DonÃ¢â‚¬â„¢t Frighten the Horses Ã¢â‚¬â€œ the Political Economy of SingaporeÃ¢â‚¬â„¢s Foreign Exchange Rate Regime since 1981
In this paper we explore the links between Singapores foreign exchange rate regime since 1981 and the broader aspects of its political economy. Singapore has been remarkably successful in achieving fast growth, low and stable price inflation and a strong external position. An important part of this strategy has been its managed floating exchange rate regime, which is generally regarded as being successful, but this needs to be viewed within the broader context of the governments pragmatic socialism to keep inflation low and stable as the bedrock for attracting inflows of mobile foreign capital to sustain long-run export competitiveness, and an economic strategy based on high levels of centralized saving and investment, a high degree of government involvement in the economy and the relentless accumulation of foreign exchange reserves. Indeed, part of the reason why managed floating has been successful in Singapore has been because the credibility of monetary policy has been enhanced through the governments command over resources and its ability to respond quickly and flexibly to changes in economic circumstances using, where necessary, unorthodox policies of demand management to cut business costs. Exchange rate policy, therefore, becomes an integral part of the policy to redistribute income to capital to sustain employment and prevent mobile firms from leaving Singapore. By the early 1990s the imperative became to diversify the structure of the economy away from exclusive reliance on a predominantly foreign manufacturing base and to reduce the extent of government involvement in the economy and it became harder to justify high levels of centralized saving and investment. The dilemma is that the government is finding it difficult to extricate itself from the economy without compromising policy effectiveness, and there is little evidence that dependence of the economy on foreign capital and labour has diminished.
|Date of creation:||Jan 2005|
|Date of revision:|
|Contact details of provider:|| Postal: JG Crawford Building #13, Asia Pacific School of Economics and Government, Australian National University, ACT 0200|
Web page: http://www.eaber.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jeffrey Sachs & Andrew Warner, 1995.
"Economic Reform and the Progress of Global Integration,"
Harvard Institute of Economic Research Working Papers
1733, Harvard - Institute of Economic Research.
- Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
- Huff, W G, 1995. "What Is the Singapore Model of Economic Development?," Cambridge Journal of Economics, Oxford University Press, vol. 19(6), pages 735-59, December.
- Wilson, Peter, 1994. "Export earnings instability of singapore, 1957-1988: A time series analysis," Journal of Asian Economics, Elsevier, vol. 5(3), pages 399-412.
- Chow, Peter & Kellman, Mitchell & Shachmurove, Yochanan, 1994. "East Asian NIC manufactured intra-industry trade 1965-1990," Journal of Asian Economics, Elsevier, vol. 5(3), pages 335-348.
- Mukhopadhaya, Pundarik, 2001. "Changing labor-force gender composition and male-female income diversity in Singapore," Journal of Asian Economics, Elsevier, vol. 12(4), pages 547-568.
When requesting a correction, please mention this item's handle: RePEc:eab:develo:22583. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shiro Armstrong)
If references are entirely missing, you can add them using this form.