Singapore Model - Essay Example

Question 3: Singapore Model Introduction Singapore operates through a trade-focused market economy in which the locals can freely work in any market segment and economic sectors. This arises because of the low tax rates, high per-capita and the least corruption cases experienced in government institutions. In this regard, the government controls the vital economic sectors without interfering with the individual traders. The Singaporean government controls and organizes the production means of the various sectors, such as capital addition, wage employment and centralized management. Although private traders own some of the production means, the state still enjoys considerable control over the credit distribution and investment facilities. Singapore’s State Capitalism Singapore’s description of state capitalism is that the government has controlling shares in various public corporations and issue funding through the sovereign wealth fund (SWF). The SWF is state-owned capital funds used for real and financial asset investments in stocks, bonds or other alternative ventures. The funds are applied universally from export revenues or foreign exchange reserves in the custody of the central bank (Tajuddin 52). Considering this, Singapore attracts multinational organizations to take the global SWF benefits. The country also imposes business friendly regulations that favor the establishment of multinational organizations. The Singapore’s capitalism Model incorporates the private and public-owned companies towards an overall contribution to the economy (Tajuddin 54). The availability of the SWF has enhanced domestic investment in which the local industries are capable of manufacturing large-scale production. As a result, the state-owned companies transform into global enterprises that serve other regions with quality products. It is apparent that the SWF contribute to government social spending without raising taxes because they represent the budgetary surplus owned by the central bank. Similarly, the SWF does not have international debts accrued from government borrowing (Tajuddin 57). The country creates SWF in order to boost economic activities inspired to promote the state-owned enterprises. Singapore depends on services and manufacturing exports, with little government interference. The country does not adopt the other Asian’s philosophy of state socialism that has failed in China and India among others. The mainstream public-owned companies derive their successes through international presence, but not due to access to cheaper bank credit facilities. My opinion on the Singapore’s state capitalism is that it exposes some challenges that might affect the development of small-scale businesses (Musacchio and Sérgio 65). The government mostly focuses on the expansion and setting up of its enterprises that can compete in international forums. The SWF attracts large companies that can invest in stocks, bonds or hedge funds and this is not favoring the entrepreneurs. I think it would be essential to assist the entrepreneurs to play a part in the economic development of Singapore. Although the state-owned companies help in the job creation across the country, this inhibits creativity and sharing of ideas among the entrepreneurs. The Singapore’s legal procedures are also attractive to foreign companies that are free to set up their production bases within the country. This trend kills the growth of privately owned establishments that do not enjoy government support. As a result, the Singapore Model is numerous benefits of the country’s economic development, but does not help in innovation and entrepreneurship (Musacchio and Sérgio 65). Ways that the Country can Deal with Corruption Corruption normally comes up in state-owned institutions because of bureaucracy created by the state officials. However, the Singaporean government can deal with the corruption cases by setting up regulations and models that monitor the wealth accumulation tendencies of the officials, which involves the adoption of smart technology (Harris 23). One of the ways the government has been able deal with corruption is the wage rate reforms that reward the state officials. This implies that the civil servants receive decent remunerations that can sustain their families and various requirements. It is also apparent that the imposing of taxation laws encourages savings among the civil officials and this prevents lavish spending and self-fish interests. Singaporean government also copes with corruptions through effective leadership that provides opportunities to the citizens to venture into different economic sectors. The auditing procedures conducted on the state-owned and foreign investments reduce corruption in it leads to imprisonment. The other way that the Singapore government uses to deal with corruption is by creating transparency and fairness in their spending (Harris 36). For instance, the introduction of the SWF is a transparent model that enables the citizens to understand where the government spends surplus finances in the budgets. The public procurement of products and the control of the state resources ensure that the government involves the citizens in investment decision-making. The establishment of international conventions that bring together the foreign and local investors facilitates the creation of a formal framework for conducting global business (Harris 42). Improving Administrative Effectiveness The success of Singapore’s State capitalism depends on administrative effectiveness undertaken by the government agents. For instance, the government can ensure that the regulations support the establishment of private industries. In order to improve the administrative effectiveness, the Singaporean government can hire attachés who understand the dynamics of international trade. The employment of the attachés helps in ensuring that the state-owned firms produce customized products for the foreign markets (Tajuddin 69). They also collect information about the management of the foreign firms for favorable administrative practices. Administrative effectiveness reduces misuse of resources and corruption cases, which hinders maximization of revenues. The improvement of administrative effectiveness also involves hiring of competent managers who understand cultural variations. This is because Singapore attracts employees and investors from various parts of the country with diverse cultural inclinations. The country can also improve its administrative effectiveness by introducing business-tailored courses for the supply of qualified employees. Considering this, Singapore offers sponsorship benefits to deserving students to enable them acquire new skills in overseas institutions (Tajuddin 69). The enactment of economic policies also facilitates transparency among the employees who must protect government resources. The regulations impose severe punitive actions of state officials who misuse resources or engage in fraudulent activities. The improvement of administrative effectiveness takes place at all levels of the trading transactions, such that everyone performs to develop their careers. The other way that the Singaporean government can adopt to improve administrative effectiveness is by encouraging openness in production. This eliminates the bureaucracy and the production of fake commodities that might flood the markets due to dumping of low quality products. Works Cited Harris, Godfrey. Corruption: How to Deal with Its Impact on Business and Society. Los Angeles, CA: Americas Group, 2003. Print. Musacchio, Farias A, and Sérgio G. Lazzarini. Reinventing State Capitalism: Leviathan in Business, Brazil and Beyond, 2014. Print. Tajuddin, Azlan A. Malaysia and Singapore in the World Economy: State, Capitalism, and Authoritarianism, 2002. Print. Read More