.0% which was still good. However, this again turned further down to 1.9% in 2012. Consequently, in the subsequent year, the GDP rebounded to 4.1% despite this not being reflected in the Straight Times Index. Also notably, Singapores STI remained relatively flat between the period 2012 and 2013 since STI looks at the economy six months ahead and investors, as well as analysts at this time, probably were not confident of the nations economy. Based on the above results, it can be deduced that Singapores economy has not been stable, it is fluctuating. However, the fluctuation has not been very wide. The GDP of the nation has been high depicting that its economy is doing relatively well as compared to other developed nation. For instance, in this past decade, the countrys GDP has had an average GDP of 6%. Consequently, since 2010, the economy has been relatively stable depicting a growing economy (Irpan et al., 2016). This stable GDP is mainly attributed to the high inflow of Foreign Direct Investments as a result of its attractive investment environment. The substantial economic success depicts its outward-oriented development strategy. Furthermore, Singapore largely depends on exports especially chemicals and electronics. It, therefore, imports raw materials then refines or produces them and then re-exports them as finished goods. Also notably, 75% of Singapores economy is dependent on the service sector with the great contributors being the financial and banking services, transportation and retail services.

Governments measures adopted to attain production output performance

The main measures that have been embraced by Singapore to attain the best production output performance include;

Becoming a smart energy economy

Anchor the country as a Global-Asia Hub

Growing through skills and innovation

Building a distinctive Global city as well as an endearing home

Building a vibrant as well as diverse corporate ecosystem

Enhancing land productivity in order to secure future growth

Making innovation pervasive and fostering commercialization of research and development

Labor market Analysis

Definition and Description of Unemployment trends in Singapore

Unemployment is a great indicator of a nations economic performance. Essentially, unemployment infers to the number of unemployed persons as a percentage of the labor force. The labor force refers the total number of employed persons and unemployed persons. Unemployed workers can also be defined as those who are not currently working but are able and are willing to work for pay, are available for work and have also engaged in the active job hunt (Economics, 2014). With regards to Singapores unemployment rate, its average unemployment rate is at 2.45% that is from 1986 to 2017 (Sugimoto, 2011). However, the focus of this research is its unemployment rate between 2004 and 2014. The unemployment rates are as follows from 2004 to 2014.

Year Rate Percentage change






















1.95 -15.19 %

-6.72 %

-15.20 %

-19.81 %

4.71 %

35.96 %

-28.10 %

-6.90 %

-3.70 %

-2.56 %

2.63 %


The unemployment rate determines the percentage of the labor force that is not employed. The unemployment rate is a direct economic indicator of the economic performance of Singapore. The lower the unemployment rate, the better (Rajan & Thangavelu, 2009). Notably, it is impossible to have a 0% unemployment rate. From the data presented above, it can be deduced that Singapore has maintained an average unemployment rate of 2% since 2010. This figures when compared to other developed cities, it is doing much better. For instance, in 2014 the unemployment rate in New York 5.8%, Hong Kong 3.3%, London 7.13%, and Japan 3.6%. It is clear that Singapore enjoys a lower level of unemployment. Moreover, it had been able to maintain an average rate of about 1.9% within the first quarters of 2015. Despite, the 2009 global financial crisis, Singapore managed to maintain its unemployment rate at 3% which was an incredible performance (Newell, Pham & Ooi, 2015). Over the recent years, there has been a debate regarding the issue of foreign talent replacing Singaporeans from their jobs (Abdullah & Chan, 2016). As of 2014, 40% of the total population of Singapore is foreigners. For instance a comparison of the ratio of the unemployment of the residents in comparison to foreigners, it has been determined that the unemployment rate of Singapore citizens, as well as the permanent residents, is relatively higher than that of the overall unemployment rate thus it is true that foreigners are taking the jobs of the Singaporeans. The table below indicates the unemployment rate for the residents.

Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Resident unemployment Rate (%)

Annual Average 4.1 3.6 3.0 3.2 4.3 3.1 2.9 2.8 2.8 2.7

With regards to whether there are enough jobs that are generated in Singapore, the table below shows that in 2014, for every individual person that is unemployed, there were 1.39 jobs to select from.

Year 2011 2012 2013 2014

Job vacancy to unemployed person ratio

Annual Average 1.21 1.07 1.29 1.39

It is clear from above table that there are more job vacancies than persons that are unemployed. Thus this could be interpreted that probably the unemployment rate could be as a result of a personal choice. This can, however, be determined as maybe it could also infer that Singaporeans from higher paying jobs were retrenched and that the only available jobs are the lower paying jobs. However, certain aspects are often not reflected in the numbers. For instance, issues regarding job quality, remuneration, and the progression opportunities are often not reflected in the numbers.

Overall, from the analysis unemployment is a subjective issue and Singapore has managed to deliver an excellent report card when it comes to its unemployment rate as compared to most other countries and cities as reflected in the numbers.

The different types of unemployment in Singapore

There are three main kind of unemployment in Singapore; cyclical, structural and frictional unemployment.

Cyclical unemployment: it is the major cause of unemployment in Singapore mainly because Singapore has a relatively larger external sector that is dependent on external demand for economic growth.

Structural unemployment: this is caused by globalization since there is a lot of restructuring in the country and this contributes to structural unemployment. it has changed from labor intensive to capital intensive economy making different skills to be needed and that workers who do not have the requisite skills are laid off or moved to another industry.

Frictional unemployment: this also happens in Singapore when people have to find new jobs when they look for suitable jobs or change their careers.

Governments measures adopted to attain full employment

The government has embraced certain measures to attain full employment. Some of the measures embraced include the hiring majority of the locals, putting in place monetary policy that cuts interest rates in order to boost the aggregate Demand, education and training, fiscal policies such as cutting taxes to boost Aggregate demand and lowering the minimum wage in order to reduce the real wage unemployment.

Price Level Analysis of Singapore between 2004 and 2014

Description of Inflation trends...

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