The Economic Miracle of Singapore: the Role of FDI, Export and Expenditure on Education

Ong, Huai Yi (2021) The Economic Miracle of Singapore: the Role of FDI, Export and Expenditure on Education. Final Year Project (Bachelor), Tunku Abdul Rahman University College.

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Abstract

Singapore, our beloved neighbour, is a small island that located at the end of the south of Malay Peninsula which is also the smallest nation in South East Asia. Singapore was facing tremendous problem including high unemployment rate, social unrest, labour unrest, war ravaged infrastructure, low wages, inadequate housing and community facilities and slow economic growth after World War 2. However, today, Singapore is one of the richest and most developed and successful country in the world. This successful miracle was not just happened suddenly, a lot of efforts have been made by them, tons of strategies which have comprehensive goal and cover on every factors of economy was implemented to ensure the growth of economics. There are tons of factors that combine together to create this economic miracle, the paper will focus on these three factors which is export, foreign direct investment and expenditure on education. Hence, this paper will examine the relationship between these variables and Singapore economic miracles. Annual time series data will be used to examine the relationship between the variables for the period 1981 to 2018. This paper will be using Autoregressive Distributed Lag (ARDL) and Error Correction Model (ECM) model to reveal the long run and short run relationship. In addition, diagnostic checking will be performed after it. The empirical results showed that FDI and Export both shows a long run, positive and significance relationship with the RGDP of Singapore. However, expenditure on education found to has an insignificant relationship in both long run and short run. Policy implications which able to promote their FDI and exports were presented and advised to be propose to the policy makers in order to make this miracle last longer