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SINGAPORE’S DEVELOPMENT POLICIES 389

‘developmental state’ (see Castells, 1992; strategies were either progressing too slowly,
Huff, 1995; Perry et al., 1997) – was able to or had failed altogether (see Booth, 2004).
introduce these policies because of its political These governments had observed the rapid
dominance within Singapore society. For many growth of countries that had adopted FDI-
years, the People’s Action Party held total con- oriented strategies. The exemplars were not
trol over Parliament (see Rodan, 1997). only Singapore and Hong Kong, but also
Although Singapore lacked industrial Ireland, Malta and Mexico (see World Bank,
experience, and did not have a sizable con- 1994). At the same time, there was an expo-
sumer market, many industrial transnational nential growth in the volume of capital seek-
corporations set up production sites on the ing to go ‘transnational’ (see Dicken, 1998).
island, particularly those that wanted to relo- The electronics sector was the most domi-
cate lower value added production away nant player in the global economy. Driven
from high wage areas such as the USA, by intense competition between firms, corpo-
Western Europe and Japan. Although the rations began a global search for the most
state’s strategies were responsible for this cost effective locations for production (see
relatively high inflow of FDI, it was also Henderson, 1994). Even industrial enter-
important to note that Singapore was one of prises from newly industrializing countries
the very few countries within Southeast Asia such as South Korea and Taiwan were seek-
where American, European or Japanese com- ing to relocate in cheaper production sites,
panies could locate production during that adding to the growing volume of global FDI.
period (1970–1980) (Pereira, 2000). Countries As mentioned at the beginning of this chapter,
such as Malaysia, Indonesia and Thailand there was also an ideology of ‘neo-liberalism’
were pursuing domestic import substitution emerging from the USA and Western
industrialization (ISI) strategies, which Europe, where the political belief in ‘free
meant that national economic policies were markets’ and ‘less statism’ became more
intent on protecting domestic firms from for- significant (Sachs, 1999). This led some gov-
eign producers. Communist countries such as ernments to lower economic barriers, not just
China, Vietnam, Cambodia, Laos and North for trading purposes but also to attract
Korea, and heavily pro-socialist countries foreign investment.
such as India almost completely shut out In the late 1970s, many governments of
FDI. Thus, during that period, Hong Kong – developing economies began experimenting
not fully an independent country – and cer- with FDI-oriented development strategies,
tain enclaves in Taiwan and South Korea usually through the establishment of Export-
were probably Singapore’s only serious com- Processing Zones, Special Economic Zones,
petitors for FDI. The Philippines was gener- or the Free Trade Zones (see World Bank,
ally open to FDI, but remained mainly an 1994). These zones were specially desig-
agricultural economy (Booth, 2004). nated areas or estates, where foreign capital
Singapore’s ability to attract FDI was aided, would be permitted. Such zones were a strat-
therefore, by a relative lack of direct compe- egy to take advantage of global production
tition in the region (Pereira, 2000: 430). needs but still insulate the rest of the country
from foreign capital. Goods produced from
these zones could not be sold in the rest of
the country, thus still protecting domestic
Intense competition
industrial enterprises. The main benefits of
By the 1980s, the political economy of Asia these zones were that employment was
had changed dramatically. Many Asian gov- generated (because industrial multinational
ernments had conceded that their domestically corporations required labour), and that foreign
oriented import substitution industrialization income was generated (based on the wages