The political economy of Singapore's industrialisation: State policy and international capital investment

Garry Rodan

This thesis analyses the industrialisation of Singapore with special focus on the roles of the state and international capital. The interest in Singapore is due to its status as a newly-industrialising country (NIC) which has been successfully incorporated into a new international division of labour. This new structure has emerged in the last two decades, opening up opportunities for manufacturing production in the Third World. Since both Singapore and NICs in general have been promoted as models for other developing countries wishing to industrialise, it is essential we clarify the reasons for such success. The argument of this thesis is that Singapore's rapid industrialisation through incorporation into this new international division of labour has been facilitated by the state assuming a pervasive and decisive role, intervening at the social, economic and political levels. This intervention has helped shape Singapore's comparative advantage as well as establish the necessary pre-conditions for the attraction of international capital. The capacity of the state to perform such functions should not be taken for granted: it derives from a convenient juncture of historical and social structural conditions. To argue that the state has played a role in NIC, and in this case Singapore's, industrialisation is not novel. Certainly there are accounts which ignore the state's role. More commonly, however, neo-classical economists have acknowledged state intervention in the economic sphere but have emphasised market forces in explaining rapid industrialisation. Such an approach generally misrepresents the relationship between market and state. The relationship between the two is presented as dialectical in this thesis, and one which encompasses social and political, and not just economic, factors. Nevertheless, this thesis is not just at odds with such neo-classical analysis, it also challenges the voluntarism of rational-choice approaches and the determinism of dependency theory. So, not only does this thesis examine the various ways in which the state influences the pattern of industrialisation, especially the pattern of investment by international capital, it also examines the reasons for the state's behaviour. It is here that we see the state's complexion is contingent upon a complex set of domestic and international relationships. In Singapore's case, domestic class formations have combined with fortuitous tendencies in international capital accumulation: in short, a relatively autonomous political state has emerged with sufficient need and will to exploit and contribute to this new international division of labour. Divided into four parts, this thesis provides a chronological account of Singapore's industrialisation. After an introduction to the theoretical concerns of the study, Part I outlines the historical developments of colonial Singapore affecting the island's long-term economic and social structure. Part II looks at how historical and political developments after World War II gave rise to the People's Action Party (PAP) which, in turn, came to assume the status of a virtual 'state party'. In Part III we see how extensive state power was of primary importance not just to the implementation of the export-oriented industrialisation (EOD programme which incorporated Singapore into the new international division of labour, but also to the ongoing management and modification of this relationship. This culminates in the late 1970s in various economic and social contradictions. Part IV examines the so-called 'Second Industrial Revolution', the government's policy response to these contradictions. This was designed to affect an accelerated transition to a more sophisticated technological base and represents the boldest attempt by any NIC government to test the objective limits to the state's ability to influence the pattern of private capital investment in industry. In essence, this thesis attempts to redress the lack of serious analysis of the state's role in the industrialisation of Singapore and other NICs.

The political economy of Singapore's industrialisation: State policy and international capital investment

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