Singapore's Economic Miracle: How Authoritarianism and Liberalism Led the Country from Zero to $400 Billion GDP

Imagine a small city-state, situated in Southeast Asia, with few natural resources, a multi-ethnic society, and fresh out of colonial rule. It's the 1960s, and the prospects don't seem too promising. Fast forward to the present day, that city-state, Singapore, has transformed itself into one of the world's most prosperous countries, renowned for its remarkable economic success. But what led to this so-called "Singapore Miracle"? Interestingly, it was a unique mix of elements, which included less democracy, authoritarianism, and restriction of individual freedoms.

The Emergence of an Authoritarian Regime

At the core of Singapore's transformation was the late Lee Kuan Yew, who became the Prime Minister in 1959 and remained in power until 1990. Often described as authoritarian, Lee pursued policies that some might consider undemocratic. For instance, Singapore's Public Order Act effectively curtailed the rights of citizens to stage protests, effectively limiting public dissent. In addition, stringent laws against defamation have been used to suppress opposition voices.

A 2010 Economist Intelligence Unit's Democracy Index classified Singapore as a "flawed democracy", reflecting the degree of control exercised by the ruling People's Action Party (PAP). However, these measures ensured political stability, which was attractive to foreign investors. With less political volatility, businesses could focus on growth and innovation without fear of sudden policy changes or civil unrest. This allowed Singapore to attract substantial foreign direct investment (FDI), increasing from $112 million in 1965 to $1.35 trillion by 2020.

Emphasis on Pragmatism Over Freedom

The Singaporean government espoused a pragmatic approach to policy making, prioritizing economic development over individual freedoms. There was no free press; instead, media outlets often served as a tool for the government to communicate its policies. Freedom House rated Singapore's press as "not free" in its 2023 Freedom in the World report. However, this censorship provided a unified narrative that contributed to social harmony, which in turn led to a stable environment conducive to business operations.

An autocratic yet meritocratic bureaucracy was developed to drive the economic agenda. Rather than giving into populist measures, the government made hard choices, investing heavily in education and infrastructure. The 2021 Human Capital Index ranked Singapore first globally, reflecting the emphasis on human capital development. The focus on meritocracy ensured that the most capable individuals were appointed to positions of power, regardless of their social or ethnic backgrounds.?

Moreover, the government aggressively tackled corruption. In 2020, Singapore ranked third in Transparency International's Corruption Perceptions Index, highlighting the low levels of corruption in the public sector. This gave businesses confidence in the system's fairness, further incentivizing investment.

Trade and Economic Policies

Singapore’s geographical location was instrumental in its economic success. The government capitalized on this by developing Singapore as a global hub for trade, finance, and transportation. They pursued economic liberalization, inviting multinational corporations to set up operations, and established one of the world's most open economies, with a World Bank Ease of Doing Business rank of 2 in 2021.

Under the authoritarian regime, Singapore also maintained strict control over the labor market. Strikes were rare and trade unions were kept under control, further enticing multinational corporations who sought predictability in their operations.

Promising Social Policies

Despite the strict control, the Singapore government showed an exceptional commitment to providing high-quality public services. One remarkable example is the provision of affordable housing. Over 80% of the population lives in Housing Development Board (HDB) flats, a public housing scheme established by the government. This has helped to avoid the issue of slums that plague many rapidly urbanizing societies.

Similarly, Singapore's government maintained tight control over its healthcare system, providing quality services at relatively low costs. In 2020, Bloomberg's Global Health Index ranked Singapore as the healthiest country in the world, underpinning the effectiveness of its healthcare policies.

Long-Term Planning

The authoritarian regime allowed Singapore's government to effectively implement long-term economic strategies. There was no need to appeal to short-term populist demands, a common pitfall in many democratic societies. This resulted in forward-thinking initiatives such as the Jurong Island project, which consolidated the country's petrochemical industries into one dedicated location, driving efficiency and competitiveness.

Additionally, the government pushed for a shift towards high-tech industries in the 1990s, foreseeing the potential of the technology sector long before it came to dominate the global economy. This strategic move allowed Singapore to develop a robust technology sector, with its IT industry contributing about 18% of the country's GDP in 2021.

Balancing Act

While the above elements contributed to Singapore's economic miracle, it's essential to note that the city-state performed a delicate balancing act. The leadership consistently demonstrated a high level of integrity and commitment to public welfare, effectively preventing the common issues associated with authoritarianism, such as corruption and abuse of power.

At the same time, Singapore managed to retain a degree of democratic practices. There are regular elections, and the public's support for the government's policies is essential for the stability of the regime. This has created a unique political ecosystem where the government has a strong mandate to implement its policies, while still being accountable to the public.

Singapore's rise from a third-world country to a thriving global hub within a span of five decades is nothing short of astonishing. The role of less democracy, authoritarianism, and restricted individual freedoms in driving this transformation is both intriguing and controversial.

However, it's critical to remember that these elements were just one part of a broader, nuanced strategy that included effective policy-making, a long-term vision, and a strong emphasis on integrity. The ability to replicate Singapore's success in other contexts is uncertain, given the unique constellation of factors that facilitated the city-state's economic miracle.