Industrial Restructuring, the Singapore City-State, and the Regional Division of Labour

Abstract

With continuous economic growth in the 1970s and 1980s and increasing overseas competition, Singapore, as a small city-state with an open economy, faces perhaps the greatest challenge among the Asian newly industrialised economies in their attempts to maintain the pace of development. The effects of a chronic labour-supply situation and the appreciating Singapore dollar on the export competitiveness of the manufacturing sector are reviewed. Enterprise and state responses to these mounting pressures are examined, particularly with regard to the labour shortage. One optimistic long-term solution seems to lie in regional cooperation in industrial development, with a sectoral and technical division across Singapore, Johor in Malaysia, and the Riau Islands of Indonesia. With the three regions in different stages of development, the regional development plan is to bring about a division on the basis of the relative availability of land, labour, and infrastructure. In the second half of the paper, the Singapore—Johor link, the most developed side of the growth triangle is examined, and the potential and problems arising from this arrangement are explored.