How far can diversifying the economy ensure that Singapore stay competitive in a globalized world? Explain your answer.
Diversifying the economy will make Singapore focus on new areas such as technology-intensive, high value-added manufacturing industries. This can be done with the help of Research and Development (R&D) in transforming Singapore into a knowledge-based economy as it brings about new and better products. Local enterprises are encouraged to partner universities and research institutions to develop new ideas, methods and products to be sold in the world market. At the same time, Singapore also continues to attract TNCs to set up operations here. By being an education, health, tourism and finance hub, Singapore will diversity and generate economic growth to be able to compete with her neighbors. We will then not become vulnerable and too overly dependent on only one particular sector for economic growth.
Venturing abroad would also help Singapore to stay competitive globally. Going regional and eventually global would enhance Singapore’s overall economic competitiveness by linking the domestic economy to the external economy. By taking a regional approach, Singapore invests in neighboring countries that have abundant resources in land and lower labor costs. These regions also provide a new market for our goods and services. Co-operation between Singapore and the host country also results in better relations between the two countries. Hence, venturing abroad would help Singapore stay competitive.
In order to stay competitive, the government has also nurtured Small and Medium Sized Enterprises (SMEs). SMEs provide jobs for many Singaporeans and they play a complementary role to TNCs as they support TNCs. SMEs help Singapore to stay competitive as they help to enhance Singapore as a regional manufacturing and services hub. As SMEs are typically small businesses with small capital and mainly, family expertise, the government has many schemes to help and develop them. With more successful SMEs, more TNCs will be attracted to come and start their operations here in Singapore. As such, nurturing SMEs is another way of staying competitive globally.
In conclusion, diversifying the economy is the most effective strategy to ensure that Singapore stays competitive globally. It encompasses the whole economy and gives immediate impact to the entire economy. Singapore is too small to make a huge impact, hence, it needs to adapt itself in order to manage globalization. As such, it must constantly be on the look out for potential areas of growth and how best it can look at alternative sources of income for the country.
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