JC History Tuition Online- What is the 1991 Strategic Economic Plan - Economic Development Notes

What is the 1991 Strategic Economic Plan?

Topic of Study [For H2 History Students]:
Paper 2: Economic Development after Independence
Section B: Essay Writing
Theme II Chapter 1: Paths to Economic Development

Historical Context: Role of the Ministry of Trade and Industry
The Ministry of Trade and Industry (MTI) was established in March 1979 to oversee economic planning, manpower planning, industrial policies and investment promotion. Overall, the MTI served to maintain the economic progress for Singapore.

In 1980, the MTI came up with the second strategic plan, known as ‘Singapore’s Economic Development Plan for the Eighties’. The plan sought to raise productivity levels and ease labour shortage.

Like Taiwan and other successful Asian economies, the governments at the onset understood the acute importance of rapid industrialisation and the development of a productive manufacturing sector. […] The Economic Development Plan for the Eighties which was published in the 1980s was the beginning of the effort to make public the Singapore’s development. The government’s interventionist approach was carried out mostly with policy directives and therefore carried more influence than indicative planning. What the government also did was to provide the requisite infrastructure as well as skilled but cheap and well-ordered labour force.

An excerpt taken from “Economic Development in the Twenty-first Century Lessons for Africa Throughout History” by Matthew Kofi Ocran.

The 1985 Recession
However, the MTI’s plan was soon put to the test. In 1985, Singapore experienced its first recession since independence, ending its continuous Gross Domestic Product (GDP) growth of 8.5% per year. By the second quarter of 1985, Singapore’s growth rate fell to -1.4%, shocking observers and businesses.

Recession figures - Department of Statistics - Ministry of Trade and Industry - Business Times
Examine the figures that showed Singapore’s economic situation during past recessions, from 1985 to 2020. [Accessed from The Business Times]

One of the contributing factors for the recession was the policy changes by neighbouring countries. For instance, Indonesia, the Philippines and Thailand imposed exit taxes. This meant that their citizens were taxed each time they travelled outside their country, which limited the movement of labour. In addition, Singapore experienced a fall in export demand due to the economic slowdown in Western industrialised nations, especially the USA.

In view of the recession, the MTI announced the creation of an Economic Committee in March 1985 to assess the economic situation and chart new pathways for growth. In 1986, a report was published, known as ‘The Singapore Economy: New Directions’, which proposed economic reforms to guide Singapore in the post-recession phase.

1991 Economic Plan
In order for Singapore to keep up with the stiff competition, the government came up with a document to envision the next phase of Singapore’s growth in the 1990s. In 1991, the MTI launched the ‘Strategic Economic Plan: Towards a Developed Nation’. This Plan aimed to turn Singapore into a ‘first league’ developed country in the next three decades.

The Business Times Infographic - Singapore's Economic Development
An illustration to summarise Singapore’s economic development from 1965 to 2015. [Assess from The Business Times]

The National Science and Technology Board (NSTB), which is now more commonly known as the Agency for Science, Technology and Research (A*STAR), was formed in 1991 to focus on applied research. The NSTB supported the development of 13 industrial clusters, such as shipping, commodity trading, shipping, petroleum and petrochemicals, finance and information technology.

Thirteen industrial clusters were identified as areas where Singapore could sustain a competitive advantage in world markets and these were to be the priority areas for development. However, in order to sustain economic growth and reduce vulnerability, it was also considered necessary for Singaporean companies to move out of Singapore into the Asia Pacific region and to form an ‘external economy’ (known as ‘regionalisation’). This would enable Singapore not only to take advantage of cheaper labour in the less developed countries in the region, but also to place Singapore in the centre of the region’s drive for economic growth.

An excerpt taken from “Explaining the Economic Success of Singapore: The Developmental Worker as the Missing Link” by Johnny Sung.

To support the 1991 Plan, the Singapore government referenced education systems in Germany and Japan to develop a skill-intensive economy. As such, the Ministry of Education introduced reforms, mandating all young individuals to acquire at least ten years of general education, so that they can develop the rigour of learning and skill upgrading at an early age.

In 1992, the Vocational and Industrial Training Board (VITB) was renamed the Institute of Technical Education (ITE), which highlighted the Ministry’s commitment towards higher standards of technical education. The ITE offered higher skill content courses that charted pathways for students to advance to polytechnics and universities.

In line with the national aspiration of moving towards a developed country status as articulated in “The Strategic Economic Plan (1991)”, the goal was to upgrade the educational and skill profile of the workforce.

An excerpt taken from “Breakthrough In Vocational And Technical Education, A: The Singapore Story” by Song Seng Law.

What can we learn from this article?
Consider the following question:
– How far do you agree that that expertise was most crucial in determining the economic development of Southeast Asian states after independence?

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