The country that has moved from a poor island to one of the richest in the world (and what threat is it facing)

Filled with skyscrapers, private jets and Rolls-Royce, Singapore is the fourth richest country in the world, barely exceeded by Qatar, Luxembourg and Macao, according to the purchasing power of its inhabitants.

Nicknamed "the pearl of Asia", this small state town has only 5.6 million inhabitants. It is currently one of the largest financial centers in the world, the most expensive and most expensive place of production to live, study of the Economist Intelligence Unit.

But half a century ago, it was a poor island, with very few natural resources, that did not promise a great future. After leaving the British regime and gaining independence from Malaysia in 1965, Singapore became an autonomous state headed by Lee Kuan Yew. The man, who has held the position of prime minister for more than 30 years, is the architect of the so-called "economic miracle".

Lee devised a vast program of reforms aimed at bringing Singapore out of what he described as "the black hole of misery and degradation" and transforming it into a modern industrialized country under a capitalist model subject to close control of the state.

"Singapore occupies a strategic geographic position, in the most populous and fastest-growing region of the world," said Linda Lim, professor of political economy in Southeast Asia at the University of Michigan. This location has allowed him to be on a key marketing path between giants such as China, India and Southeast Asia.

Since the late 1960s, the government has promoted extensive employment programs and the construction of social housing, social policy going hand in hand with strict control of privacy and the removal of individual freedoms (including l & # 39; 39, arrest of opponents). without bringing them to justice and corporal punishment). There were even explicit orders on how to stay polite and even clean the sink.

Over time, the country has impressed the world with its high levels of education, health and economic competitiveness, while tackling corruption, considered an endemic disease in the old world. colony.

How did they do it?

In a first phase of development, Singapore is dedicated to the production of labor intensive manufactured products for export to developed country markets.

But in the late 1990s, the country entered a new phase of economic transformation that led to it becoming a global financial center. Since then, it has not stopped growing.

According to experts, Singapore not only presents a geographical location, but also a number of comparative advantages. Among them, "a population able to speak Chinese and English, solid institutions that work and the absence of corruption," says Professor Lim.

This is badociated with a significant social investment in housing, health and education, which has been put into practice early on in the economic transformation agenda.

In parallel, "Singapore has generously encouraged foreign investors" to settle in the country, adds Mr. Lim. It has allowed the free flow of capital and signed important free trade agreements with the United States, China, the Association of Southeast Asian Nations and the United States. ;European Union.

Analysts agree that Singapore's economic success is partly due to the fact that measures to stimulate growth began more than half a century ago.

"The government has put in place a series of policies early in the era of independence to support the core industries," says Joshua Kurlantzick, a researcher at the Council on Foreign Relations research center.

"They have built an excellent education system and created incentives to attract foreign companies," said the expert, measures that have helped to make Singapore a center for foreign investment, with offices of multinational companies located on its territory.

Another element mentioned by some badysts is that Singapore has not faced big enemies trying to stop its development policy.

"The United States has been protected as a backdrop," said Tyler Cowen, professor of economics at George Mason University and columnist for Bloomberg.

And among the reasons for its success, Cowen mentions investment in human capital, as well as "very good governance and economic policy from the outset, as well as a predictable business environment". "They were in the right place at the right time, when the rest of Asia was also starting to grow," he added.

What are your main threats?

Although Singapore is one of the richest countries in the world, Singapore faces many challenges that can shape the direction of its future. "Low productivity growth, rapid population aging and high inequality" are three of the key factors that the island will have to overcome, said Linda Lim.

Although these problems are not unique to Singapore, since they affect many developed countries, they are part of the shadows that can become threats.

"One of the biggest mistakes has been the widespread and prolonged dependence on foreign labor," Lim said, starting in the mid-2000s, particularly unskilled workers who increase their productivity.

He adds that excessive dependence on the manufacturing industry forces the country to subsidize certain sectors and "the absence of strong local businesses capable of further stimulating growth," he said. -he adds.

With a rise of 3.3% in 2018, the country's Central Bank warned that in the coming months, the economy would likely be affected by the trade war between China and the United States. In fact, Singapore is currently one of the largest foreign investors in China and, at the same time, China is its main export market.

Thus, while Beijing continues on the path of economic slowdown, Singapore is increasingly exposed to the clouds of thunderstorm haunting the Asian giant.