Saving and Investment: The Economic Development of Singapore 1965-99: An in-depth look at the country’s saving behaviour and government control

book 2009


At the centre of understanding Singapore’s phenomenally successful growth story lies the country’s saving performance. From 1965-99 the country managed to save an unprecedented 46% of its GNP. Quite a few studies have investigated this seemingly unbelievable saving performance and its resulting growth success. The bridge between the two – namely investment allocation and the central role of the government – has rarely been studied. This publication aims to fill these gaps in Singapore’s economic history and therefore help the assessment of its potential application to other country’s development plans. An in-depth econometrical time-series analysis gets to the source of the drivers behind the saving performance. A benchmarking exercise using cross-sectional regression techniques evaluates how special this performance was. Finally, through an accounting exercise based on a newly accumulated database it is able to offer for the first time quantitative evidence for a number of general speculations about Singapore’s economic history. Not least because of the included database, this book is a must-read for all researchers interested in Singapore’s recent history.

A Critical Assessment of Past Investigations into Singapore’s Saving Performance

Singapore Economic Review 2006


The literature so far has not been able to present a statistically robust answer to the question of what drove Singapore’s spectacular savings rates. A substantial part of the literature must be rejected on methodological grounds since the time-series properties of the respective data series were not taken into consideration when choosing the appropriate testing method. Others have omitted potentially crucial determinants of savings or have wrongly disaggregated Gross National Savings. This unsatisfactory state of investigation into Singapore’s saving behaviour is unfortunate because savings play such a central role in Singapore’s economic history since the country’s independence. The critical assessment is intended as a guideline to future researchers of which mistakes to avoid and where potential pitfalls lie. In Addition, the article also supplies new data series, which disaggregate Singapore’s national savings after taking the country’s peculiarities into account.

With all diligence due: Where did all the savings go? Singapore’s investment pattern, 1965-99

Economic History Society – Best Young Researcher’s Paper 2003


During the country’s 35 years since independence in 1965 saved in average an incredible 46.16 percent of the country’s Gross National Product every year. Over the same timespan the country increased real per-capita income by a factor of over 8.5, which corresponds to an annualised growth rate of 6.3 percent. While this spectacular growth performance has attracted a fair share of interest, the underlying investment behaviour has rarely been investigated largely due to a lack of a readily accessible data source. In an attempt to close this gap a large amount of government and private sources have been combined into a new database, which allows a much more revealing investigation and leads to a number of new insights into Singapore’s recent economic history.

Given the country’s standard development story as a labour-intensive manufacturing export base, it might be somewhat surprising that manufacturing has attracted only 7.2 percent of total investments made, far behind real-estate (16.2 percent), overseas investments (23.1 percent) and the service sector (29.7 percent). Singaporeans have had a continuous desire for overseas investment, indulged almost equally by the public and the private spheres. Moreover, of the small proportion in manufacturing two-thirds came from foreign sources. This is of particular interest to the discussion about the country’s productivity performance, because if increases in productivity are found they are within the – foreign dominated – manufacturing sector. Additionally, based on the analysis of the investment patters a strict reading of the flying geese hypothesis must be rejected, since it would argue for a much later development of the tertiary sector. Instead Singapore chose to develop its service sector from the outset and continuously invest overseas.

Was Singapore Extraordinary? A comparative view of Singapore’s saving Performance 1965-99

HSBA Working Paper 2009


Although the mere observation of saving aggregates might have us believe differently, this article argues that Singapore’s sustained high saving performance was far from extraordinary once the country’s particular circumstances are econometrically controlled for. Singapore’s saving performance should therefore not be regarded as a mere blip in economic history. As a matter of fact, not the high saving rates in the late 1980s and 1990s, which usually attract the most attention, but rather the speed of transformation of the country’s saving behaviour in the first years of independence is shown to be indeed extraordinary. Singapore was able to overcome its low initial saving performance much faster and much more strongly than could have been expected given its circumstances.