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How did rubber and tin in the Malay States affect the Singapore economy in its global dimensions?

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Introduction

How did rubber and tin in the Malay States affect the Singapore economy in its global dimensions? Singapore thrives on its strategic geographical location where lying at the crossroads of main shipping lines, it is one crucial factor that turned it into one of the world's greatest commercial centre. Other contributory factors such as a strong and stable government, good infrastructure and a transparent legal system could perhaps be traced back to the development of the tin and rubber industry in the Malay States during the 1870s and the l900s. The advantageous position of Singapore fully capitalized by the two proliferating industries thus marked the beginning in its gradual transformation into the global trading power that it is today. Singapore's emergence as a staple port began with tin. Tin was Singapore's main import during the period 1874 and 1896. The demand for tin took off as a result of two product innovations: barrels for transporting petroleum and canned food. Herein lies the first sign of how technological advances was to influence future trade patterns and consequently the economy of Singapore. The emergence of a new trading partner in the United States (US) ...read more.

Middle

Unfortunately, tin (also rubber) subjects the economy to both positive and negative effects. Characterized by a low price elasticity of demand and high income elasticity, it is prone to fluctuations in prices as a result of changes in demand. Indeed, dependency on tin as its export meant that Singapore is susceptible to world events beyond its control. Positive effects on the economy arose from occurrences (the Industrial Revolution, which brought about an increase in tin demand, the America Civil War, which precipitated the tin canning of food). The above mentioned world events marked the start of an important trading relationship with the US. Since the US was the main importer of tin, the volume of Singapore's exports to Britain slowly declined. This shift also reflected the relative decline of London as an entrepot in the late 19th century. Thus, Singapore started to be more independent from its colonial masters. However, the downside of this is precisely the over-reliance on the US for tin demand. This would mean that any decrease in US demand for tin would have a serious adverse impact on the Singapore economy. ...read more.

Conclusion

Furthermore, with the US turning to synthetic rubber to reduce its dependency on Malayan cultivated rubber and the spread of the uses of synthetic rubber across the industrialized countries, the economy of Singapore was further hit. The consequences of technological advances and over reliance on US trade were once again exhibited. This is exacerbated by the existence of rubber restriction schemes (Stevenson Scheme in 1922), which reduced rubber exports, thus hurting the Singapore economy. In conclusion, it is clear that tin and rubber affected the Singapore economy on a micro and macro level. On a micro level, tin and rubber brought about a positive impact on the Singapore economy through their contribution in laying the foundations for the development of transportation infrastructure, financial and banking services and the shipping industry. These are the fundamentals of the economy, which facilitated the evolution of a globalized nation. On a macro level, tin and rubber fully utilized the strategic location of the Singapore port for entrepot trade leading to its maturation as a global hub for shipping today. The other main consequence was to reduce the multiplier effect of exports to the West by making trade, and balance of payments, less bilateral than in the 19th century. ...read more.

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