Monday, December 18, 2006

Post No. 95a: Singapore: Place or Nation?

Yes, I am very aware that the commentary which I have reproduced below (for the reading pleasure of you all) is quite outdated, considering that it was first reported in the Straits Times on the 19th of June this year. Well, I really do not know how I managed to miss reading this insightful & thought-provoking commentary when it first came out (perhaps I did read it but somehow it slipped my mind) but, fortunately, I was able to come across it recently as it was being used as the source material for a source-based test for one of the modules (that module was SSA2204, if you all are interested to know) I was taking earlier this semester.

Singapore: Place or Nation?
The Implications for Economy, State and Identity

Talk by Linda Lim, Professor and Director, Center for Southeast Asian Studies, University of Michigan, for Institute for Policy Studies and Institute of Southeast Asian Studies, Singapore, June 8, 2006. Revised and expanded version of a talk at second annual Singapore Lecture Series, Brown University, Providence R.I., April 14-15, 2006

Singapore's economic development has not always, and perhaps never, relied on its being a nation state. At its modern founding by Stamford Raffles, the island was wrested from its titular Malay rulers and transformed into a free-trading port where immigrant merchants and labor thrived by serving the regional business needs of the British empire in Asia.

Not until 1965 did Singapore become a sovereign nation state, and even then its economy was dictated mainly by global and regional market and political forces, not by national economic policy. And when national policy was developed and implemented beginning in the late 1960s, it too located Singapore within the regional trade and global production networks of foreign multinational corporations.

Unlike industrializing Asia's other export-oriented "developmental states" –-Japan, South Korea and Taiwan—Singapore notably did not nurture or encourage the emergence of a local capitalist class or national bourgeoisie. The elements of such a class who existed— mainly Chinese-educated entrepreneurs who posed a potential political threat to the new government--were instead "crowded out" by favored foreign and state enterprises, not just in manufacturing, but also in the established trade and services sectors of the economy.

Singapore thus never developed the "national champion" enterprises that the other developmental states did—the Toyotas, Sonys, Samsungs and Acers that became icons of their national development, providing opportunity for local elites to develop the indigenous technical, managerial and leadership expertise, and financial, human and social capital, needed for competitive and innovative "world-class" corporations, and arguably, also for civic leadership. At the same time, the size and nature of Singapore's state and its peculiar manpower needs also precluded the market-determined emergence of the dynamic local entrepreneurial ventures for which Hong Kong is known.

From its modern inception then, and in the state rhetoric of the 1970s and 1980s, Singapore has always been a "global city"—a place, and not a nation. Economically, it has been deeply integrated into the global value-chains or supply-chains of multinational corporations—over time producing some, but usually not all, of the value of processed commodities and services, for sale to regional and global markets. Singapore is a place where parts and people are imported to produce partial or whole goods and services that are exported to foreign consumers. It does not have a national economy, only parts of a global one which are themselves not necessarily place-specific.

Economically, there is nothing wrong with this, of course. In fact, given Singapore's extreme size constraints, the strategy of being a niche player in global value-chains is quite defensible, even if other small countries—like Switzerland, Denmark, Finland and New Zealand--have managed to grow locally-owned and –run global companies out of their national economies. From a competitive strategy perspective, what distinguishes Singapore is that it is the state rather than market actors which have decided on the particular niches in global value-chains to occupy, and that those niches are almost exclusively filled by subsidiaries of foreign enterprises rather than local start-ups. State policy has acted to shape local resources—the education system, foreign labor, land, infrastructure, the housing market, fiscal regimes, cultural amenities and so on—to provide a competitive or at least profitable place for particular foreign economic entities to operate.

This is not a national development policy in that it is not predicated on or limited by the boundaries of the nation whether in terms of resources (labor, "talent"), markets (consumers), or enterprise ownership. If this were what the market dictated, say, as in Hong Kong, it would not be worthy of comment. But what makes the Singapore case interesting is that this non-national or a-national development strategy is crafted and implemented by a national government through multifarious state agencies, including state-owned enterprises or government- linked companies that arguably both substitute for and crowd out local private enterprises in capital, labor, "talent" and final product markets. It is also accompanied by an often intense political rhetoric of nationalism.

The standard theoretical justification for state intervention in a market economy is "market failure"—that is, market forces fail to allocate resources efficiently. The most common reason for this is the presence of externalities, or the divergence of private and social costs and benefits, for example in health, education and the environment. In these sectors society's net gain from an investment is arguably greater than the private return to the individual, resulting in under- investment if resource allocation is left to market forces alone. This argument is most commonly made for developing countries, where market institutions are under-developed and market forces distorted, hence the state has to be relied upon to allocate resources. But as a country develops, so do markets, and state intervention becomes not only less necessary, but also arguably prejudicial to the development of markets and private enterprise.

In the case of Singapore, the state has retained its developmental role and control of the economy, way past the stage at which a market-believer would expect it to "wither away". It plays a major role not only in shifting comparative advantage by shaping the country's relative resource endowment through the import and export of labor, skills and capital, but also by intervening to mould competitive advantage in the sense of Alfred Marshall, the early 20th century Cambridge University economist whose "economics of agglomeration" Michael Porter repackaged as "clusters".

Developmental state policy in Singapore since the achievement of developed economy status around 1990 has not merely focused on enhancing productivity through investments in health, education, infrastructure and the like, leaving market forces to determine the exact sectoral allocation of resources. Rather, state policy has targeted the development of specific economic "clusters" in which Singapore does not have the resources, markets or companies able to provide leadership in their development, most notably the extremely capital- and talent-intensive, scale-sensitive and risky field of the life sciences. Importing foreign talent, sometimes by paying above-world-market compensation rates, and providing capital subsidies to foreign corporations in the hopes of producing medical breakthroughs for global consumers, are the essence of the life sciences policy.

While the government's policy might make Singapore a competitive and profitable place for parts of the life sciences global value-chain to locate, which it would not if responding to market forces alone, it is not clear where Singapore the nation benefits, since the resultant jobs, profits and products are produced overwhelmingly by and for foreigners. Indeed in this case the Singapore state itself may be seen as acting as a steward of the interests of non-Singaporeans. Certainly foreign and local interests may be complementary, including in the labor market. But in this case if the state did not attract, steer and push resources in the direction of the life sciences, local resources would have been allocated in other sectors by local entrepreneurs. In a market economy, such as Singapore claims to be, every investment choice, private or public, has an opportunity cost, and it is against this that its economic benefit to the place and the nation must be evaluated.

The "picking of winners" (or to the skeptics, "losers") by the Singapore state reflects both its continued adherence to the last generation's industrial policy formula for economic growth and development, and its continued distrust of markets and of local private entrepreneurs as drivers of the economy. It is true that the government has been encouraging private entrepreneurship, including among its own bureaucrats and scholarship-recipients. But this policy is itself based on a contradiction, since individual initiative and risk-taking in response to market forces are the essence of private entrepreneurship, not a response to government exhortations, training and incentives to become "technopreneurs" (remember that?). Both entrepreneurship and creativity spring from social conditions, and an economic policy environment, that is very different from the top-down control model found in Singapore still today.

In 2002, Richard Florida, a Carnegie-Mellon professor (now at George Mason) specializing on regional economic development, published The Rise of the Creative Class, which he has since built into a lucrative consulting franchise including a third book on The Flight of the Creative Class: The Global Competition for Talent. Florida identified "technology, talent and tolerance" as the characteristics of "cool cities" which attract creative young people whose work then contributes to economic growth.

One of Florida's indicators of "tolerance" was a tolerance for homosexuals, who some argue are disproportionately represented among the creative class. It is this supposed correlation of gay-ness with economic growth and dynamic cities that led to the Singapore government revealing that there are gays in the senior levels of government, and to its promotion of so-called "Pink Dollar" tourism (remember that?), which I read about on the front page of the Wall Street Journal. "Tolerance" in this case was apparently motivated by the prospect of economic gain for the place, rather than as a value in its own right for the nation.

The economic primacy of place over nation in today's Singapore is reflected in the government's recent controversial decision to allow international gaming companies to establish casinos in Singapore. In response to local objections based on moral, social, cultural and religious as well as some economic concerns, the government argued that casinos would not undermine Singaporean society because Singaporeans would, in essence, not be involved in the gambling business as owners or consumers, but only as workers. The casinos would be owned by foreign multinationals which would pay heavy tax revenues (which chronically budget-surplus Singapore arguably does not need) in exchange for taking their profits out. There would be restrictions (if only by high-end price rationing) on Singaporeans patronizing the casinos as customers. And while employment created for Singaporeans was touted as the primary motivation for allowing the casino complexes, we would expect their employees to be disproportionately foreign, as is the case in the rest of Singapore's hotel and recreation sector. Singapore, in short, is to be a place where foreign profits are earned from foreign customers served disproportionately by foreign workers, and it is only the disentanglement of place from nation that makes the casino enterprise justifiable in the face of national objections to it.

From the viewpoint of economic development, the disentanglement of place from nation may be considered inevitable given contemporary globalization trends, the diminution of nationalisms globally, and Singapore's own small size and lack of economic scale. A state-directed place-based economic development strategy could also yield higher income and non-monetary returns to nationals than market-determined entrepreneur- led nation based activities (whatever they may be).

From my perspective as an economist and business strategy professor, I would caution that there are also economic risks and potential losses associated with defining Singapore merely as a place in competition with other places around the world. It exposes us to Tom Friedman's "flat world", rather than building the unique competencies and niche strategies based on difference rather than sameness that we strategy professors urge on businesses and on our own students, which involve taking advantage of the world's roundness rather than surrendering to its flatness. In Singapore's case, for example, this would mean "market positioning" as a regional rather than a global city, exploiting location-specific advantages and the limited regional competition, versus replicating the amenities of multiplying other "global cities" like London or New York or Shanghai. But, the economic and business case aside, my primary concern here is to consider the implications that place-enhancing, nation-denying economic development has for Singapore as a nation, for Singapore nationals, and for the meaning of nationhood more generally.

We all know that 25% or more of Singapore's workforce today consists of foreign workers, the majority of whom do not have the opportunity of becoming Singaporeans due to their lower skill levels. Rather, they constitute a floating guest-worker population who will never have the rights and responsibilities of citizenship, including political participation. For them, Singapore is merely a place, not a nation. The situation at the upper, more educated, skilled and higher-income levels of the labor-force is of more interest to the nation, since it tends to be elites, including cultural elites, who lead nations and define nationhood, just as it is "talent" which, at least according to Richard Florida, determines the economic success of a place.

The Singapore government's policy on "foreign talent" will be well-known to this audience. It resembles the U.S. policy of giving H1B visas and permanent residence more readily to immigrants with unique skills that can enhance the nation's economic growth and technological development. This policy also resonates with our own history as a nation of immigrants now populated predominantly by people of a different ethnic group than the "original" inhabitants who sold their land to Stamford Raffles. The influx of foreign talent, in Singapore as in the U.S., shifts the nation's comparative advantage towards more highly-skilled activities, and is thus complementary, as well as competitive, with local talent.

There are, of course, many differences between Singapore and the U.S. with respect to the role of foreign talent in society and the economy. Immigrants form a much larger proportion of the labor force in Singapore than in the U.S., and are particularly highly represented at upper echelons, for example, among university faculty who groom our next generation's elite. Foreign talent in Singapore is also more likely to be here temporarily, moving on back to their home or larger third countries after a period of study and employment in Singapore. They are probably less likely than talent attracted to the U.S. to be from the top of their home societies and thus "world-class", and for various reasons are less inclined to participate in politics than the locally-born. Further, rightly or wrongly, there is a perception among some native-born Singaporeans that foreign talent receives favorable treatment from the government and private sector employers, relegating the native-born to "second-class citizen" status in their own country.

Over the past ten years, I have come to know many Chinese and Indian nationals who studied at Singapore schools and universities, often with scholarships provided by the Singapore government, worked here for a few years, then applied to U.S. MBA programs such as the one at Michigan. To my knowledge none has ever returned to Singapore after graduating with the MBA, their goal all along having been to use the place as a stepping stone into the U.S. job market. It is easier, they say, to get into a top U.S. MBA program from Singapore than from China and India, which are awash with top candidates, and also easier to get a U.S. visa both for school and for work, if they apply from Singapore. So far, none of these students who claim to be from Singapore, and in some cases hold Singapore permanent residence, has even chosen to take my class on Business in Asia, which is full of Americans, and other Asian nationals, or to socialize with the Singaporean and other Southeast Asian students. They tend to identify most with student groups from their countries of origin. This is only to be expected, since Singapore to them is just a place to study and work—like Ann Arbor, Chicago, New York, San Francisco or London—whereas their nation remains China or India or, for some, eventually the U.S.

I have also known many Southeast Asian nationals, mainly ethnic Chinese from Malaysia, Thailand and Indonesia, who attended school in Singapore from a young age, even as young as under ten years' old. Many if not most also hold Singapore permanent residence status. Yet at the University of Michigan, with only a few exceptions, they belong to and are active not in the Singapore Students' Association but in the Malaysian, Thai or Indonesian Students' Associations. The big advantage of studying in Singapore was that it provided them with a world-class secondary education, including a facility in English and Mandarin that makes them more competitive on their national and the global job markets. Most return to their Southeast Asian homelands to work after their U.S. college education, with a handful to date staying on in the U.S. or going to China.

This is only to be expected of a place which is not a nation, at least not for those passing through. Economically, this is not necessarily a problem—the circular flow of talent may actually benefit the economy by enhancing its flexibility--but politically and socially it may be a problem, particularly for a state which desires to maintain much tighter political and economic control of its place and its nationals, than is typical of other "places" around the world. The nation, after all, is a political entity, and its ability to survive as such is already undermined in an era when globalization allows economic survival and prosperity to occur with the bypassing of national authorities in an increasingly "borderless" economic world and global value-chain. Today, in Singapore, place and nation increasingly do not coincide. Many of those in the place are not of the nation, and many that are of the nation, including I would argue, myself, a Singapore passport-holding expatriate rather than an immigrant to the U.S., are not to be found in the place.

I am an observer rather than an expert on the subject of identity, including both individual and national identity. In the case of Singapore, much of our pre-nation-state identity was deliberately erased—most notably through language policy—in order to forge a "new" national identity that would not conflict with survival and prosperity in a globalized world economy, or encourage challenge to established domestic political authority. Identity has been reshaped to serve economic and political goals, with the state itself becoming the determinant and arbiter of acceptable ethnic identities and their expressions, such as the enforced diminution of the Malay heritage of Peranakan Chinese, and of the dialect heritage of the majority non-Mandarin-speaking Chinese. If what makes a nation is its collective memory and shared values, it is difficult to find the nation in a place where memory, including its physical embodiments, has been erased or reconstructed, and values pared to emphasize only social stability and material prosperity.

Fearful of the emergence of alternate centers of power, the Singapore state has also preempted local private initiative in civil society as well as the economy, precluding the kind of independent political involvement which engages and defines the citizens of nations, but is typically denied foreigners, making them easier to control, and thus perhaps the preferred inhabitants of a place. Note that a high-performing benign and paternalistic state which engenders a passive dependence and apathy on the part of contented citizens (including by distributing "goodies" such as "Singapore shares" and other handouts just before general elections) is perhaps a greater threat to nationhood and national identity than an under-performing state which allows and provokes discontent and thus active civic and political participation. A nation, after all, is a political entity and arguably cannot exist in a domestic political vacuum. And, in a nations as in any organization— like a university or a corporation—the empowerment of stakeholders is necessary to engender the "sense of ownership" that can attract and retain "talent" and elicit its best performance. As parents and teachers, we know that the best way to develop our children and students is to let them "own projects" and make their own mistakes while "learning-by-doing", even though we are more efficient and better at doing everything than they are.

The recently resurrected rhetoric of a "global city" implies "global citizens" like our immigrant ancestors in Singapore, distinguished by their willingness and ability to move and change nationality in response to the ever-shifting competitive attractions (or detractions) of other places. A "global city" also requires that these citizens be led by a cosmopolitan elite able to navigate the complexities of a global economy, thus further legitimating continued political control by the members of such an elite. To the extent that such a cosmopolitan elite includes "foreign talent", we may even end up with a situation where Singaporean "heartlanders", relatively immobile in the global job market in part because they lack the linguistic and cultural tools to participate in it, are ruled by "foreign talent" which developed those tools in other places and nations, while members of the Singapore-born cosmopolitan elite, raised to be "global", depart for foreign shores.

Whether one views Singapore as a "place" or "city" versus "nation" has practical implications for almost any public policy. For example, my friend Dr Geh Min, former Nominated MP and President of The Nature Society, has noted that viewing Singapore as a city results in its physical environment being managed by urban planners, with our land resources treated as real estate, defined by their commercial market value as in any city with a limited terrain but facing global market demand. Open spaces are seen as having value only as manicured parks, improving the urban quality of life of the place.

Considering Singapore as a nation, however, would result in its physical territory, including the biodiversity represented in "wild" areas, being valued as a national treasure and birthright, as well as (in this case) contributing to the global commons. "Wild" lands might then be preserved in their natural state for the emotive and affective appeal that they would have for nationals, in other words, for their contribution to a natural-place-specific sense of national identity.

In education, Singapore-the-place would overweight the technical training of commercial value in subordinate parts of global value-chains, and underweight the study of Singapore and Southeast Asian history, languages and literature. Thus, the Singaporean students at Brown and other East Coast universities whom I met in April told me that one reason they organized the conference that motivated this talk was because they were embarrassed that they themselves did not know enough about Singapore to answer questions posed to them by interested Americans! Remarkably, I understand from some colleagues who teach about Singapore in our local universities, their classes are populated mainly by curious foreign students, but shunned by native Singaporeans who evidently see "no use" in learning or thinking about their/our own past or present. Also remarkably, foreign faculty in our universities seem to shy away from doing research on Singapore that might be construed in any way as "controversial" or critical of the imagined local conventional wisdom--characteristics that would tend to be rewarded rather than penalized in U.S. academia, for example, for being "path-breaking". Not surprisingly, a place which is "unknown" to its own most privileged and educated youth, and which fades away in both teaching and research, risks disappearing as a nation.

I will leave to your imagination the ways in which the domestic politics and foreign policy of a globalized, even virtualized, place would differ from that of a nation. In the cultural sphere, all you have to do is visit Singapore's Chinatown today to see how it has been re-formed, and to many locals and long-term visitors over 40 years of age, deformed and diminished, into an a-national, universalist or even Americanized theme-park devoid of its and our true and unique multicultural history. Even Singapore documentaries and other cultural and educational products are being outsourced to foreign experts and consultants, who may produce technically superior products to "global standards", but cannot be expected to capture the intangible "local soul".

From my own experience and observation, I believe that national identity, perhaps all identity, must have an irrational and not just an economically rational component, that is to say, it comes from emotional affiliation rather than pragmatic self- interest. If I choose to become a member of a nation because it gives me a good job and good lifestyle, good education for my children etc., I am really interested in that nation only as a place, and it makes sense if I leave it for another place which can offer me superior conditions and opportunities—the situation of the MBA students and graduates I mentioned.

It is when I stick around when a place is in trouble, and cannot guarantee me a good life, or I am concerned with the welfare of others in that place, and try to improve things even at a risk to my own good life (say, I decide to join the political opposition), that I can say I am indeed of the nation, and not just the place. In the same manner, it is when I enter public service even though it pays me but a fraction of what I could earn in the private sector that I can claim to be primarily interested in the public good and national welfare. In academia we are used to very bright people voluntarily choosing a profession which pays much less than the private sector—that's how we know they have the passion for scholarship. That is also the test of whether one has the passion for public service.

The audience at the Brown University conference where I gave a first version of this talk consisted of about 70 Singaporean and Malaysian students from elite East Coast liberal arts colleges and universities, like Wesleyan, Wellesley, Harvard, etc. Many of the Singaporeans had Malaysian roots, and they were about evenly split between government "scholars" and "private" students. During the post-lecture forum, I asked them if they were "afraid of failure", and nearly all raised their hands. Why this was considered remarkable in a population frequently self-lampooned and self-chastised for being kiasu, I don't know, but the students themselves were struck by their own response. One of them even feared freedom of the press because it might lead to racial conflict—they apparently did not trust themselves to eschew such conflict if given such freedom. I commented that fear of failure undermines both place and nation, since tolerance of risk and acceptance of failure are required for political democracy, business entrepreneurship and scientific discovery—all of which Singapore officially aspires to. To the extent that this "fear of failure" comes from a culture created by a strong state (since it is not present in ethnic Chinese communities in other countries), this strong state may result in a weak nation, and possibly even in a weak economy.

Let me end with quotes from two emails I received two months ago, just before my talk at Brown, both from Michigan MBAs, which highlight the distinction between Singapore the place and Singapore the nation. One, an American and my former student with a large multinational company, said this: "My wife and I have decided to come to Singapore instead of London. (The company offered him promotions and postings in both places.) Quality of life is so much higher here and it will be great for the kids."

The other, a Singaporean and a successful banker, was running for election as an opposition party candidate (of course he lost). His message: "My wife and children walked the ground (visiting voters) with me together with my other party colleagues.After three weeks of walking the ground, my daughter (aged 15) said that some people can say we are crazy but she has never met five persons (my party colleagues and I) who loved their country so much."


Kenneth said...

Quite a fantastic piece of writing!

magdelene said...

impassioned essay:]
it's just the article i was looking for!
our social studies teachers gave us this article( with ALOT cut out and simplified for our secondary four minds)to analyse for our exam.
we are supposed to contrast this with another atricle to be given on the day of the test><
the full version is very helpful:]
thanks for posting it!

Anonymous said...

A really insightful speech!

Some Critics have noted that PAP itself said it runs Singapore like a company, and not a nation. However, supporters of the PAP have reiterated the fact that currently, national education is enhanced to strengthen emotional heartware and rootedness in Singapore.

It makes me wonder though, had Singapore not controlled the state policies and economic policies, and allowed local entrepreneurs to drive the economy, would we be able to enjoy the economic benefits that we do now? Professor Lim also seems to suggest that an under-performing state which allows and provokes discontent and thus actie civic and political participation has a greater national identity than a high-performing benign and parternalistic state like Singapore. Are we willing to forgo social stability and peace for political participation which may lead to political dissent, which in turn threatens social cohesion instead of harnessing national identity? Are we willing to follow the footsteps of our neighbouring countries to achieve national identity?

Anonymous said...

i guess we are from the same school...LOL :)

Anonymous said...


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