“We need to remain connected to the world to survive. For this reason, Singapore will continue to be an international hub open to global investments and talent.”
“If over time they find that we have become not as welcoming as before, or our business environment becomes less favourable… then of course there will be consequences for Singapore”
- PM Lee Hsien Loong, Aug 1st, 2011
Attracting foreign investment is a very old idea first recommended by Dutch economist Albert Winsemius in 1960 as the main strategy to grow Singapore from a kampong / fishing village into a modern city-state. While the idea has it's merits and was very instrumental in Singapore economic growth story, over reliance on this strategy will have it's drawbacks.
In today's fast paced world of instant communications, technology sharing and open exchange of innovative ideas, more wealth can be created by fostering a culture of innovation than by blindly attracting capital investment flows.
Take Apple, Inc for instance, they now have more than US$76.2 billion in cash as of the June quarter, and The Wall Street Journal reported on Wednesday that this was more than the gross domestic product (GDP) of 128 countries. Apple now has a market capitalization of US$364 billion and is the second most-valuable in the world, after oil giant Exxon Mobile, which currently has a market cap of US$412 billion. That leaves a mere US$50 billion gap between the market value of the two companies. The main reason for their success amongst other things, is innovation.
For our small little dot on the world map, such a culture of innovation is impossible to nurture with an overbearing political system keen to stamp out all forms of dissent and criticism. Innovation cannot thrive in a culture of fear, for this reason, Singapore is currently doomed to relying on fickle capital inflows instead of creating wealth through innovation and homegrown technologies.
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