Singapore Inc.Singapore's per capita GDP has grown from 2,860 in 1975 to 25,910 US in 2001. Singapore'seconomic miracle that was initiated in the 1961 owed great gratitude to Albert Winsemius.Dr. Winsemius who previously had helped the Dutch Government in developing its post-war industrialization programme, was asked to help Singapore develop a similar kind of plan.With his advise and the enlightened and visionary leadership of Lee Kuan Yew and cohortsSingapore was able to prevent Winsemius' initial fear that Singapore would end up being "
a poor little market in a dark corner of Asia
Instead Singapore became an Asian Tiger Economy and in 2010 in Singapore "
one in every six households has more than $1 million inassets, making it the densest population of wealthy households in the world
One of the reasons on why the number of millionaires is so high is the compulsory savingsscheme that the Singapore government (CPF) had implemented. Under this scheme 36% of total wages are to be forced savings for those above 35 to 50 years and earning more than1500 SGD a month.
The CPF functions as the only formal social security scheme inSingapore. Beyond functioning as a social security scheme the CPF has functioned as avehicle for the country to access cheap capital. This capital has been used to makeinvestments in Singapore (and more recently abroad) and offer the government (at least ingood times) a steady source of additional income that could function as a cushion to thecyclicity of the economy. But can the high saving rate explain Singapore's miracle?It is important to note here that there is no magical bullet in explaining a country's economicdevelopment or downturn for that matter. A series of interrelated factors play a role. Youngand Krugman have shown how in the case of Singapore a large part of Singapore's initialgrowth could be accounted for by the ability to increase inputs. These inputs were theincreased size of the workforce, higher education level of workforce and huge investments in physical capital.
The second and third factor both contributed from increased savings as itreduced Singapore's reliance on foreign capital. According to Comin et al. an increase in thesaving rate for countries such as Singapore in the period 1960s-1980s could contribute to an
Kees Tamboer, Albert Winsemius, 'founding father' of Singapore, http://www.iias.nl/iiasn/iiasn9/soueasia/winsemiu.html
Krugman, P. (1994) "The myth of Asia's miracle," Foreign Affairs, Nov/Dec, 73(6), p.62-78.