Trinity Development

Theory and
Singapore Economic
Development
Dr. Sng Hui Ying

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Emeritus
Professor
Lim Chong Yah

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Trinity
Development
Theory

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 To explain:
 Why do some developing countries grow slowly
Trinity and are not able to catch up with the developed
nations?
Development  Why do some developing countries grow rapidly
Theory and are able to catch up with the developed
nations?
 Why do affluent developed nations grow slowly?

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 1. EGOIN Theory
Trinity
Development 2. Triple C Theory
Theory

3. S Curve Theory

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 E Entrepreneurship
G Government (and the bureaucracy)
EGOIN
O Ordinary Labour (human capital)
Theory
I Investment (physical capital)
N Natural Resources (natural capital)

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  EGOIN are the inputs, GDP is the
output
 “EGO” are active factors, most
critical
 G must take on an enabling,
EGOIN supporting and facilitating role for E
Theory and O to function properly
 Aptitude and attitude of
government and people
 EGO is also the social capital of the
country
 I and N are passive factors

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  The higher the per capita EGOIN,
the higher the level of per capita
EGOIN income
Theory  The bigger the ∆ per capita EGOIN
over time, the faster the growth
rate of per capita income

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  Three growth engines
 domestic, regional, global

Global

Triple C Regional

Theory Domestic

(Circular Engine

Cumulative
Causation)
 EGOIN Theory focuses on the domestic
dimension of economic development
(domestic engine) while Triple C Theory
highlights the regional and global
dimensions of economic development
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  Regional and global growth
engines
 Transmission of regional and
Triple C international growth is via trade
(visible and invisible), capital flow
Theory (particularly FDI) and the transfer of
technological, institutional and
management knowledge
 Connectivity

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  The higher the connectivity factor,
the higher the level of per capita
Triple C income
Theory:  The bigger the ∆ in connectivity
Connectivity factor over time, the faster the
growth rate of per capita income

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 Stage I Stage II Stage III
(Turtles) (Horses) (Elephants)
Slow growth Rapid growth Slow growth

Singapore
South Korea

Japan
S Curve for

Taiwan
Malaysia
Selected

China
Thailand
Indonesia
Log (GDP per Capita)

Asian

Philippines
North Korea
Economies

Development Stages

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 Turtle Horse Elephant
Income per Low and slowly Medium and High and slowly
capita growing rapidly growing growing
Savings rate Low High Low
Investment Low High Low
rate
Characteristics Openness to
trade and
Low High High

of the turtle, investment

Demographic Usually high Youthful, usually Aging
horse and profile population controlled population
elephant growth population
growth
economies Investment Poor Conducive Diminishing
climate returns and
rising land and
labor costs
Emphasis of Meeting basic Priority on High marginal
society needs and economic propensity of
survival achievements leisure

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 Turtle Horse Elephant
Entrepreneur Poor, profusion Market-oriented Market-oriented
ship of market- and and
distorting entrepreneur- entrepreneur-
government enabling enabling
interventions
Government Poor in both Good leader Good leadership
economic and with emphasis with emphasis
Characteristics political on economic on social
of the turtle, leaderships development development
Human Underdeveloped Medium and High
horse and capital rapidly
elephant Fixed capital Poor
improving
Rapidly Infrastructures
economies accumulation infrastructures improving and private-
and low level of infrastructures sector capital
private-sector and rapid stock well built
capital increase in up
accumulation private-sector
capital
accumulation
Natural Not well utilized Well utilized Well utilized
resources or lacking
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Singapore’s
Economic
Development

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 EGOIN Theory
E: Market-oriented pro-business
stance
G: Good public governance, efficient
Singapore’s bureaucracy, prudent fiscal and
Key monetary policies
Ingredients O: Investment in human capital
of Growth
EGO: Investment in social capital
I: Investment in physical capital
N: Capitalize on our geographical
advantages

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E: Market-  Minimal government intervention in
goods market and labour market
oriented
 Making it easy for business to set up,
pro- to operate, and to exit
business  Help in facilitating domestic and
stance international trade

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  Singapore is the world's 2nd easiest place
to do business (out of 190).
Ease of Doing Business Ranking
New Zealand 1
Singapore 2
Hong Kong 3
Denmark 4
2020 Doing South Korea
United States
5
6
Business Malaysia
Thailand
12
21
Report, Germany
Japan
22
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World Bank China
France
31
32
Vietnam 70
Indonesia 73
0 10 20 30 40 50 60 70 80

 Correlation between the ease of doing

business ranking and the Global
Competitiveness Index is 0.84
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 Country Days
New Zealand 0.5
Canada 1.5
Hong Kong 1.5
Singapore 1.5
Australia 2
Days
Denmark 3.5
Required to United States 4.2
Start a South Korea 8
Business Germany 8
China 8.5
Japan 11.1
Indonesia 12.6
Malaysia 17.5
India 17.5
Source: 2020 Doing Business Report, World Bank
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 EGOIN Theory
E: Market-oriented pro-business
stance
G: Good public governance, efficient
Singapore’s bureaucracy, prudent fiscal and
Key monetary policies
Ingredients O: Investment in human capital
of Growth
EGO: Investment in social capital
I: Investment in physical capital
N: Capitalize on our geographical
advantages

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 Rank Country
1 New Zealand
1 Denmark
3 Singapore
3 Finland
G: Good  Corruption 3 Switzerland
public Perception Index 3 Sweden
governance 2020 ranked
7 Norway
and efficient Singapore 3rd out
of 180 countries. 11 Hong Kong
bureaucracy 19 Japan
25 United States
57 Malaysia
78 China
86 India

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 EGOIN Theory
E: Market-oriented pro-business
stance
G: Good public governance, efficient
Singapore’s bureaucracy, prudent fiscal and
Key monetary policies
Ingredients O: Investment in human capital
of Growth
EGO: Investment in social capital
I: Investment in physical capital
N: Capitalize on our geographical
advantages

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  Investment in education
 Compulsory primary education
 Highly subsidized
 Investment in adult training and
O: retraining
Investment  E.g. Skills Development Fund, SkillsFuture
in Human Life expectancy Mean years Literacy Rate
Capital at birth of schooling
1980 72.1 4.7 ..
1990 75.3 6.6 89.1
2000 78.0 8.6 92.5
2010 81.7 10.1 95.9
2020 83.9 11.3 97.1

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 EGOIN Theory
E: Market-oriented pro-business
stance
G: Good public governance, efficient
Singapore’s bureaucracy, prudent fiscal and
Key monetary policies
Ingredients O: Investment in human capital
of Growth
EGO: Investment in social capital
I: Investment in physical capital
N: Capitalize on our geographical
advantages

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EGO:  Promotion of ethnic harmony and
Investment religious respect
in Social  Tripartism among unions, employers
Capital and government

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 EGOIN Theory
E: Market-oriented pro-business
stance
G: Good public governance, efficient
Singapore’s bureaucracy, prudent fiscal and
Key monetary policies
Ingredients O: Investment in human capital
of Growth
EGO: Investment in social capital
I: Investment in physical capital
N: Capitalize on our geographical
advantages

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  Gross capital formation (% of GDP)
 21% (1965), 46%, (1982), 23% (2019)
50%
45%
40%
I: Investment 35%

in Physical 30%
25%
Capital 20%
15%
10%
5%
0%
1965
1967
1969

1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
1971
1973
1975
1977

2001
2003
2005
2007
1979

2009
2011
2013
2015
2017
2019
GFCF/GDP

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 EGOIN Theory
E: Market-oriented pro-business
stance
G: Good public governance, efficient
Singapore’s bureaucracy, prudent fiscal and
Key monetary policies
Ingredients O: Investment in human capital
of Growth
EGO: Investment in social capital
I: Investment in physical capital
N: Capitalize on our geographical
advantages

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  Capitalize on our geographical advantages
to become:
 Shipping hub
 Aviation hub
 Logistic hub
N: Capitalize
on our
geographical  Export of services to regional countries
advantages  Tourism
 Healthcare
 Education

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 Triple C Theory
Singapore’s  Build and strengthen Singapore’s
Key connectivity with the ROW
Ingredients of  Trade in both goods and services
Growth  Foreign direct investment
 Transfer and exchange of knowledge

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  Rapidly improving EGOIN and
connectivity factor
Singapore  High savings rate and investment rate
was a horse
 Youthful population
economy
 Society and government emphasized on
economic development

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  High levels of EGOIN and connectivity
factor, but slow improvement
 Rising land and labour costs affecting
investment desirability
Singapore as  High savings rate but declining
an elephant investment rate
economy  Aging population
 Higher marginal propensity to leisure
 Government emphasizes on social
development

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  Pushing the envelop of growth
 O is the most important growth
driver of high-income countries; G is
Singapore as the most important growth driver of
an elephant the middle-income countries
economy  Diminishing returns from
knowledge- and technological-
transfer; has to increasingly reply on
indigenous innovation for growth

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THE END
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