What is most important for a country’s economic growth: geographical position, natural resources or is it the size of the country and its population?
What Singapore has achieved in barely over 50 years is astounding. Singapore has made it very clear that natural resources and the size of the country, with its population are not a necessary ingredient for a growing economy. What has made Singapore the go-to place for multinational companies?
There are two important factors that have supported the current state of economic stability in Singapore. First, Singapore's geographic position has always been appealing to companies and has helped encourage companies to make Singapore the location for their APAC headquarters. Further, it's location also serves as the hub for exporting products, making it ever more appealing to manufacturers. Secondly, and most importantly is the pro-business laws and regulations that Singapore has.
There might be one more factor to consider too. Tapping this article from the Huffington Post, the third factor presented was exceptional leadership. There has been a steady stream of great leaders that have positioned Singapore well. "Many in the world have heard of Mr. Lee Kuan Yew, the founding prime minister who passed away in March this year. Far fewer have heard of Dr. Goh Keng Swee, the architect of Singapore's economic miracle, and Mr. S. Rajaratnam, Singapore's philosopher par excellence."
This is not to say that Singapore has no challenges, but we are seeing other APAC countries follow Singapore by promoting their open and "friendly" laws and regulations for foreign companies to open a base office in their respective countries. Singapore will continue to flourish in line with the growing economies in APAC as long the country can stay focused on the business-friendly environment and enforce a very low post-profit corporate tax rate.
It seems counterintuitive that a country lacking natural resources and having a small domestic output can actually be ranked as one of the strongest economies in the world, but Singapore continues to maintain a zero foreign debt ratio and a positive surplus despite these two drawbacks. How does it do it? For one thing, Singapore’s location makes it an ideal Asian hub for exporting products, which is what drives the major portion of its economy. Secondly, the country’s pro-business laws and regulations encourage both domestic and foreign companies to set up shop there. In 2017, Singapore was ranked by the Heritage Foundation’s Index of Economic Freedom as one of the globe’s most open economies and received a second place global ranking by the World Bank for maintaining a pro-business structure.