Question 1

Introduction
The economy growth of a country is generally defined as an increase in the output of
its final goods and services over a period of time and is measured by an increase in
the real Gross domestic Product (GDP) - total output. Thus growth can be measured
as a percentage of the countrys real GDP
. As explained by an e-source
(http://www.economicsonline.co.uk/Competitive_markets/Economic_growth.html
It would also mean an increase in the countrys capacity to be more productive, when
using all its scare resources and this can be determined by an outward shift in the
economys possibility frontier (PPF)
Therefore, increased in capacity to produce happens when the economy undertakes
the following:

1) Uses of Natural resources:

An article by www.GfGD.org states that natural resources like heavy metals, minerals
and precious metals can contribute significantly to the growth of a country. It will lead
to an increase in production and manufacturing thereby increasing export revenues. It
also helps to reduce cost of local businesses and households. Both of these leads to an
increase in both the quantity and quality of total output.
However, natural resources are not necessary to be abundant for a country to produce
goods. Thorvaldur Gylfason and Gylfi Zoega Revised June 2001 wrote that while
natural resources are important source of national wealth, it is neither necessary nor
sufficient for economic growth. While countries like OPEC are rich in oil and heavily
dependent for its growth, for others like United States, Canada and UK, it plays a
small part. Other East Asia Pacific rich countries like Singapore, who do not have any
natural resources at all, and Hong Kong grow their national wealth through other
means.

Thovaldur and Gylfi further explained that a rich abundance of natural resource might
not necessarily be a blessing. Take for example Sierra Leone, a country rich in supply
of diamonds but because of internal domestic strife and warfare, it became the worlds
poorest country in 1998 according to World Bank (2000).

2) Investing in human resources.

The investment, though not limited to, can be in the form of its skills (training) and
education of its population.
Prof. Dr Kwon in his article Human capital and its measurement expressed that
people with high levels of competency can add value to the economic growth. He
stated human capital could be regarded as either labor force, just like other production
factors (financial capital, land, machinery), or as a means to invest through education
and training.
Singapores economic success story over the last decade lies in maintaining its
competitive advantage, by using education as a driving force of human capital to spur
its economy.
http://www.oecd.org/countries/singapore/46581101.pdf viewed 25May 2015

3.) Capital accumulation

Physical capital accumulation through financing by stock markets and banks can lead
to greater growth.
Levine (1991) explained that the stock market accelerate growth by allowing
investors to liquidate their stocks, trade ownership of firms and convert to cash if
market is volatile or unstable and to reinvest in other funds or capital reinvestments.
Banks also plays an important role for physical capital accumulation. For example,
Gerchenkron (1966) wrote that in a weak economic market situation, as business
conditions are soft and weak, banks are more likely to pressure them to look into

refinancing through collaterals. This will facilitate access to capital and encourage
capital investments even in a soft market.

4) Uses of technology
Uses of technology can lead to more efficient ways to produce goods and services
(from the same quantity or resources) or factors of production thus generating more
output and raising real GDP.
Following are some points how it can lead to growth:
i)

It creates jobs.
According to an article by Computer World, 2012, it projects that IT
related jobs would increase by 22 % in US by 2020.

ii)

It contributes towards GDP growth

Business and economy, 2012, reported that e-commerce contributes to 8.3
% of U.K GDP in 2010, and it is forecast to reach 225 billion pounds by
2016

iii)

It leads to new start-ups, as more services and information are available

and encourages innovation.
An Australian report by Balarat ICT Limited, states in its 2030 summary
that IT investments creates jobs, attracts skilled professionals and opens up
new markets for local businesses.

Question 2

A) Education policy in Singapore

Introduction
Since its independence in 1965, Singapore (with no natural resources) has relied on its
human resource as its most precious assets. ) Statistics from a straits times report,
http://www.straitstimes.com/sites/straitstimes.com/files/ST_20121006_SAT2_333022
5.pdf viewed June 2, 2015 ,states that it has a population of only less than 2 million in
1965. It then needed to up skill and better educate its labor force through a structured
education policy so as to be able to compete with its neighboring countries.

According to an article, by Center on International Education Benchmarking,

http://www.ncee.org/programs-affiliates/center-on-international-educationbenchmarking/top-performing-countries/singapore-overview/ viewed 26 May2015,
Its implementation of its education policy was successful because:
Firstly, of the governments emphasis to attract the best educated civil leaders to put
up a world-class educational system. This was done by revamping the salaries of the
civil sector to match that of the private sector.
Secondly, it ensured that its policies are benchmarked extensively to global standards.
And thirdly, much attention is paid not only in the development of its policies but to
make sure they are carried out effectively.
An

article

by

http://www.oecd.org/countries/singapore/46581101.pdf

viewed

26May2015 elaborated that the education policy underwent three phases:

I) Survival phase 1959-1978 in which Singapore concentrated in getting labor
force to have basic education. The domestic market for port and warehousing
was not enough for survival and it shifted to providing basic education for its
labor so as to attract foreign manufacturers and to gain expertise. Emphasis of
the education policy was on bilingual language (English and mother tongue
language)

II) The next phase 1979-1996- focuses were on quality of its labor and to elevated
the country to a skillful economy. Early educational streaming was conducted
in early primary schools to ensure that the gifted ones can reach their
maximum potential in the shortest timeframe. Different pathways for
academic students leading to college and universities, and technical
institutions (Polytechnics and Technical institutes) were introduced to train a
wider workforce so that they can meet the demands at all levels.

III) The third phase: from 1997 to present

This phase focuses on Innovation, Creativity and Research. The article stated
that the world economy was shifted to a global knowledge economy and there
is a need for Singapore to have a workforce who is not only highly educated
and skillful but also to be able to think, be creative and have the capacity to
innovate.
In a speech announced by Prime Minister Lee, in 2004,
https://www.nie.edu.sg/files/NIE_research_brief_11-004.pdf

viewed,

June

02,2015
Singapore introduced the Teach Less, Learn more initiative to encourage
more creative thinking and less memorization of subject content. Art, music
and physical take a more prominent role in the educational system.
Conclusion
A report by http://www.ncee.org/programs-affiliates/center-on-internationaleducation-benchmarking/top-performing-countries/singapore-overview/,
viewed Jun02, 2015,
States that in the 2012 PISA Mean scores by countries (comparing with United
States and OECD Average) for Reading, mathematics and Science, Singapore
students excelled in all three of the subjects.
It reiterated that Singapores emphasis on not just quantity but subsequently
the quality of its workforce through its education system has led it to
becoming not only one of the worlds busiest and leading ports, but also a
leader in the telecommunications, financial and information technology.

The highly efficient workforce ensures that it stays competitive and adds more
value to the products and services it produces which will help it to achieve
greater economic growth.

B) Singapore FDI policy

Another successful policy, which the Singapore Government has introduced, is FDI
(Foreign Direct Investment).
Introduction:
Foreign Direct Investment (FDI) as defined by Kenneth A.Froot, states that it is the
acquiring of another countrys assets or enterprises through cross-border expenditures
(or investments).
A OECD report, 2013 claims that FDI can help a country not only to acquire transfer
of technology, but also help the host economy to markets its products internationally
as well as providing a source of funding for investments.
The opening of Singapores market through its FDI policy has help it to attract capital
flow which would augment its economic growth.
Teck-Wong Soon and William. A.Stoever wrote that attracting Foreign Direct
Investments (FDI) taking advantage of its cheaper local labor made Singapores first
phase of economic growth from 1965-1969 possible.
The policy subsequently transforms its workforce from a low paying skilled labor to a
higher pay and skilled workforce.
Augustine H H Tan elaborated in his journal that during the export-oriented period:
1967 -1969, several measures were introduced by the government to attract foreign
investments mainly
i)

Reduced tax rate drastically for approved industries to 4 % m a high of

40% and tax exemption was also granted to interest on foreign loans.

ii)

Subsequent Income tax relief incentive for new firms acquiring pioneer
status and for those who embark on new expansions,

The above measures were taken to ensure that FDI would eventually spur more
growth in the later stage of the economy through technology transfer to local
industries, thereby upgrading the skills its labor workforce.
Singapore saw this as necessary as a higher educated and skilled labor will be able to
take advantage of technology spillover. This is in line with the view by
Borensztein, E.R (1998).
There were others like Carkovi and Levine (2002) who showed that FDI alone does
not result in growth, as there were other growth determinants.
Gary Dean, 2000 acknowledged that while FDI is able to contribute to GDP growth,
he argues that heavy reliance on FDI has its consequences, i.e. the tendency of local
companies importing technologies and not innovate.

To overcome the risks mentioned above that too much reliance on FDI might stifle
innovation Singapore continues to emphasis on R & D to foster innovation, while
maintaining a highly educated and skillful workforce.
This has led to over $ 500 million worth of Biotechnology R $ D related investments
in to Singapore in 2003 (Beh, 2004, p. 36). The figure increased to $700 million in
2004 (Singapore Investment News, December 2004 Special Supplement, p. 9)

Conclusion
Singapores strong FDI policy has led it to be the fifth largest recipient of FDI and the
figure reached US 81 billion in 2014 as recorded by World Bank 2014. Accordingly to
an article by National research Foundation, in its R & D milestones, Several facilities
were set-up, namely Economic Development Board, (EDB) in 1961, A*STAR for

research scientists in2001 and other R&D hubs like Biopolis (pharmaceutical and
biotechnology) in 2003 and Fusionopolis (science and engineering) in2008.
http://www.nrf.gov.sg/research/r-d-milestones viewed May 28
With its greater emphasis and investments on R & D to spur innovation, its FDI
policy has resulted in increased job opportunities, ability to market its exports
globally and transfer of high technology to its workforce, will continue to play an
important part in its economic success.