Attracting FDI is probably the thing PAP does best.... because
PAP can depress local wages, import foreigners and give minimal
protection to workers. Something not many countries can do.
http://www.okusi.net/garydean/works/fdising.html
Of the NIEs that have taken conscious control of the national
economy -- which is to say, all of them with the exception of
Hongkong -- only Singapore chose to use FDI as its principal source
of external capital. Taiwan and South Korea, by stark contrast,
chose a completely opposing route and in the main relied upon
external borrowings and aid to support their developmental agendas.
Consequently, 'technological deepening' and innovation is
now far more apparent in Taiwan and South Korea. These two
economies have retained control of investments and developed the
skills and infrastructure to innovate.
However, one important weakness in Singapore's approach is the
question of technological innovation, considered the last stage of
technology transfer.[10] For a variety of reasons, state-of-the-art
R&D by TNCs is nearly always concentrated in a few developed
countries, and high technology tends not to be developed outside
the TNC's home-base. Cutting-edge R&D in particular is usually
undertaken close to management and decision-making centres where
there exists a large local market, and a pool of advanced and
specialist technical skills.[11] Another important weakness is that
the very presence of strong TNCs can inhibit local companies from
deepening their technological capabilities, preferring to import
foreign technologies that are proven and ready-to-use, rather than
invest in their own R&D.[12] This is arguably what has already
happened in Singapore as a consequence of their developmental
path.
With or without FDI, Singapore would have found it difficult to
languish as an economic backwater. Accidents of location, culture
and history came together in Singapore, and given a modicum of
political stability, such a country could only prosper. Singapore
was lucky; its apparent 'success' was certainly not only due to its
FDI policies, but also due to many other factors.
What FDI has done for Singapore is to assist in the creation of a
nation with one of the highest per capita incomes in the world, for
what that is worth. Singapore could be said to be wealthy in the
same way that ancient Athens was said to be democratic. In
both cases, a huge, anonymous underclass of cheap labour supported
the superstructure; in the case of Singapore, Malaysians (of every
race, not just Malays) and other Southeast Asians, who are offered
only the barest of legislative protection by the
government.
The cost in human terms of this success has been high:
Singapore today is an authoritarian corporatist state that
intervenes in virtually every aspect of citizen's lives. Singapore
has become a nation of functionaries who serve the interests of the
TNCs and the Singaporean state elite. Within such an environment
there exists very little true entrepreneurship. FDI has not
assisted in the development of an innovative population;
rather it has assisted in the creation of a self-satisfied,
arrogant society that seems content to live off its natural
advantages.[23] Singapore today resembles an enormous
air-conditioned shopping mall, with squeaky-clean streets and
traffic so orderly as to border on the bizarre.
