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

Has globalization been of benefit to the Singapore economy?

Extracts from this document...

Introduction

Has globalization been of benefit to the Singapore economy? Globalisation is the integration of national economies with the international economy through trade, foreign direct investment, capital flows, migration and the spread of technology. There is reduction and removal of barriers between national borders in order to facilitate the flow of goods and services, investments, financial capital, labour and technology. One of the characteristics of globalization is free trade, whereby flow of goods and services across borders is not restricted. Global trade allows for an enormous variety of resources to be made more widely accessible in Singapore. With free trade, foreign goods which are cheaper than domestic products can be imported. At the same time, the existence of foreign competition provides incentive for domestic firms to engage in research and development that will lead to product improvement. With each country trading based on comparative advantage, trade promotes economic efficiency by providing a wider variety of goods, often at a lower cost. As a result, consumers are able to enjoy more variety of goods of better quality at lower costs from the wages they earn. Hence, the consumer welfare is improved and their standard of living is raised. ...read more.

Middle

Globalisation allows for the inflow of foreign direct investments which enables firms to get better capital equipment that can facilitate growth from an increase in research and development activities. The level of investments may increase due to free trade agreements which allows easy flow of investments into the country with fewer restrictions as well as influenced by the potential returns that are higher in Singapore than domestically. The expansion of exports via low or absence of barriers also increases investments in export-oriented industries. As such, the inflow of foreign direct investments and foreign talent raises the aggregate demand, leading to multiplier effects on employment and income. The inflow of foreign direct investments into domestic financial institutions may improve liquidity, making more funds available at lower interest rates, promoting domestic consumption. There is increase in productive capacity in the long run and potential growth is promoted. The inward foreign direct investments, caused by the desire of multinational companies to set up facilities in Singapore so as to be nearer to their customers, helps to improve the capital and financial account balance. Nevertheless, there is also outward foreign direct investment which may relocate to cheaper destinations and hence result in 'hollowing out' of Singapore's economy. ...read more.

Conclusion

This helps to reduce inflation rate. The exchange of technology and ideas improve innovation and raises the level and quality of technology. Being more productive efficient with better technology and ideas, productive efficiency is promoted, therefore cost of production is lowered. Potential growth is hence being stimulated. However, technology often causes negative externalities such as pollution from increased air and sea freight transport. The carbon footprint of Singapore will increase. There may be possible increased pollution from increase in production due to the need to increase provision of increasingly sophisticated entertainment, recreational and social activities to satisfy the needs of a more cosmopolitan labour force. Pollution due to higher levels of industrial pollution, clearing of land for production facilities, discharge of toxic wastes into environment have affected Singaporean's standard of living. Singapore's rapid growth may be attributed, to a large extent, to relatively free trade, free capital flows, free movement of labour and exchange of technology and ideas. Globalisation actually provides more opportunities than threats, just that it requires governments to adopt appropriate policies to mediate the adverse impacts of globalization such as structural unemployment due to the restructuring of the economy and mergers of firms. In the case of Singapore, the government consistently restructures the economy to cope with the challenges of globalization. In all, globalization has been of benefit to the Singapore economy. ...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. Budget 2004-05 and Economic Analysis of Pakistan

    819 Other Industries 149 149 163 ENVIRONMENT PROTECTION Environment Protection has been provided with Rs 136 million under Water Waste Management. This is slightly higher than the budget and revised estimates 2003-2004. (Rs.in Million) 2003-2004 2004-2005 Classification Budget Revised Budget ENVIRONMENT PROTECTION 132 132 136 Water Waste Management 132 132

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

    The difference between the actual GDP and the trend line is known as the output gap. Figure 15.0 - Production Possibility Frontier If a country has unemployed resources, it may be able to increase its output by a significant amount.

  1. Greece financial crisis: The main causes of this crisis are? What are ...

    Specifically, the 3-year reform program includes measures to cut government spending, reduce the size of the public sector, tackle tax evasion, reform the health care and pension systems, and liberalize the labor and product markets. Greece has committed to reduce its deficit to fewer than 3% of GDP (the ceiling under the EU's Maastricht Treaty)

  2. Comparing the effects of immigration on GDP in Malaysia, Japan and South Africa.

    In year 2003, there were only 9.6% of the total immigrants were economically active, contributing to the GDP. However, majority of the immigrants in South Africa were not economically active, contributing zero the economy. From those who had active participation in the economy, 477 of them were in professional

  1. Discuss appropriate policy measures that the Singapore government may undertake to increase the net ...

    Foreign imports are now more expensive in the eyes of Singaporeans due to its weaker currency. On the other hand, with a weaker exchange rate, there would be a surge in the world's demand for Singapore's export as Singapore's export is now relative cheaper in the eyes of the world.

  2. Why does smoking lead to an external cost?

    the government use the revenue collected from the tax on rehabilitation and products to encourage people to stop smoking. WORLD TRADE ORGANISATION WANTS TALKS TO REDUCE PROTECTIONISM A) Explain the main forms of protection used to restrict international trade Protectionism is the economic policy of restraining trade between countries.

  1. Pakistan is in the grip of a serious energy crisis that is affecting all ...

    Similarly transport sector uses around 28.0 per cent of energy. It wastes energy due to old transport and improperly tuned engines. Heavy losses due to transmission, distribution and theft are estimated around 30.0 per cent. Large scale theft of electricity as clearly revealed by the growing difference between units generated or purchased and those paid for.

  2. Australia's place in the global economy - "Explain the reasons for our current exchange ...

    Currently, the U.S is cutting back interest rates to regulate growth cutting back to 4.5%, and doing so Australia has followed at 5%. This will decrease foreign investment in Australia further, lower investment will then mean that the demand for our $A reduces and depreciates.

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