Globalisation in a small open economy: the Singapore experience

This note reviews Singapore’s experience with globalisation, including policy measures taken to mitigate its effects on the income distribution and labour market. While the benefits have been enormous, the forces of globalisation in recent decades, together with skill-biased technological change, have necessitated a more proactive policy response to counter the rise in income inequality. A retreat from globalisation, however, is not the solution, especially for small open economies. Rather, policymakers need to better manage the globalisation process by being strategically interventionist, in order to ensure that the gains are more uniformly and equitably shared, and the costs alleviated. In addition to redistributive programmes, Singapore is stepping up efforts to promote equality of opportunity and inclusive growth through various government schemes aimed at rematching, retraining and retooling workers.