In this chapter we look at the structure of Singapore’s trade and how it has changed over time: its imports and exports and interdependence with other countries through trade ﬂows, and its vulnerability to changes in external demand, including the cyclical ups and downs of the global electronics cycle and the regional slowdown induced by the Asian ﬁnancial crisis of 1997–98. Despite a history of successful export-led growth and industrialization, there is a perception that Singapore has special characteristics and so lacks the depth and breadth of fully developed economies. From the trade perspective this means extreme openness to international trade and factor ﬂows, heavy ‘dependence’ on imports of goods and services, export revenues, and foreign sources of labour and capital. Singapore has always worried about its ability to continue to attract foreign direct investment and capacity to compete internationally both with other developing countries in the Asian region as they undergo rapid growth and structural change, and with the advanced developed countries in terms of high value-added and new economy goods and services. We look at empirical studies which suggest that Singapore may have lost export competitiveness in the last two decades, become over-specialized in electronics and chemicals, and too heavily oriented towards export markets in East and South-east Asia. Since independence in 1965 there has been a remarkable degree of continuity in Singapore’s trade policy: a commitment to free trade, an active export promotion strategy, an ‘open arms’ policy towards MNCs and the pursuit of multilateral trade...
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