@bewildered, we are on the same economic page and the issues that SG faces and how they have created a grossly imbalanced economy. The point you did not expand on is the negative productivity growth in the SG economy. SG's GDP growth is an illusion as it is entirely based on increased inputs, rather than productivity growth through more efficient/effective use of assets and processes. The key inputs that drive the illusion of SG's economic growth are the massive population increase, subsidized construction, and the substantial Govt subsidies and incentives to local companies and MNCs. There are billions pumped into the SG economy by the Govt that go straight to the "GDP bottom line".
GDP Growth without Productivity Increases is unsustainable. The illusions only has a few years to run. I can't see SG having a population of 13 million.
Even some local academics are trying to raise the issue. Sadly for them they will likely lose their tenure and have to leave SG by publishing such research. Here is their intro:
SINGAPORE’S DECLINING PRODUCTIVITY GROWTH
AN EXPLORATORY PAPER
INTRODUCTION
Labour productivity has been on a down trend since 2004. It has declined further in the second quarter of 2008 (-7.5 per cent), after two consecutive quarters of contraction in the previous periods (refer to Exhibit 1 in attachment). This decline is seen across all industries except for wholesale and retail trade (0.5 per cent). The contraction is steepest in manufacturing (-13.0 per cent), followed by hotels and restaurants (-8.5%), business services (-6.4 per cent), financial services (-4.5 per cent), construction (-3.4 per cent), transport and storage (-1.2 per cent), community, social and personal services (-1.1 per cent) and information and communications (-0.1 per cent).
In contrast to productivity growth, real earnings rose in 2006 and 2007. With the global economic slowdown, however, it has since shrunk to -4.0 per cent in the second quarter of 2008 (refer to Exhibit 2).
Overall unit labour cost (ULC) has been on the rise since 2006. Despite the slowdown and dip in productivity as well as real earnings, labour costs have not receded. Overall ULC increased from 9.6 per cent to 11 per cent from the first to the second quarter of 2008 (refer to Exhibit 3 in attachment). Manufacturing ULC rose even more aggressively from a -0.7 per cent to 17.9 per cent during the same period. This pumped up unit business cost (UBC) in manufacturing by 10.7 per cent.
Declining productivity, coupled with increasing costs, does not augment well for the Singapore economy. Yet this is not an uncommon problem among developed countries. What triggers such labour productivity performance? This paper explores some possible causes behind Singapore’s declining productivity growth. Causes highlighted below are based on a review of the literature and feedback obtained while interacting with professionals in the business community.http://www.spp.nus.edu.sg/aci/docs/research_outputs/Singapore%20Declining%20Productivity%20Growth.pdf
