Impacts of British Colonialism on Singapore’s Economy
How did Singapore’s colonial history shaped its economic development, and what were the lasting impacts of colonialism on its economy? What role did foreign investments and multinational corporations (MNCs) play in Singapore’s economic growth, particularly during its early development phase?
In this blog post, we will mainly investigate the abovemention quesion by elaborating effects of British colonial rule in Singapore, including the establishment of a strategic port, infrastructure development, legal and administrative systems, and the introduction of trade networks. Additionally, we are going to analyze how these factors influenced Singapore’s economic development and contributed to its later success as an independent nation. In line with this, we envisage shedding light on the role of foreign direct investment (FDI) and the attraction of multinational corporations in Singapore’s economic development.
Introduction
The colonial history of Singapore played a crucial -if not the most crucial- role in the making of what we know now as modern Singapore, it shaped the economic development all around and paved the way for potential economic changes in the future. Since Singapore was colonized by Britain, it is fair to say that most of the economic developments are attributed mainly to the Brits, as most of the pivotal changes in Singapore’s economy were during the colonial era. Under the rule of Britain, Singapore became a strategic port in which it was located between major trade routes. The geographical position of the country made it much easier to emerge as centre of trade and commerce among the countries in the region and globally. Britain also implemented and executed plans to improve the overall infrastructure, including port facilities, and transportation routes to name a few, and that build the fundamental base for Singapore as we know it today. Additionally, the British colony introduced a new legal and administrative system that revolved around transparency and economic stability, ultimately creating an ecosystem that facilitates a business environment, illustrating both computers and creativity among businesses in Singapore. All of these factors and efforts are topped up with Singapore’s success in attracting foreign investors, mainly multinational corporations, as these corporations play an important role in shaping the economic structure of Singapore to date.
British Colonial Impact on Singapore’s Economy
The British colonial rule was a key actor in the development of Singapore’s economy. One crucial aspect was building the PSA or the Singapore Port that Singapore as a main location for international trade. It is important to mention that Britain implemented strategies and invested with huge amount of money in order to develop ‘Singapore Port’ or the PSA‘s infrastructure, as the port was facilitated with unique features that helped handle goods and store them efficiently, which ultimately led to making Singapore a great location for transhipment, acting as a major intermediary between Asia, Europe, and the rest of the world.
The port also boosted economic growth due to the attraction of various traders and merchants from all across the globe, which fostered the economy in the region and facilitated it to become a vibrant marketplace. The domino effect that occurred after the establishment of the port didn’t just stop at attracting foreign investors, but also continued to go even further, to create job opportunities and reduce unemployment to the average citizens of the country, creating a balance in all aspects of the economy while simultaneously boosting it.
The port’s history speaks for itself, as it has seen many development eras since the early 1900s. In 1914 for instance, the Port of Singapore handled approximately 10.5 million tons of cargo, but in 1939, almost 25 years later, it increased to around 25 million tons. In addition to the cargo, the busyness of the port has been affected since the intervention of the British Colony, to make it one of the most busy ports around the world, with the influence extending till today’s date, as around 37.2 million TEUs were handled in 2020, being only behind two countries in the entire planet; The United States and China.
Moreover, the British colonial administration invested heavily in the infrastructure of Singapore’s transportation system, which was a crucial step towards making Singapore an economic power. Britain constructed a huge network of roads, lines, routes, railways, and so on. This network acted as the primary transportation system in the country, connecting the society, individuals, companies and corporations all together. The infrastructure’s development attracted tourists as well, as the country became more organized and connected, which led to even further growth in the economy.
Investments in Singapore’s Economy (MNCs-Focused)
Aside from the physical developments, the British administration introduced a legal and administrative system that provided clarity, transparency, and opportunity for businesses in the country. The system was established based on the classic British legal system, which is based on the principles of common law, and that is known to offer framework that facilitates commercial activities, as well as advocate, an ecosystem that fits perfectly for businesses. And the legal system was enhanced by the establishment of courts, which insured fairness and justice, and that automatically made people trust each other even further, as well as making business transactions smoother than ever, with such transparency and supervision. The colonial administration also had implemented tax collection, strategies, well governance, and public services, all of which constructed a respected and a well functioning bureaucracy.
Foreign investments and MNC’s were combining together to act as one of the most important actors in growing Singapore’s economy. Specially, during the early phase of the economic development, and the British government that were meant to attract, specifically as foreign direct investment or FDI, doing this, at such an early stage emphasized and conveyed, the openness and confidence of the British government Singapore towards international investors all around the world. Singapore became known as a business-friendly destination, gathering, millions and millions of investors year after year, attracting both global businesses and domestic and regional businesses at the same time.
Multinational corporations, or MNCs were particularly more important to Singapore than other investors, as these corporations, most of the time invest with huge amount of capital, which is seen as not only a monetary or financial investment, but also an investment in the country as a whole, and in the trust between the corporations and Singapore. The robust infrastructure of Singapore how long side, the relatively secure and stable political atmosphere of the country multinational corporations see Singapore as a fit island, and the great bass for economic and business operations, with its transportation network that was constructed in a way that enhanced logistics powerfully.
Direct Benefits for Singapore.
Singapore, in return for all of the investments, benefit from the advanced technologies and the expertise that multinational corporations provided and brought to Singapore, and that way itself was pivotal enough for the country to gain access to global markets across the planet. Similar to the development of the strategic port by the British administration in Singapore, multinational corporations paved the way for more job creation, opportunities, as well as skill acquirement and development opportunities likewise.
Singapore did not miss the chance to invest in its people to get the best education and vocational training possible to come up with a talent pool that meets the requirements and the demands of the growing industries provided by global companies that were establishing connections with Singapore. The country, during the colonial rule strongly suggested, and recommended multinational companies and corporations to diversify their investments into various sectors such as biotechnology, medicine, information, technology, finance, and so on.
The step was taken to make sure that Singapore does not rely on a single industry, but rather be evenly strong in diverse industries to enhance the resilience to any potential economic shock to the country.
Conclusion.
In conclusion, and the British colonial rule impacted significantly the economic growth of Singapore during the colonial era by investing heavily in the infrastructure of the country, as well as establishing a strategic port to ensure that Singapore becomes a crucial trade actor in the global market, alongside the attraction of multinational companies, global trade partners, and foreign direct investors overall. Combining these factors created Singapore as we know it today as an economic powerhouse on the modern country that it looked up by many, and is considered a role model for economic growth and development despite being an extremely small country.
Anas Mousa
Social Sciences University of Ankara — Department of Economics
References:
https://lawgazette.com.sg/feature/the-british-rule-of-singapore-an-evaluation/
https://eresources.nlb.gov.sg/infopedia/articles/SIP_2018-04-20_085007.html
https://www.straitstimes.com/opinion/from-the-era-of-mncs-to-todays-diverse-businesses
