Singapore was ranked third in Ernst and Young’s Globalisation Index 2011 – a survey that measures the degree of globalisation in 60 large economies relative to their GDP.

Discuss the consequences of globalisation on Singapore and the policies that the government could implement in light of globalisation. [25]

Introduction

Globalisation refers to the increased interconnectedness and interdependence amongst people and countries, which includes the opening of borders to increasingly rapid flows of goods, services, finance, people and ideas across geographic borders as well as the changes in institutional and policy regimes at the international and national levels that facilitate such flows.

Positive impacts of globalisation to Singapore (choose 2-3)

1. Access to larger markets (EOS)

2. Increased inflow of FDI (Growth, transfer of skills and technology)

3. Greater variety of goods and services enjoyed by consumers (SOL, consumer welfare)

4. Tap on low-cost labour and foreign talent to increase competitiveness (reduce COP)

Negative impacts of globalisation to Singapore (choose 2-3)

1. Structural unemployment (loss of CA – Hard-disk industry in early 2000s)

2. Increased generation of pollution and waste due to higher economic activity (negative externalities)

3. Increased stress on existing infrastructure and resources (e.g. transport, housing), àcould also lead to inflation

4. Brain drain

5. Downward impact on wages of less skilled workers due to inflow of cheap foreign labour àgreater income inequity

Policies in response negative impacts of globalisation

1. For structural unemployment

·      Can adopt supply side policies to constantly keep workers updated with relevant skills (through provision of grants for training courses), spend more on education to increase the supply of skilled workers as well as to develop new niche areas of growth to develop new areas of CA. (evaluate)

2. For greater income inequity

·      Can be dealt with using a progressive tax system whereby the rich is taxed more, and income re-distribution programmes to supplement incomes of lower income individuals. Lower personal income taxes àgreater incentive to stay àreduce brain drain

Conclusion

Although it is apparent that globalisation has indeed impacted Singapore negatively in many ways, the benefits from globalisation has far outweigh the costs in the context of Singapore. We should continue to embrace globalisation, taking into consideration the plethora of tools at Singapore’s disposal to help mitigate the problems arising from globalisation.