• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Discuss appropriate policy measures that the Singapore government may undertake to increase the net benefits of globalization

Extracts from this document...

Introduction

Discuss appropriate policy measures that the Singapore government may undertake to increase the net benefits of globalization To increase the net benefits of globalization, the negative impacts of globalization have to be mitigated and the positive impacts of globalization have to be enhanced at the same time. While Singapore may be handicapped by its small market size and lack of natural resources, it seems that these drawbacks could be less of a problem as the world economy becomes more globalised. However, it does not seem to be the case. Since Singapore government consistently restructures the economy to cope with the challenges of globalization, it hence resulted in structural unemployment. A remedy for structural unemployment is to use supply-side policy which is to provide education, retraining facilities and assistance to move the labour from depressed to expanding industries. This helps to raise the productivity of labour and hence raises the productive capacity. With a more educated workforce, the quality of labour could be raise too. However, the re-skilling and changing mindset of labour require increased government expenditure, therefore incurring opportunity cost. Firms may also reluctant to send workers for training if there were no subsidies or any financial support. There may be insufficient appropriate training facilities due to space constraint. There is a tendency for import expenditure to rise with the availability of cheap imports and increased variety due to globalisation. ...read more.

Middle

One of such ways is to use devaluation which is the deliberate lowering of the exchange rate of the home currency in terms of other countries' currencies. Suppose Singapore suffers a balance of payment deficit because of globalization and hence devalues her currency from US$1=S$2 to US$1=S$4, Singapore exports to US in terms of US$ are now cheaper while her imports from US in terms of S$ are more expensive. Exports will be encouraged and this leads to an increase in export revenue. Meanwhile, imports will be discouraged, which leads to a fall in import expenditure. Thus balance of payment equilibrium may be restored. However, Singapore may face retaliation from other countries. When Singapore devalues its currency, other countries' exports will fall and their imports will rise. They may retaliate by implementing various protectionist measures such as placing tariffs on imports and may even counter-devalue their currency. Therefore, to counter balance of payment deficit, it would be wiser to use long term measures through improving the supply side of the economy. Business need to be more competitive in domestic and overseas markets by reducing costs. Investments in new growth sectors or in industries with large exporting potential should be encouraged and research and development promoted to increase productivity as this will reduce the productivity gap with other countries. ...read more.

Conclusion

Therefore, there is trade creation. However, with FTAs, local firms, especially the small and medium enterprises will now have to face greater competition from foreign firms and may be forced out of the industry, resulting in unemployment. Strong competition may also deter potential local investment from taking place, leading to market domination by foreign firms.Trade diversion may occur too whereby trading activities move away from the pattern of comparative advantage due to distortion created by FTAs, resulting in inefficient allocation of resources. There has always been a sharing of goods, services, knowledge and cultures between people and countries, but in recent years improved technologies and a reduction of barriers means the speed of exchange is much faster. Globalisation provides opportunities and challenges, benefits and costs. Bigger markets can mean bigger profits which leads to greater wealth for investing in development and reducing poverty in many countries. Weak domestic policies, institutions and infrastructure and trade barriers can restrict a country's ability to take advantages of the changes. Singapore should make decisions and policies that position them well to maximize the benefits and minimize the challenges presented by globalization. Singapore must strive to be more competitive and be ready with appropriate government policies to take advantage of the situation, and to minimize the costs through attempts to foster greater economic integration with other countries so as to fully benefit from globalization. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Macroeconomics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Macroeconomics essays

  1. Peer reviewed

    Using an appropriate diagram explain how a government may attempt to close a deflationary ...

    4 star(s)

    This situation may also be shown in the real output diagram below. The value of the deflationary gap is again $100. This is not good news for countries, as it means that the growth of their output will decrease, and standards of living associated may decline.

  2. Has globalization been of benefit to the Singapore economy?

    In addition, its export markets increase, allowing it to raise its export revenue. Accordingly, it leads to rise in job creation and increase level of employment. There will also be improvement in the balance of payments due to higher net exports via free trade that raise its current account.

  1. Budget 2004-05 and Economic Analysis of Pakistan

    Tax Revenue (CBR) 510000 510000 580000 Direct Taxes 161100 161500 181900 Income Tax 154200 154638 174362 Capital Value Tax 700 600 650 W. W. Tax 6200 6262 6888 Indirect Taxes 348900 348500 398100 Customs Duties 78100 86600 103200 Sales Tax 223100 218400 249200 Federal Excise 47700 43500 45700 b )

  2. Governments set economic objectives - Discuss the relative importance of each of these objectives ...

    change in the money supply [M] will cause a similar change in the price level [P]. Figure 8.0 below illustrates how an increase in the money supply leads to increased prices. Figure 8.0 - Increases in the money supply [Monetarist theory] When there is an increase in the money supply,

  1. To what extent does the government budget/statement reflect current government priorities?

    same group that may have to pay more taxes than the wealthier upper class. Similarly, when a government decides to adjust it's spending; its policy may affect only a specific group of people. A decision to build a new bridge, for example, will give work and more income to hundreds of construction workers.

  2. This report will highlight how Government policy could change to try to: Increase economic ...

    * Increasing the rate of saving, this would be extremely beneficial to the Government as the Marginal Propensity to Spend by consumers is 0.8. This means that for every additional dollar of the National Income, eighty cents will go into increased spending.

  1. Discuss the measures taken by the current Labour government to enhance the independence of ...

    But this does limit how independent the Bank can be, if there is the possibility of government interference. Along with the move to increase central bank independence, an additional change made by the government at this point was to transfer banking supervision to an enhanced securities and investments board.

  2. To what extent does the government budget/statement reflect current government priorities?

    credit available to lone parents until June 2008, benefiting over 250.000 lone parents. - A four week run-on in entitlement to working tax credit from the day that a previously eligible claimant ceases to work 16 hours. There are many more aims, most revolving around training schemes (especially for people

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work