V SUSTAINING ECONOMIC DEVELOPMENT

How do nations sustain their economic development in a globalised world?

Driving forces of globalisation:Developments in transportationImprovements in transportation has shrunk the world considerably in terms of time taken to get from one place to another. Containerisation has reduced the time and cost of moving goods over long distances. It has also greatly simplified the transfer of goods from one mode of transportation to another as containers can be easily transferred from ships to trucks. In a globalizing world, there is an increasing mobility of goods and people. Countries have built efficient and integrated transportation infrastructure to facilitate this movement. The efficient transport network worldwide has made it possible for goods to be moved around the world easily. At the same time, it has also meant that people can travel easily.

Developments in communicationsImprovement in technology has made communications among people in different locations faster and more convenient. People across the globe can communicate via tools such as telephone, electronic mail, fax and video conferencing. Satellite technology has enabled messages to be transmitted from one location and received in another part of the world almost simultaneously. Similarly, optical fibre systems have very large carrying capacity and transmit information at very high speed. The Internet has greatly transformed the way one communicates, conducts business, obtain information and purchases goods and services. It has enabled consumers to gather information about new products and places.

Transnational corporations
Transnational corporations (TNCs) are large global firms that operate in a number of countries and have production or service facilities outside the country of their origin. This is due to a variety of reasons such as to lower cost of production and to find new markets. These worldwide operations are coordinated and controlled by the headquarters located in the country of origin. As such, the economies around the world became more integrated. There is also increased exchange of ideas among the people based in different countries but are from the same TNCs leading to more globalisation.

Ways to increase Singapore’s competitiveness in a globalizing world

Diversifying the economy
Singapore aims to promote technology-intensive, higher value-added manufacturing activities in the electronics, chemical engineering and engineering fields. In addition, Singapore is venturing into areas like Life Sciences, which involves the study of genetic and development of new medical treatment using gene therapy, new drugs and food products that have been genetically modified, Having vibrant service sectors such as education, healthcare, tourism and banking also plays an important role in increasing Singapore’s competitiveness. Singapore is also being promoted as an education and healthcare hub. Many foreign universities have set up their branches here. At the same time, people in the region are coming to Singapore to seek medical treatment due to our high standards of healthcare. Diversifying the economy ensures that the Singapore economy remains stable in the event of the downturn of one sector of the economy. A stable economy enhances Singapore’s competitiveness in a globalising world.Ventures abroad through regionalizationSingapore ventures abroad through regionalization, which involves investing in nearby countries that have abundant land, lower labour costs and new markets. The Singapore government and Singapore-based companies aim to provide the infrastructure, expertise and money to develop industrial parts in host countries. In return, the host countries provide land and labour for Singapore companies. Venturing abroad enhances Singapore’s competitiveness as it opens up new markets for trade.

Nurturing growth of Small and Medium Enterprises (SMEs)
Nurturing growth of SMEs promotes Singapore development as these local businesses will be able to generate employment for the country. SMEs play an important role in Singapore’s economy. Today, SMEs make up a large percentage of businesses in the Singapore economy. SMEs also support the operations of Transnational Corporations by supplying them with components in the manufacturing process. The SMEs increase Singapore’s competitiveness as it enhances the attractiveness of Singapore as a regional manufacturing and services hub.

Expanding market reach through economic cooperation
Singapore has a small market due to our small population size. It is necessary for us to establish trade ties with other countries to enable the local companies to sell their goods to a larger market. One way is to sign the Free Trade Agreement or set up Special Economic Zones whereby taxes on goods are removed. This makes it cheaper for the companies to import or export goods, leading to cost saving for the companies as well as encouraging the companies to venture aboard and find new markets. Companies will be able to sell their goods to more countries and increase their profits. Thus ensuring economic growth for the country.

Managing our resources efficiently
Singapore is a small country with limited resources. People are our most precious resource. Hence it is essential to develop our people to have the right mindset and skills to thrive in the globalising world. Our people are encouraged to go for continuous learning to upgrade their skills and stay relevant in the globalising world. The country also promotes entrepreneurs and technoprenuers so that we have people who are willing to take risk and come up with new products to compete with the foreign companies. Our country also actively attracts foreign talent as we have declining birth rate and we need new skills in the knowledge-based economy. These foreign talents will not only bring skills to our companies, they also bring in overseas business contacts as well. Thus, by managing our resources, it will help Singapore sustain its' economic growth.

Conclusion:
Diversifying the economy by developing various sectors of the industry is important as it will help reduce Singapore’s dependence on a single industry or market. Should any sector of the economy slow down, the other sectors can continue to generate revenue. Venturing abroad is also important as it allows Singapore to spread her investments across the world. Similar to diversifying the economy, it ensures that Singapore’s growth is maintained even if the markets and investment opportunities in one particular region are weakened, However, venturing abroad can result in many Singaporeans relocating abroad permanently. This can lead to a situation similar to India’s brain drain. Other factors such nurturing the growth of SMEs and managing resources are also vital for Singapore’s success. Therefore to overcome the challenges of a globalising world, Singapore has to continue to adopt different strategies and stay creative and open to new ideas and opportunities.
Is globalisation beneficial or harmful to Singapore’s economic growth? Explain your answer.
Harmful
Increased competition among countries - compete to be attractive by offering incentives as TNCs constantly seek out lower production costs. So countries with lower costs, good infrastructure and political stability get ahead eg Dalian has well-developed infrastructure to support industrial growth, has Hi-Tech industrial facilities and can offer lower taxes. So, attracted foreign manufacturing companies eg Nokia. Another eg is Maersk Sealand shifting its transshipment hub from Singapore to rival port, Tanjong Pelepas. Loss of big clients resulted in loss of revenue. Posed a challenge to Singapore as difficult to compete with countries with lots of resources, cheaper labour and land eg China & India & TNCs
- Increased income gap between rich and poor within nation. More highly-educated or those who possess better skills are better off than poorly-skilled. Latter are the ones who would be the first to be retrenched. Not only economic problem but social problems if not properly managed eg affect social cohesion. Lack of cohesion affects economic growth.
- Might lead to brain drain of talent to developed countries which can offer better prospects

Beneficial
· More trade and foreign investments
- Bigger market through FTAs, SEZs lead to more revenue which translates to improvements in standard of living as money used for improvements in infrastructure, health, housing, communications
- More job opportunities and increase in average household incomes eg $4940 in 2000 to $5400 in 2005. So, higher purchasing power and higher standard of living
- Coming of foreign talents -brings with it overseas contact and more business opportunities. Translates to increased in earnings and economic growth.

· Increased in tourists
- globalization has shrunk the world, enabling more countries to know about Singapore and taking interest to visit the country
- better communication has boost travel

How far do you agree that environment degradation is the most serious adverse effect of globalisation? Explain your answer.
Many environmentalists have argued that globalisation can be a destructive force to the natural environment and have protested against it. When TNCs set up plants in different parts of the world, many of them use natural resources such as timber, oil and metals at a rapid rate. At the same time, developing countries are eager to gain the economic benefits that come with globalisation. Very often, the natural environment suffers because these development countries are more concerned with economic development than environment protection. Environment degradation poses a serious problem to the countries as well as to the rest of the world, bring about problems like global warming which has far reaching consequences. Future generations will suffer as a result of the irresponsible actions of the present generation.

Globalisation has rapidly increased the income gap between the rich and poor countries. It has resulted in rapid development in many countries. However, it has also increased the spread of poverty in many countries. The developed countries are experiencing rapid income growth as they own most of the manufacturing activities. On the other hand, the developing countries often face trade barriers imposed by the developed countries. They are not capable of producing quality goods, which command high prices and fetch large revenue. The situation of widening income gap poses a serious problem to the countries that embrace globalisation as it may adversely affect social cohesion. IF not probably managed, it may lead to many other social problems such as an increase in crime rates.

Globalisation may also lead to a loss of local culture. Globalisation has resulted in global brands such as Starbucks and McDonalds’ dominating the consumer market in developing countries. These corporations with their standardised methods of operation have outlets that are identical in appearance. In this way, these corporations have created a homogenous culture across the world and eroded the local culture. The loss of local culture poses a serious problem to the country because when the culture is eroded, it would be difficult to re-create. As such, the identity of the country is at stake.

Environment degradation is the most serious problem posed by globalization as the impact is the most pervasive as compared to the other two problems. Environment problems such as deforestation and global warming are international issues that affect everyone. However, the problem of widening income gap and loss of local culture affect only the country concerned.