THE COMPARISON WITH Hong Kong is inevitable. Both are thriving ports and financial centres; both have Chinese-majority populations and legal systems inherited from the British. But in the past 30 years Singapore and Hong Kong have trodden very different economic paths. With the opening of China, Hong Kong’s manufacturing industry shifted over the border, falling from about 20% of GDP in 1980 to just 1% now (see chart). In Singapore, it has dropped from about 28% a decade ago, but only to 19%. That is far below the 30% or so seen in places such as China, South Korea or Taiwan, but far above the levels in other developed countries such as America, Britain, France or Spain, let alone Hong Kong.
Yet Singapore faces many of the same pressures as its main regional rival: land scarcity, a tight labour market and competition from lower-cost neighbours. The decision to retain a manufacturing base has been the government’s. It provides 420,000 jobs, many of them high-skilled. Rolls-Royce, for example, a British aerospace and marine-engineering firm, has what it describes as its most modern manufacturing, training and research facility in Singapore. Of the 2,...
from The Economist: Special report http://ift.tt/1I5W0Fg
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