Social Cohesion and Political Equilibrium

The steady expansion of the economic pie, not only the total size, but on a per capita basis, facilitated the achievement of social cohesion during Singapore’s catch-up phase of growth as gains were broadly shared across the population. A commitment to be engaged in the global economy through the international flow of goods and services, capital, and people found broad public support. As a mature economy, Singapore’s pace of growth is determined by the rate of indigenous innovation and the pace of advance of frontier technology. The Romer and Schumpeterian models of endogenous technological change provide the microeconomic underpinnings for growth of the world’s technology frontier. In practice, the bulk of the world’s R&D is carried out by the G-5 countries: France, Germany (West Germany until 1990), Japan, the United Kingdom, and the United States. We can call them the “frontier economies”. The endogenous growth models developed by the economists Paul Romer, Philippe Aghion and Peter Howitt explain the factors and mechanisms behind the determinants of the growth rate of frontier technology, driven by the frontier economies. With the end of catch-up growth, as Singapore gets closer to the technology frontier, successful business ventures that launch new and higher-quality products enable Singapore to join the ranks of these frontier economies. Whereas in the past, a transition from being a relatively poor country to one that was getting closer to the standard of living of developed economies fostered a sense of social cohesion, in future, it will be the ability to create an economic system that supports innovative activities that provides the social glue…