No not because S’pore is heading for insolvency etc if Tan Kin Lian is to believed
We and the Irish are dependent on MNCs.
Mr Honohan [the Irish Central Bank governor] … points out that Ireland’s official GDP and unit labour cost statistics have consisently overstated the size of the Irish economy and its productivity respectively – largely because that economy is so dependent on multinationals with headquarters in the Republic, whose high profits acrrue to the overseas owners of those multinationals rather than to Irish residents.
That overstatement of the magnitude of the output of Irish residents, which in some real sense is attributable to those residents, could be as much as quarter, he says. Excerpt from Robert Preston’s blog on BBC Online.
Here, where the economy too is dependent on MNCs, this means that the economy is not as big as the stats imply. And that productivity is even worse than the already lousy numbers show*. The latter isn’t juz Reform Party spin. Remember there is yet another government campaign to raise productivity going on.
Perhaps the fact that the economy is smaller than the stats imply is why the government seems obsessed by the need to build up the reserves. We will (not might) need the rainy-day money, one day. Question of “when” not “if”.
(A reminder: The combination of Budget surpluses, CPF money (indirectly via a circuitous route), and state land sale proceeds, have resulted in our SWFs having 179.5% more in assets than S’pore’s 2009 estimated GDP. By way of comparison Norway’s much larger fund (US$471bn) is only 23% more than Norway’s GDP; while Abu Dhabi’s fund (at US$627bn) is 627% of its GDP.**
Even after taking away our public debts; 8th in the world at 113.10% of GDP (partly due to the special CPF bonds that are issued to recycle our CPF monies), we have plenty of money barring more investment disasters like UBS, Merril Lynch, Barclays, Shin and ABC Learning. We need more investments like StanChart.)
And why the government is hell-bent on growth. If one accepts that the stats overstate the size of the economy, then the government’s holy grail of economic growth can be understood if not appreciated: high profits acrrue to the overseas owners of those multinationals, means we get the leftovers.
The Red Queen in “Through the Looking-Glass”, has to run to remain in the same spot, otherwise she “moves on”. We need high GDP growth numbers to get the crumbs to maintain the value of our HDB flats, condo apartments and landed property?
[This link was added at 10am.]
As to why it prefers immigration as the preferred tool of growth, read this analysis of the problems that a greying population is bringing to Japan. Not that the Japanese seem to care. Sumetimes I get the impression that MightMind and the Economist worry more abt Japan’s future than the Japanese do.
*A more relevant measure of economic well-being is productivity and this is captured crudely by looking at GDP per hour worked.
Singapore looks good when we look at GDP per capita but when we correct for our higher employment-population ratio and much higher hours worked, our achievement is more modest.
In fact the latest figures for 2009 from the US BLS show that Singapore came near the bottom of the countries surveyed, only just above South Korea and the Czech Republic and about 60% of the US level.
Since 1995 Singapore’s GDP per hour worked has grown more slowly than the US and Singapore’s growth rate fell to less than 50% of the US figure over the period 2000-2009. Over the same period South Korea’s GDP per hour grew by 3.8%. : excerpt from Kenneth J’s speech at a recent forum.
**For those interested, I used FT’s US$248bn for GIC and US$133bn for Temasek. As to GDP numbers, I used the data from the CIA Fact Book. BTW, I’ve not taken into account the amt of foreign reserves that MAS manages because I could be double counting if I do. For the record, MAS says its reserves as at end 2009 are US$188bn.